Affordable Housing Update
NJ Supreme Court strips COAH of jurisdiction
In a unanimous decision issued on March 10, 2015, the New Jersey Supreme Court up-ended nearly 30 years of procedural and administrative processes and agreed to allow interested parties the opportunity to pursue their affordable housing challenges in court rather than appear before the Council on Affordable Housing (COAH).
This decision marks the end of the tortured path of COAH’s Third Round Rules, initially proposed and adopted in 2004 and then amended and re-amended in the ensuing years—with a new legal challenge filed virtually every step of the way. The Third Round Rules were unique in that they deviated from the numerical quotas assigned to communities in the first two COAH Rounds. The Third Round Rules introduced the “growth share” formula, which linked the affordable housing obligations of municipalities to their rates of growth.
The Appellate Division struck down the growth share formula in 2010 and—despite a series of intervening court orders—COAH failed to adopt a new methodology or new rules by the Supreme Court-ordered deadline of November 2014. The Supreme Court’s decision in March is the result.
Most builders and developers are familiar with COAH’s long and challenged history: it has gone 15 years without a viable set of administrative rules. The Court’s ruling this week struck a simple and logical tone.
The Supreme Court held that because COAH, the administrative forum statutorily charged with adjudicating affordable housing issues, has failed to function as intended by the law due to the continuing lack of appropriate rules, it was incumbent upon the court to permit parties seeking their available remedies, the option of doing so in court until such time as the administrative process is restored.
For approximately 350 of New Jersey’s towns, COAH has been the only forum in which to litigate affordable housing issues. The decision to return these issues to the courthouse is a radical reversal of the process.
Recognizing the magnitude of its own decision, the Supreme Court went on to establish a timeline for the transition from an administrative process to an adjudicatory one. The Court’s Order will go into effect in 90 days, on June 10. In the next 30 day period that follows i.e., by July 10, those towns that previously had received COAH approval or had petitioned COAH to approve their affordable housing plans, on notice to interested parties, may seek a declaratory judgment from the court that their affordable housing plans are constitutionally compliant with the principles in the Mount Laurel doctrine.
Should any of those towns decline to seek judicial affirmation or after July 10, any interested party may file an action challenging a town’s constitutional compliance with its affordable housing obligations. In years past, participation in COAH’s processes had provided long-term immunity to towns from builder’s remedy lawsuits. This recent decision provides for the courts to grant a similar, albeit more temporary immunity during the pendency of the declaratory judgment proceeding or the constitutional compliance cases.
There are two matters of interest for builders and developers:
1) There will be an opportunity to participate when towns file declaratory judgment actions, since the Supreme Court has required such actions to be on notice to interested parties including all on the COAH service list. Although builder’s remedies may not initially be requested, participation at this stage may be a prerequisite for a later builder’s remedy.
2) Even towns that previously received COAH approval should not expect the courts to rubber-stamp those approvals. New fair share calculations, made without using the invalidated growth share approach, will have to be reviewed and the previously submitted fair share plans will be measured against these new numbers.
In its closing remarks, the Court reminded COAH and the Legislature that they retained the opportunity to restore or recreate a viable administrative remedy that towns and interested parties could use in connection with deciding affordable housing issues.
Undoubtedly, the summer of 2015 will be a busy one. Many towns will file declaratory judgment actions seeking to affirm their previous affordable housing commitments—perhaps not because of their underlying philosophical acceptance of the concept but to foreclose the courts from imposing an obligation on them to create more affordable housing opportunities within their midst.
The past efforts of some towns will be acknowledged by the courts. Others, with weak histories of providing opportunities for affordable housing, may not fare well in this judicial process. Housing advocates and builders will have an opportunity to press this issue in a way that they have been unable to do for decades.
One thing is clear; ten years of litigation on the Third Round Rules have denied all the interested parties certainty on the issue of affordable housing. This decision reminds them all that affordable housing obligations are real and are here to stay.
If you have questions or concerns related to this ruling or other matters, please contact Lori Grifa or Guliet D. Hirsch or a member of Archer & Greiner’s Government Affairs or Land Use Group in Haddonfield, N.J., at (856) 795-2121, in Flemington, N.J., at (908) 788-9700, in Princeton, N.J., at (609) 580-3700, in Hackensack, N.J., at (201) 342-6000, in Philadelphia, Pa., at (215) 963-3300, or in Wilmington, Del., at (302) 777-4350.
Lori Grifa is a partner at the firm and practices in the firm’s Government Affairs Group. From 2010 to 2012 she was the Chairman of the New Jersey Council on Affordable Housing. Guliet D. Hirsch is a partner at the firm and practices in the firm’s Land Use Group.
DISCLAIMER: This client advisory is for general information purposes only. It does not constitute legal or tax advice, and may not be used and relied upon as a substitute for legal or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified attorney or tax practitioner licensed to practice in the jurisdiction where that advice is sought.