October 8, 2010

Princeton, NJ -- In a case brought by Hill Wallack LLP on behalf of the New Jersey Builders Association, the Appellate Division of the New Jersey Superior Court struck down key provisions of the affordable housing regulations promulgated by the New Jersey Council on Affordable Housing (COAH).

The Appellate Division ruled In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing that the regulations would impede construction of affordable housing by private builders in New Jersey. The court also held that the regulations improperly permitted municipalities to reduce or avoid their constitutional obligations to provide for affordable housing.

The decision strikes down regulations promulgated in 2008, and affects housing construction in all of New Jersey’s 566 municipalities.

The 72-page opinion declared that regulations requiring builders to set aside 25 percent of new housing units for low and moderate income households are invalid. It found that this requirement, coupled with standards that would set minimum densities only at four, six, or eight units per acre, did not create sufficient incentives for the construction of affordable housing.

The court also struck down regulations that would have permitted towns to receive credit against their housing obligations for nonprofit or municipal housing projects for which no site has been selected, no funding has been secured, or no developer has been designated. It held that these speculative proposals would not create realistic housing opportunities for low and moderate income families. This regulation would have permitted municipalities to propose such speculative projects instead of rezoning for privately constructed inclusionary projects.

The court also rejected the so-called “growth share” methodology used by COAH to determine municipal affordable housing obligations. It held that the growth share regulations would have permitted municipalities to reduce or avoid their affordable housing obligations by engaging in exclusionary zoning.

The court also invalidated a number of other regulations that would have permitted municipalities to receive “bonus” credits against their housing obligations for activities that do not create additional housing.

The court ordered COAH to adopt compliant regulations within five months. It left the impact of its decision on individual towns to be determined on a case-by-case basis.

Hill Wallack LLP partners Thomas F. Carroll, III, Stephen Eisdorfer and Henry T. Chou prepared the briefs in this matter. Mr. Eisdorfer made the oral arguments before the three-judge court. This is the second case brought by Hill Wallack LLP on behalf of the New Jersey Builders Association in which the Appellate Division struck down versions of COAH’s “third round” regulations. The previous decision invalidated an earlier version of the regulations promulgated in 2004.

Hill Wallack LLP's Land Use Team

Hill Wallack LLP has one of the premier land use practices in New Jersey. Our Land Use Team provides comprehensive solutions to issues arising in every area of law affecting the land development permitting process at the local, county, state and federal levels.

Our team represents both private and public sector clients, including some of the nation’s leading homebuilders, developers, redevelopers, office and commercial developers, state and local redevelopment authorities, public transportation authorities, municipalities and local boards, and other public and private entities.

Clients count on Hill Wallack LLP's Land Use Team to create solutions for many of the toughest challenges they face. Our extensive experience enables us to present a number of pragmatic options to our clients, and where we can, we work to avoid litigation. But when litigation is our clients’ only—or best—alternative, we provide aggressive, cost-effective advocacy, at the trial court and appellate levels, and before our state courts and the federal courts.

Our attorneys are contributing authors to the blog, New Jersey Land Use Law Blog.

About Hill Wallack LLP

Hill Wallack LLP is a leading law firm in the central New Jersey and eastern Pennsylvania region, with offices in Princeton and Atlantic City, NJ, and Yardley, PA. The firm has built a reputation for comprehensive problem-solving and aggressive advocacy. The firm has broad-based commercial capabilities and deep experience in a number of industry sectors, including community associations. With extensive government experience, Hill Wallack LLP represents businesses and public entities in many areas in which public and private interests intersect. Our attorneys are called upon to tackle some of the toughest legal and business challenges. We work to do more than advise on the law − we craft real-world solutions

For more information, contact one of the attorneys who work in this area: Thomas F. Carroll, III, Esq.; Stephen M. Eisdorfer, Esq.; Kenneth E. Meiser, Esq.; Henry T. Chou, Esq. or Michael J. Lipari, Esq.

This article provides information of general interest and is not intended, and should not be used, as a substitute for consultation with legal counsel. Any questions regarding the specific issues raised in this article should be directed to the authors or to your contacts at Hill Wallack LLP.