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SEAVIEW HARBOR REALIGNMENT COMMITTEE, LLC VS. TOWNSHIP COMMITTEE OF EGG HARBOR TOWNSHIP (L-0079-17, ATLANTIC COUNTY AND STATEWIDE)
Citation: Not availableDocket: A-3048-19
Court: New Jersey Superior Court; December 28, 2021; New Jersey; State Appellate Court
Original Court Document: View Document
Plaintiffs Seaview Harbor Realignment Committee, LLC, and residents of Seaview filed a deannexation petition to join Longport, which was reviewed by the Egg Harbor Township Committee. The Planning Board conducted over thirty days of hearings and recommended denying the petition, citing potential harm to Egg Harbor residents. The Committee adopted this recommendation, stating the petition was incomplete and did not demonstrate contiguity between Seaview and Longport. Plaintiffs subsequently filed a four-count complaint challenging the Committee's decisions, asserting: (1) the refusal to consent was arbitrary and unreasonable; (2) their petition complied with jurisdictional requirements; (3) violations of the Open Public Meetings Act and Open Public Records Act; and (4) a violation of the New Jersey Civil Rights Act. The court bifurcated the civil rights claim. Judge Mendez granted summary judgment to plaintiffs on counts two and three, affirming the petition’s compliance and finding an OPRA violation. However, after a hearing on count one, Judge Mendez denied relief, concluding that while the Committee's refusal was detrimental to Seaview, it was not arbitrary or unreasonable, and plaintiffs did not prove that deannexation wouldn't harm Egg Harbor significantly. Plaintiffs are appealing a court order that denied their petition for deannexation from Egg Harbor, arguing that the judge incorrectly determined that significant harm to Egg Harbor's residents outweighed the injury to Seaview residents. Under N.J.S.A. 40:7-12.1, petitioners must prove that the refusal of annexation was arbitrary or unreasonable, detrimental to the majority of residents on the affected land, and that annexation wouldn't significantly harm the existing municipality. Additionally, plaintiffs allege bias among certain committee members who recused themselves, claiming they had preconceived opposition to the petition and swayed others, which they argue made the decision arbitrary and unreasonable. Defendants cross-appeal, disputing the court's finding that the refusal of deannexation would harm a majority of Seaview residents and questioning whether plaintiffs sufficiently identified the land for deannexation and its contiguity with Longport. The court affirms the decision based on Judge Mendez's opinion, emphasizing that a municipality's decision can be upheld if found reasonable and if deannexation would detrimentally affect the majority of residents, despite potential tax savings for homeowners seeking lower taxes. Detrimental impacts could include loss of community services, diminished civic engagement, and a reduction in diverse citizenship. The court highlights the context of the dispute, noting that Egg Harbor comprises approximately 43,000 residents across a 75-square-mile area, with Seaview representing about 1% of this area and housing 102 residents. Seaview is isolated from the mainland by marshland, leading residents to feel disconnected from Egg Harbor's community. The summary also indicates that further details from the record relevant to the decision will be provided. Plaintiffs primarily relied on Longport for their activities and services due to the shorter travel distance compared to the Township mainland. They asserted that their association with Egg Harbor was detrimental to their social and economic well-being, highlighting their identification with Longport residents and participation in local activities such as shopping, dining, and religious services. There were minimal school-age children in Seaview, none of whom attended Egg Harbor public schools, as the long commute and lack of local friendships discouraged enrollment. Many plaintiffs' homes bore Longport addresses, causing confusion regarding their residency status and leading to delays in mail delivery and missed residential benefits from Egg Harbor. Plaintiffs criticized Egg Harbor's emergency services as inadequate and untimely, noting that Longport often provided better responses. They reported insufficient water supply for the fire department and inadequate snow removal services, with residents frequently clearing roads themselves. Trash collection was limited to once a week, in contrast to biweekly pickups in neighboring towns during summer months. They claimed Egg Harbor neglected the beautification of Seaview and was slow to respond to maintenance needs post-Superstorm Sandy, resisting dredging and bulkhead improvements. Additionally, plaintiffs argued that Seaview's zoning was improperly aligned with mainland Egg Harbor, complicating construction projects due to the need for variances. They also expressed discontent with Egg Harbor's lack of participation in flood insurance programs, resulting in higher premiums and fewer benefits compared to Longport, which they believed would lower their costs significantly. Tax implications were also a concern, with a significant difference between Egg Harbor's tax rate of 2.376% and Longport's 0.388%. Plaintiffs’ accountant noted that Seaview residents paid an average of $20,759 in property taxes to Egg Harbor versus $3,347 if they were Longport residents, leading to a potential savings of $17,412, primarily due to lower school-related expenditures. In 2014, Egg Harbor’s total revenue was $37,452,455, with 