388 Route 22 Readington Realty Holdings, LLC v. Township of Readington
113 A.3d 744
| N.J. | 2015Background
- Readington Township purchased increased sewer capacity from the regional authority and allocated portions to private landowners via sewer allocation agreements to help finance the expansion.
- 322,009 gallons per day (gpd) of Readington’s allocated capacity remained unused, largely held by a few entities (e.g., Merck: 141,900 gpd; Bellemead: 66,060 gpd).
- 388 Route 22 (plaintiff) sought 11,260 gpd to redevelop its property for retail/restaurant use but was told no capacity was available and that the Township maintained a policy of not repurchasing allocated capacity.
- Plaintiff sued, claiming the sewer allocation ordinance was invalid on its face and as applied (improper delegation and effective moratorium), and sought an order compelling the Township to recapture capacity.
- Trial court upheld the ordinance but found the Township’s blanket no-repurchase policy ran afoul of First Peoples and ordered the Township to review unused allocations and provide reasoned explanations for not recapturing capacity.
- Appellate Division reversed the remedy; Supreme Court affirmed facial validity of the ordinance but reversed the Appellate Division on the as-applied challenge, ordering a 90-day, development-by-development review to determine whether capacity can be recaptured.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Facial validity of the sewer allocation ordinance | Ordinance lacks adequate standards to guide repurchase decisions; invalid | Ordinance sets temporal limits, allows termination for lack of progress, and permits extensions for good cause; valid | Ordinance is facially valid; provides adequate standards and must be liberally construed in favor of validity |
| As-applied challenge: unlawful delegation/functional moratorium (First Peoples) | Township’s blanket policy of not repurchasing delegated land-use control to private parties and functionally moratoriums development | Township relied on contracts, paid-for allocations, economic delays, and Permit Extension Act protections; decision entitled to deference | Township’s blanket no-buy-back policy effectively is a moratorium and improperly abdicates municipal discretion; violates First Peoples principles |
| Adequacy of Township’s decisionmaking and reasons for denial | Township failed to analyze each holder’s circumstances or explain why recapture was inappropriate | Township relied on defendants’ submissions, contract protections, and good-cause extensions | Township’s resolution was insufficient: it wholesale adopted developers’ arguments, did not analyze Permit Extension Act applicability, and lacked a reasoned, development-by-development explanation |
| Remedy and procedure for reallocating capacity | Plaintiff sought compelled recapture or order directing exercise of discretion | Defendants urged deference and protection of contractual expectations | Court ordered Township Committee to conduct a critical review within 90 days, applying specified practical factors, and to determine whether any identified capacity can be recaptured; remanded for further proceedings |
Key Cases Cited
- First Peoples Bank v. Twp. of Medford, 126 N.J. 413 (1991) (municipality must retain control to ensure sewer permits are used or repurchased; prevents private hoarding that blocks development)
- Rumson Estates, Inc. v. Mayor & Council of Fair Haven, 177 N.J. 338 (2003) (ordinances are presumed valid and liberally construed in favor of validity)
- S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mt. Laurel, 92 N.J. 158 (1983) (municipal land-use power must be exercised for the general welfare)