Opposition Brief — Morris Industrial Builders, Inc. v. Township of South Brunswick

No. 92-1396

In The

Supreme Court of the United States

+

October Term, 1992

MORRIS INDUSTRIAL BUILDERS, INC., a New Jerse

Corporation,

THE TOWNSHIP OF SOUTH BRUNSWICK in the County ot

Middlesex, a municipal corporation of the State of New Jersey

THE TOWNSHIP COMMITTEE OF THE TOWNSHIP OF

SOUTH BRUNSWICK, THE PLANNING BOARD OF THI

TOWNSHIP OF SOUTH BRUNSWICK,

i> , / , s 7

Kespondents

On Petition for Writ of Certiorari to the Superior Court of

New Jersey, Appellate Division

BRIEF IN OPPOSITION FOR RESPONDENT NEW

JERSEY COUNCIL ON AFFORDABLE HOUSING

ROBERT J. DEL TUFO

Attorney General of New Jerse

JOSEPH L. YANNOTTI

Assistant Attorney General

Counsel of Record

GERALDINE CALLAHAN

Deputy Attorney Genera

Richard J. Hughes On the Brief

Justice Complex Attorneys for Respondent

CN 112 New Jersey Council o?

Trenton. New Jersev O8625 Affordable Housing

(609) 292-1760

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QUESTION PRESENTED

Whether McKesson v. Division of Alcoholic Beverages, 496

U.S. 18 (1990) applies where fees collected pursuant to a municipal

ordinance to be used to satisfy a State constitutional obligation to

provide low and moderate income housing are not taxes and the

scheme under which the fees were collected is not unconstitutional

or otherwise illegal.

ii

TABLE OF CONTENTS

Page

Cuestion Presented ..... sc veescnccaseven ee eee i

TRRMOOCTCOMICMES 20. cece ccnevsvnsue eee eee li

po ae eee li

te PTT ]

Summeny Of ATQUMOM. ... osc scnceuvaneneaebeueeen 6

Reasons for Denying the Writ ........ccscecevcesens 8

oe Pe 16

TABLE OF CITATIONS

Cases Cited:

Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 76 (1988)

Pettitte ee 9

Bd. of Directors of Rotary Int’l v. Rotary Club, 481 U.S.

SOU CIGST) svnncccnsadsevavenkseeaueaeeeeeent 7,10

Chevron Oil Co. v. Huson, 404 U.S.77(1971) ......... 14,15

Exxon Corp. v. Eagerton, 462 U.S. 176(1983) ......... 10

Frank A. Greek v. South Brunswick Tp., 257 N.J. Super.

94, 607 A.2d 1359 (App. Div. 1992), certif. denied, 130

N.J. 602, 617 A.2d 1223 (1992) ..... 5,6, 7, 8,9, 10, 13, 14, 15

ae |

uu

Contents

Page

Hills Dev. Co. v. Bernards Tp., 103 N.J. 1, 510 A.2d 621

ey Sekt elas ka oie iécwcecssscuce. 2

Holmdel Builders Ass’n v. Township of Holmdel, 121 N.J.

350,583 A.2d 277 (1990) ............ 3, 4,5, 6,8, 12, 13,14

McKesson v. Division of Alcoholic Beverages, 496 U.S. 18

Naas cs aig ts 6,64 00 i, 6,7, 8,9, 11, 12, 13, 14, 15

Nieder v. Royal Indemnity Co., 62 N.J. 229, 300 A.2d 142

on ys sors saws ine kn'scanceec 7,10

Parker v. McLain, 237 U.S. 469(1915) ............... 14

So. Burl. Cty. N.A.A.C.P. v. Mt. Laurel Tp., 92 N.J. 158,

Oe 2

So. Burl. City, N.A.A.C.P. v. Tp. of Mt. Laurel, 67 N.J. 151,

336 A.2d 713, cert. denied, 423 U.S. 808 (1975) ...... 2

Statutes Cited:

INS.DA. S2:2 7-901 C8800, 2.2... wc cece cee cnce 2

Se 2

iv

Contents

Page

New Jersey Constitution Cited:

New Jersey Constitution (1947):

UE cA G Aa Cavs RaW edeN GARTH Reh eae E eee Rae 2

“sca Moin t nn) MERE TERT CET TET ET TTT Toe 2

Rule Cited:

eres Cre Don nw cnc tcecsivcnsecsews 8

Other Authorities Cited:

NT el: a ene wey re eee aera 2

Petts eee E NOON. o.es dake ceesnnckeweveuene 5,10, 13

Pr ARE Sac 655s soba weN KERN aNeeNeseuue ees 12

|

No. 92-1396

In The

Supreme Court of the United States

a

October Term, 1992

MORRIS INDUSTRIAL BUILDERS, INC., a New Jersey

Corporation,

Petitioner,

vs.

