January 1, 1900

Stephen M. Eisdorfer

With the legal assistance of Hill Wallack, builders in New Jersey, along with the New Jersey Builders Association, are joined in a struggle to preserve the opportunity for homebuilders to construct inclusionary developments in New Jersey.

More than 20 years ago, the New Jersey Supreme Court condemned the widespread practice of zoning to exclude housing affordable to the poor. In Southern Burlington County NAACP v. Mount Laurel Township, the Court held that the New Jersey state constitution requires every town to create sufficient realistic housing opportunities for safe, decent affordable housing to meet the town's fair share of the unmet regional need for housing low and moderate income families and individuals. This obligation was subsequently codified in the Fair Housing Act of 1985, and a state agency, the New Jersey Council on Affordable Housing (COAH), was created to oversee compliance by towns throughout the state.

COAH's Failure to Issue "Third Round" Numbers

Less than two years ago, the Supreme Court reaffirmed the Mount Laurel principles in Toll Brothers v.West Windsor. In that decision, the Supreme Court specifically reasserted the key role to be played by homebuilders in vindicating the rights of lower income households through the use of litigation against recalcitrant towns and the actual construction of inclusionary developments. Despite that decision, COAH has followed a course of action that thwarts the production of affordable housing and seeks to remove developers from the process.

First, although COAH was required to issue new "third round  municipal housing obligations in 1999, it still has not done so. These new housing obligations are now almost five years overdue. This has permitted municipalities to avoid formulating any plans or responding to builder proposals to meet post-1999 housing obligations on the grounds that they are unable to plan for obligations of unknown magnitude.

Hill Wallack has assisted a number of builders in bringing "third round" exclusionary zoning suits against municipalities, with those suits urging that the failure of COAH to put a number to post-1999 municipal housing obligations does not relieve municipalities of the obligation to create realistic housing opportunities for lower income individuals and families. In these suits, the builder-plaintiffs contend that, in the absence of a determination by COAH of the town's obligation, the courts must make their own determinations, as they did before COAH was created. These builders have submitted to the courts detailed estimates based upon COAH's pre-1999 methodology for determining municipal housing obligations. No court has yet ruled on the merits of any of these ãthird roundä lawsuits. In two instances, Farmingdale and Eagleswood, the court declined to reach the issue because it found that the town had not even met its pre-1999 obligation. In one case, involving Princeton, the court held that the developer had to first exhaust administrative remedies before COAH.

COAH's "Extensions" of Substantive Certifications

Second, instead of determining post-1999 municipal housing obligations, COAH has developed the practice of granting requests by municipalities for indefinite "extended" or "interim" substantive certification. "Extended" or "interim" certifications provide municipalities with all the benefits of COAH approval ("substantive certification") of their plans to meet their fair share housing obligations under the Fair Housing Act-including certain protection against exclusionary zoning litigation. COAH is granting municipalities such benefits without their having to determine their current fair share housing obligation, and without requiring towns to submit any plans that show that they are meeting those obligations. Indeed, towns need not show that they have actually taken any steps to meet their current fair share housing obligation.

This practice conflicts with the specific provisions of the Fair Housing Act, the statute establishing COAH, as well as the constitutional principal enunciated in the Supreme Court's Mount Laurel decisions.

Builder's Remedy Suits Viable?

Initially, COAH asserted that "interim" or "extended" certification does not grant municipalities a "bullet proof vest" against exclusionary zoning suits brought by builders. Towns with interim or extended certification would still have to defend their housing plans in court if sued. More recently, COAH has reversed position and defended municipal inaction on the grounds that interim or extended certification grants towns indefinite and complete immunity from exclusionary zoning litigation, even if they have made no effort to meet their housing obligations, whether pre-1999 or post-1999.

Represented by Hill Wallack, the NJBA has mounted a multi-pronged attack on this practice. It has challenged extended certifications granted to individual municipalities before COAH itself and before the courts. It has also challenged the legality of the agency regulations on which COAH has relied to develop this practice.

