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CBS OUTDOOR, INC., PLAINTIFF-RESPONDENT, v. BOROUGH OF LEBANON PLANNING BOARD/BOARD OF ADJUSTMENT, DEFENDANT-APPELLANT.

OPINION BY Senior Judge FLAHERTY.[fn1] [fn1] This matter was argued before a panel consisting of Judge McGinley, Judge McCullough and Senior Judge Flaherty. Following argument, Judge McCullough found it necessary to recuse and the case was assigned to the authoring Judge on June 10, 2010 and was submitted on briefs to Judge Brobson for consideration as a member of the panel.

Gregory J. Rubino and Passport Realty, LLC (collectively, Rubino) petition for review of the September 2, 2009, order of the Pennsylvania Gaming Control Board (Board) which held that real estate agents and brokers are not exempt from the registration and certification requirements of section 437a.l of the Board's regulations, 58 Pa. Code § 437a.l. We affirm.

Rubino is a licensed Pennsylvania real estate agent transacting business through Passport Realty, LLC. Rubino sought to offer professional real estate services to MTR Gaming Group, Inc. (MTR), the parent company of Presque Isle Downs, Inc. (PIDI), which had been awarded a slot machine license by the Board on December 20, 2006. The grant of this license was subject to a statement of conditions (SOC), including SOC 58. SOC 58 required MTR and PIDI to refrain from entering into or engaging in any business activity or transaction with Rubino or his affiliates, with an exception relating to a transaction involving the Green Shingle property. PIDI's chairman, Ted Arneault, signed the SOC on August 20, 2007.

Rubino also owned Tecnica Development Corporation (Tecnica). In 2001, Tecnica entered into a consulting agreement with MTR to provide services related to the development of a racetrack in Erie, Pennsylvania, including land acquisition and acquisition of land development and zoning permits. The consulting agreement provided for compensation of an initial fee of $50,000, a fee of $250,000 when property for the racetrack was acquired, a $10,000 monthly retainer and, after the racetrack is opened, 3% of the earnings of the racetrack before interest, taxes, depreciation and amortization. After the Board expressed concerns over compensation in the nature of a, percentage of the earnings, MTR and Tecnica reached an agreement whereby MTR and PIDI paid Tecnica $4.2 million to terminate the consulting agreement. During the course of the consulting agreement, Rubino assisted MTR with the acquisition of three properties, the International Paper property in Erie, a site located along Interstate 90, and the Green Shingle property. MTR is considering the sale of the International Paper property to Erie Renewable Energy. Rubino is president of Erie Renewable Energy and handles its real estate and development work. Additionally, Rubino's wife owns fifty percent of Conservation Associates, LLC, which in turn owns thirteen percent of Erie Renewable Energy. Rubino sought relief from SOC 58 to participate in the sale of the International Paper property as well as other properties of MTR/PIDI.

Subsequent to the execution of the SOC, the Board promulgated regulations requiring any vendor or person seeking to conduct business with a slot machine applicant or licensee to apply for registration and/or certification from the Board. 58 Pa. Code § 437a.l(a), (b). However, the regulations specifically exempt "[providers of professional services including accountants, attorneys, engineers and architects" from the registration and certification requirements. 58 Pa. Code § 437a.l(c)(8). On February 13, 2008, Rubino filed a petition for relief from SOC 58 with the Board. In furtherance of this objective, Rubino sought a declaration that he and his company are exempt from the certification and registration requirements set forth in the Board's new regulations. The Board's Office of Enforcement Counsel (OEC) filed an answer, and the case ultimately was heard before Linda Lloyd, Director of the Office of Hearings and Appeals (OHA).

As a result of recent amendments, this exemption is now found at section 437a. 1(d)(8) of the Board's regulations, 58 Pa. Code § 437a. 1(d)(8). However, for purposes of clarity, the opinion will continue to refer to the original section 437a. 1(c)(8).

On January 30, 2009, Director Lloyd issued a report and recommendation that the Board deny the relief requested in Rubino's petition, finding insufficient evidence to support a change to SOC 58 and noting that PIDI freely signed the SOC. However, Director Lloyd disagreed with OEC's argument that the exemption list found in the Board's regulations is all-inclusive and recommended that a licensed real estate agent or broker be included in this exemption. Rubino and OEC filed exceptions to the report and recommendation.

On September 2, 2009, the Board issued an adjudication and order rejecting the exceptions filed by both parties. The Board first addressed what it deemed to be a threshold issue, i.e., whether a licensed real estate agent or broker is included in the exemption. In its analysis, the Board agreed with Director Lloyd that the regulation's list of exempted professionals is not all-inclusive. Nevertheless, the Board distinguished the type of professions identified in the regulation as professions that required "prolonged courses of specialized education at the collegiate level and beyond," from "[r]eal estate agents, [which], although required to be licensed by the Pennsylvania Real Estate Commission, are not required to complete any secondary education, nor are they required to hold a college or high school diploma." (Board op. at 4.)

The Board reviewed the licensure requirements for a real estate salesperson: an applicant must be eighteen years of age and have completed sixty hours of approved, general real estate coursework before taking and passing an examination. The Board also noted the requirements for a real estate broker's license: the applicant must be twenty-one years of age, must be a high school graduate, must complete 240 hours in real estate instruction, and must have been engaged as a licensed real estate salesperson for at least three years.

Section 521 of the Real Estate Licensing and Registration Act (Real Estate Act), Act of February 19, 1980, P.L. 15, as amended, 63 P.S. § 455.521.

Section 511 of the Real Estate Act, 63 P.S. § 455.511.

Citing Ridley Township v. Pronesti, 431 Pa. 34, 244 A.2d 719 (1968) and Reich v. Reading, 3 Pa.Cmwlth. 511, 284 A.2d 315 (1971), the Board observed that the mere requirement of licensure of real estate brokers does not, itself, categorize this occupation as a profession. In Ridley Township, our Supreme Court held that a licensed real estate broker was not permitted to operate an office as an accessory use in a single-family dwelling. The applicable ordinance allowed accessory uses that were "customarily incidental" to a permitted use and defined the "customarily incidental" to include the professional office or studio of a doctor, dentist, masseur, teacher, artist, architect, musician, lawyer, magistrate or practitioner of a similar character.