THE TOWNSHIP OF SOUTH BRUNSWICK in the County of

Middiesex, a municipal corporation of the State of New Jersey,

THE TOWNSHIP COMMITTEE OF THE TOWNSHIP OF

SOUTH BRUNSWICK, THE PLANNING BOARD OF THE

TOWNSHIP OF SOUTH BRUNSWICK,

Respondents.

On Petition for Writ of Certiorari to the Superior Court of New

Jersey, Appellate Division

RESPONDENT’S BRIEF IN OPPOSITION

STATEMENT OF THE CASE

In two landmark decisions, the Supreme Court of New Jersey

declared that each municipality in the State has a unique and

important obligation under New Jersey’s constitution to provide a

2

realistic opportunity for its fair share of lower income housing.

N.J. Const. (1947), Art. I, §1; Art. IV, § 6, 42; So. Burl. City,

N.A.A.C.P. v. Tp. of Mt. Laurel, 67 N.J. 151, 174, 336 A.2d 713,

cert. denied, 423 U.S. 808 (1975); So. Burl. Cty. N.A.A.C.P. v. Mt.

Laurel Tp., 92 N.J. 158, 208-09, 456 A.2d 390 (1983). In response

to the so-called Mt. Laurel decisions, the State Legislature enacted

the Fair Housing Act (the Act), N.J.S.A. 52:27D-301 et seq., to

provide a comprehensive mechanism to address in an orderly and

meaningful way the constitutional duty of all local communities.

See N.J.S.A.52:27D-303.

Among its many regulatory features, the Act created a State

agency known as the Council on Affordable Housing (the Council)

and gave it wide-ranging administrative powers to define regional

needs throughout New Jersey for low and moderate income

housing, to establish guidelines for municipalities to determine

their fair share of the region’s needs and to decide if proposed

ordinances and related planning steps will satisfy local needs. Hills

Dev. Co. v. Bernards Tp., 103 N.J.1,21-23,510A.2d 621, 632-33

(1986). Under the Act, a municipality is required to submit to the

Council a “housing element,” which is an analysis of the measures

it plans to take to address its lower income housing obligation, and

a “fair share plan,” the township’s proposed ordinances designed

to actually carry out its planning steps. N.J.S.A. 52:27D-309(a);

N.J.A.C. 5:91-4.2. Pursuant to the Act, a municipality “... may

provide for its fair share of low and moderate income housing by

means of any technique or combination of techniques which

provide a realistic opportunity for the provision of the fair share.”

N.J.S.A. 52:27D-311(a). Based on its submissions, a community

may petition the Council for “substantive certification” which, if

granted, constitutes approval of the plan to satisfy the

municipality's Mt. Laurel obligation. N.J.S.A.52:27D-313.

In response to the constitutional obligation to provide

affordable housing as codified in the Act, several municipalities

seem emanate renaacccmeaciniunidincscueea iaidiniiies

3

adopted ordinances requiring owners of new development to pay to

the municipalities a fee which the municipalities would use for

lower income housing. The method for imposing the fee varied

from municipality to municipality, but, generally, the fee imposed

was based on the size of the project. See Holmdel Builders Ass'n v.

Township of Holmdel, 121 N.J.550, 558-62, 583 A.2d 277, 281-83

(1990). Several builders associations filed suit against a number of

municipalities, including South Brunswick Township, challenging

these municipal development fee ordinances, claiming that the

ordinances exceeded municipal authority under the zoning and

police powers and the Act; were illegal taxes; constituted an

uncompensated taking and were a denial of due process and equal

protection. In Holmdel Builders Ass'n v. Township of Holmdel,

supra, the New Jersey Supreme Court rejected these arguments.