56% derived from property taxes. Seaview homeowners contributed $1,839,847 in school taxes and $507,404 in municipal taxes, totaling $2,347,251. Ryan indicated that Egg Harbor could offset revenue loss from Seaview's deannexation by slightly increasing taxes on remaining residents, noting Seaview's contribution was only 1% of total revenue. He estimated an increase of $120.70 per year—$27.05 in municipal taxes and $93.64 in school taxes—less than recent average tax increases of $176.61. Ryan believed Egg Harbor could recover the loss through alternative revenue sources, citing $1.2 million in ambulance fees from local service agreements. In contrast, Seaview's potential for additional revenue was limited due to its nearly fully developed status, with few opportunities for new development. Regarding bonding capacity, Ryan stated that municipalities could bond up to 3.5% of their equalized valuation over three years. Based on a 2012 valuation, Egg Harbor could borrow $152,567,632, and deannexation would not significantly impact its bonding capability. The school also had adequate funds to maintain its borrowing ability. Planner Tiffany A. Cuviello reported that deannexation would not materially harm Egg Harbor, aligning with the location and identity of Seaview and Longport, which both have a high percentage of seasonal homeowners. In contrast, Egg Harbor's population was predominantly permanent residents. Cuviello pointed out that Seaview lacked public beaches, meaning Egg Harbor residents would not lose benefits from deannexation. Furthermore, Seaview residents had limited influence in Longport, where they primarily sought services and activities. She noted that Egg Harbor was designated a Regional Growth Area, expected to continue experiencing substantial growth, unlike Seaview, which was fully developed and excluded from Egg Harbor’s growth plans. Egg Harbor opposed Seaview's petition, with Township Administrator Peter Miller asserting that the plaintiffs aimed to evade higher taxes post-2013 reassessment. He claimed their service complaints were unsubstantiated or contradicted by municipal records, and that Seaview residents had been actively engaged in Egg Harbor’s governance and planning for decades. Miller emphasized that without Seaview’s involvement, Egg Harbor would be significantly different. Plaintiffs claimed issues with mail and package delivery due to address confusion; however, Miller presented a postal service letter indicating that delivery relies on zip codes, not town names, asserting correct zip codes ensured proper delivery. Regarding landscaping complaints, Miller stated Egg Harbor does not provide this service to any local community. On zoning and setbacks, Miller noted that the Seaview developer established initial setbacks in the deeds, which were later adjusted in 2000 based on a reexamination report, resulting in no variance requests from residents since then. Miller countered claims about Egg Harbor's slow response to Superstorm Sandy, asserting the municipality acted promptly to repair township property and that recovery efforts fell under state jurisdiction. He also highlighted Egg Harbor's participation in flood insurance programs for the last forty years, including a decision against joining the Community Rating System due to cost-benefit issues. Simerson testified on road and common area maintenance, stating Seaview streets were swept biannually and that debris cleanup occurred immediately after storms, including Superstorm Sandy. He noted no requests for emergency snow plowing during severe blizzards from 2009 to 2015, despite nineteen snow events, and detailed various repair and improvement projects completed by Egg Harbor, detailing costs and years. Simerson warned that if Seaview seceded, Egg Harbor would face reduced tax revenue, leading to staff cuts and diminished services. Police Chief Davis indicated no formal inter-municipal agreement existed for police responses, but neighboring departments would continue to assist as needed. He reported thirteen priority calls from Seaview residents between 2011 and 2015, averaging a response time of 11.74 minutes. Chief Davis indicated that the removal of Seaview from Egg Harbor would lead to a 17% reduction in overall tax revenue, costing the police department between $175,000 and $200,000 annually. Such a budget cut would necessitate a reduction in police officers and community policing initiatives, negatively impacting residents. Robert Winkler, III, Chief of the Fire Department, highlighted that the fire department's response capabilities would diminish due to decreased funding from Seaview, as it relies on volunteers and a limited budget. Donald Stauffer, Fire Subcode Official, noted that while Seaview's water supply is inadequate for fighting major fires, Egg Harbor has contingency plans that involve assistance from neighboring fire companies and the use of a fire boat. In response to claims that the school would not face funding issues from Seaview's deannexation, Kateryna Bechtel, School Administrator, testified that the school would lose approximately $1.88 million in funding, requiring significant budget cuts to meet state funding standards. The school district needed $52,339,929 to meet minimum state requirements, with a current budget exceeding $132 million, including debt service. The state had frozen school aid, further complicating reliance on property taxes. Bechtel detailed potential budget cuts totaling around $1.88 million across various programs, including afterschool transportation, sports programs, and staffing reductions. Additionally, losing $1.88 million would decrease the school's debt capacity by $3.5 million, hampering future borrowing. Although Egg Harbor might save some transportation costs by deannexing Seaview—approximately $4,420—this amount is negligible compared to the overall funding losses. Future projects, such as transitioning to full-day kindergarten and construction improvements, would require additional funding, with a potential increase in student population necessitating more resources and classrooms. Dr. Richard Perniciaro, Executive Vice President for Planning Research at Atlantic Cape Community College, analyzed the economic implications of Seaview's potential deannexation from Egg Harbor. He emphasized the importance of maintaining a diverse tax base for economic stability, noting that Seaview, being significantly wealthier and the only waterfront area in Egg Harbor, contributed a substantial tax base. Perniciaro projected that losing Seaview would negatively impact Egg Harbor's economy, as its property values were more stable and likely to increase. Township Financial Auditor Leon Costello corroborated Perniciaro's findings, stating that Seaview's total assessed property value rose from $28 million in 2012 to $80 million post-2013 reassessment. In 2015, Seaview homeowners contributed over $2.3 million in taxes, which Egg Harbor would lose if deannexation occurred. To compensate for this loss, mainland homeowners would face a tax increase of 5.9 cents per $100 of assessed value, translating to an annual increase of approximately $122.78 for the average home. Costello dismissed the possibility of addressing the loss without raising taxes, citing the inadequacy of the emergency fund and the potential negative impact on Egg Harbor's bonding rates. On January 29, 2016, Professional Planner Stuart Wiser issued a report evaluating the consequences of deannexation. He noted that plaintiffs' claims of feeling disconnected from Egg Harbor lacked evidence and concluded that deannexation would not significantly alter zoning or variances. He addressed plaintiffs' concerns regarding municipal support for dredging, suggesting that expecting substantial taxpayer funding for waterfront improvements was unrealistic. While acknowledging that taxes might be lower in Longport, Wiser cautioned that deannexation would lead to significant tax revenue loss for Egg Harbor, necessitating either tax hikes for mainland residents or service reductions, both of which would adversely affect the township. Ultimately, the Board determined that the plaintiffs did not demonstrate that denying deannexation would harm Seaview residents or that deannexation would significantly harm Egg Harbor. The Board determined that the overall impacts of deannexation favored denying consent, finding plaintiffs' concerns about services and zoning unsupported by evidence. The choice of school and social activities was deemed a private matter unlikely to be affected by deannexation. While acknowledging potential tax and flood insurance savings for plaintiffs, the Board highlighted significant losses for Egg Harbor, including the loss of civic engagement from Harbor residents, a decrease in social and economic diversity, and a reduction of 2.4% in tax ratables, equating to over $2 million in lost municipal and school taxes. This would necessitate service reductions or increased taxes for mainland residents. Judge Mendez, after a two-day hearing, applied the relevant legal test and found that while deannexation was detrimental to Seaview residents, Egg Harbor's refusal to consent was not arbitrary or unreasonable. He noted the financial benefits Seaview residents would gain under Longport's tax structure and recognized the claim of tax shopping based on the timing of the petition post a tax increase. He referenced previous cases to support the social detriment argument but ultimately concluded that the evidence indicated significant harm to Egg Harbor residents from deannexation, despite some merit found in the plaintiffs’ claims regarding emergency services. Seaview's geographic location required Longport to provide emergency services as first responders, leading to social injury claims from plaintiffs who sought annexation to Longport. However, Judge Mendez found no evidence that Seaview residents were denied emergency services, dismissing the plaintiffs' argument that the distance to mainland municipal services constituted a social detriment. The inconvenience of travel did not significantly impact residents, who rarely visited municipal buildings and had voting by mail available. The judge noted that plaintiffs' claims regarding social harm based on community life were balanced; Seaview residents participated in Township government and civic activities that would be lost with deannexation. The plaintiffs failed to demonstrate that deannexation would significantly harm the well-being of Egg Harbor residents. Judge Mendez highlighted the substantial lost tax revenue of $2,325,000 from Seaview, despite it being only 1.3% of Egg Harbor's budget and compounded by the municipality's economic stress due to state mandates and economic downturns. To compensate for the loss, Egg Harbor residents would face a tax increase of $122.78 annually, much lower than the tax savings Seaview residents would realize if annexed to Longport. The judge emphasized that the continued loss of revenue would adversely affect Egg Harbor's bond rating and could lead to reduced police and fire services. Although emergency personnel would still respond to calls due to a mutual aid agreement, no financial savings would result for Egg