NJ Supreme Court Finds Municipalities Must Address "Gap Years" Housing NeedFebruary 2, 2017
The New Jersey Supreme Court has ruled on the "gap years" (1999-2015) issue that has preoccupied municipalities and developers for almost two years and that effectively continued to prevent the provision of affordable housing from moving forward. The gap years are the years in which the Council on Affordable Housing (COAH) failed to adopt lawful regulations and fair share numbers. The NJ Supreme Court’s January 18, 2017 opinion makes clear that fair share need numbers must be calculated for the gap years. Thus most, if not all, municipalities will face higher fair share obligations that their fair share housing plans must address.
NJ Supreme Court Agrees to Hear Appeal on "Gap Year"September 12, 2016
On September 8, 2016, the New Jersey Supreme Court agreed to hear an appeal of the Appellate Division's decision on what has become known as the "gap year" issue. The gap years include the years 1999 through 2015, during which time COAH failed to adopt lawful regulations. The issue on appeal is whether the trial courts should establish fair share numbers reflecting the need for affordable housing that was generated during those years. Municipalities have argued that this need does not have to be considered as persons needing housing during those years have found housing elsewhere. They also do not want to be “penalized” for COAH’s failure to act.
Appellate Division Decides Affordable Housing “Gap Year” QuestionJuly 18, 2016
The Appellate Division of the Superior Court has ruled that "gap year" need cannot be calculated in the way that has been presented to the courts thus far. The gap years are the years 1999-2015, i.e., the years in which the Council on Affordable Housing (COAH) was non-functional. In March 2015 the New Jersey Supreme Court returned exclusionary zoning matters to the trial courts and directed them to establish the fair share numbers that COAH had failed to lawfully calculate for years. One fair share methodology proposed to the trial courts was a methodology prepared by David N. Kinsey, Ph.D, in conjunction with the Fair Share Housing Center. That methodology proposed to calculate the gap year need numbers as "prospective need," as COAH had done in the past. Most municipalities retained the firm of Econsult Solutions to calculate fair share numbers. Econsult proposed that the gap year need should not be considered. Judges hearing the exclusionary zoning disputes in Ocean County ruled that the Kinsey approach was correct and Ocean County municipalities appealed this decision to the Appellate Division.
In reversing the Ocean County trial court decision, the Appellate Division ruled that gap year need cannot be included within the prospective need portion of fair share obligations. The Appellate Division determined that prospective need can only include need based on projections, and cannot be retrospective.
Parties such as Fair Share Housing Center may request that the New Jersey Supreme Court hear an appeal of the Appellate Division decision, and reverse that court's rulings. The Appellate Division’s ruling was unanimous, however, meaning the state Supreme Court would have to decide whether to accept an appeal.
Despite the Appellate Division's gap year opinion, municipalities remain obligated to satisfy their "prior round" obligations (those fair share obligations COAH calculated for the 1987-1999 time period), their present need obligations, and prospective need obligations (the projected need for affordable housing arising over the next 10 years). The numbers must take into account current needs, which could be influenced by the slowdown of affordable housing development since 2000; a projection of the need for additional housing over the next decade; and any still-unmet needs assigned by COAH before 1999.
Affordable housing advocates assert that the present need component should now be recalculated to include some or all of the gap year need arguing that the gap year need should not be ignored simply because COAH did not do its job for 16 years.
Affordable Housing Numbers and Municipal Compliance STILL in LimboJanuary 12, 2016
In March 2015, New Jersey's Supreme Court ordered that NJ abandon the little-used and much maligned “growth share” formula the Council on Affordable Housing (COAH) had devised for calculating municipalities' affordable-housing obligations, and revert to the so-called Second Round formulas the state used in the 1980s and '90s. It also decreed that the Superior Court - not COAH - oversee implementation of municipal fair share housing obligations within each vicinage. Since March 2015, municipalities and the courts have been wrestling with what the number of affordable housing units that must be created should be, and how municipalities shall comply.
A new but disputed report contends that New Jersey's 565 municipalities must zone for the creation of 37,000 low-income housing units by 2025 - far fewer than projected by a key advocacy group - to meet the state Supreme Court's latest directives for implementing the Fair Housing Act. The figure in the report, conducted by the Philadelphia planning firm Econsult Solutions on behalf of more than 200 New Jersey municipalities, is far below the nearly 202,000 units calculated in July by the Fair Share Housing Center, based in Cherry Hill, as the statewide obligation. If the Appellate Division or Supreme Court does not approve or reject certain calculations used in the Econsult or Fair Share Housing reports, Superior Court judges would decide each municipality's obligation on a "case-by-case basis," perhaps calling Econsult and Kinsey as expert witnesses.
