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  • September 26, 2013

    Supreme Court Strikes Down COAH “Growth Share” Regulations

    Princeton, NJ – The New Jersey Supreme Court issued an opinion today invalidating the so-called “third round” regulations issued by the New Jersey Council on Affordable Housing (COAH) in 2008. These regulations had been attacked by the New Jersey Builders Association (NJBA) and housing advocacy groups as deterring the construction of affordable housing rather than fostering it. Hill Wallack LLP represented the NJBA on the appeals.  The Supreme Court ordered COAH to adopt new regulations on an expedited schedule based upon the methodology COAH employed with its “first round” and “second round” regulations.

    The Ruling on “Growth Share”

    The Supreme Court found that COAH’s regulations violated the New Jersey Fair Housing Act of 1985, N.J.S.A. 52:27D-301 et seq., because they did not assign to each municipality a specific, definite housing obligation based upon its fair share of the unmet regional need for low and moderate income housing.  Instead, COAH’s third round regulations assigned to municipalities a floating obligation proportional to its residential and non-residential growth.  The Court held that this so-called “growth share” approach violated the Fair Housing Act.

    The Court reaffirmed that municipalities have an affirmative constitutional duty to create safe, decent affordable housing and eliminate exclusionary zoning.  The Court acknowledged, as Hill Wallack LLP argued on behalf of the NJBA, that the “growth share approach” created incentives for municipalities to avoid creating opportunities for low and moderate income households to move into the municipality by zoning to prevent additional residential or non-residential growth.  The Court, however, left open the question of whether the New Jersey Constitution would permit the Legislature to adopt future legislation incorporating some version of a “growth share” approach.

    The Rulings as to Densities and Set-Asides

    The Supreme Court also upheld the decision of the Appellate Division striking down several other provisions of COAH’S regulations.  One of those very significant rulings was the Court’s invalidation of the COAH regulations authorizing municipalities to enact inclusionary zoning ordinances (i.e., zoning for developments with both market rate housing and lower income housing) at reduced densities and increased low and moderate income housing set-asides.  The Appellate Division had held that builders can be required to provide low and moderate income housing within inclusionary developments only at increased densities and limited set-asides, so that the developments will be economically viable and, hence, realistic opportunities for affordable housing.

    Additional Rulings

    Other significant rulings include the Court’s invalidation of the COAH regulation granting municipalities “double credit” against their housing obligations for affordable rental housing that was to have been constructed by 1999 but was not actually constructed by that date. 

    The Court also struck down a regulation permitting municipalities to claim credit against their housing obligations for expressing a mere intention to permit publicly constructed or subsidized housing without taking the steps necessary to actually create that housing.

    COAH Ordered to Adopt New Regulations

    Because the last set of valid regulations adopted by COAH was issued for the second round, which began in 1994 and ended in 1999, the scope of the duty of municipalities to create opportunities for affordable housing has been in limbo for 14 years.  In light of this fact, the Supreme Court ordered COAH to adopt new regulations based upon its 1994 regulation methodology within five months, that is, by no later than February 26, 2014.

    Five members of the Court heard the case, with three members of the Court having issued the majority opinion described above, and with two Justices dissenting.  Two other members of the Court recused themselves and did not participate in the decision.

    Hill Wallack LLP attorney Thomas F. Carroll, III noted that “Full compliance with municipalities’ obligations to allow for affordable housing has been frustrated for the last 14 years.  This Supreme Court decision represents a long-awaited major victory for builders and other proponents of affordable housing.”

    For further information concerning this critically important decision, readers are encouraged to contact Thomas F. Carroll, III, Esq., or Stephen Eisdorfer, Esq., of Hill Wallack LLP, at 609-924-0808.

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