In Reich, this court held that the office of a licensed insurance broker was a "business office" rather than a "professional office" and, therefore, was not a permitted use in a multi-family zoning district. In doing so, we specifically held that the mere fact that an insurance broker was licensed by the state did not, of itself, categorize his occupation as a "profession." "There are various occupations required to be licensed by the Commonwealth but which have been held not to be professions, such as real estate brokers. . . ." Reich, 284 A.2d at 320 (citations omitted). Furthermore, we acknowledged in Reich that an exact definition of the term "profession" and "professional" was difficult, was not limited to the traditional professions of theology, medicine, and law, and included professions such as teaching, architecture, and engineering "for which considerable educational preparation and continuing study are required." Id. 284 A.2d at 320. While acknowledging the occupation of an insurance agent/broker as "important and specialized," after consideration of the provisions of the ordinance at issue, as well as the applicable licensure requirements, we concluded that an insurance office was a business office rather than a professional office. Id.

The Board determined that unlike accountants, engineers, attorneys and architects, which professions require prolonged courses of specialized education at the collegiate level and beyond, real estate agents and brokers are not required to complete any secondary education and thus, real estate agents and brokers are not the type of professionals contemplated by the regulation. (Board's decision at 4, 5.) Accordingly, the Board rejected Director Lloyd's recommendation to extend the exemption to real estate agents and brokers. The Board held in abeyance the remainder of the matter, concerning SOC 58, until such time as Rubino submits certified vendor applications through PIDI and a background investigation is completed. Rubino then filed a petition for review with this Court.

By order dated November 2, 2009, this Court directed the Board to issue an amended order clarifying whether its September 2, 2009, order was an interlocutory order or a final order certified pursuant to Pa. R.A.P. 341(c). The Board issued an amended order dated November 12, 2009, declaring that its September 2, 2009, order was not a final order pursuant to Pa. R.A.P. 341(c). Accordingly, this Court dismissed Rubino's petition for review by order dated December 18, 2009. Rubino filed an application for reconsideration with this Court, which was granted by order dated December 28, 2009, finding that Rubino had timely filed a petition for review under the note to Pa. R.A.P. 341(c). By subsequent order dated January 25, 2010, this Court granted the petition for review from the Board's interlocutory order and stated that it would consider the issue of whether real estate agents and brokers are exempt From Board jurisdiction by virtue of the regulatory exemption of certain "professionals" found at 58 Pa. Code § 437a.l(c)(8).

On appeal, Rubino argues that the Board erred as a matter of law in concluding that real estate agents and brokers are not exempt from Board jurisdiction by virtue of the regulatory exemption of certain "professionals" found at 58 Pa. Code § 437a.l(c)(8). We disagree.

Our scope of review of an agency's adjudication is limited to determining whether constitutional rights were violated, whether the adjudication is in accordance with the law and whether the necessary findings of fact are supported by substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa. C.S. § 704. Moreover, because Rubino raises a question of law, appellate review of the Board's order is plenary. Tire Jockey Service, Inc. v. Department of Environmental Protection, 591 Pa. 73, 915 A.2d 1165 (2007).

We begin by noting that a reviewing court must give considerable weight and deference to an agency's interpretation of a regulation the agency is charged with enforcing. Bayada Nurses, Inc. v. Department of Labor and Industry, 958 A.2d 1050 (Pa.Cmwlth. 2008). Moreover, an agency's interpretation of its regulation is controlling unless the interpretation is plainly erroneous, inconsistent with the regulation or statute, or unreasonable. Portalatin v. Department of Corrections, 979 A.2d 944 (Pa.Cmwlth. 2009).

In support of his argument that real estate agents are, in fact, professionals, Rubino reiterates the licensure requirements for real estate salespersons and notes that real estate licensees must maintain a good reputation and complete fourteen hours of continuing education every two years. However, Rubino acknowledges our holding in Reich that the mere requirement of licensure does not categorize an occupation as a profession. In addition, the educational requirements were specifically considered by the Board and found to be insufficient to warrant the classification of real estate salespersons as professionals for purposes of applying section 437a.l(c)(8) of the Board's regulations. We conclude that such requirements do not compel a finding that the Board's interpretation of section 437a. 1(c)(8) is plainly erroneous, inconsistent with the regulation or the Pennsylvania Race Horse Development and Gaming Act (Gaming Act), 4 Pa.C.S. §§ 1101- 1904, or unreasonable, especially in light of the Board's consideration of the "prolonged courses of specialized education at the collegiate level and beyond" for the professionals recognized in the regulation. (Board decision at 4.)

Sections 501 and 404a of the Real Estate Act, respectively. 63 P.S. §§ 455.501, 455.404a. Section 404a was added by the Act of July 9, 1990, P.L. 338.

Rubino contends that more recent decisions reflect the courts' recognition of real estate agents and brokers as professionals. However, in support of this assertion, Rubino relies entirely upon general statements taken out of context from cases involving issues not relevant here. For example, Rubino relies on a single reference to the "profession of selling real estate" in Younkin v. Bureau of Professional and Occupational Affairs, State Real Estate Commission, 774 A.2d 1281 (Pa. Cmwlth. 2001). The issue in Younkin, however, was whether a licensed auctioneer brokered a sale of real estate without being licensed to do so. There was no discussion as to whether real estate agents are, by definition, professionals. Rubino also cites D.J. Malatesta Associates, Inc. v. Century 21 Rueter, Inc., 739 A.2d 1076 (Pa.Cmwlth. 1999), a case involving claims against real estate brokers brought under Real Estate Recovery Fund (Fund). A footnote in the case describes the Fund as similar to other funds that protect the public from "professional" fraud or misconduct. Again, this case also did not address the issue of whether real estate agents meet the definition of a professional. Rubino's reliance on Krauss v. Claar, 879 A.2d 302 (Pa.Super.), appeal denied, 586 Pa. 713, 889 A.2d 1217 (2005), is also misplaced. Therein, the court determined that Pa. R.C.P. No. 1042.1, which addresses professional liability actions, does not include real estate agents/brokers as a licensed professional subject to the rule. Rather, Pa. R.C.P. No. 1042.1 only recognizes the following as licensed professionals: health care provider, accountant, architect, chiropractor, dentist, engineer or land surveyor, nurse, optometrist, pharmacist, physical therapist, psychologist, veterinarian, and attorney at law.

