January 1, 1900

by Stephen M. Eisdorfer

This past summer the New Jersey Supreme Court decided three cases brought by builders seeking remedies under the so-called Mount Laurel doctrine: Toll Brothers v.Tp. of West Windsor, Fair Share Housing Center v. Cherry Hill Tp.; and Bi-County Development v. Borough of High Bridge. These cases provide important lessons for builders seeking to build inclusionary developments and to use the Mount Laurel doctrine to overcome unfavorable zoning.

1. The builder's remedy is alive and well-you can still sue. Perhaps the most important lesson in the Supreme Court's recent decision is that the courts will still grant builder's remedies to builders who seek to construct inclusionary developments in towns that have not met their fair share housing obligations. Despite hopes by many towns and some environmental groups that the Supreme Court would abolish the builder's remedy or dramatically prune it back, the Court did not do so. It reaffirmed its 1983 holding in Southern Burlington County NAACP v.Tp. of Mount Laurel (Mount Laurel II) that the courts should routinely order the rezoning of the property of builders who successfully prosecute exclusionary zoning cases.

2. Just as builders must listen to the market, so must towns (and courts). In Mount Laurel II, the Supreme Court ruled that a municipality meets its constitutional fair share housing obligation only if it creates housing opportunities that are "realistic," i.e., opportunities that a "sensible developer" would seek to utilize. In Toll v.West Windsor, the Supreme Court enforced this ruling. It held that West Windsor could not meet its housing obligation by zoning for housing products for which there was little actual current market demand.

3. Towns cannot take back with one regulatory hand what they give with the other. Following Mount Laurel II, some towns "complied" with their housing obligations by adopting inclusionary zoning ordinances but imposing other policies that made development impossible or prohibitively expensive. In Toll, the Supreme Court not only reaffirmed its 1983 holding that towns have an affirmative obligation to rezone to create realistic housing opportunities, but expressly held that towns have the obligation to remove all other types of regulatory obstacles to the construction of inclusionary developments, except for those truly necessary to protect public health and safety. For example, the Court struck down policies of West Windsor prohibiting sewer systems from using pumping stations, as well as policies requiring the developer to "front" the costs of construction of the regional sewer lines.

4. New redevelopment opportunities may change the rules of the game. In Fair Share Housing Center v. Cherry Hill Tp., the town had secured a court ruling that, because of lack of vacant developable land, it need not meet its entire housing obligation. Subsequently, a developer proposed to redevelop the former Garden State Racetrack. The Supreme Court held that, once this property became available for redevelopment, the town and the courts were required to reconsider the town's housing obligation and the adequacy of its housing plan. This ruling suggests that a builder who identifies a redevelopment opportunity, even in a town that has a judgment of compliance or COAH-granted substantive certification, may be able to bring a successful COAH proceeding or exclusionary zoning suit to compel the town to rezone to permit inclusionary redevelopment.

5. The courts can sometimes compel towns to provide public sewer service for inclusionary developments. In the Bi-County case, the Supreme Court ruled that the courts can compel towns and sewerage authorities to facilitate provision of sanitary sewers to an inclusionary development. As public sewer service increasingly becomes a constraint on development opportunities, this is a very powerful holding.

The Supreme Court ruled, however, that this power has its limits. The Court declined to grant relief to the builder in Bi-County because of a combination of three considerations: (1) the builder was not actually constructing low and moderate income housing, but was merely making a contribution to a municipal housing trust fund; (2) the builder had previously worked out an arrangement for the provision of sanitary sewer, which, although more expensive, would make construction of the development feasible; and (3) the builder was seeking relief from an adjoining municipality rather than from the municipality in which the development was located.

6. Subsidizing the construction of housing is not necessarily the equivalent of actually building housing. A decade ago, in Holmdel Builders Association v.Tp. of Holmdel, the Supreme Court held that towns could adopt ordinances requiring contributions by builders to local housing trust funds. In Fair Share Housing Center v. Cherry Hill Tp., the redeveloper of the former Garden State Racetrack agreed to make a large contribution to Cherry Hill's housing trust fund. The Supreme Court held that this was not the equivalent of actual construction of housing and did not satisfy the municipality's fair share housing obligation. The same question came up again in a different context in Bi-County. In that case, the Court treated the fact that the builder was merely contributing cash to the local housing trust fund, rather than actually building affordable housing, as one of the considerations for not ordering the adjoining town to facilitate the provision of sanitary sewer service. If a builder wants to use the Mount Laurel doctrine as either a sword or a shield, it may well have to actually construct affordable housing. Subsidizing construction by the municipality or by a third party may not suffice.

All of these lessons should help guide builders as they continue their efforts to provide affordable housing for the citizens of New Jersey.

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.