Cigna Site - Update

As previously reported, the office campus owned by Cigna Corporation (“Cigna”), of which nearly 89 acres is located in Franklin Lakes, is under contract for sale to a developer, The S. Hekemian Group. The property, formerly owned by IBM and Express Scripts, was acquired by Cigna in 2019 and is located adjacent to the Borough’s 100-acre Parsons Pond Park. It is located in the OB-RL Office Building – Research Laboratory zone, which generally permits office building uses. 

The developer is interested in developing multifamily residential units and other potential uses. Prior to any development of the property, there will be ample opportunity for the general public and neighboring property owners to provide their input on any redevelopment plan and/or rezoning ordinance. The Mayor and Council are committed to keeping Borough residents informed as to the process going forward and to provide plenty of notice of any public hearings involving the property. Development plans will be made public when the developer seeks formal approval from the Mayor and Council, should they decide to request a rezoning, and when the developer seeks approval of a development plan from the Planning Board or Board of Adjustment.

Importantly, the property that is under contract for sale to the developer does not include the Borough’s 100-acre Parsons Pond Park, which was donated to the Borough by Express Scripts, the prior owner of the property. Parsons Pond Park is not and will not be part of any development plan. 

At the December 6 Mayor and Council meeting, the Mayor and Council adopted a resolution authorizing and directing the Planning Board to conduct a preliminary investigation and hearing, and to make a recommendation as to whether the property qualifies as an area in need of redevelopment. The Planning Board will utilize the services of the Borough Planner to prepare a written report evaluating whether the property meets the statutory criteria for redevelopment. It is anticipated that the report will be issued and a public hearing will be held within the next three months. However, this study is only the beginning of the process and will not include the proposed development plan for the property. The proposed development plan will be part of the rezoning or redevelopment process which will follow the area in need of redevelopment evaluation process. The Planning Board, at its meeting on December 21, approved the retention of the Borough Planner to prepare the report evaluating whether the property meets the statutory criteria for redevelopment.

To understand the reasons for considering a development plan that is not consistent with the current zoning, you must have an understanding of New Jersey laws and caselaw governing affordable housing, how affordable housing law applies to Franklin Lakes, and how it applies to the Cigna property. The following is an overview of these issues which is intended to provide the context for the Borough’s negotiations for the development of the Cigna property.

Borough’s Approved Affordable Housing Plan

The New Jersey Supreme Court, in its “Mount Laurel” decisions, has determined that every municipality has a constitutional obligation to provide for its “fair share” of affordable housing. Without going through the tortured history of the Mount Laurel doctrine and the Council on Affordable Housing (“COAH”), we wanted to provide a summary of the Borough’s recent efforts to maintain compliance with its constitutional obligation, as it is all relevant to the development of the Cigna property.

The New Jersey Supreme Court has dictated that municipalities must follow a Court-directed process to determine compliance. This process involves the filing of a plan with the Superior Court for meeting the Borough’s obligation, which the Court, with the assistance of a Court-appointed “Special Master,” reviews and assesses. The Borough, like most municipalities, decided to seek Court approval of its affordable housing plan. Had the Borough decided not to follow this Court-directed process, it would have been exposed to the potential for “builders’ remedy” lawsuits, which are lawsuits brought by property owners or developers seeking to have the Borough meet all or a portion of the Borough’s obligation on property owned by the property owner or developer. Builders’ remedy lawsuits can result in high density development on sites chosen by individual property owners. By following the Court process, the Borough is retaining its authority to meet its obligation through an appropriate planning process rather than forfeiting control of its zoning to outside parties.

On June 26, 2019, the Honorable Christine A. Farrington, J.S.C., following a “compliance hearing,” entered a Final Judgment of Compliance and Repose (“JOR”) in favor of the Borough of Franklin Lakes. This Judgment approves the Borough’s plan for meeting its constitutional obligations to provide a realistic opportunity for its “fair share” of affordable housing. It was the culmination of several years of planning by the Borough and negotiations between the Mayor and Council, Fair Share Housing Center, a nonprofit housing advocacy group, and two developers that objected to the Borough’s affordable housing plan.