The Real Estate Recovery Fund was established by the Act of February 19, 1980, P.L. 15.

Rubino also quotes a statement in Gobao v. State Real Estate Commission, 96 Pa.Cmwlth. 341, 507 A.2d 917 (1986), which held that the penal provisions of the Real Estate Act were not intended to cover a felony such as possession of controlled substances but were meant to curb the fraudulent practices that had crept into the practice of "the real estate profession."

Furthermore, we note that in accordance with 4 Pa.C.S. § 1202(a)(1) of the Gaming Act, the Board has sole regulatory authority over the conduct of gaming and related activities in the Commonwealth, vesting broad discretion with the Board to administer all aspects of the gaming industry in Pennsylvania. The Board, as authorized by 4 Pa.C.S. § 1102(1), has the responsibility to protect the public by enacting regulations and policing all activities involving gaming. Additionally, the Board via 4 Pa.C.S. § 1202(b)(12), has the specific power and duty to issue, approve, renew, revoke, suspend, condition or deny issuance or renewal of slot machine licenses at its discretion. The vendor registration and certification regulation represents one effort by the Board to fulfill this responsibility. In this capacity, the Board determined that real estate agents and brokers are not the type of professional contemplated by the Board's regulations at 58 Pa. Code § 437a.l(c)(8) and are, therefore, not exempt from the Board's vendor registration and certification requirements. We conclude that the Board's interpretation of section 437a.l(c)(8) is both reasonable and consistent with the Board's statutory obligations.

Accordingly, the order of the Board is affirmed.

Judge McCULLOUGH did not participate in the decision in this case.

ORDER

Now, July 23, 2010, the order of the Pennsylvania Gaming Control Board, in the above-captioned matter, is affirmed.

g building and the property line. The property already has extensive development The fact that two bulk variances are required in order to shoehorn in an additional structure indicates that the applicant is seeking more development than the site can properly handle.

On March 27, 2008, CBS filed a complaint in lieu of prerogative writs in the Law Division, claiming that (1) the Board did not have reasonable support to deny its application; (2) the Board's action was arbitrary, capricious, and unreasonable and should therefore be reversed; and (3) relief from the conditional use requirements was warranted, as the Board's resolution was unsupported in its failure to find that the required negative criteria were present. CBS's pleading did not address those issues connected with the non-filing of Ordinance No. 2007-04 because it still was unaware of the municipality's faux pas. So too was the Board oblivious to the omission, as its answer did not contend that a (d)(1) variance was required due to the alleged ineffectiveness of the unfiled ordinance.

After meticulously reviewing both the agency's proceedings and the evidence presented for the Board's consideration, the Law Division judge — in an oral decision — reversed and remanded the matter to the Board for its further review of the site plan aspects of the development application. The trial court agreed with CBS's arguments regarding the Board's improper denial of the conditional use variances. When it came to the critical illumination issues, the court found the following:

With respect to the lighting the testimony is that the [B]oard was presented [with] evidence that the applicant could comply with the lighting requirements. That — the response from the borough engineer was, well it seems like a lot of light to me, and I'm not sure. Nonetheless, the testimony was, as opposed to speculation that I'm not sure, there could be a lot of light, that we can comply with this, either now or through a site plan approval, and we will show — and if you look at the ordinance in that regard, even though some of the language is for, I guess it's [e] and [h], they do talk about specific mechanisms, shielding visors or other, to prevent disturbance, to eliminate glare, light trespass, spillover light.
* * *
But they did indicate that they were willing to abide by [e] and [h] through the use of visors and other mechanisms, and that seemed to me to conclude the matter, because I never heard from the engineer that it's impossible, you can't do it. that seems to me to be a matter of site plan detail, not a matter of a variance. There was a commitment to use the mechanisms, do additional items, like turning off the lights to accommodate the observatory. So, I think the applicant has sufficiently proved its case.

As we understand it, the trial judge determined that the Board's attempted reliance upon increased noise and diminished aesthetics in denying the application was trumped by the overriding policy judgments of Lebanon's governing body when it first adopted the amendatory ordinance in 2007, allowing billboards as a conditional use. The Law Division essentially concluded that the Board had not followed the law respecting the proper method of analyzing applications for conditional use variances and found that CBS had adequately demonstrated its entitlement to a grant of all necessary variances. The matter was then remanded to the Board for its consideration of lighting in the context of site plan review, together with "all the [other] standard site plan issues." On March 20, 2009, the Board filed its appeal with this court.

While this appeal was pending, the municipality had a change of heart regarding the construction of new billboards. On May 20, 2009, the governing body adopted Ordinance No. 2009-03, which impliedly revoked Ordinance No. 2007-04 and expressly repealed "Current Article 7 of the Borough of Lebanon's Land Use Ordinances, relating to Signs," resulting in "prohibiting within the Borough" of all billboards. Several days later, the Borough Clerk mailed a copy of Ordinance No. 2009-03 to the Hunterdon County Planning Board in accordance with N.J.S.A. 40:55D-16; unlike its predecessor, this ordinance was properly and promptly filed the next day. Additionally, notice of the passage of the 2009 ordinance was published in the Hunterdon County Democrat newspaper pursuant to N.J.S.A. 40:49-2(d).

As noted, Ordinance No. 2009-03 specifically prohibited the erection of billboards in all of Lebanon's zoning districts. This had the effect of requiring such applicants to apply for the more exacting (d)(1) use variance, as opposed to the formerly available and less stringent (d)(3) conditional use variance pursuant to Ordinance No. 2007-04.