Harbor. Additionally, the loss of revenue would negatively impact local schools, affecting programs and staffing, while the school would only gain $4,420 from transportation reimbursements. Deannexation would also diminish the civic engagement of Seaview residents and threaten the unique character and prestige of Egg Harbor as a diverse community. Judge Mendez concluded that there was ample evidence supporting the detrimental effects of deannexation on Egg Harbor residents. The municipality is deemed best suited to assess local impacts and residents' needs. Judge Mendez dismissed the plaintiffs' claims of bias, affirming that they had a fair hearing, and that Egg Harbor's decision regarding deannexation was well-supported by evidence. He characterized deannexation as a politically sensitive issue and expressed confidence that Seaview Harbor was treated fairly. Both Planning Board member McCullough and Committee members recused themselves from voting on the matter. The judge concluded that Egg Harbor's refusal to consent to deannexation was justified and not arbitrary. Plaintiffs argue that this conclusion was erroneous, specifically challenging the findings of social and economic harm to Egg Harbor residents, the balance of harms considered, and the rejection of their bias claims and request to add evidence. The trial court reviews a municipality's refusal to consent to deannexation based on arbitrariness or unreasonableness, recognizing municipalities' expertise in local matters and presuming their decisions are valid unless proven otherwise. The standard was codified in 1982, shifting the burden of proof to petitioners, which implies a legislative intent to make deannexation more challenging and to prioritize the preservation of municipal boundaries over transient or trivial motivations. Petitioners seeking deannexation must demonstrate that refusal to consent negatively impacts the economic and social well-being of a majority of petitioners. Relevant considerations include geographic location, physical connection to the municipality, social interactions, emergency services, demographics, municipal services, petitioners' identity and sense of belonging, and economic effects of deannexation, such as taxes and financial consequences. These considerations should reflect not only the present situation but also potential future changes. Economic benefits for petitioners do not automatically imply economic detriment if deannexation is denied; for example, residents may seek deannexation for lower property taxes, yet still afford higher taxes without suffering economic harm. Improper petitions have been identified where motives included obtaining lower tax rates, avoiding sewage expenses, or seeking favorable zoning for profit. To determine if deannexation will harm non-petitioning residents, courts should assess social and economic impacts, including the loss of petitioners' participation in community activities, contributions to social diversity, and overall community cohesion. The municipality's development plans and the future impacts of deannexation are also significant. In the case at hand, plaintiffs contest Judge Mendez's conclusion that Egg Harbor residents would experience social detriment from losing Seaview residents' civic participation, arguing that such participation is already declining and occurring elsewhere. They assert that Seaview residents comprise a minimal portion of Egg Harbor's population and are geographically distinct, questioning the evidence of any loss of prestige or diversity for Egg Harbor. The court, however, disagrees with these claims. Judge Mendez determined that deannexation would adversely affect Egg Harbor residents by removing the benefits derived from Seaview residents' involvement in government and civic organizations, as well as the advantages associated with Seaview’s high property values. This finding was substantiated by records showing Seaview’s historical participation levels, dismissing the plaintiffs' claims of declining participation as speculative. The judge highlighted Seaview's contributions to Egg Harbor's prestige and diversity, being its only shore town with the highest property values, which cannot be overlooked as mere elitism. Dr. Perniciaro noted that Seaview property values are stable and likely to appreciate, providing a significant contribution to Egg Harbor’s tax base, thus helping to stabilize income and mitigate revenue fluctuations. The plaintiffs contested the judge's economic findings, arguing he focused primarily on the absolute dollar impact of deannexation rather than analyzing the percentage change in tax revenue. They claimed the loss estimation was exaggerated, considering that 44% of Egg Harbor's revenue comes from other sources and that the town has experienced significant growth, which would continue to generate tax and construction revenue. They also challenged the assertion that essential services would suffer due to revenue loss, labeling these concerns as speculative. Moreover, they argued that the potential tax increase for mainland residents to offset lost revenue would be modest and insufficient to justify claims of significant harm. However, the court rejected these arguments, noting that the deannexation statute does not mandate the consideration of tax consequences in percentage terms. The statute requires the petitioner to demonstrate that deannexation will not significantly harm Township residents, considering current and future tax implications. Specifically, the tax consequences of deannexation could result in either funding losses or an annual tax