In re Twp. of Bordentown

• Decision Date: 14 March 2022
• Docket Number: DOCKET NO. A-0357-20
• Citation: 471 N.J.Super. 196,272 A.3d 413
• Parties: In the MATTER OF the Application of the TOWNSHIP OF BORDENTOWN, County of Burlington.
• Court: New Jersey Superior Court — Appellate Division

471 N.J.Super. 196

272 A.3d 413

In the MATTER OF the Application of the TOWNSHIP OF BORDENTOWN, County of Burlington.

DOCKET NO. A-0357-20

Superior Court of New Jersey, Appellate Division.

Argued February 9, 2022

Decided March 14, 2022

Bruce I. Afran, Princeton, argued the cause for appellant Mark Bergman.

Michael J. Edwards, Brielle, argued the cause for respondent The Township of Bordentown (Surenian, Edwards & Nolan LLC, attorneys; Michael J. Edwards, of counsel and on the brief; AnnMarie Harrison, on the brief).

Joshua D. Bauers argued the cause for respondent Fair Share Housing Center (Fair Share Housing Center, attorneys; Bassam F. Gergi, of counsel and on the brief).

Before Judges Sumners, Vernoia and Firko.

The opinion of the court was delivered by

FIRKO, J.A.D.

In this Mount Laurel ¹ case, defendant-intervenor Mark Bergman appeals from the final judgment of compliance and repose entered by the Law Division on August 27, 2020, in accordance with Mount Laurel IV, 221 N.J. at 30, 110 A.3d 31. The final judgment approved an amended settlement agreement between plaintiff, the Township of Bordentown (the Township), and the Fair Share Housing Center (FSHC). The agreement established the Township's Third Round fair share obligation for affordable housing and provided a plan for its compliance. In this opinion, we address the parameters of a fairness hearing and judicial approval of a settlement involving the FSHC in the absence of Third Round rules being promulgated by the Council on Affordable Housing (COAH).

On appeal, Bergman argues the trial court erred by denying his request to testify at the fairness hearing and finding the settlement fairly and reasonably protects the interests of low-income individuals. He also contends special master Mary Beth Lonergan, A.I.C.P., P.P., had a conflict of interest because she, or others in her firm, were simultaneously representing dozens of municipalities in affordable housing settlement negotiations. We disagree and affirm.

I.

On July 2, 2015, the Township filed a verified complaint seeking a declaratory judgment that it satisfied its fair share of affordable housing for its Third Round Mount Laurel obligation, pursuant to COAH's 2014 calculation, and it is immune from prospective litigation.² On November 12, 2015, the FSHC moved to intervene.

Bergman, doing business as Sage Builders, Inc., entered into an option agreement on April 27, 2017, to purchase 17.04 acres of unimproved real property located at block 92.01, lot 18, on Route 528 in the Township (the property) for the purpose of constructing 250 residential units, which would include forty affordable housing units. He filed a motion to intervene, which the trial court granted. The court also appointed Lonergan as a special master in the case.

Following immunity and intervention proceedings, the parties engaged in extensive negotiations. At the time, the property was "zoned as R-120 Low Density Residential." The Township wanted to acquire the property for its Green Acres open space preservation program. On April 3, 2017, the Township awarded a contract for the appraisal of the property to J. McHale and Associates, LLC. The property appraisal indicated "a maximum of [thirteen] building lots" would be permitted under current zoning regulations.

The option agreement provided Bergman nine months—until January 27, 2018—to acquire all rights in the property under the terms and conditions set forth in the agreement. Bergman could extend the initial option period for an additional nine months by notifying the owner "in writing no later than ten ... business days prior to the expiration of the" option agreement—January 17, 2018—and making four $37,500.00 payments upon exercising the extended option period and "at [seventy-five] day intervals thereafter," for a total sum of $150,000.00. Failure to extend the initial option period in writing by January 17, 2018, would automatically result in termination of the option on January 27, 2018.

Between May and June 21, 2017, the Township and Bergman had preliminary discussions relative to his proposed development. Bergman did not file an application to rezone the property or seek site plan approval regarding his proposal. The Township informed Bergman it was in the process of determining its affordable housing obligation.