On June 29, 2009, defendant filed its initial brief with this court, but it was not until eleven days later that Lebanon's Borough Clerk discovered that Ordinance No. 2007-04 had never been filed with the Hunterdon County Planning Board pursuant to N.J.S.A. 40:55D-16. After learning of this failure to file, defendant filed a motion with this court to vacate the Law Division's judgment on July 23, 2009, arguing that it was void because Ordinance No. 2007-04 never enjoyed efficacy during the pendency of CBS's development application, and a (d)(1) variance was therefore required pursuant to the then-revived and applicable 1983 version of Lebanon's land use regulations. We denied that motion, instead electing to remand the evolving and on-going dispute to the trial court to address the impact on its judgment of (1) the failure of the Borough to file Ordinance No. 2007-04 and (2) the subsequent adoption and filing of Ordinance No. 2009-03.

On January 28, 2010, after the remand hearing concluded, the trial court in a written decision determined that, although Ordinance No. 2007-04 was never properly filed, it should be deemed effective for the purposes of the instant development application and subsequent litigation, "relating back to the institution of the hearings before the Board." Additionally, the court concluded that the Board determination and subsequent trial were not affected by the passage of Ordinance No. 2009-03's blanket prohibition of billboard use in the Borough.

Thereafter, the parties filed supplemental briefs and appendices after remand respectively, urging this court to either (1) vacate the original Law Division judgment because Ordinance No. 2007-04 was never filed, and asserting the applicability of the time of decision rule or (2) affirm the conclusions of the trial judge on remand.

II. A.

The first and most fundamental dispute that must be resolved in this appeal is whether the Board's denial of the request for conditional use variances was appropriate. If the Board acted properly regarding those setback-implicated conditional use variances, then CBS's billboard application must fail in its entirety. On the other hand, if the Board was capricious in its refusal to grant the two conditional use variances, then a remand to the Board for its consideration of lighting issues and the proffered site plan could be sustained, subject to the impact and effect, if any, of (1) the failure to file Ordinance No. 2007-04 with the Hunterdon County Planning Board and (2) the impact of Ordinance No. 2009-03 under the time of decision rule.

We have no occasion at this time to analyze the potential effect upon CBS's application of L. 2010, c. 9 ( N.J.S.A. 40:55D-10.5), which amends the MLUL to provide, "[n]otwithstanding any provision of law to the contrary, those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development and any decision made with regard to that application for development," because the legislation expressly provides that it is not effective until "one year next following" May 5, 2010. See Andrew T. Fede, Legislature Revises the Time of Decision Rule for Land Development Applications, 200 N.J.L.J. 877, June 28, 2010.

We start with the time-tested mantra, "[a] local zoning determination will be set aside only when it is arbitrary, capricious or unreasonable." Kramer v. Bd. of Adjustment, Sea Girt, 45 N.J. 268, 296, 212 A.2d 153 (1965). Even were we to harbor reservations as to the good judgment of a local land use agency's decision, "there can be no judicial declaration of invalidity in the absence of clear abuse of discretion by the public agencies involved." Id. at 296-97, 212 A.2d 153 (citing Ward v. Scott, 16 N.J. 16, 23, 105 A.2d 851 (1954)). We apply this same standard when reviewing a trial court's decision on an appeal from a decision of a board of adjustment. D. Lobi Enters, v. Planning/Zoning Bd. of Borough of Sea Bright, 408 N.J.Super. 345, 360, 974 A.2d 1134 (App.Div. 2009); N.Y. SMSA L.P. v. Bd. of Adjustment of Twp. of Weehawken, 370 N.J.Super. 319, 331, 851 A.2d 110 (App.Div. 2004).

In this context, the spirit of our current endeavor acknowledges the fact "that local citizens familiar with a community's characteristics and interests are best equipped to assess the merits of variance applications." Med. Ctr. at Princeton v. Twp. of Princeton Zoning Bd., 343 N.J.Super. 177, 198, 778 A.2d 482 (App.Div. 2001). A reviewing court's analysis must focus on the validity of the Board's action; it is not within this court's mandate to substitute our judgment for the proper exercise of the Board's discretion. Fallone Prop. L.L.C. v. Bethlehem Twp. Plan. Bd., 369 N.J.Super. 552, 561, 849 A.2d 1117 (App.Div. 2004). Although the scope of review of a local governmental agency decision is circumscribed, it is "`not simply a pro forma exercise in which [the court] rubber stamp[s] findings that are not reasonably supported by the evidence.'" In re Taylor, 158 N.J. 644, 657, 731 A.2d 35 (1999) (quoting Chou v. Rutgers, State Univ., 283 N.J.Super. 524, 539, 662 A.2d 986 (App.Div. 1995), certif denied, 145 N.J. 374, 678 A.2d 714 (1996)). The court's authority and duty is to review the record before the Board in order to determine whether the Board's decision was adequately supported by the evidence. Lang v. Zoning Bd. of Adjustment of N. Caldwell, 160 N.J. 41, 58, 733 A.2d 464 (1999). See also Burbridge v. Mine Hill Twp., 117 N.J. 376, 385, 568 A.2d 527 (1990) (stating that there must be "adequate evidence" in the record supporting the board's determination); Pullen v. S. Plainfield Planning Board, 291 N.J.Super. 303, 312, 677 A.2d 278 (Law Div. 1995) aff'd, 291 N.J.Super. 1, 676 A.2d 1095 (App.Div. 1996) (holding that there must be "substantial evidence" of both the positive and negative criteria before the board).

Simply stated, a reviewing court must determine whether the Board followed statutory guidelines and properly exercised its discretion. Med Ctr. at Princeton v. Twp. of Princeton Zoning Bd., supra, 343 N.J.Super. at 199, 778 A.2d 482. Lastly, the deference accorded to a board's denial of a variance is greater than that given to its decision to grant a variance. Ibid; Saddle Brook Realty, L.L.C. v. Twp. of Saddle Brook Zoning Bd. of Adjustment, 388 N.J.Super. 67, 76, 906 A.2d 454 (App.Div. 2006); Northeast Towers, Inc. v. Zoning Bd. of Adjustment, Borough of West Paterson, 327 N.J.Super. 476, 494, 744 A.2d 190 (App.Div. 2000); Funeral Home Mgmt, Inc. v. Basralian, 319 N.J.Super. 200, 208, 725 A.2d 64 (App.Div. 1999). Thus, a party seeking to overturn the denial of a variance, such as CBS, must prove that the evidence before the local board was "overwhelmingly in favor of the applicant." Scully-Bozarth Post 1817 of the VFW v. Planning Bd., 362 N.J.Super. 296, 314-315, 827 A.2d 1129 (quoting Med. Realty v. Bd. of Adjustment, City of Summit, 228 N.J.Super. 226, 233, 549 A.2d 469, (App.Div. 1988)), certif. denied, 178 N.J. 34, 834 A.2d 407 (2003).