The Court found that a municipality has the statutory authority

under the Act to impose by ordinance mandatory fees on

development to be used for affordable housing. The Court also

concluded that, since the Act created the Council and vested it with

primary jurisdiction over satisfaction of the municipal fair share

housing need, the Council, in the first instance, should adopt

regulations to govern imposition of development fees. Because the

Council had not yet promulgated regulations governing mandatory

development fees, the Court ruled that the ordinances at issue were

not validly adopted. The New Jersey Supreme Court also

specifically declared that development fees did not constitute a tax,

but rather were legitimate regulatory measures designed to provide

a realistic opportunity for provision of the municipality’s lower

income housing need.

In response to Holmdel Builders Assn’n, on January 28, 1991,

the Council issued an Administrative Order directing

municipalities that had collected fees prior to Holmdel Builders

Ass’n to hold those monies in a separate, interest bearing escrow

account pending promulgation of regulations. The Order was

intended to preserve the status quo until the Council could follow

the New Jersey Supreme Court’s directive and promulgate

regulations governing mandatory development fee ordinances.

4

Meanwhile, a number of developers instituted lawsuits

against six municipalities claiming that they were entitled to a

refund of the fees paid. In all cases, the developers argued that

Holmdel Builders Ass’n mandated refunds. The developers relied

heavily on language in the opinion that rejected one builders

association’s attempt to sue for refunds on behalf of its

constituents. The New Jersey Supreme Court rejected the claim on

standing grounds “. . . without prejudice to the right of individual

members to seek refunds in separate actions.” Holmdel Builders

Ass'n v. Township of Holmdel, supra, 121 N.J. at 586, 583 A.2d at

295. The developers also relied on the New Jersey Supreme

Court’s finding that the ordinances were not validly adopted due to

lack of Council regulations. Each municipality sued raised the

Council’s Administrative Order as a defense to its failure to give

refunds and the Council sought and was granted leave to intervene

in all cases.

Petitioner, Morris Industrial Builders, Inc., as well as several

other developers, filed suit against South Brunswick Township

seeking refunds of the development fees they had paid under South

Brunswick’s mandatory development fee ordinance. All plaintiffs,

including Petitioner, moved for summary judgment, arguing that

Holmdel Builders Ass’n entitled them to refunds of fees paid under

the ordinances as a matter of law and that the Council had no

authority to adopt regulations that would enable municipalities to

keep fees collected under ordinances adopted before promulgation

of Council regulations. The Council filed a cross-motion for

summary judgment arguing that Holmdel Builders Ass'n did not

mandate refunds and that the Council could adopt regulations

allowing municipalities to retain fees already collected. Neither

Petitioner nor the other developers raised any federal due process

issues during the course of the hearings before the trial court.

Petitioner did state in its complaint that South Brunswick’s actions

in continuing to hold the development fee collected from Petitioner

“violates the plaintiffs’ constitutional due process rights and

———— ee |

5

plaintiffs’ property rights,” however, petitioner never raised any

arguments concerning this allegation in its summary judgment

motion or in response to the Council’s cross-motion.

In the South Brunswick cases, by Order dated July 30, 1991,

the trial court granted the developers’ Motions for Summary

Judgment finding that Holmdel Builders Ass’n required a refund

and denied the Council’s motion. In ordering refunds, the trial

court concluded that the Council could not promulgate regulations

that would allow municipalities to keep the previously collected

fees. The trial courts in the cases involving other municipalities

issued similar rulings.

The Council appealed those cases in which the trial courts’

decisions constituted a final judgment and was granted leave to

appeal in those cases where the trial courts’ Orders were

interlocutory. Meanwhile, on January 21, 1992, while the

Council’s appeals from the refund Orders were pending, the

Council adopted regulations governing development fees.

N.J.A.C. 5:91-15.1 et seq.; 5:92-18.1 et seq. These regulations

include procedures for retaining previously collected fees.

N.J.A.C. 5:91-15.1 et seq. Three developers filed timely appeals

from these regulations which are now pending before the New

Jersey Appellate Division.

The Appellate Division ruled on the Council’s appeals from

the trial courts’ refund Orders in Frank A. Greek v. South

Brunswick Tp., 257 N.J. Super 94, 607 A.2d 1359 (App. Div.

