Automated Summary
Key Facts
Plaintiffs Hopewell Borough, Pennington Borough, Paul Anzano, and James Davy appealed the trial court's order dismissing their complaint challenging Hopewell Township's adoption of Ordinance 22-1766, which approved a financial agreement between the Township and Lennar (U.S. Home) under the Long Term Tax Exemption Law. The agreement facilitated construction of more than 1,000 residential units with a thirty-year property tax exemption and payment-in-lieu-of-taxes schedule. Plaintiffs alleged the Township's adoption was arbitrary and capricious and violated the LTTEL and regional school funding formula. The trial court conducted a bench trial and found the Township was not arbitrary and capricious in adopting the ordinance, which satisfied LTTEL provisions. The Appellate Division affirmed the trial court's decision.
Tax Type
Property tax exemption under Long Term Tax Exemption Law for affordable housing development project
Issues
- Whether the Township's adoption of Ordinance 22-1766 and its financial agreement with Lennar under the Long Term Tax Exemption Law (LTTEL) was arbitrary and capricious, and whether the LTTEL requires an express finding that the project would be financially infeasible without a tax exemption
- Whether the trial court committed error by severely constraining discovery in the case, and whether the plaintiffs' expert findings and conclusions were properly considered by the Township officials at the public hearing
Holdings
The court affirmed the trial court's order dismissing plaintiffs' complaint, holding that Hopewell Township's adoption of Ordinance 22-1766 and the financial agreement with Lennar complied with the Long Term Tax Exemption Law. The court found the ordinance was adopted for a proper legislative purpose (facilitating affordable housing) and was not arbitrary or capricious. The court concluded the LTTEL does not require a finding that the tax exemption was 'necessary' to attract investment, only that it was 'important.' The trial court did not err in denying plaintiffs' discovery requests.
Remedies
The appellate court affirmed the trial court's order dismissing plaintiffs' complaint with prejudice. The trial court found that the Township's ordinance and PILOT agreement complied with the Long Term Tax Exemption Law, was adopted for a lawful purpose, and was not arbitrary, capricious or unreasonable.
Tax Issue Category
Other
Legal Principles
- A reviewing court should not be concerned over the wisdom of an ordinance and should not substitute its own judgment for that of the municipality unless there is a clear abuse of discretion. The proper scope of judicial review is to determine whether the municipality could reasonably have reached its decision on the record. Courts use a deferential standard of review for trial court discovery orders.
- Municipal ordinances are presumed to be valid and may not be overturned unless they are clearly arbitrary, capricious, or unreasonable, or plainly contrary to fundamental principles of zoning or the zoning statute. The party challenging the ordinance bears the burden of overcoming this presumption of validity.
- The party challenging a municipal ordinance bears the burden of overcoming the presumption of validity. Plaintiffs must demonstrate that the ordinance was adopted in accordance with the enabling statute and advances one of the legislative purposes of that statute. The court applies a deferential standard rather than a substantial evidence standard for properly enacted municipal ordinances.
Precedent Name
- Bow & Arrow Manor v. Town of West Orange
- Malanga v. Twp. of West Orange
- Ward v. Montgomery Twp.
- Riggs v. Twp. of Long Beach
- Riya Finnegan LLC v. Twp. Council of Tp. of South Brunswick
- Savage v. Twp. of Neptune
- In re Adoption of N.J.A.C. 5:96 & 5:97
- Brock v. Pub. Serv. Elec. and Gas Co.
- Brugaletta v. Garcia
- Fuster v. Twp. of Chatham
- Perez v. Zagami, LLC
- Griepenburg v. Twp. of Ocean
- DiProspero v. Penn
- Ten Stary Dom P'ship v. Mauro
- Musker v. Suuchi, Inc.
- Blackridge Realty, Inc. v. City of Long Branch
- Berardo v. City of Jersey City
- Wiggins v. Hackensack Meridian Health
- Jock v. Zoning Bd. of Adjustment of Wall
- Keyworth v. CareOne at Madison Ave.
- Rumson Ests., Inc. v. Mayor & Council of Fair Haven
- Cox & Koenig, New Jersey Zoning & Land Use Administration
Cited Statute
- Long Term Tax Exemption Law
- Local Redevelopment and Housing Law
- Local Redevelopment and Housing Law redevelopment designation standard
- Long Term Tax Exemption Law application requirements
- Long Term Tax Exemption Law financial agreement provisions
- New Jersey School Funding Formula statute
Judge Name
- Judge Gooden Brown
- Judge Smith
Passage Text
- Having concluded that this ordinance satisfies the Riggs test, we conclude that the ordinance was proper. Like the trial court, we decline plaintiffs' invitation to replace our traditional deference to a properly enacted municipal ordinance with a 'substantial evidence' standard of review.
- There is no language in the LTTEL which compels a municipality to conduct an assessment under subsection 11(b) resulting in a municipal finding that the tax exemption granted under the ordinance was 'necessary' to attract the desired development. The Legislature's choice of the word 'importance' rather than 'necessity' demonstrates its clear intent to provide municipalities with flexibility in their assessments. Further, when the Legislature is silent on such a proposition, as it is here, we should not incorporate that proposition by inference.
- N.J.S.A. 40A:20-11(a) and (b) contain express language which requires the Township to include certain 'findings' in its approved financial agreement. Those findings must include 'appropriate tax exemption provisions' and 'an appropriate annual service charge schedule,' as well as the following: a cost benefit analysis comparing the benefits of the project with any identified costs 'associated with the tax exemption;' and an assessment of the 'importance' of the role the tax exemption played in persuading the developer as well as subsequent purchasers and renters to participate in the project.