N.J.S.A. 40:55D-3 defines a conditional use as:

a use permitted in a particular zoning district only upon a showing that such use in a specified location will comply with the conditions and standards for the location or operation of such use as contained in the zoning ordinance, and upon the issuance of an authorization therefore by the planning board.

Consequently, although a conditional use may be appropriate in certain areas of a zoning district, it is not necessarily appropriate everywhere within the zoning district. "It is for this reason that a municipality is permitted to delegate discretion to its planning board to consider the suitability of a proposed conditional use for a particular site." Cardinal Props, v. Westwood, 227 N.J.Super. 284, 287, 547 A.2d 316 (App.Div.), certif. denied, 111 N.J. 631, 546 A.2d 545 (1988).

If, however, the proposed conditional use does not meet all of the conditions for the use, an applicant must apply to the board of adjustment for a conditional use variance pursuant to the standards articulated in N.J.S.A. 40:55D-70(d)(3). Coventry Square, Inc. v. Westwood Zoning Bd. of Adjustment, 138 N.J. 285, 296, 650 A.2d 340 (1994). "A variance for a deviation from a condition allows the applicant to engage in a conditional use despite the applicant's failure to meet one or more of the conditions: It is not the use but the non-compliance with the conditions that violates the ordinance." Id. at 287, 650 A.2d 340.

In Coventry Square, the Supreme Court explained the burden of proof that applicants must satisfy in order to be granted a conditional-use variance. In contrast to a (d)(1) use variance to allow a use in a zoning district where such use is prohibited, the proofs required for a (d)(3) conditional use variance are notably less stringent. Id. at 287, 650 A.2d 340. This is because the use itself is not prohibited but rather the deviation is only as to one or more standards or specifications imposed upon such use. Thus, the Court concluded:

We hold that the proof of special reasons that must be adduced by an applicant for a "d" variance from one or more conditions imposed by ordinance in respect of a conditional use shall be proof sufficient to satisfy the board of adjustment that the site proposed for the conditional use, in the context of the applicant's proposed site plan, continues to be an appropriate site for the conditional use notwithstanding the deviations from one or more conditions imposed by the ordinance. That standard of proof mil focus both the applicant's and the board's attention on the specific deviation from conditions imposed by the ordinance, and will permit the board to find special reasons to support the variance only if it is persuaded that the noncompliance with conditions does not affect the suitability of the site for the conditional use. Thus, a conditional use variance applicant must show that the site will accommodate the problems associated with the use even though the proposal does not comply with the conditions the ordinance established to address those problems.
[ Id. at 298-99, 650 A.2d 340 (emphasis added).]

As for the negative criteria, the Court concluded:

The board of adjustment must evaluate the impact of the proposed [conditional] use variance upon the adjacent properties and determine whether or not it will cause such damage to the character of the neighborhood as to constitute "substantial detriment to the public good" . . . In respect of the second prong, that the variance will not "substantially impair the intent and purpose of the zone plan and zoning ordinance," N.J.S.A. 40:55D-70(d), the board of adjustment must be satisfied that the grant of the conditional-use variance for the specific project at the designated site is reconcilable with the municipality's legislative determination that the condition should be imposed on all conditional uses in that zoning district. [ Id. at 299, 650 A.2d 340 (internal citations omitted) (emphasis added).]

Because the memorializing resolution of the Board is the wellhead for the judiciary's consideration of the validity of municipal action, Scully-Bozarth Post 1817 of the VFW v. Planning Bd., supra, 362 N.J.Super. at 313-14, 827 A.2d 1129 ("[t]he resolution must rise or fall on its merits"), we begin our review there. The Supreme Court has noted that "the key to sound municipal decision-making is a clear statement of reasons for the grant or denial of a variance." Kaufmann v. Planning Bd. for Twp. of Warren, 110 N.J. 551, 566, 542 A.2d 457 (1988). "Local boards and their counsel should take pains to memorialize their decisions in resolutions that explain fully the basis on which the Board had acted, with ample reference to the record and the pertinent statutory standards." Commercial Realty Res. Corp. v. First Atl. Props. Co., 122 N.J. 546, 566-67, 585 A.2d 928 (1991) (internal citation omitted). "[A] mere recital of testimony or conclusory statements couched in statutory language" is insufficient. N.Y. SMSA, L.P. v. Bd. of Adj. of Twp. of Weehawken, supra, 370 N.J.Super. at 332-33, 851 A.2d 110 (internal citations omitted).

In this case, the Board's resolution provides a lengthy summary of the proceedings that unfolded during the presentation of CBS's development application and recites the Board's reaction to the testimony and evidence. However, it is apparent to us that the Board did not deploy the Coventry Square paradigm when it considered the two setback conditional use variances. The resolution failed to focus upon the "specific deviation[s]" from the conditional use standards and whether those deviations affected the suitability of the site for the proposed use. See Coventry Square, supra, 138 N.J. at 298, 650 A.2d 340. Additionally, the Board did not thoroughly analyze the impact of the use on adjacent properties and determine whether such use specifically constituted a substantial detriment to the public good. Id. at 299, 650 A.2d 340. Instead, as its resolution stated, the Board relied upon an ad hoc methodology that would have required the applicant to conduct a "balancing test . . . to determine if the positive results of granting the variance would outweigh the negative aspects."

On the other hand, the signal concern of the Board — but unfortunately not stressed during the course of its proceedings — turned out to be the fact that CBS had presented an incomplete picture of the illumination issues and an inadequate response to those problems. This failure to fully address all lighting issues was intensified by the Board's correct insistence that unless a variance was requested, conditional uses must satisfy all of the ordinance's standards and specifications relating to the conditional use, even if those requirements are numerous.