Drafting of Affordable Housing Regulations Could Go Back to the CourtsDecember 8, 2014
The state Supreme Court will hear arguments on January 6, 2015 that will decide whether the Council on Affordable Housing (COAH) or the courts gets to write the rules that govern affordable housing regulations. COAH, whose members are appointed by the governor, has been tasked with writing affordable housing rules but it missed a state Supreme Court deadline to approve new guidelines. Fair Share Housing Center then filed suit demanding that the courts take over the process. COAH operates within the executive branch. A change in venue from COAH to the courts could return the process to the court system that originally said affordable housing was a constitutional right.
COAH Deadlocked on Affordable Housing RulesOctober 22, 2014
The Council on Affordable Housing (COAH) was unable to adopt the proposed affordable housing regulations for the period 2014-2024 that were on its October 20, 2014 agenda. Both the regulations and the timing for adoption were in response to a directive from the New Jersey Supreme Court and were on the Board's October 20, 2014 agenda for the adoption. The COAH Board was deadlocked at 3-3 on the issue of whether to adopt the regulations as proposed. After the vote failed, the Board took a short recess into executive session. After it emerged, it voted to adjourn the meeting. No further action was taken on the issue of the proposed regulations. The result - the dysfunction continues and New Jersey's affordable housing policies remain as unsettled as ever.
GOVERNOR Conditionally Vetoes Statewide Non-residential COAH Moratorium Bill, Calling For Overall Affordable Housing ReformSeptember 15, 2014
Governor Christie has conditionally vetoed the Statewide non-residential COAH moratorium bill, A1907/S1011 (Burzichelli/Lesniak). This bill would have extended the moratorium on development fees (the fee of 2.5% of assessed value on new nonresidential development) until January 2015. In his veto message, the Governor called on the Legislature to achieve "broad affordable housing reform that is simple, direct, and predictable" and said that the non-residential fee is "a component of the existing patchwork of affordable housing laws" that "cannot be considered in isolation." The governor proposed legislation that mirrors an earlier affordable-housing compromise that passed the state Senate in 2010. That bill would have replaced the state Council on Affordable Housing with a requirement that developers set aside 10 percent of their units for low- and moderate-income families. Builders would have been allowed to meet the requirement through rehabilitation of older units, construction of new units at a different site or payment of a 2.5 percent fee. Commercial development would not have been charged a fee, unlike under current COAH rules.
Council on Affordable Housing Proposes New RegulationsMay 5, 2014
On April 30, 2014, the New Jersey Council on Affordable Housing ("COAH") introduced the long awaited new set of "third round" (post-1999) regulations, as ordered by the New Jersey Supreme Court. The rules will be published in the June 2, 2014 edition of the New Jersey Register, and there will then be a 60-day comment period on the rules. COAH has scheduled a July 2, 2014 public hearing on the rules, as well as additional meetings on August 13, 2014 and October 21, 2014.
The new regulations divide municipal fair share obligations into three components: (1) the "rehabilitation share"; (2) the "unanswered prior obligation" component; and (3) "fair share of prospective need." The rules recognize the need for density bonuses and other compensatory benefits when the private sector is asked to provide affordable housing through inclusionary developments that contain both lower income housing and market rate housing. They propose that lower income housing set-asides will, in general, be limited to 10% of the total number of units, although they envision that municipalities may seek higher set-asides upon making a proper showing. The rules do not require presumptive minimum densities for inclusionary development. Instead, they require that municipalities conduct an "economic feasibility analysis" as to every site in the State proposed for inclusionary development. This provision will require costly, time-consuming, and debatable studies as to the issues of anticipated expenses and income, and whether an "adequate profit" could be derived by the developer given the applicable density and set-aside.
Under the rules, municipalities will still have to submit fair share plans and housing elements to COAH proposing means to address their fair share obligations. Provisions are made for objections to those plans to be filed by interested parties, with mediation by COAH and COAH ultimately deciding whether a municipality's plan lawfully meets its fair share obligation.