1992), certif. denied, 130 N.J. 602, 617 A.2d 1223 (1992). The

New Jersey Appellate Division found that Holmdel Builders Ass'n

did not mandate refunds. Rather, the court found that the Supreme

Court did not decide the issue. The Appellate Division then

concluded that the Council has the “potential power to promulgate

regulations upon which the defendant municipalities may rely to

validate prior action on their part in collecting mandatory builders’

’

6

fees.” Jd. at 101, 1362. Relying on well-established law, the

Appellate Division found that the municipalities can validate

ordinances since the municipalities were not acting ultra vires. The

Appellate Division stressed in its opinion that it was deciding only

the limited issue of the Council's potential power to pass curative

regulations and the municipalities potential power to validate their

prior actions. Since the Council had expressed to the trial courts its

intention to adopt regulations, the Appellate Division concluded

that the trial courts should have deferred to the Council for a

reasonable period pending completion of the rule promulgation

process and, accordingly, reversed the Orders requiring refunds.

Petitioner, as well as several other developers, petitioned the

New Jersey Supreme Court for discretionary review of Frank A.

Greek. The parties argued that the New Jersey Supreme Court

should hear the cases because the Appellate Division had

interpreted the New Jersey Supreme Court’s decision in Holmdel

Builders Ass'n wrongly and because the Appellate Division had

misapplied the well-settled law governing validation of prior

municipal actions. Petitioner also argued, for the first time in the

long history of these cases, that the failure to award refunds

violated federal due process standards as set forth in McKesson v.

Division of Alcoholic Beverages, 496 U.S. 18 (1990). The New

Jersey Supreme Court denied the various petitions for certification

without comment on November 24, 1992. Frank A. Greek v. South

Brunswick Tp., supra. Petitioner filed a petition for writ of

certiorari with this Court on February 22, 1993. Respondent

received the petition on February 23, 1993.

SUMMARY OF ARGUMENT

1. Petitioner failed to raise federal due process arguments at

either the trial or Appellate Division levels, despite having ample

opportunity to do so and the Appellate Division decision does not

discuss any federal due process issues. Petitioner first raised

‘

7

McKesson and the due process issue when it petitioned the New

Jersey Supreme Court for certification. New Jersey appellate

courts do not address issues not properly raised at the trial level.

Nieder v. Royal Indemnity Co., 62 N.J. 229, 234, 300 A.2d 142, 145

(1973). The United States Supreme Court generally will not review

a final judgment of a State court where the claim was not presented

in the States courts. Bd. of Directors of Rotary Int'l v. Rotary Club,

481 U.S. 537, 550 (1987). Petitioner's failure to properly raise

these claims, therefore, should preclude its petition.

2. This petition should be denied because the matter is not

finally resolved by the New Jersey courts. In F rank A. Greek v.

South Brunswick Tp., supra, the New Jersey Appellate Division

decided only the limited issue of the Council’s power to

promulgate regulations that may allow municipalities to validate

their previously adopted development fee ordinances, thereby

allowing the municipalities to retain the fees collected or a portion

thereof. As the Appellate Division noted, the substance of the

regulations and municipal conduct in response to the regulations is

a separate matter. An appeals from the regulations are now pending

before the New Jersey Appellate Division. It is these regulations

that set forth the procedures that may allow municipalities to retain

previously collected fees or, conversely, will result in refunds to

the developers. Since Petitioner’s requested relief is a refund, it

seems premature at this time to consider this case when the very

regulations that may result in some refund still are on appeal in the

State courts.

3. Contrary to Petitioner's assertions, McKesson has no

applicability whatsoever to this case. McKesson states that due

process requires the State to afford taxpayers a meaningful

opportunity to secure post-payment relief for taxes already paid

pursuant to a tax scheme ultimately found unconstitutional. In this

case, there is no tax involved nor is there any payment scheme

involved that has been found to be unconstitutional or otherwise

illegal. The New Jersey Supreme Court specifically declared that

development fees are not taxes. Holmdel Builders Ass'n v.

Township of Holmdel, 121 N.J. at 585, 583 A.2d at 294. Moreover,

the New Jersey Appellate Division found that the Council

possesses the statutory authority to promulgate regulations to

allow municipalities to retain previously collected fees and that

municipalities may validate the invalidly adopted ordinances

pursuant to Council regulations. Frank A. Greek v. South

Brunswick Tp., supra. These conclusions were reached solely on

the basis of State law. Without some scheme of illegal taxation

present, McKesson provides no basis for granting the petition.