The Board also noted its view that CBS had not adequately demonstrated the absence of other billboards within 1,000 feet of the proposed structure. We agree with the trial court that CBS's evidence on this issue satisfied the condition and was unassailable.

Notwithstanding our substantial alignment with the conclusions of the trial judge, we cannot agree with his minimization of lighting issues and relegation of those problems to site plan review, finding that eventually "the applicant could comply with the lighting requirements." Even if that were an accurate observation, because those conditions relating to illumination were integral to the conditional use, they could simply not be deferred to site plan review. A promise from an applicant about its future potential compliance with a conditional use standard or specification is not permitted under either the MLUL or the Coventry Square framework.

We note that CBS did not seek bifurcation of its application into separate applications for the conditional use variances and subsequent site plan approval pursuant to N.J.S.A. 40:55D-76(b). Thus, in one integrated proceeding, CBS was required to demonstrate complete fidelity to the zoning regulations as well as thorough compliance with the Borough's site plan review requirements, or seek variances or exceptions therefrom. See N.J.S.A. 40:55D-51, -70(c), -70(d). Its suggestion to the Board to conditionally grant preliminary site plan approval, allow the billboard to be built, and then allow CBS to tweak the lighting as needed, is wholly inconsistent with both the duty to meet all of the standards and specifications of a conditional use and to demonstrate full compliance with local site plan requirements. Deferral of full compliance for even a six-month period was not something that the Board was required to countenance.

On this issue we conclude that the trial judge did not provide sufficient deference to the Board's finding that light spillover was a justifiable concern and that the applicant's illumination compliance was imperfect. We understand the Board's argument that CBS was on notice of the Board's significant interest in the lighting issues and should have requested a continuance to more fully demonstrate the tangible means by which it would comply with the lighting standards of §§ 7.08(2)(a)(4)(e) and (h). On balance, however, if the Board was so unconvinced about CBS's ability to meet those standards, it should have treated any deviations from the ordinance's zero tolerance for light spillover as implied requests for additional conditional use variances, and then analyzed them under Coventry Square's standards. Although a remand to the Board is required so that it may follow Coventry Square regarding the setback conditional use variances, it is also necessary that the illumination issues be reviewed by the Board through that same lens. It was not appropriate to remand the matter for treatment of the lighting issues as mere site plan concerns. Rather, the Law Division should have reversed and remanded the application for reconsideration of whether CBS had satisfied all respects of Coventry Square, including the illumination issues. To that end, and subject to the balance of our determinations in this opinion, we provisionally remand the entire development application (including the site plan review component) to the Board, where CBS may supplement the record on all issues and either (1) attempt to demonstrate complete compliance with §§ 7.08(2)(a)(4)(e) and (h) or (2) argue that it is entitled to additional conditional use variances therefor, pursuant to N.J.S.A. 40:55D-70(d)(3). The Board shall be obliged to analyze the entire development application anew, and make specific findings and conclusions for each variance in light of what we have said, and as commanded by Coventry Square.

The Board's resolution refers to the light spillover as "significant," relying upon a single stray comment of its engineer. We cannot say on this record what objective standards the engineer or the Board utilized in reaching this critical value judgment. We elect to permit CBS and the Board to grapple with all aspects of the illumination conditions in the provisional remand.

For example, CBS should respond, to the extent it believes necessary, to those items identified by the Board in its resolution as failures of proof. CBS must also explicitly advise the Board as to the configuration for which it seeks approval. We mention this because the record contains confusing and contradictory references about a change in the location of the billboard, and the effect of that change upon required variances.

B

Having concluded that there were substantial grounds for the Law Division's sympathetic treatment of the application and a basis for our provisional remand, we must address the incongruity between such a mandate and the two post-trial circumstances that now arguably deprive the Board of the authority to consider CBS's development application at all. The first dilemma is the non-filing of Ordinance No. 2007-04, which raises the question of whether it ever became effective; the second situation is the adoption of Ordinance No. 2009-03, specifically in the context of this litigation, which arguably triggers an analysis of the time of decision rule. Logically, we start with the effect of the non-filing of Ordinance No. 2007-04.

The failure to file Ordinance No. 2007-04 — a development regulation adopted pursuant to the MLUL — is relevant to this case because of N.J.S.A. 40:55D-16, which provides in relevant part:

Development regulations, except for the official map, shall not take effect until a copy thereof shall be filed with the county planning board.
* * *
Copies of all development regulations and any revisions or amendments thereto shall be filed and maintained in the office of the municipal clerk. [ N.J.S.A. 40:55D-16.]

The unmistakable and plain language of the statute makes clear that until someone, not necessarily a municipal agent, presents a development regulation to the county planning board, and the county planning board files it, the regulation is not effective. See Burcam Corp. v. Planning Bd. of Medford, 168 N.J.Super. 508, 512, 403 A.2d 921 (App.Div. 1979); Millburn Twp. v. Short Hills Assoc, 23 N.J.Tax 311, 317 (Tax 2007). Thus, the Board argues that during all pertinent times — throughout the hearings and determination of the Board, and the trial in the Law Division — the only effective land use ordinance in Lebanon did not permit billboards. Accordingly, the Board claims that any determinations made regarding conditional use variances relating to a billboard during that period are nullities. Conversely, CBS claims that the Board is estopped from making these arguments because the applicant should not be penalized for what it describes as "the Borough's negligence."

When read in pari materia with the MLUL, N.J.S.A. 40:27-6.10 appears to compel county planning boards to accept for filing all development regulations of municipalities "[i]n order that county planning boards shall have a complete file of the planning and zoning ordinances of all municipalities in the county."

Unlike Burcam Corp., where a previously unfiled development regulation was eventually filed with the Burlington County Planning Board during the pendency of the plaintiffs site plan application, in our case Lebanon never filed Ordinance No. 2007-04. The ostensible reason for never filing was first explained as an oversight, and then when the appropriate municipal officials became aware of this failure to file — not until July 2009 — Lebanon had already impliedly repealed Ordinance No. 2007-04, arguably making its belated filing an exercise in futility. Thus, the application of a relation-back principle is impossible.

