New Jersey Case of the Month

April 2010Newsletters In The Zone

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In the Riverview Development case, the Appellate Division was asked to consider whether townhouse residents, whose views of the Hudson River and New York City skyline would be fully or partially blocked by a proposed high-rise development, have the right to a trial-type hearing before the Office of Administrative Law (OAL). The residents wanted to contest the high-rise developer's application to the Department of Environmental Protection (DEP) for a waterfront development permit under the Coastal Zone Management Regulations.

The DEP commissioner denied the residents' demand for an OAL hearing, concluding the residents lacked a particularized property interest sufficient to require a hearing on constitutional or statutory grounds.

Through the residents' homeowners association, an appeal was filed of the commissioner's denial of the residents' request for an OAL hearing. The Appellate Division, for reasons stated in the opinion, affirmed the commissioner's denial of the residents' request. The residents lacked “a particularized property interest sufficient to require a hearing on constitutional or statutory grounds.”

The developer in this instance, Riverview Development, LLC (Riverview), obtained a Waterfront Development Permit to construct 17 townhomes along a 1,150 feet riverside walkway, a two-floor parking structure and three high-rise towers. The towers would rise to a maximum height of 95 feet and would consist of 265 residential condominium units.

A neighboring property known as Bergen Ridge Townhomes was present at all stages of the permit process and in fact participated in a public hearing. Bergen Ridge consisted of 34 townhomes, approximately 30 feet high. Bergen Ridge was opposed to grant of the waterfront development permit on the grounds that Riverview's proposal would violate the high-rise structure regulations and traffic regulations contained in the Rules on Coastal Development.

Bergen Ridge appeared at a public hearing held on June 27, 2006, and had the opportunity to present both a viewshed analysis and traffic information. Moreover, Bergen Ridge also submitted post-hearing submissions regarding the proposed impact upon traffic and the viewshed.

After considering all of the evidence, the DEP approved and issued a Waterfront Development Permit to Riverview on October 23, 2006. Thereafter, on a timely basis, Bergen Ridge appealed the Waterfront Development Permit approval to the commissioner. The appeal requested a full adjudicatory hearing on the matter before the OAL. The commissioner issued a written decision denying Bergen Ridge's hearing request. Upon the denial, Bergen Ridge appealed the denial of its hearing request to the Appellate Division.

The court held that the third-party's right to a formal administrative hearing to contest the issuance of a permit is defined and circumscribed by the Administrative Procedure Act. The Administrative Procedure Act limits the situations in which third parties are entitled to a formal hearing to challenge a permit application.

The relevant portion of the Administrative Procedure Act provides that:

Except as otherwise required by Federal Law or by statute that specifically allows a third party to appeal a permit decision, the State agency shall not promulgate any rule or regulation that would allow a third party to appeal the permit decision.

The court held that by enacting these limitations, the legislature unmistakably intended to prevent the processing of permit applications by state agencies from being bogged down by time-consuming and costly formal hearings in the OAL.

In addition, allowing such hearings would convert an agency's administrative review process into a "veritable litigation battleground."

On the other hand, the Appellate Division held that the legislature recognized the importance of respecting constitutionally or statutorily protected property rights of third parties that can be infringed upon by the issuance of a permit. Consequently, the APA does not foreclose such third parties from seeking judicial review of the merits of a permit once it is issued by an agency. The legislature has maintained significant avenues for third-party objectors to present their concerns about proposed permits to agency decision-makers before they reach a final determination on a permit application.

Fox Rothschild Publishes Guide to the NJ Permit Extension Act
In New Jersey, it is costly and time-consuming to obtain permits and approvals for commercial and residential projects. The New Jersey Permit Extension Act extends the approval period of certain permits issued by state, county and local government units. The Act is intended to prevent the wholesale abandonment of approved projects and activities due to the present unfavorable economic climate -- which has particularly impacted real estate developers and redevelopers -- by tolling the running of the term of these approvals for a period of time, thereby preventing a waste of public and private resources.

Jack Plackter has prepared Preserving Permits and Approvals in New Jersey's Real Estate Industry: A Guide to the Permit Extension Act (P.L. 2009 c336) as a resource for developers and redevelopers looking to understand the nuances of the Permit Extension Act. To view the guide, click here.

The Appellate Division held that the reported cases evaluating a third party's claimed right to a formal agency hearing had turned upon the relative strength of the property's interest that the third parties invoked. The more general and attenuated that property interest is, the less likely it will be sufficient to trigger a hearing under the statute. Fundamentally, the party affected by the administrative action must have a safeguarded interest. The Appellate Division then cited the line of cases denying property owners the right to appeal an agency decision to the OAL.

For example, in the Normandy Beach Improvement Association v. Commissioner, 193 N.J. Super. 57 (App. Div. 1983), a group of property owners opposed the DEP's issuance of a CAFRA permit to a county utilities authority that had sought to build a sewage pumping station near residents' homes. The objecting homeowners in that case alleged that the quality of their lives would be adversely affected by the proposed pumping station. In order to buttress their contentions, the objectors retained a real estate expert who opined that the station would have a detrimental effect on the economic values of the homes in the area. The Appellate Division in that case rejected the homeowners' claims that their interest rose to such a level as to require the DEP to conduct a formal administrative hearing and consider their opposition. The court held that the DEP public hearing in the matter afforded the objectors an adequate opportunity to satisfy due process and fundamental fairness considerations, as well as the procedural requirements under the CAFRA Statute, and denied the property owners the right to an OAL hearing.

In the instant case, like Normandy, the Appellate Division concluded that the anticipated loss of scenic views and alleged negative traffic impacts did not rise to a “particularized property interest justifying the hearing.” The Appellate Division found that because it is well settled as a matter of law, in the absence of a restrictive covenant a property owner has no right to an unobstructed view across a neighbor's property, the Bergen Ridge owners lacked such an interest.

Accordingly, this case reaffirms the extremely restricted right of objectors to compel an OAL hearing in the instance of a state-issued land use or environmental permit.

For more information, please contact Jack Plackter at 609.572.2200 or [email protected].