4. Even assuming arguendo that McKesson is not limited to

taxes and applies to any monies collected by a governmental entity,

McKesson still does not apply to this case. The underlying premise

of McKesson is that the government must provide a mechanism to

refund citizens’ monies when those monies have been collected

illegally. In this case, no court has found that the municipalities

involved have collected fees illegally. The New Jersey courts have

found that development fees are authorized under the Act and that

the Council may adopt regulations that allow municipalities to

retain previously collected fees. Unlike McKesson, this is not a

situation where the government’s collection of monies is

unconstitutional or illegal.

REASONS FOR DENYING THE WRIT

There are no special and important reasons why this Court

should review the New Jersey Appellate Division’s decision in

Frank A. Greek. Sup. Ct. R. 10. Petitioner did not raise the federal

law questions which it now urges this Court to consider at either the

State trial or Appellate Division levels. Indeed, the opinion from

which Petitioner seeks review does not even discuss any of the

issues Petitioner now raises. Petitioner, therefore, should not be

permitted now to premise the basis for this court’s jurisdiction on

9

such arguments. Additionally, contrary to Petitioner’s assertions,

no federal due process issues as discussed in McKesson are at issue

inthis case. Frank A. Greek v. South Brunswick Tp., supra, the case

from which Petitioner seeks review, is just one case in an ongoing

series of cases addressing the permitted use of development fees as

a technique to provide for the municipal fair share lower income

housing need as required under New Jersey law. This is not a

situation where a party has paid an unconstitutional tax and the

State is refusing to refund the taxes wrongly collected. Thus, the

post-deprivation remedy and attendant due process considerations

as discussed in McKesson do not apply.

Initially, this Court should deny the petition because

Petitioner never properly raised the federal law issues in the State

courts and the New Jersey courts therefore have not had the

opportunity to review the federal due process issues Petitioner

raises. Petitioner did not raise any federal due process claims at

either the trial court or Appellate Division level.’ Petitioner

certainly had ample opportunity to do so, especially since it was

Petitioner’s Motion for Summary Judgment, which the trial court

granted, that was the subject of Frank A. Greek. Petitioner's

arguments both before the trial court and Appellate Division were

premised on State law. Consequently, there is no discussion of any

federal due process considerations in Frank A. Greek. It was not

until Petitioner sought discretionary review of Frank A. Greek

from the New Jersey Supreme Court that it even raised McKesson

and federal due process arguments. The New Jersey Supreme

Court denied the petition without explanation, not surprisingly

1. Petitioner did allege in its complaint that the failure of South Brunswick

to refund its money constituted a deprivation of its due process rights. Petitioner,

however, never pressed this claim. The mere mention of a federal right without

full briefing and argument is an insufficient basis on which to premise Supreme

Court jurisdiction. Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 76, 77-78

(1988).

10

thereby refusing to address the newly raised federal issues since

New Jersey appellate courts will not consider issues which have

not been raised in the trial courts. Nieder v. Royal Indemnity Co.,

supra, 62 N.J. at 234, 300 A.2d at 148.

Likewise, this Court will not review a State court decision

unless the record demonstrates that the federal claim was

adequately presented in the State system. Bd. of Directors of

Rotary Int'l v. Rotary Club, 481 U.S. 537 (1987). The absolute

silence of the Appellate Division’s decision aptly demonstrates

that federal issues were not raised before it. Exxon Corp. v.

Eagerton, 462 U.S. 176, 181 n.3 (1983) (failure of highest State

court to pass upon federal question leads to assumption that federal

issues were not properly presented in State courts). Under these

circumstances, this Court should deny the petition.

Moreover, the New Jersey courts have not finally resolved the

matter of imposition of development fees and possible refunds.

The purpose of Petitioner’s petition as set forth therein is to secure

a refund of the development fees it has paid to South Brunswick

Township. Petitioner may very well secure some refund. The

Council has promulgated regulations which set forth standards and

procedures for municipal retention of development fees collected

under previously adopted ordinances. N.J.A.C. 5:91-15.1 et seq.

and N.J.A.C. 5:92-18.1 et seq. Itis entirely likely, indeed probable,

under the regulations, that Petitioner will receive some refund.