COAH's "Third Round" Regulations

Third, in October 2003, COAH finally published proposed "third round" regulations for public comment, including regulations governing determination of post-1999 housing obligations. The public comment that followed-including comments by civil rights, good planning, and environmental organizations-was extremely negative. On behalf of the NJBA, Hill Wallack prepared a detailed legal analysis of the legal and constitutional defects in the proposed regulations. The list of legal defects (which is available at www.njba.org) ran 15 single-spaced pages. In addition, critiques by the last executive directors of COAH were submitted.

Among other things, the comments and critiques submitted by the NJBA concluded that the proposal:

Ignores the clear direction of the Supreme Court by allowing each municipality to calculate its own fair share (growth share) based on its own projections of growth.

Rewards and encourages exclusionary zoning by allowing a municipality that is most likely to experience growth to develop low projections of growth and alter its zoning to reflect its projections.

Allows municipalities to discriminate against low and moderate income families with children.

Fails to require the municipal shares of the regional housing obligation to equal the total regional housing obligation.

Allows municipalities where the housing market can most easily address the housing need (locations with large quantities of undeveloped land and adequate infrastructure) to reduce their need by deciding to prevent people from moving into the communities through their land use ordinances.

Is unlikely to even assign much of the regional need to municipalities due to historical compliance patterns, building patterns and flaws in the methodology.

Reduces the housing obligation by approximately two-thirds based on undocumented assertions that the existing housing stock will address the housing need.

Impermissibly reduces the need for additional low and moderate income housing (prospective need) by subtracting from this need COAH's projections of the private market's ability to respond to the needs of low and moderate income households living in existing substandard housing (present need).

Reduces the housing need in rural and suburban locations based on market factors that COAH has acknowledged occur mainly in urban locations. Thus, COAH has adopted rules that perpetuate the isolation of many of the state's poor in urban areas.

Impermissibly reduces the housing obligation by providing: credit for housing activity that does not respond to the housing need; credit for housing units that may never be constructed; extra credit for categories of housing that COAH has chosen to encourage; and credit for housing units that COAH has simply "written off the books."

Dilutes the concept of realistic opportunity by deleting objective criteria that are essential to the construction of low and moderate income housing.

Does not provide for the preservation of scarce resources necessary to construct low and moderate income housing.

Sacrifices the needs of low income households for moderate income households.

It is unclear, in the face of these objections, whether COAH will proceed to adopt the proposed regulations, will re-propose something entirely different, or will simply continue to indefinitely postpone determining post-1999 municipal housing obligations. Hill Wallack is prepared to represent builders in legal challenges to these proposals if COAH actually adopts them as proposed or in some other similar form.

COAH Moving in Slow Motion

Finally, COAH has gone into "slow mo" or "stop-time" even in its routine business of reviewing municipal housing plans. As a result, towns-including even recalcitrant towns whose plans do not even seek to meet their constitutional housing obligations-are being sheltered from litigation or scrutiny by the courts for years within COAH's safe harbor. According to a recent study prepared by planner Arthur Bernard, COAH is taking an average of two years to review municipal housing plans where there are no objections by builders, civil rights organizations, or neighbors, and four years where there are objections. In one case, a trial court, frustrated by the protracted failure of COAH to even commence proceedings in a long-pending matter, actually seized jurisdiction from COAH. Regrettably, that decision was reversed by the Appellate Division. Because the courts provide the only realistic remedy for this type of agency delay, a possible appeal to the Supreme Court is being considered.

Construction of inclusionary residential developments continues to present profitable opportunities for builders in New Jersey. COAH's hostile posture, however, has made the task more complex and requires that builders who seek to pursue these opportunities have knowledgeable and sophisticated legal guidance. Hill Wallack stands ready to assist builders in the quest to make the Mount Laurel obligation real again.

Stephen M. Eisdorfer is also a partner within the Land Use Division of Hill Wallack. A Member of the Board of Directors of the New Jersey State Bar Association's Land Use Section, he concentrates his practice in land use litigation, including Mount Laurel litigation and litigation involving the civil rights statutes.