COAH Saga Continues and To What End?March 20, 2014
While a state appellate court threatened the members of the Council on Affordable Housing (COAH) with jail time if they did not adopt a housing plan by May 14, 2014, the NJ Supreme Court gave COAH a reprieve. COAH now has to meet the following deadlines: By May 1, 2014, COAH must propose regulations, which will be published in the June 2, 2014 edition of the NJ Register. By August 1, 2014, the public may submit comments to COAH regarding the proposed regulations; and by October 22, 2014, COAH must adopt the regulations, which will be published in the November 17, 2014 edition of the NJ register. If COAH does not adopt regulations by November 17, 2014, the Court will entertain motions seeking relief in aid of litigant's rights. Part of the relief that could be granted by the court is lifting the protections afforded to municipalities by the Fair Housing Act which would permit builder's remedy lawsuits against municipalities. The Court retained jurisdiction over any future applications to enforce the judgment of the Court. Although COAH is supposed to have 12 members, only half of the seats are currently filled and two of those members of the Christie administration, so it is questionable how much can really get done, and municipalities may in fact start to face builders remedy law suits.
COAH Saga Continues: Do Builders Remedy Lawsuits Loom?December 23, 2013
The Fair Share Housing Center (FSC), the non-profit “watch dog” for affordable housing in New Jersey, has filed a Motion with the Appellate Division noting that the Council on Affordable Housing (COAH) Board has not met despite the Supreme Court's decision on September 26, 2013 ordering COAH to adopt third round rules compliant with the 1st and 2nd round methodology within 5 months of the date of the ruling. FSC’s motion states that there are no signs of drafted rules and that it is now impossible procedurally to meet the adoption deadline. FSC’s motion urges that COAH be removed from the rulemaking process and a special master appointed to prepare a rule proposal by February 15, 2014. Alternatively, FSC requested that COAH no longer be authorized to protect municipalities from builder's remedy lawsuits and instead allow these suits to proceed in the trial courts to facilitate the production of affordable housing. We will continue to keep you apprised of any developments as they occur.
Related Practice: Environmental & Land Use
Growth Share Not Consistent With Fair Housing Act-COAH Has 5 Months To Develop Second Round-Type RegulationsSeptember 27, 2013
The New Jersey Supreme Court found that COAH's Third Round “growth share” methodology violated the New Jersey Fair Housing Act of 1985 (FHA) (N.J.S.A. 52:27D-301 et seq.)
The regulations did not assign to each municipality a specific, definite housing obligation based upon its fair share of the unmet present and prospective regional need for low and moderate income housing. Instead, COAH's Growth Share methodology regulations assigned to municipalities an obligation that was proportional to its residential and non-residential growth. The Justices found that the growth share regulations exceeded the rule making authority granted to COAH in the FHA, and that it was up to the Legislature to change the FHA to provide alternative methodologies such as presented by growth share.
The Court reaffirmed that municipalities still have an affirmative constitutional obligation to provide for a realistic opportunity for the construction of their fair share of the present and prospective regional need for low and moderate income housing, as articulated in Mt. Laurel I and II. (S. Burlington Cnty NAACP v. Twp of Mt. Laurel, 67 NJ 151 (1975) and S. Burlington Cnty NAACP v. Twp of Mt. Laurel, 92 NJ 158 (1983)). COAH now has 5 months to develop regulations along the lines of those used in the Second Round to determine municipalities’ fair share affordable housing obligations.
The Court’s ruling was a 3-2 one. The two Justices who dissented stated that they thought that there was enough flexibly in the FHA to allow alternate methodologies.
COAH Ruling - Growth Share OutSeptember 26, 2013
This morning (September 26), the NJ Supreme Court released a decision affirming the lower court's finding that Growth Share should be removed from COAH's Third Round Rules. More to follow!
NJ Supreme Court to Issue COAH RulingSeptember 25, 2013
The New Jersey Supreme Court's long awaited decision on the validity of the Council on Affordable Housing's Third Round rulemaking will be released on THURSDAY, September 26, 2013.
Supreme Court Rules Governor Cannot Abolish COAHJuly 10, 2013
Supreme Court Rules Governor cannot abolish COAH-- The NJ Supreme Court has ruled that Gov. Chris Christie is not allowed to scrap the Council on Affordable Housing (COAH) and fold its duties into the Dept. of Community Affairs. Governor Christie's attorney had argued that governors have broad license to reorganize government agencies under a 1969 law called the Executive Reorganization Act, while housing advocates countered that the law doesn't extend to nonpartisan, independent agencies such as COAH. The Court's majority agreed with the housing advocates. One justice in dissent, however, stated that nearly all of our state's recent governors have abolished or reorganized (independent) agencies under the 1969 law.