Those regulations, however, are the subject of pending appeals. As

aresult of these appeals, the amount of a refund that Petitioner may

be entitled to is unsettled. Under these circumstances, it is

premature for the Court to consider the petition at this time. This is

especially so since the Appellate Division in Frank A. Greek

specifically limited its decision to the narrow issue of whether the

Council has the “potential power” to adopt regulations that allow

municipalities to validate previously adopted ordinances thereby

resulting in the retention of fees collected. Frank A. Greek v. South

Brunswick Tp., supra, 257 N.J. Super. at 106, 607 A.2d at 1365.

1]

The petition also should be denied because Petitioner does not

present any legitimate federal claim. Petitioner's reliance on

McKesson in support of its claim that it is entitled to a refund is

totally misplaced. In McKesson, Florida enacted a liquor excise tax

scheme to give preference to alcoholic beverages manufactured

from certain products grown in the State. McKesson, which had

been paying the taxes, challenged the preferential tax treatment.

The Florida court invalidated the tax scheme as violative of the

Commerce Clause of the United States Constitution and enjoined

future enforcement of the scheme, but declined to order refunds or

any other form of relief for previously paid taxes. This Court

reversed the Florida court finding:

When a State penalizes taxpayers for failure to

remit their taxes in a timely fashion, thus

requiring them to pay first before obtaining

review of the tax’s validity, federal due process

principles long recognized by our cases require

the State’s post-deprivation procedure to

provide a “clear and certain” remedy [cite

omitted] for the deprivation of tax moneys in

an unconstitutional manner. [McKesson v.

Division of Alcoholic Beverages, supra, 496

U.S. at 51).

McKesson does not state that a refund is the required remedy.

Rather, McKesson provides that “[t}he State is free to choose

which form of relief it will provide, so long as the relief satisfies

the minimum federal requirements we have outlined.” bid.

McKesson requires the State to afford taxpayers a meaningful

opportunity to secure post-payment relief for taxes paid pursuant

to a tax scheme found to be unconstitutional.

McKesson is readily distinguishable from the present case for

two significant reasons. First, here there is no tax involved. The

12

New Jersey Supreme Court unequivocally has declared that

development fees are not taxes. Rather, the fees are the equivalent

of mandatory set asides,’ another technique already approved by

the New Jersey Supreme Court for providing lower income

housing. Holmdel Builders Ass'n, supra, 121 N.J. at 582-85, 583

A.2d at 293-94. McKesson specifically involved taxes and the

discussion and decision dealt with an unconstitutional tax scheme.

McKesson, therefore, is inapplicable.

Even assuming, however, that McKesson is not limited to

taxes and applies to any type of governmentally compelled fee,

McKesson still is inapplicable because the fees charged here are

not unconstitutional. Indeed, quite the contrary exists here. The

New Jersey courts have specifically upheld such fees and the

Council’s ability to promulgate regulations governing previously

collected fees. Thus, not only is the fee not unconstitutional, it has

not been found to be illegal in any way.

In Holmdel Builders Ass’n, supra, the New Jersey Supreme

Court ruled that the State Fair Housing Act authorizes

municipalities to impose development fees as a technique for

municipal provision of its fair share of lower income housing. The

Court further found that, since the State Legislature had vested the

Council with primary jurisdiction of municipal satisfaction of the

fair share need, the Council, in the first instance should promulgate

regulations addressing development fees. In Frank A. Greek,

supra, the Appellate Division addressed the issue of the Council’s

authority to adopt regulations that may allow municipalities to

2. “Set aside means the percentage of housing units devoted to low and

moderate income households within an inclusionary development.” N.J.A.C.

5:92-1.3. A mandatory set aside is when a municiality by zoning ordinance

requires a developer to include a certain percentage of low and moderate income

units in a development in order to help satisfy the municipality’s Mr. Laurel

housing obligation.

13

keep previously collected fees, finding that the Council has such

authority. The Appellate Division also ruled that, in accordance

with well established State law, municipalities can take action to

validate prior development fee ordinances since those ordinances

were not ultra vires, as explained in Holmdel Builders Ass'n. The

Appellate Division in Frank A. Greek was careful to note that it

was deciding only the very limited issues of the Council’s

“potential power” to pass curative regulations and municipalities’

potential power to validate prior ordinances. Frank A. Greek v.

South Brunswick Tp., supra, 257 N.J. at 106, 607 A.2d at 1365. The

substance of the regulations themselves, and thus the actual

procedures for retaining fees, presently is the subject of pending

appeals before the New Jersey Appellate Division.

