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The New Jersey Appellate Division has just granted a big win for a little guy against a big Town Hall.

The matter concerned a member of the  Moorestown Council and Planning Board voting on Township matters relating to affordable housing developments while he was employed by the New Jersey Housing and Mortgage Finance Agency.

The Superior Court previously rejected two lawsuits which attempted to argue that the Township ordinances and a related Minor Subdivision approval should be voided because this councilman's vote was tainted.

The Appellate Division has now reversed these rulings, saying an astounding "N-O" to conflicts of interest in Town Hall.

The winning attorneys are Ron Gasiorowski Esq. and Bernard M. Reilly Esq.

In 1988, the Township acquired an 11.23-acre lot, known as the Nagle Tract, for the purpose of affordable housing development.

In February 2021 the Township received an Affordable Housing related Court-order to "select a developer for the Nagle [Tract]," "enter into a developer's agreement," and "provide . . . [a] construction schedule" within 90 days. Pertinently, the order also required the Township to "expeditiously work with the designated developer" to submit "an application for mixed-income tax credit funding in the 2021 application cycle."

Lockheed operated its facility on property adjacent to the Nagle Tract. When Lockheed learned of the proposed housing development near its facility,
it informed its primary customer who is the U.S. Navy.

The Navy informed Lockheed that they objected to any housing nearby due to security concerns.

Lockheed sent its objection to the Township and proposed the exchange of a suitable parcel
of nearby land for the Nagle Tract and offered another property they owned. This tract is known as the Borton site.

Lockheed thereafter filed a minor subdivision application before the Planning Board to create a 12.5-acre lot to be exchanged for the Nagle Tract. Planning Board Member David Zipin voted to approve this application.

On June 14, 2021, the Township entered into a Development and Property Transfer Agreement with Moorestown Family Apartments, LLC (MFA) to develop the Borton site. The agreement provided, "in order for [MFA] to complete the project it will be necessary to obtain and close on the tax credit financing" with the New Jersey Housing and Mortgage Finance Agency (HMFA). "Closing on the tax credit financing" implemented by the HMFA was a contingency "to commence and complete" the housing project.

It is clear that MFA and the Township Council contemplated tax credits would be necessary for the affordable housing development of the Nagle Tract and then the Borton site.

On the same day, the Township introduced two ordinances. The first rezoned the two lots and the second authorized the exchange of the properties, and memorialized the Development and Property Transfer Agreement. Councilman Zipin participated in and voted on the Township ordinances.

When the Planning Board reviewed the introduced Ordinances for consistency with the Master Plan, Zipin offered the motion and voted to approve the resolution.

On August 10, 2021, Vishnu Reddy, a local liquor store proprietor, filed suit in Superior Court seeking to vacate the two ordinances on several counts. On August 23, 2021, after learning that Zipin was employed by the New Jersey Housing and Mortgage Finance Agency, Reddy amended his complaint to include Zipin's conflict of interest in that he voted on Township matters relating to affordable housing developments while he was employed by the State's Housing and Mortgage Finance Agency.

On July 26, 2022, the trial judge dismissed this claim, finding that no conflict of interest existed.

The judge found that the ordinances involved a land exchange and rezoning, not affordable housing refinancing or tax credits; the HMFA was a government entity providing housing credits and
had not provided tax credits or financing to MFA in connection with this project; Zipin's recusals on other affordable housing matters were not relevant; and the plaintiff failed to prove Zipin's employment at the HMFA created a conflict of interest.

(Notably, the same judge had signed the February 23, and August 19, 2021 affordable housing orders, which memorialized MFA and the Township's agreement to seek the HMFA tax credit funding.)

On September 1, 2021, plaintiff filed a second lawsuit seeking to vacate the Planning Board's approval of Lockheed's minor subdivision application based on three counts including Zipin's conflict of interest as the subdivision was in furtherance of the property exchange.

