Ramapo River Reserve Homeowners Ass'n v. Borough of Oakland

Justice ALBIN,

dissenting.

Today’s majority decision allows municipalities to do indirectly what the Municipal Services Act, N.J.S.A. 40:67-23.2 and -23.3, specifically prohibits—collect real estate taxes from residents of qualified private communities without providing, or reimbursing for, such basic services as snow and ice removal and garbage and recyclable disposal. Because municipalities now will be able to evade their responsibilities under the Municipal Services Act *455through the clever subterfuge of a “developer’s agreement,” qualified private communities again will suffer the unfair burden of double taxation: payment of real estate levies without receiving municipal services. Because I cannot conceive that the Legislature intended that result, I respectfully dissent.

Under the Municipal Services Act, a municipality must provide certain services to a qualified private community “in the same fashion as the municipality provides these services on public roads and streets,” or the municipality must reimburse the qualified private community for the services. N.J.S.A. 40:67-23.3(a). The services referred to in the Act are “[r]emoval of snow, ice and other obstructions from the roads and streets”; “[l]ighting of the roads and streets, to the extent of payment for the electricity required”; and “[c]ollection of leaves and recyclable materials along the roads and streets and the collection or disposal of solid waste along the roads and streets.” N.J.S.A. 40:67-23.3(a). The purpose of the Act was to “eliminate double payment for some services which the residents of qualified private communities [paid] through property taxes and fees to their association.” Sponsors’ Statement to Senate Bill No. 2689, at 3 (Apr. 18, 1989); see also Stonehill Prop. Owners Ass’n v. Twp. of Vernon, 312 N.J.Super. 68, 75, 711 A.2d 346 (App.Div.1998) (observing that Legislature’s intent was “to relieve condominium owners of the burden of paying twice for municipal services”).

In Briarglen II Condominium Ass’n v. Township of Freehold, the Appellate Division held that a municipality could not delegate its statutory duty to provide or reimburse for the services enumerated in N.J.S.A. 40:67-23.3(a) to the developer of the project. 330 N.J.Super. 345, 348, 749 A.2d 881 (App.Div.), certif. denied, 165 N.J. 489, 758 A.2d 648 (2000). In that case, an agreement between the municipality and the developer required the developer to clear the community’s roads of snow and ice until the municipality’s “final acceptance” of those roads. Id. at 348-49, 749 A.2d 881. Writing for the Briarglen II panel, Judge Newman observed that

*456[t]he legislative purpose would be frustrated if municipalities were permitted to contract away their statutory duty to either provide or reimburse qualified private communities for the enumerated services. If-municipalities were permitted to do so, the result would be that the residents of qualified private communities would be paying double for services, that is, through property taxes and fees to their association. It is just such a result that the Act seeks to avoid.
[Id. at 356, 749 A.2d 881.]

The Briarglen II court declared the contractual provision delegating a municipality’s duty to provide snow and ice removal to be in direct conflict with “the express legislative policy of N.J.S.A. 40:67-28.3 and, thus, ... void as against public policy.” Ibid.

In the present case, the Borough of Oakland and Baker Residential, LP, the developer of Ramapo River Reserve, entered into an agreement similar to the one found offensive in Briarglen II. The Appellate Division affirmed the trial court and rejected Oakland’s argument that it had a legitimate right to recoup the costs of providing snow and ice removal from the developer until the Borough by formal resolution accepted the “public improvements” required of the developer. For the same reasons expressed in Briarglen II, the Appellate Division found the contractual provision delegating snow and ice removal to the developer to be contrary to the legislative intent of N.J.S.A. 40:67-23.3(a), understanding that the developer would merely pass its costs along to the homeowners.

In reversing the Appellate Division, the majority in this ease engages in a reformation of the developer’s agreement to allow the municipality to delegate its obligation to provide the services enumerated in N.J.S.A. 40:67-23.3(a) until the developer transfers control of the homeowners’ association to its members. The majority accomplishes that end by superimposing the Planned Real Estate Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-21 to -56, over the Municipal Services Act and then concluding that the developer is responsible for snow and ice removal, garbage and recyclable disposal, and street lighting until the homeowners take control of the association. Under the PREDFDA, control passes from the developer to the homeowners *457when there is seventy-five percent homeownership in the community. N.J.S.A. 45:22A-47(a)(3).

The majority’s result does not square with the statutory language or legislative history of the PREDFDA or the Municipal Services Act. Nothing in the provision of the PREDFDA relied on by the majority, which was enacted four years after passage of the Municipal Services Act, indicates that the Legislature intended to lessen a municipality’s obligations to provide services to a taxpayer under the Municipal Services Act until residents in a qualified private community achieve seventy-five percent ownership and gain control of the homeowners’ association.

Perhaps the only point that the parties in this case can agree upon is that the majority’s interpretation of the applicable statutes is wrong. In response to a written question from this Court, both parties and amicus curiae New Jersey Builders Association (NJBA) have expressed their view that the developer’s transfer of ownership to the homeowners’ association is completely irrelevant to the Municipal Services Act. Amicus curiae NJBA accurately points out that the provision in the PREDFDA terminating a developer’s control does not “contain any language modifying or eliminating the requirement that a municipality provide services to a qualified private community, no matter what the composition of the association board may be.” The resolution achieved by the majority completely undercuts the homeowner protectionist policy that animates the Municipal Services Act.

The majority also ignores the fact that it may take years in a large subdivision before control is transferred from the developer to the homeowners. Because a developer is not an eleemosynary institution, it assuredly will pass the costs to the homeowners in the form of increased sales prices of homes. Thus, the homeowner will pay twice for municipal services, once through inflated home purchase prices and again through real estate taxes. This cannot be the result intended by the Legislature that passed the Municipal Services Act.

*458Moreover, we should keep in mind that a developer is unlikely to balk at a contractual provision delegating a municipality’s duty to provide snow removal and garbage disposal and thereby threaten approval of a subdivision project, when that developer can simply make up the added cost by increasing the price to the home buyer. Although this ease involves only snow and ice removal, the majority’s decision will allow a municipality to contract away all of its duties under N.J.S.A. 40:67-23.3(a), including its duty to collect garbage, recyclable materials, and leaves. Thus, homeowners in qualified private communities will lose the very benefit the Legislature intended in enacting N.J.S.A. 40:67-23.3— basic services for their tax dollars.

Last, the majority premises its opinion on the unproven notion that the real estate taxes collected from the first tier homeowners in Ramapo Reserve and in other qualified private communities are not sufficient to cover the costs of removing snow and ice from the roadways or collecting garbage. The majority has failed to support that position by reference to the record in this case. Even if there were support in the record, the Municipal Services Act does not require the rigid formula suggested by the majority—that for each dollar of services provided to a homeowner there must be a concomitant tax dollar collected.

If the Legislature concludes that the majority has not only misconstrued its statutes but also disadvantaged the homeowners it intended to protect through the Municipal Services Act, it has the power to correct the error by a statutory amendment. The developer’s agreement in this case is in direct conflict with N.J.S.A. 40:67-23.3 and should be declared void. I therefore dissent.

For reversal and remandment—Chief Justice PORITZ and Justices LONG, LaVECCHIA, ZAZZALI, WALLACE and RIVERA-SOTO—6.

For dissent—Justice ALBIN—1.