The Holmdel Builders Ass'n and Frank A. Greek cases

discussed above demonstrate that development fees for affordable

housing are legal. They also demonstrate that the Council has the

power to promulgate regulations that may allow municipalities to

keep some or all of the fees collected. This is a far cry from the

situation in McKesson where the State court concluded that the tax

scheme in Florida was flatly unconstitutional. Here, the fees are

legal and the methods for imposing fees and allowing towns to

keep monies already collected still is under judicial review.

Moreover, unlike McKesson where there was no mechanism for a

refund of the illegally imposed taxes, here the Council has adopted

regulations that may result in refunds in those instances where the

municipality has collected too much money under the Council's

standards. N.J.A.C. 5:91-15.1. Given these significant differences,

McKesson has ne applicability whatsoever to the present case and

thus cannot provide a basis for granting the petition.

Although not specifically stated in its petition, it appears to be

Petitioner’s position that the development fees in question are

illegal because the New Jersey Supreme Court in Holmdel Builders

Ass’n felt constrained to declare the ordinances “not validly

14

adopted” because of lack of Council regulations governing the

fees. Holmdel Builders Ass'n v. Township of Holmdel, supra, 121

N.J. at 580, 585, 583 A.2d at 292, 295. Petitioner seems to assume

that because the municipal ordinances under which the fees were

collected were “not validly adopted,” the fees are totally illegal and

therefore it is entitled to a refund under McKesson. As the New

Jersey Supreme Court found in Holmdel Builder Ass’n and as the

Appellate Division explained in Frank A. Greek, invalidation on

procedural grounds is something that can be cured because the

municipal power to adopt the ordinances has existed all along. This

is not a Situation, as in McKesson, were a tax was imposed in

violation of the law and therefore the authority to collect the

monies was entirely lacking. Petitioner’s leap of logic in this case

is entirely inconsistent with McKesson and provides no basis for

granting the petition. Parker v. McLain, 237 U.S. 469 (1915)

(federal question which rests on obviously false assumption is so

plainly devoid of merit as to afford no basis for the exercise of

jurisdiction).

Petitioner also mentions briefly without explanation that

somehow the New Jersey Supreme Court mistakenly applied

Chevron Oil Co. v. Huson, 404 U.S. 77 (1971). This argument

seems to be wrapped up in Petitioner’s arguments that McKesson

should apply here and therefore it appears really to be an extension

of its McKesson arguments. For the reasons cited above,

McKesson has no applicability to this case. In any event, neither

the New Jersey Supreme Court nor the Appellate Division cited

Chevron Oil Co. The Appellate Division in Frank A. Greek, citing

New Jersey law, did state that issues concerning disruption of

governmental policies and other equitable considerations are to be

considered when determining whether a law is to be applied

retroactively. While the Court in Frank A. Greek does discuss

retroactive application of laws, it was not the law on retroactivity

that was the focus of the court’s decision. The Appellate Division

found that since New Jersey law allows a municipality to cure an

15

imperfectly taken action which was within the municipality's

authority, it is appropriate for an administrative agency such as the

Council to exercise its rulemaking authority and allow

municipalities to cure municipal action that was not void ab initio.

This decision does not implicate Chevron Oil Co. in any way.

In conclusion, there is absolutely no basis on which to grant

the petition in this case. Frank A. Greek involves a matter that is

unique to New Jersey, namely municipal satisfaction of a State

constitutional obligation to provide lower income housing. The

New Jersey Supreme Court has found that development fees are

authorized under New Jersey statutes as a method to meet this

obligation. Petitioner’s last minute attempt to inject federal due

process issues into these lengthy proceedings is entirely

inappropriate. Moreover, its federal due process arguments relying

on McKesson have no merit. Under these circumstances, this Court

should deny the petition.

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CONCLUSION

For the foregoing reasons, the petition for writ of certiorari

should be denied.

Respectfully submitted,

ROBERT J. DEL TUFO

Attorney General of New Jersey

JOSEPH L. YANNOTTI

Assistant Attorney General

Counsel of Record

GERALDINE CALLAHAN

Deputy Attorney General

On the Brief

Attorneys for Respondent

New Jersey Council on

Affordable Housing

Richard J. Hughes

Justice Complex

CN 112

Trenton, New Jersey 08265

(609) 292-8230