Related Practice: Environmental & Land Use
COAH Fund Transfer Still StayedMay 31, 2013
COAH Fund Transfer Still Stayed-The NJ Supreme Court has ordered the continuation of the May 13 interim stay entered by the Appellate Division that prevents COAH from transferring approximately $142 million municipally collected funds to the NJ Affordable Housing Trust Fund. However, COAH is permitted to resume gathering and evaluating submissions by municipalities regarding their expenditure of trust fund monies.
Related Practice: Environmental & Land Use
Affordable Housing Funds May Be Seized By StateJuly 18, 2012
Gov. Chris Christie's plan to use up to $200 million in municipal affordable housing trust funds that have sat idle for four or more years, has not been stopped by the New Jersey Appellate Division. However, local governments that are fighting the loss of the funds must be given a chance to demonstrate to the Council on Affordable Housing (COAH) that they have entered into legally binding commitments to spend the funds. The Fair Share Housing Center and the New Jersey State League of Municipalities, usually on opposite sides of the table from each other, in this particular matter were in agreement and had sought to temporarily enjoin the administration from taking the uncommitted money.
Affordable Housing Reform Debate ContinuesFriday, January 14, 2011
Both the State Senate (on a vote of 21 in favor and 16 opposed) and the General Assembly (45-32) have now passed S-1, which would abolish the Council on Affordable Housing (COAH) and transfer its duties to the Department of Community Affairs (DCA). The bill would require municipalities to comply with 25% of their obligation through inclusionary development. It mandates densities of between 6 and 50 units per acre in inclusionary projects (as opposed to COAH’s presumptive densities of between 4 and 8 units per acre). Additionally, the bill provides a developer who decides to do a rental project with an additional density bonus equal to 20% above the mandated higher densities, with only a 15% set-aside for affordable housing. The certification process specified in the bill requires municipalities to pay for a second planner, chosen from a State list, to review and certify a municipal plan. The Bill would eliminate the current 2.5 percent tax on commercial development. Those who opposed the bill did so in part because it would establish quotas for low and moderate-cost housing. Governor Chris Christie is also opposed to quotas and may conditionally veto the bill.
Affordable Housing Reform May Be on Its WayWednesday, December 15, 2010
The New Jersey Assembly has forwarded to the Senate a vastly overhauled Affordable Housing reform bill. The bill, Assembly, No.3447, uses the marker for what constitutes a low- or moderate-income family, namely, how many children are eligible for free or reduced lunch programs, to determine whether a municipality has to provide more affordable housing, and if so, how much. Towns where less than 20 percent of children qualify for free or reduced cost lunches would have to ensure that 10 percent of their housing is for low- and moderate-income families. Seventy-one municipalities would have no affordable housing obligation because more than half of the children in local public schools come from homes with incomes low enough to qualify for free or reduced-price lunches. Towns in between would have to ensure 8 percent of housing is considered affordable.
The bill eliminates the 2.5 percent fee on commercial development but creates a 1.5 percent fee on total assessed value on any residential development that does not include housing affordable to low- and middle-income households. The Council on Affordable Housing (COAH) would be abolished and any remaining duties of COAH would be transferred to the Department of Community Affairs.
Predictably, there is controversy, although most people agree reform is needed.
"Growth Share Metholodogy" Invalidated by Appellate DivisionWednesday, November 03, 2010
"Growth Share" is out, again. The Appellate Division issued its decision on October 8, 2010 invalidating, once again, substantial portions of the Third Round Rules of the New Jersey Council on Affordable Housing (COAH). The court invalidated the "growth share methodology" for determining municipal housing obligations and standards for inclusionary development as such standards fail to provide sufficient incentives to make affordable housing construction a "realistic opportunity." Stating that COAH's revised Third Round Rules "suffer from many of the same deficiencies as the original Third Round Rules," the court has given COAH five months to adopt new rules based on a methodology similar to that which was used under the prior rounds. The opinion addressed 22 different appeals challenging the Third Round Rules that were consolidated. Four of the parties involved in the suit have petitioned the New Jersey Supreme Court for certification to hear the case. The Supreme Court may decide at its discretion whether it will take the case. In the meantime, the New Jersey Legislature has also re-energized its affordable housing reform efforts.
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