09/04/2015

By Thomas F. Carroll, III, Esq. 

Beginning on June 8, 2015, municipalities began filing declaratory judgment (DJ) lawsuits pursuant to the Supreme Court’s March 10, 2015 decision taking Mount Laurel compliance out of the hands of the Council on Affordable Housing (COAH), and returning such cases to the courts. The Supreme Court so ruled because COAH failed to do its job for 15 years. Over 300 DJ cases have now been filed, and much of the initial skirmishing has now concluded. This article summarizes where the matters now stand. In coordination with the NJBA, Hill Wallack LLP has been tracking the municipalities’ filing of DJ actions from the onset. A link to the updated spreadsheet is available on the Hill Wallack LLP website, click here.

Status of the DJ Cases

The trial courts in nearly all counties have now issued their initial decisions in the DJ cases. Most municipalities sought an indefinite period of immunity from exclusionary zoning suits, including builder’s remedy suits. The NJBA, individual builders and the Fair Share Housing Center (FSHC) have participated in many of the cases, in an overall effort to keep the cases on an expedited track, with the ultimate goal of acquiring more rezonings allowing for the provision of much-needed affordable housing. The trial courts have generally allowed those entities to intervene in the various DJ actions to stake out their positions. One of the positions accepted by the trial courts is that towns should be given no more than five months of immunity commencing with the filing of the DJ cases, i.e., five months within which to file fair share plans complying with their Mount Laurel obligations. Fighting off the municipal efforts for indefinite delay was crucial in order to keep the rezoning process on an expedited schedule.

Fair Share Obligations

A major issue in all the DJ cases is the magnitude of the municipalities’ fair share obligations, i.e., the number of lower income units that must be provided if given towns are to achieve satisfaction of their Mount Laurel obligations. The trial courts throughout the State are dealing with this issue differently, with some courts establishing rather aggressive schedules for resolution of the fair share obligation issues. At least two counties have announced that, for purposes of establishing fair share obligations, all the DJ cases filed within each county shall be managed on a consolidated basis, with a “special numbers master” being appointed to assist the trial court judges in establishing fair share numbers. Because towns need to know the magnitude of their fair share obligations before a court can rule that the towns are in compliance with their obligations, and because towns currently have until various dates in November or December to submit such plans, the judicial establishment of fair share numbers should occur on a speedy basis.

Compliance Standards

In addition to fair share numbers, towns must know which compliance standards apply in order to prepare lawful fair share plans. Compliance standards address issues such as densities, lower income housing set-asides, rental unit obligations, if any, the percentage of a fair share plan that can consist of age-restricted units, standards governing requests for vacant land adjustments to fair share obligations, “bonuses” for certain lower income housing productions activities, and the like.

Those compliance standards changed over the years. COAH’s “second round rules” – the last set of lawful COAH rules – had one set of compliance standards. The two sets of invalidated third round rules contained different sets of compliance standards.   Moreover, since the adoption of COAH’s second round rules, certain laws have changed. For example, the legislation known as “A-500” banned the use of Regional Contribution Agreements (RCAs) – a compliance technique that was permitted by the second round rules. Thus, the courts must rule upon the content of the compliance standards that will shape the process moving forward.

Requests for Rezonings in DJ Cases

In addition to involvement by the NJBA and the FSHC, individual builders throughout the State are participating in the DJ process for the purpose of seeking rezonings of their sites for inclusionary developments containing both lower income housing and market rate housing. Some builders have simply been in contact with towns, proposing rezonings and asking to be considered “interested parties” in the various DJ cases. Other builders have also sought to formally intervene as parties in DJ cases – something that maximizes the builders’ procedural rights. In essence, builders typically argue for higher fair share numbers, and they contest the validity of towns’ fair share plans, offering up their own sites as a way to help fill the “gaps” that are identified in municipal fair share plans. Judicial acceptance of a fair share methodology will allow this rezoning process to accelerate.

Builder’s Remedy Suits

At this point in time, builder’s remedy suits can be effectively filed against towns that have not filed DJ cases if they are otherwise vulnerable to such suits. Those contemplating such suits should discuss the pre-suit negotiation requirement with counsel.

Conclusion

The new chapter of Mount Laurel compliance commenced by the Supreme Court’s March 10, 2015 opinion is well underway, and builders interested in participating and seeking rezonings are well-advised to promptly review the status of towns of interest to those builders.

Hill Wallack LLP, Land Use Counsel to the NJBA, represented the NJBA when playing a lead role in the COAH regulation litigation, and has also represented the NJBA and individual builders in many of the DJ actions discussed in this article. Please feel free to contact the author to learn more about the cases and what they may mean to you.

About the Author:

Thomas F. Carroll, III is a partner of Hill Wallack LLP and is partner-in-charge of the Land Use Division, which encompasses the Land Use Litigation and Land Use & Environmental Applications Practice Groups. He has significant experience in the land development application and permitting process, as well as the litigation of land use matters at the trial level and in the appellate courts. He can be reached at (609) 734-6336 or tcarroll@hillwallack.com.