increase of $122.78 for the average homeowner in Egg Harbor. This increase is deemed significant, contrasting with previous cases that found lesser economic impacts to be negligible. The Township is facing economic challenges, including state funding deficiencies and local economic downturns. The plaintiffs' assertion that future development could offset revenue losses was found to be speculative and unsubstantiated. The Board determined that any potential increased revenues from development would benefit the Township as a whole, not merely counteract losses from deannexation. The court referenced precedent that rejected the notion of recovering lost taxes through unrelated revenue streams, emphasizing that such funds should benefit taxpayers rather than remedy deannexation losses. The plaintiffs' argument that a $122.78 tax increase is insignificant overlooks the potential combined impact of typical tax increases, which could amount to $299.39 if deannexation occurs. Furthermore, the Board concluded that failing to raise taxes to address revenue losses could necessitate cuts to essential services, a claim the plaintiffs did not adequately challenge. Overall, the Board's findings, supported by evidence, indicate that the negative consequences of deannexation would unfairly burden the residents of Egg Harbor, meriting judicial deference. Plaintiffs argue that Judge Mendez erred by not adequately considering the economic and social harm that Seaview residents would endure if they remained part of Egg Harbor, particularly in contrast to the minimal harm Egg Harbor residents would face from deannexation. They assert that Egg Harbor residents would see a minor average tax increase of $122, while Seaview residents would face a substantial tax increase of $17,950 if deannexed. Additionally, they claim significant social harm due to being part of a township that does not meet their needs, citing specific instances of service inadequacies such as bridge repairs, water supply provisions, participation in flood insurance programs, and snow removal. They also highlight a deprivation of their constitutional right to vote for local officials providing emergency services. However, the court found that Judge Mendez properly considered Seaview’s unique geographical status and the significant harm Egg Harbor residents would incur from deannexation, which includes the loss of a critical municipal resource and the contributions of Seaview residents to local governance. The court noted that claims of economic detriment due to higher taxes were unsupported, as the plaintiffs did not demonstrate an inability to afford these taxes. Furthermore, allegations regarding Egg Harbor’s service inadequacies were largely unsubstantiated. The judge's findings regarding the provision of fire services and the discretion exercised in bridge repair decisions were upheld as valid and supported by the record. The key points highlight a disagreement regarding the closure of a bridge, weighing the options of a complete winter closure versus a prolonged one-lane closure. Egg Harbor's choice to defer to Longport, which would experience greater resident impact, was deemed reasonable. Plaintiffs' claims about Egg Harbor's failure to install a firefighting water pipe and inadequate snow removal services were found to lack support. Judge Mendez identified social harm experienced by Seaview residents but ruled that this did not outweigh the significant tax revenue loss suffered by Egg Harbor, affirming his discretion in the matter. The plaintiffs also alleged bias against Judge Mendez's evaluation of testimonies and decisions made by individuals involved in the planning process, asserting that their opposition to deannexation was influenced by bias. However, the judge determined that the plaintiffs had a fair opportunity to present their case and that Egg Harbor's denial of consent was justified by the record. The judge denied the plaintiffs' motion to supplement the record with additional documents, noting that the relevant information had already been covered during cross-examination. The claims of bias against McCullough and Finnerty were dismissed since both recused themselves, and there was no evidence of improper influence. Overall, Judge Mendez's rulings were upheld as appropriate based on the evidence presented. The primary goal of conflict of interest laws is to ensure public officials serve their communities without bias and to foster trust in government integrity. In the case of Miller, who served as Township Administrator for 25 years, he had access to pertinent information and provided testimony regarding deannexation. Although it might have been preferable for him to refrain from expressing his opinions on the matter, there was no indication that he acted with ulterior motives; rather, he aimed to prevent what he believed would be an unnecessary litigation expense for taxpayers. Additionally, there was no evidence that his personal stance against deannexation swayed the votes of other members, which is important when evaluating the impartiality of proceedings, as highlighted in relevant case law. The significant evidence presented regarding the tax burden and loss of services for Egg Harbor residents if deannexation occurred was independent of personal opinions. Consequently, Judge Mendez's ruling that Egg Harbor did not act arbitrarily or unreasonably in denying deannexation consent was upheld, supported by evidence of potential harm to residents. Any unaddressed arguments from plaintiffs were deemed insufficiently meritorious for further discussion. The decision was affirmed.