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Despite Continued Litigation, New Jersey Affordable Housing Law Continues to Heavily Impact Private Residential Development

Posted on Wednesday, October 28, 2015 by James M. Spanarkel

Despite Continued Litigation, New Jersey Affordable Housing Law Continues to Heavily Impact Private Residential Development

One of the biggest uncertainties currently facing land owners seeking to develop residential or mixed use property in New Jersey, particularly in the more densely populated northern counties, is the ongoing determination of each municipality’s affordable housing obligation pursuant to the “Mount Laurel Doctrine”, and the impact these obligations will have on future development applications. Specifically, developers must consider carefully the potential number of affordable housing units they may be required to incorporate into such projects going forward.

Under the Mount Laurel series of New Jersey Supreme Court cases, all New Jersey municipalities are constitutionally required to actually take “affirmative” action to provide realistic opportunities to provide their “fair share” of affordable housing to satisfy the present and prospective regional need. In response, the State Legislature passed the Fair Housing Act (“FHA”) to create a procedure for municipalities to follow to ultimately meet their Mount Laurel obligations. The FHA in turn provided for the creation of the Council on Affordable Housing (“COAH”), a now essentially defunct state agency that was initially tasked with calculating each municipality’s respective fair share housing obligation, as rolled out over a series of three compliance “rounds” (from 1987 through 2025), and with overseeing and administrating municipal submissions of plans documenting their respective proposals for meeting these obligations.

Although COAH functioned relatively effectively during the first two rounds, a steady stream of litigation concerning regulations prescribing the methodology to be used to calculate municipal Third Round obligations (now, 1999-2025), and COAH’s ongoing failure to subsequently adopt valid regulations setting forth such a methodology, essentially overwhelmed COAH’s capacity to independently administer affordable housing requirements.

The New Jersey Supreme Court’s March 2015 Affordable Housing enforcement opinion (increasingly referred to as Mount Laure IV) saw the Supreme Court essentially divest COAH of its authority. Responsibility for setting municipal affordable housing obligations, and for ultimately evaluating and administrating each municipality’s proposed plan for meeting its respective obligation, has now been returned to the State’s Mount Laurel trial courts, for disposition in accordance with a declaratory judgment action procedure set forth by the Supreme Court in its March 2015 opinion and incorporated remand order. (221 N.J. 1)

Towns that had been seeking approval of compliance plans before COAH were authorized, in the Supreme Court’s March 2015 enforcement opinion, to file Declaratory Judgment Actions before the County Mount Laurel Judge for a final judgment declaring them compliant with Mount Laurel and essentially immune from the so-called “Builders’ Remedy” suits in which private developers can otherwise seek Court enforcement of affordable housing development opportunities.

Despite the ongoing uncertainty with respect to municipal Third Round affordable housing obligations, the Appellate Division of the Superior Court of New Jersey’s recent decision in Fair Share Housing Center v. The Zoning Board of the City of Hoboken, et al., (Appellate Docket No. 1535-12T2) (the “Fair Share case”) makes clear that private developers can and will be required to comply with state and local affordable housing law, even in urban municipalities which adopt affordable unit mandates as a matter of local policy rather than Constitutional compulsion.

In the Fair Share case, which centered upon the validity of residential zoning approvals held by a group of private developers that were conditioned on compliance with Hoboken’s affordable housing ordinance, the Appellate Division ultimately overturned the trial court’s decision that had invalidated the local ordinance on the incorrect grounds advanced by the developers that adoption of local affordable housing ordinances required approval from an essentially defunct COAH under the FHA.

In upholding Hoboken’s affordable housing ordinance, and clarifying that no state approval was required to adopt a municipal affordable housing ordinance, the Appellate Court noted that an urban municipality’s power to participate in the affordable housing process, though perhaps completely voluntary, was not suspended solely because of COAH’s failure to function as intended. The decision has created uncertainty in the affordable housing landscape in the urban setting, in addition to the on-going Declaratory Judgment actions filed by suburban communities, seeking judgments declaring them compliant with their Mount Laurel obligations, because each municipality is essentially left free to adopt its own variant of the Hoboken ordinance.

Despite the myriad of uncertainties surrounding New Jersey’s affordable housing laws, it is clear private developers and landowners, particularly in Northern New Jersey, will continue to be called upon by both local and state law to provide affordable housing units in conjunction with forthcoming residential projects, as municipalities continue to work towards meeting their Third Round fair share housing obligation. Accordingly, it is more essential than ever that property owners and developers engage skilled counsel to advise and guide them in navigating the ever evolving requirements of New Jersey affordable housing law in connection with real estate development projects moving forward.

This article can also be seen on the Meadowlands Chamber of Commerce's http://meadowlandsusa.com/2015/10/23/affordable-housing-development-implications/, and will be featured in the forthcoming edition of the Chamber's quartely magazine, "Meadowlands USA".

Waters, McPherson, McNeill, P.C. is a full service law-firm with a particular expertise in real estate development and all related matters. For more information, or to further discuss any of the issues discussed in this article, please contact James M. Spanarkel, Esq. at (201) 319-5740 or via email at js@lawwmm.com. For more information about Waters, McPherson, McNeill, P.C., please visit our website at www.lawwmm.com.

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