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What Hath New Jersey Wrought?

In a case with the unlikely title of In re Adoption of N. J. A. C. 5:96 & 5:97 by N. J. Council on Affordable Housing, the New Jersey Supreme Court put an end to forty years of litigation over the responsibilities of New Jersey local governments to provide for their fair share of affordable housing.  As a result of two cases decided in 1975 and 1983 both named Southern Burlington County NAACP v. Township of Mt. Laurel, that Court established a state constitutional right to require local governments exercising land use regulatory powers to “make realistically possible the opportunity for an appropriate variety and choice of housing for all categories of people who may desire to live there, of course, including those of low and moderate income.”  In doing so, the Court granted broad relief that included a “builder’s remedy” - allowing an applicant who prevails before a trial court on a constitutional claim of this nature to ask the same court to approve its application.

The prospect that the courts may decide local zoning applications moved the New Jersey legislature to enact the Fair Housing Act in 1983, creating the Council on Affordable Housing (COAH), to provide for a substitute administrative system by which regional housing needs would be assessed and the share of that regional need to constituent local governments would be apportioned and implemented.  This legislation also provided those local governments that achieved “substantive certification” of compliance with those regional obligations with immunity from the builder’s remedy.  In return for such immunity, COAH was obligated to adopt administrative rules to update its housing projections and allocations, as well as procedural and substantive standards dealing with local government housing obligations.  The Supreme Court deferred to this legislative solution and effectively suspended the builder’s remedy.

The administrative process worked for some time, but in 1999 the then set of COAH administrative rules expired.  Efforts to update those rules were struck down in 2007 and 2010.  A further attempt to revise the rules to use a “growth share” model failed in 2013. Under the growth share theory, the municipal obligation to provide realistic opportunities for affordable homes was calculated, but could be adjusted to reflect actual residential and nonresidential growth, allowing municipalities to reduce or avoid their constitutional obligation by controlling their rates of growth.

After the series of failed efforts to adopt new administrative rules, the Supreme Court on March 14, 2014 ordered new rules to be adopted by November 17, 2014, with the alternative that the case would be returned to the Supreme Court to fashion relief.  COAH deadlocked 3-3 on adoption of new rules on October 20, 2014 and one of the parties to the proceedings to invalidate the 2010 rules initiated proceedings in the Supreme Court for relief.  At oral argument, COAH informed the Court that it had not met since the deadlock vote and had no plans to meet.

In view of the failure to adopt new administrative rules, the Court determined that deference to the legislative solution was no longer justified and that direct access to the Courts to secure compliance with the constitutional right created in the Mt. Laurel cases would be restored.  The Court then dealt with various classes of municipalities on the basis of their receipt of substantive certification under rules later declared invalid, those that had agreed to pursue substantive certification, and those that had done nothing.

In any event the Court was clear that it would assure compliance with its Mt. Laurel decisions.  By acting only after giving COAH sufficient time to comply and warning of the consequences of noncompliance, the Court strengthened its hand and followed through on its warning.  Time will tell whether the legislature and governor adopt valid new administrative rules or a new land use system, so that the Courts of that state do not wind up making land use decisions on individual developments in the first instance.

Both Ms. Richter and Mr. Sullivan participated in an Amicus Curiae brief filed by the American Planning Association to invalidate the “growth share” concept described above.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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