For almost a half-century, our State's public policy jurisprudence has expressly insisted that governmental agents and units of government observe certain standards and norms — particularly during litigation — that are beyond reproach. See F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426, 495 A.2d 1313 (1985) (prohibiting a municipality from taking litigational advantage of another party under the "turn square corners" doctrine); Gruber v. Mayor and Twp. Comm., 73 N.J.Super. 120, 127, 179 A.2d 145 (App.Div.), aff'd, 39 N.J. 1, 186 A.2d 489 (1962) (applying an equitable remedy against government in the interest of holding the municipality to a standard of "rectangular rectitude"). We believe that the unique circumstances of this case inexorably militate in favor of the application of such an estoppe1-1ike remedy that will validate the effectiveness — at least during the period between its adoption and its implicit repeal — of the substantive provisions of unfiled Ordinance No. 2007-04.

There is no dispute that Ordinance No. 2007-04 was not filed at any time during the proceedings before the Board or the trial conducted in the Law Division. Each side criticizes the other for not detecting this unfortunate state of affairs sooner. The Board suggests that CBS should have discovered the lack of a filed ordinance when it conducted its due diligence before filing the development application. CBS conversely suggests that the Board had an independent obligation to inquire into its authority to act before permitting the extended development application process and litigation in the Law Division to progress.

We need not engage ourselves in finding fault or assigning blame to the parties. Indeed, it was the unintended default of non-parties, the Borough of Lebanon and its agents, that brought about this jurisprudential quagmire. The reasonable expectation of the parties and the public at large was that an agent of the Borough would perform the ministerial act of transmitting Ordinance No. 2007-04 to the Hunterdon County Planning Board for filing. See Millburn Twp. v. Short Hills Associates, supra, 23 N.J. Tax at 317 (noting that the party responsible for filing a duly adopted zoning ordinance with the county planning board is the municipal clerk).

The record developed in this case points to a single reason for the non-filing: human error. There is not even a whisper of evidence to suggest purposeful inaction by the municipality or its agents. Nevertheless, significant private and public rights have been affected, which require our appropriate judicial response.

One of the hallmarks of the "turn square corners" doctrine is that its application is not dependent upon a finding of bad faith. Instead, it focuses the judicial inquiry upon whether government seeks an unfair "litigational advantage." Here, that is exactly what the Board seeks. We will not tolerate the Board's purposive action of advocating the nullity of its own ordinance, particularly when it seeks to take advantage of the municipality's gaffe. We do not mean to suggest that governmental litigants are obliged to benignly surrender when they are adversaries against private parties in court. However, by using the Borough's non-filing as a bootstrap, the Board's contention seeks to succeed upon a mere tactical advantage, something it should be loath to do. In re Appeal of Howard D. Johnson Co., 36 N.J. 443, 446, 177 A.2d 756 (1962). The manifest injustice of subscribing to the Board's advocacy should be apparent, and we decline to become an instrument of mischief by deeming all of the previous proceedings mere exercises in futility. Klumpp v. Borough of Avalon, 202 N.J. 390, 413, 997 A.2d 967 (2010) (taking for granted government's requirement to turn square corners in an inverse condemnation action); Menges v. Dentler, 33 Pa. 495, 500 (1859) ("Men naturally trust in their government, and ought to do so, and they ought not to suffer for it").

We are fortified in this conclusion because, as recognized by Ordinance No. 2007-04 itself, the regulation of billboards implicates fundamental First Amendment rights. Cf. State v. DeAngelo, 197 N.J. 478, 485-86, 963 A.2d 1200 (2009) (recognizing the difference between commercial speech and the heightened protection given to speech in public forums, such as parks, streets, and sidewalks). Even Ordinance No. 2009-03 — with its twelve-page preamble and eighty-six whereas clauses — is cognizant of the significant First Amendment implications of billboard regulation. We by no means attempt to analyze the free speech issues relevant to CBS's application, and we expressly eschew any determination concerning the constitutional or other validity of Ordinance No. 2009-03. Nevertheless, the Board's invocation of N.J.S.A. 40:55D-16 in the context of this appeal is unjust. Accordingly, we agree with the implied conclusion of the trial judge, and hold that Ordinance No. 2007-04's effectiveness may not be raised by the Board in defense of its position. Thus, for purposes of this case, Ordinance No. 2007-04 shall be deemed effective as of the date of its adoption, notwithstanding the failure to file with the county planning board.

C.

Having removed the specter of N.J.S.A. 40:55D-16 from the Board's armory of litigation tactics, we must still resolve the impact, if any, of Ordinance No. 2009-03 on this case. That is, by treating Ordinance No. 2007-04 as if it had been properly filed and effective, the parties still remain at odds over the effect of the more recent legislative enactment. This dispute's resolution entails an application of the time of decision rule.

Generally, an appellate court "`will apply the statute in effect at the time of its decision, at least when the legislature intended that its modification be retroactive to pending cases.'" Riggs v. Twp. of Long Beach, 101 N.J. 515, 521, 503 A.2d 284 (1986) (quoting Kruvant v. Mayor Council of Cedar Grove, 82 N.J. 435, 440, 414 A.2d 9 (1980)), rev'd on other grounds, 109 N.J. 601, 538 A.2d 808 (1988). "The purpose of the principle is to effectuate the current policy declared by the legislative body — a policy which presumably is in the public interest." Kruvant, supra, 82 N.J. at 440, 414 A.2d 9.

The time of decision rule, with limited exceptions, permits a municipality to make changes to a zoning ordinance at any time, even during the midst of a development application, and even if the ordinance is adjusted in direct response to a particular application. Eastampton Ctr., LLC v. Planning Bd. of Twp. of Eastampton, 354 N.J.Super. 171, 196-97, 805 A.2d 456 (App.Div. 2002). It is acceptable for a local legislature to change its zoning ordinance after an application has been filed, and even after a building permit has been issued, because the amendatory provision will only be enforced as long as the applicant did not substantially rely upon the issuance of the building permit. Burcam Corp. v. Planning Bd. of Medford, supra, 168 N.J.Super. at 512, 403 A.2d 921.