The trial judge granted the Board and Lockheed's motions to dismiss the lawsuit, finding that Reddy failed to timely file the complaint within the 45 day period permitted. The judge noted that he already learned about the conflict of interest claim on August 23, 2021 when he amended his first lawsuit, therefore he could have filed that same claim on or before August 23, 2021 which was the expiration date of the 45  days since the Board adopted their Resolution of Approval. (Reddy only filed his Complaint on September 1).

The Plaintiff appealed the dismissal of his first lawsuit, reprising his arguments that because Zipin had a conflict of interest, or at the least an appearance of impropriety, his participation was precluded, and the ordinances were invalid.

The Plaintiff also appealed the dismissal of his second lawsuit, arguing that the judge erred in dismissing the conflict of interest count because he timely filed the action within forty-five days of learning of the conflict. Alternatively, he argued that the conflict, or at the least an appearance of impropriety, is a matter of public interest mandating relaxation of the 45 day rule.

"We are constrained to reverse the motion judge's orders... as it is clear Zipin had a conflict of interest," wrote Judges Messano and Perez-Friscia, citing Wyzkowski v. Riaz which established that "a conflicting interest arises when the public official has an interest not shared in common with the other members of the public," and when "contradictory desires [tug the officer] in opposite directions."

It is undisputed that Zipin was employed by the HMFA. The Township and MFA clearly contemplated and memorialized the necessity to apply for, and to receive, affordable housing tax credits through the HMFA, first for the Nagle Tract and then the Borton site. The June 14, 2021 Development and Property Transfer Agreement stated, "in order for [MFA] to complete the project it will be necessary to obtain and close on the tax credit financing." Ergo, the Township Council clearly recognized the HMFA as the agency to award the tax credits. The tax credit funding was considered an essential element of the affordable housing development plan. In fact, the HMFA implemented funding was a contingency for the developer proceeding with the Borton site.

Zipin's participation as a councilman and Planning Board member on the adoption of the resolutions and ordinances, which related to the affordable housing plan on the Borton site and clearly involved the application for the HMFA tax credit funding with his employer, was a conflict.

We do not discern any overt intention by Zipin to exercise an interest aligned with the HMFA, but recognize mere "personal involvement that might
reasonably be expected to impair his objectivity or independence of judgment " alone presents a conflict. Indeed, there is a clear public interest in ensuring government officials do not preside over matters which present a conflict of interest or have an appearance of impropriety, even if innocently undertaken.

The Appellate panel also overturned the Trial Court ruling regarding the Planning Board's approval of the Minor Subdivision application despite it being filed past the 45 day timeline, finding that there is a recognized public interest in addressing whether a local government official has acted on matters where a conflict of interest exists. The public interest is in ensuring government officials do not act when personal or professional interests might impair the official's judgment.

Additionally, the interest of justice was implicated because plaintiff did not learn of the conflict issue until receipt of the August 19, 2021 consent order and learning of Zipin's employment with the HMFA. We conclude plaintiff established sufficient facts warranting relaxation of the 45 day rule.

Based on this issue, the Appellate Division vacated both ordinances as well as the approval of the Minor Subdivision application, saying that the matters require remand for consideration of the ordinances and resolutions anew without the participation of Zipin.

This ruling is truly a big win for the little guy!

This ruling will likely also play a big role in a Lakewood Zoning Board matter which is currently pending before Judge Hodgson.

As first reported here on FAA News, facing allegations of conflict of interest with Mordy Gross regarding Lake Terrace's Use Variance appeal, the Zoning Board turned to Judge Hodgson for guidance.

As more recently reported here on FAA News, Attorney Rob Shea Esq. jumped right on the bandwagon, arguing that because the Board feels uncomfortable with the possible conflict of interest, Lake Terrace's Use Variance appeal should be stayed pending a final decision as to Mordy Gross's possible conflict.

Judge Hodgson is expected, in the coming days, to issue a ruling whether or not to grant an immediate stay of the Zoning Board hearing Lake Terrace's appeal at their next public hearing on July 10 pending a court hearing on the possible conflict.

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