07/26/2016

Client Alert

Through an opinion issued on July 21, 2016, the Hon. Douglas K. Wolfson, J.S.C., has become the first judge in the State to render rulings in “the new era” deciding fair share methodology issues. Deciding fair share methodology issues allows for the establishment of the numerical fair share obligations that must be satisfied by New Jersey’s municipalities under the Mount Laurel doctrine.   Judge Wolfson’s opinion provides very welcome news to opponents of exclusionary zoning.

The Background

The new era began with the New Jersey Supreme Court’s March 2015 opinion declaring the Council on Affordable Housing (“COAH”) ineffective and moribund, and directing that our trial courts shall now decide exclusionary zoning disputes.  Since the issuance of that Supreme Court opinion, judges throughout the State have been managing declaratory judgment (“DJ”) cases designed to bring municipalities into compliance with their Mount Laurel obligations.  Different judges have managed the DJ cases in different ways, with some cases being more advanced than others.  Judge Wolfson is the first judge in the State to preside over a trial designed to resolve the fair share methodology disputes.  The case in which the trial was held is In the Matter of the Application of the Township of South Brunswick for a Judgment of Compliance and Temporary Immunity from Mount Laurel Litigation, a DJ case filed by the Township of South Brunswick.

After hearing the testimony of various experts in the South Brunswick case, Judge Wolfson released his 100 page opinion addressing fair share methodology issues in great detail.  In a previous opinion issued on July 11, 2016, the Appellate Division had ruled that fair share obligations for the “gap years” (the years 1999-2015) cannot be made part of the “prospective need” portion of the total fair share obligation.  Thus, Judge Wolfson’s new opinion provides prospective need fair share numbers for South Brunswick for the years 2015-2025.  The extent to which affordable housing need numbers for the gap years may now be calculated as part of the “present need” component of the total fair share obligation will now be addressed by Judge Wolfson in proceedings to be conducted in the near future.  Nevertheless, Judge Wolfson’s July 21 rulings on prospective need methodology for the years 2015-2025 are most compelling, and they should be helpful statewide in finally putting the disputes over fair share methodology to rest.

The Fair Share Methodology Issues

The fair share methodology litigants may be divided into two camps.  The first camp consists of municipalities.  The second camp consists of the Fair Share Housing Center (“FSHC”) and builders.  The vast majority of municipalities that have filed DJ cases throughout the State are relying on an expert named Dr. Peter Angelides.  The FSHC is relying on the opinions of Dr. David Kinsey and Daniel McCue.  Various builders throughout the State, including the New Jersey Builders Association and individual builders seeking rezonings, are principally relying upon the opinions of Art Bernard, P.P.

All four of those witnesses testified in the South Brunswick trial over which Judge Wolfson presided.  The fair share methodology approach advanced by Dr. Angelides produces very small fair share numbers, while the experts relied upon by the FSHC/builder camp have proposed a fair share methodology with higher, more justifiable numbers that are consistent with historical norms.

In its March 2015 ruling directing that the trial courts are to now hear the DJ cases, the Supreme Court ordered that fair share numbers are to be calculated pursuant to the “prior round” methodology that was used by COAH when it established lawful fair share numbers in the prior rounds (1987-1999).  Having heard from the experts at trial, Judge Wolfson completely rejected the fair share methodology approach put forth by Dr. Angelides.  Judge Wolfson concluded that Dr. Angelides impermissibly deviated from COAH’s prior round methodology 26 times.  Judge Wolfson also made some rather scathing findings with regard to Dr. Angelides’ credibility.  In essence, the Angelides approach was completely dismissed by the court.

On the other hand, Judge Wolfson accepted the Kinsey/Bernard/McCue approach on nearly every issue.  He concluded that they tracked the prior round methodology to the extent practicable, as ordered by the Supreme Court, and he made specific findings as to their credibility.  Thus, even with the “gap years” removed from the equation for the time being, Judge Wolfson concluded that the prospective need portion of South Brunswick’s Mount Laurel obligation is 1,533 low and moderate income units.  That is in addition to the Township’s prior round obligation (the fair share numbers issued by COAH in the “second round” (pre-1999)), and is also in addition to the Township’s present need obligation, which will be addressed in the future proceedings over which Judge Wolfson will preside.

“Filtering” Rejected

Also of significance, Judge Wolfson ruled that an appropriate fair share methodology cannot include the concept of “filtering.”  That concept has previously been questioned by the courts, as it produces unreliable data suggesting that housing “filters down” to lower income households, when that simply does not happen to a significant degree in the real world.  It has also been advanced that some housing “filters up.”  However, the net result of filtering has been to artificially reduce fair share numbers.  Having heard the testimony regarding filtering, Judge Wolfson’s South Brunswick opinion concludes that filtering should not be employed at all when calculating fair share numbers, and his decision in that regard will, on a net basis, lead to higher fair share obligations.

The Statewide Implications

While not binding on other judges in other counties, Judge Wolfson’s opinion will now quickly circulate around the State, and it is hoped that judges in other counties find it to be persuasive.  It is certainly bad news for municipalities since they almost all use the same expert – Dr. Angelides – and a trial court judge has now completely rejected his approach and found his credibility to be completely lacking.

Further proceedings in the South Brunswick case will now involve the proceedings mentioned above regarding the present need issue (and the extent to which gap year need may be included within present need calculations), and also the builder’s remedy claims filed by a number of builders, with the ultimate result being a fair share plan meeting South Brunswick’s full fair share obligations.  Judge Wolfson allowed builder’s remedy claims against South Brunswick, dissolving its immunity against such claims, after concluding that the Township was determined to be noncompliant.

It has taken more than a year since the Supreme Court returned Mount Laurel disputes to the trial courts, but we now have an opinion that decides most major issues concerning fair share methodology.  It is an opinion that provides good news indeed to advocates of affordable housing.