Appellate Division Strikes Down COAH Regulations; Legislature Busily Working on a Bill to Abolish and Replace COAH
Published in December 2010 Edition of New Jersey Builders Association Cutting Edge Newsletter
By: Thomas F. Carroll, III, Esq.
On October 8, 2010, the Appellate Division of the New Jersey Superior Court released its opinion invalidating key provisions of the 2008 “third round” regulations issued by the New Jersey Council on Affordable Housing (COAH). Meanwhile, the Legislature is actively moving a bill that would abolish COAH and replace it with a new Mount Laurel compliance regime. The court’s decision and the legislation have important consequences for proposed developments throughout the state.
Summary of the Court’s Rulings
Adopting arguments made by Hill Wallack LLP on behalf of the New Jersey Builders Association (NJBA), the Appellate Division decision struck down COAH regulations that required builders to set aside twenty-five percent of new housing units for low and moderate income households. The twenty-five percent set aside was ruled illegal regardless of the proposed density of the development. The opinion similarly holds that the COAH rules setting minimum residential densities for such inclusionary developments at four, six, or eight units per acre, are unconstitutional as they did not create sufficient incentives for the construction of affordable housing.
The court also invalidated regulations that would permit towns to receive credit against their housing obligations for non-profit or municipal housing projects for which no site has been selected, no funding has been secured, or no developer has been designated. It holds that such speculative proposals would not create realistic housing opportunities for low and moderate income families.
Furthermore, the decision rejects the so-called “growth share” methodology used by COAH to determine “third round” (prospective) municipal affordable housing obligations. It holds that this methodology is an unconstitutional means of determining municipal third round obligations. In addition, the court invalidated two regulations that would have permitted certain “bonus” credits for municipalities against their housing obligations.
The court ordered COAH to adopt compliant regulations within five months. A number of parties to the appeal, including the League of Municipalities, have filed petitions with the New Jersey Supreme Court asking it to accept the case. COAH filed a motion with the Appellate Division asking the court to stay its decision so COAH does not have to adopt the compliant regulations The Appellate Division denied their motion. It is likely that COAH will now file a motion with the Supreme Court asking for the same relief.
The Status of COAH-Related Legislation
A bill designed to abolish COAH, designated as S1, was the first bill introduced in this legislative session. Since January, it has been debated both in the Senate and the Assembly. The Senate adopted S1 but it stalled in the Assembly in late June. Legislative discussions then led to the drafting of A3447. This Assembly bill was released by the Assembly Housing and Local Government Committee on December 10, 2010. The full Assembly adopted A3447 on December 13, 2010. The Senate is likely to consider the bill [A3447/S1] on December 20, and if approved, the bill will be delivered to Governor Chris Christie for his review.
In its current form, the bill sets forth new criteria for municipal compliance with the Mount Laurel doctrine. The new “fair share” numbers will be keyed to a percentage of total housing stock and percentage of school kids enrolled in free or reduced price lunch programs (i.e., a given percentage of the total municipal housing stock must be lower income housing, per specific standards set forth in the bill). Towns would have to prepare new housing elements and ordinances to address their new obligations. Those plans will have to be reviewed by independent planning professionals for compliance. At least one-half of the new municipal housing obligations would have to be addressed through inclusionary zoning. The bill specifies density and set aside ranges to which municipalities would have to adhere when preparing their inclusionary ordinances.
Time will tell whether any given bill will be passed by both the Senate and the Assembly, and then be signed by the Governor. It is hoped that further discussions will result in a new law that effectively removes the barriers created by exclusionary zoning. Much more will be written about the new bill if it is signed into law.