See William M. Cox, New Jersey Zoning and Land Use Administration, § 28-3.5(b) at 666-70 (2010) (cataloguing exceptions such as court-ordered time limits; equitable considerations; statutory vested rights; and improper ordinances).

We do not believe that CBS is inoculated from the effects of the time of decision rule on the basis — as it argues in its supplemental reply brief — that "the adoption of the prohibitive ordinance in 2009 is ineffective where there is a wrongful denial." CBS claims that its position is fortified by S.T.C. Corp. v. Planning Bd. of Twp. of Hillsborough, 194 N.J.Super. 333, 476 A.2d 888 (App.Div. 1984) and Dinizo v. Planning Bd. of Town of Westfield, 312 N.J.Super. 225, 711 A.2d 425 (Law Div. 1998), which involved the accrual of vested rights by dint of qualifying for either site plan or subdivision approval. We disagree.

We acknowledge that "when one party has obtained a vested right under the prior law, the later law may not be applied if this will divest that right." Riggs, supra, 101 N.J. at 521, 503 A.2d 284 (citing S.T.C. Corp., supra, 194 N.J.Super. at 335-36, 476 A.2d 888). "[O]nce the final site plan application was approved, [the developer's] rights were vested and the [municipality] could not thereafter impose further conditions on that approval." Brit-wood Urban Renewal, L.L.C. v. City of Asbury Park, 376 N.J.Super. 552, 570, 871 A.2d 129 (App.Div. 2005) (citing S.T.C. Corp., supra, 194 N.J.Super. at 336, 476 A.2d 888). See also N.J.S.A. 40:55D-47(e); -49(a); -52(a).

In this case, however, CBS never obtained statutory or other vested rights because it was never definitively entitled to site plan approval in the first place. This is due to the fact that such approval could only have been obtained if there had been complete fidelity to Lebanon's zoning and site plan review ordinances or if CBS had qualified for all necessary variances or exceptions. As we have already determined, CBS has yet to demonstrate its entitlement to conditional use variances relating to illumination, which will necessarily comprise a significant component of the provisional remand proceeding. Even if CBS can demonstrate that it meets the ordinance's lighting conditions during that proceeding by presenting persuasive evidence of tangible mitigation, it has failed to do so thus far, and therefore earned no vested rights, even from the trial court's limited grant of the two setback conditional use variances.

Based upon the record in this case, even in the context of what we have already said about government's obligation to comport itself with integrity and forthrightness, we remain unpersuaded that the time of decision rule should be equitably swept aside, with a single caveat. We see nothing present that "would undermine special equities without accomplishing any offsetting service to the public interest in the zoning sense." Urban Farms, Inc. v. Borough of Franklin Lakes, 179 N.J.Super. 203, 217, 431 A.2d 163 (App.Div.), certif. denied, 87 N.J. 428, 434 A.2d 1099 (1981). It is one thing to deploy the "turn square corners" doctrine to prohibit a governmental litigant from taking unfair advantage of another during litigation; it is quite another to judicially repudiate the time of decision rule without a demonstration of a significant benefit to the public at large prior to the effective date of L. 2010, c. 9 ( N.J.S.A. 40:55D-10.5). Our equitable compass is unaffected by CBS's private interests, which do not trump the public interest as presently expressed in Ordinance No. 2009-03.

Although we appreciate that there are many similarities between this appeal and the circumstances in Urban Farms, Inc., there are overriding and distinguishing differences. First, the Urban Farms, Inc. court declared the amendatory ordinance in Franklin Lakes that sought retroactive application invalid on equal protection grounds because of its "invidious and unjustifiable distinction made . . . between similar uses." Id. at 217, 431 A.2d 163. We have no correlative record before us to make such a determination. Second, because Urban Farms, Inc. involved an inherently beneficial use — a nursing home — there was an absence of evidence of "the customary public-interest underpinnings of retroactive application" to suggest that "the public interest would be more advantaged by now eliminating that use than it would be by continuing to permit it." Id. at 220-21, 431 A.2d 163. In the instant matter, even though First Amendment issues are involved, a billboard is not an inherently beneficial use, and we would not, without an adequate record, attempt to strike a public-interest balance between CBS's private interest and the public interest. Lastly, special equities abounded in Urban Farms, Inc., including a seven-year quest by the developer that included a once-obtained special exception and later vindication in the trial court. Id. at 221-22, 431 A.2d 163. Here, CBS's travails have not been as long or as arduous, and in any event, do not equate with any special equities.

We cannot say with any degree of confidence that CBS or the situation in which it finds itself shares the same or similar attributes with the Urban Farms, Inc. developer. Accordingly, we discern no principled path for us to take that would allow this court to obviate the ordinary application of the time of decision rule. Nevertheless, we are aware that CBS substantively challenged Ordinance No. 2009-03 in an action in lieu of prerogative writs, but that litigation has been consensually dismissed without prejudice, placing the dispute over the ordinance's validity into a state of suspended animation. If that action is reinstated or seasonably filed anew, and CBS's challenge succeeds, then the application of Ordinance No. 2009-03 under the time of decision rule will be undone, and our determination to vindicate the effectiveness of Ordinance 2007-04 will spring forth. On the other hand, CBS may decline to resurrect its action against the municipality regarding the ordinance or it may be unsuccessful in declaring the billboard prohibition invalid. In either of these latter circumstances, Ordinance No. 2009-03 will, of course, apply, requiring CBS to obtain a (d)(1) variance if it seeks to establish and operate a billboard in Lebanon.

Our information about this later litigation comes from the parties' representations during oral argument. We have not been provided with a copy of any pleadings in that matter.

Thus, our remand to the Planning Board is truly provisional. The actual remand proceedings need not commence unless and until there is a final determination invalidating Ordinance No. 2009-03's prohibition on billboards. We take pains to declare that we take no position regarding the outcome of that action and nothing that we have stated in this opinion is intended to presage a particular result.

Affirmed in part; reversed in part; and provisionally remanded to the Board in accordance with the terms of this opinion. We do not retain jurisdiction.

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CBS OUTDOOR, INC. v. LEBANON PLANNING BOARD
(Jul 22, 2010)