Judge Farrington concluded that the Borough’s Housing Element and Fair Share Plan “is fair, reasonable and adequately protects the interests of low and moderate income households….” The Judgment “will afford the Borough, among other things, protection from any builder remedy lawsuits brought pursuant to the ‘Mount Laurel Doctrine’ until July 1, 2025….” The Borough’s Housing Element and Fair Share Plan incorporates the terms of the Borough’s settlement with the Fair Share Housing Center and the two objector developers.

The Borough’s affordable housing plan establishes the Borough’s affordable housing obligation at 1,067 affordable housing units. However, because the Borough does not have sufficient vacant and developable land to meet this affordable housing obligation, the JOR provides for a “vacant land adjustment,” adjusting the Borough’s “realistic development potential” or "RDP" from 1,067 to 340 affordable units. The difference between 1,067 and 340 is known as the “unmet need”, which is 727. 

The Borough’s Housing Element and Fair Share Plan provides that the 340 affordable unit RDP shall be met through a combination of existing credits, assisted living uses, an 100% affordable project and inclusionary development. At the time the JOR was entered, the Borough already had credits for 253 of the 340 affordable units based on units that have been built, and, with the construction of the Sunrise Assisted Living facility and the Franklin Manor development, the Borough has met all but 55 units of its RDP.

To address the Borough’s 727 unit “unmet need,” (the difference between the total obligation of 1,067 and the realistic development potential of 340), the Housing Element and Fair Share Plan contemplates overlay zoning in certain commercial and industrial districts, and not in any residential districts. Overlay zoning means that, in these areas, if they were to be redeveloped, they could be developed with multi-family residential units, at densities of 10 to 18 units per acre, depending on the commercial or industrial district.

With its Final Judgment of Compliance and Repose, the Borough has immunity from lawsuits by developers seeking to develop property at higher densities than permitted by the Borough’s zoning. Without this protection from these “builder’s remedy” lawsuits, developers would have been able to bring lawsuits seeking development of parcels at much higher densities than zoning would permit based on an argument that the Borough had failed to meet its constitutional obligation. With compliance comes repose from these lawsuits.

Cigna Site

The Cigna site was not included in the Borough’s affordable housing plan because it was not vacant and developable, and therefore it did not generate an RDP. When a site that did not generate an RDP, later becomes available for development, some case law suggests that a municipality may need to adjust its RDP accordingly. While the Borough reserves all legal defenses to such an argument, it does impact the Borough’s risk assessment and willingness to negotiate for an outcome rather than be subject to the extreme variability of the Mt. Laurel Court process. In such a process, the Developer may ask for densities and uses that are extremely out of character with the Borough and trial courts in Bergen County have granted such relief in certain instances. 

By working with the developer, the Borough is seeking to mitigate poor planning while also maximizing future affordable housing protections. The Borough is mindful of potential impacts from any such project on the surrounding areas, including traffic impacts and other public health and safety concerns. One of the initial steps in the process of working with the developer to find a solution that is acceptable to all parties is to evaluate the property to determine whether it meets the statutory criteria for an area in need of redevelopment. If it meets the criteria and is designated as an area in need of redevelopment, it provides additional options for the developer for the financing of the project and allows for a potentially mutually beneficial payment in lieu of taxes.  

Going Forward

Going forward, the Borough will continue to negotiate with the developer and make every effort to reach a resolution that may not be ideal, but is in the best interests of the Borough, given all of the factors, variables and inputs outlined above. Any resolution will require layers of public hearings. Notice will be provided via the Borough’s website, e-blast and social media so that everyone has an opportunity to be heard. We will continue to provide updates as we move through the process.