On June 26, 2017, the Township and FSHC³ entered into a settlement agreement (the agreement), which set forth the Township's total affordable housing obligations and provided a compliance plan in order to meet those obligations. The agreement recognized the Township had the following affordable housing obligations:

REHABILITATION OBLIGATION	11
PRIOR ROUND OBLIGATION (pursuant to N.J.A.C. 5:93)	211
THIRD ROUND (1999-2025) PROSPECTIVE NEED, WHICH INCLUDES THE GAP PERIOD PRESENT NEED, RECOGNIZED BY THE SUPREME COURT, In re Declaratory Judgment Actions Filed by Various Municipalities, 227 N.J. 508, 152 A.3d 915 (2017)	425

In order to satisfy the Township's Third Round prospective need of 425 units, the agreement identifies multiple compliance mechanisms, including: (1) surplus credits (round two), consisting of residual credits resulting from the Bradford Point site⁴ for ten units with a rental bonus credit of ten (ten in total); (2) Volunteers of America (VOA) – 1, a senior rental for sixty-four units and special needs for five units (sixty-nine units in total) with a rental bonus credit of five; (3) the Bordentown Waterfront Community (BWC) residual credits, a family or senior rental with eighteen units; (4) the Zieger project, for 227 units, thirty-six units to be affordable housing; (5) the Nissam project, for 230 units, forty units to be affordable housing and over 13% affordable housing to very low-income families; (6) group home (bedrooms) designated for special needs, consisting of twenty units and sixteen rental bonus credits; (7) an inclusionary family rental development for fifty-nine units; and (8) VOA-2, a family rental development based on sixty-six units.

Bergman's property was not included in the agreement. Therefore, he chose not to meet any further with the Township's representatives relative to his development plan for the property. On September 1, 2017, Bergman filed an objection to the Township's proposed settlement and compliance plan and sought to include the property in the Township's affordable housing allocation.

On May 18, 2018, Bergman's attorney submitted a letter to the court advising he and his client "would not be appearing at the fairness hearing but that [Bergman] wished to make a statement." On June 12, 2018, Bergman submitted a pro se written statement of his objections to the proposed settlement to the court.

At the June 18, 2018 fairness hearing, the trial court permitted Bergman to make a statement and cross-examine witnesses. The judge addressed Bergman's arguments and explained:

[First], [Bergman's concerns are] not directly in front of me today. What's in front of me today is whether there is a realistic opportunity for affordable housing, [which] I think that there is based on [special master] Lonergan's testimony.

[Second], and I have this in other cases. I have it even being more actively litigated than this. It's—and I get the impression you're in the real estate business, so you know that things change, just like the rest of life and if something changes here then we'll come back and we'll have to see.

....

[Third,] you may be right. As a matter of fact, I would be surprised if you were not right, that some of these things are not going to happen, but then the question is what is going to happen?

And I think that response to your concerns, I'm not going to get into whether I think your policy arguments are right or wrong because I don't really think that's the role of the Court. ... I'm not here for policies. I'm here to do what the Supreme Court says.

So based upon this[,] I do find that there's a realistic opportunity.

On June 29, 2018, the trial court entered an order approving the Township's settlement with the FSHC based on Lonergan's testimony. The court noted the agreement's fair share methodology reduced the Township's Third Round obligation by thirty-two percent "as an incentive to settle the case," which it had "been amendable to ... in lieu of litigating the appropriate fair share methodology."

Notwithstanding entry of the order, during a court conference, the judge "directed the parties to engage in discussions to see whether ... [Bergman]'s proposed site could be included in the settlement."⁵ In September 2017, negotiations commenced and ultimately resulted in a proposal by the Township permitting Bergman "to build eighty units on the property." These units, however, "would not be affordable units, but would be market rate units." Bergman rejected the proposal "because he wanted to buil[d] affordable [units] as part of the project."

On January 17, 2018, Bergman did not notify the property's owner in writing of his intention to extend the initial option period, as required in the option agreement. A week later on January 24, 2018, the Township announced it was ceasing all negotiations with Bergman regarding the property and his proposed development. Three days later, on January 27, 2018, Bergman's option agreement expired. After Bergman's option agreement expired and was not renewed by him, the property's owner reentered into negotiations with the Township for its purchase of the property, which culminated in the sale of the property to the Township on May 3, 2018.

On June 7, 2019, Bergman filed a motion to set aside the trial court's June 29, 2018 order and argued: (1) "during the court-ordered negotiations [the Township] had taken undisclosed measures to acquire [the property] for itself for the purpose of preventing housing at that location;" and (2) the Township "had interfered in [his] ability to advocate for inclusion of the site in the affordable housing settlement."⁶

On June 11, 2019, the Township and FSHC entered into...