Posted by: Patricia Salkin | October 7, 2013

Divided New Jersey Supreme Court Reaffirms Mount Laurel’s Constitutional Housing Obligations

Special thanks to Edward J. Sullivan of Garvey, Shubert & Barer in Portland, Oregon for this summary.

After nearly ten months of consideration following oral argument, the New Jersey Supreme Court released its long-awaited decision, In re Adoption of N.J.A.C. 5:96 & 5:97 by New Jersey Council on Affordable Housing, Case No. 067126, (September 26, 2013). The case
involved challenges to the constitutionality and validity of the “third round” administrative rules for housing under the state’s Fair Housing Act (“FHA”) enacted in 1985 to provide a statutory mechanism to implement the New Jersey State Supreme Court’s decision in Southern Burlington County NAACP v. Township of Mount Laurel, 456 A2d 390 (NJ, 1983) (Mount Laurel II). This case established the means for implementing a constitutional obligation on local governments to afford “a realistic opportunity for the construction of their fair share of the present and prospective regional need for low and moderate income housing.” The FHA established a state agency, the Council on Affordable Housing (“COAH”) to adopt by administrative rule regional housing need expectations to be fulfilled by local governments. The Council established those expectations for 1987-93 in its “First Round Rules” and for 1993 to 1999 in its “Second Round Rules.” However, attempts at Third Round Rules first promulgated in 2004 were successfully challenged in 2007. Revised rules were adopted in 2008 but again challenged and invalidated by the Appellate Division. The Supreme Court accepted review of the case in 2011.

The challenged rules had three components for a fair share allocation of a local government: a rehabilitation share (dealing with existing housing stock), a numerical share of unsatisfied housing needs under the first two rounds, and a “growth share” whereby low and moderate income housing was required to occupy a percentage of that residential growth actually occurring at the local level. The instant case focused on this growth share, which was a new concept that did not exist in the first and second rounds – those rounds had specific numerical housing expectations regardless whether residential growth occurred. The growth share concept came from an article by Professor John Payne, Remedies for Affordable Housing: From Fair Share to Growth Share, Land Use Law and Zoning Digest, June, 1997. Opponents of the Rules contended that local governments could avoid meeting their constitutionally mandated housing obligations by manipulating their residential growth or simply decide to have no such growth.

In a 60-page opinion, a 3-2 opinion Supreme Court (two justices not participating) agreed with opponents of the Rules. After discussing the history of the two Mount Laurel decisions (Note: Mount Laurel I, i.e., Southern Burlington County NAACP v. Township of Mount Laurel, 336 A2d 713 (1975) established that the share concept was a constitutional requirement, while Mount Laurel II, (supra.) provided the judicial means to implement compliance with that doctrine), the Fair Housing Act, and the three rounds of Rules thereunder, the Court then turned to the merits. In addition to the invalidation of the growth share concept, the Appellate Division also invalidated the presumptive minimum densities and maximum set asides for affordable housing percentages, finding they did not provide for a realistic opportunity for housing, and also invalidated some rental bonus provisions.

The Court noted that there was no data on regional shares provided to it, which it found to be an important element of the Mount Laurel decisions and was specifically included in the FHA. Instead, COAH based its obligations on percentage of market rate housing and jobs created and applied those figures to the historic growth trends of each municipality. Thus housing obligations were based on projected growth but only came to fruition if there were any actual growth. The court found this approach “facially inconsistent” with the FHA and the remedies provided in Mount Laurel II to compel construction of housing in anticipation of present or projected regional housing needs. The court noted in the 30 years since Mount Laurel II, 30-60,000 new low and moderate income housing units were provided and 15,000 substandard units were refurbished. The court also noted that in fact housing production in the state exceeded population growth rates.

The court acknowledged that there may be means other than the Mount Laurel remedies to meet constitutional housing obligations and stated that legislative approaches are preferred to judicially-based constitutional rulings. However, the Court said those constitutional requirements must still be met – i.e., there must be a showing that regional housing needs are fulfilled (rather than dealing with those needs on a state-wide basis) and there must be numerical housing expectation which the Court found to be required under the Mount Laurel decisions and by the FHA itself. Thus the Rules, which were based on the fair share approach, fell on the basis of their inconsistency with the FHA. The Court said the legislature remains free to change the FHA in a way that meets those constitutional obligations.

There was a spirited dissent from Justice Hoens, joined by Justice Patterson, which found the growth share concept consistent with both Mount Laurel II and the FHA, found the relief granted by the majority (i.e., invalidation of all the Rules as opposed to those that failed to deal with regional issues) overly broad. Indeed the dissent asserted that the majority’s view of both the regional review and actual numerical housing expectations was inconsistent with those standards and resulted in creating forced growth and sprawl, noting that the legislature provided COAH with the tools to adjust housing expectations in particular cases. Moreover, the dissent said the third round rules retained the obligations of the first two rounds and concluded that the scope of relief – total invalidation of the Rules went too far, suggesting that the Court did apply proper deference to administrative agencies as well as granting overbroad relief.

This reviewer was a member of the American Planning Association’s Amicus Curiae Committee that submitted the brief in opposition to the challenged Rule. However, the Mount Laurel cases may compel the result in this case, it is those cases themselves that create the greater problem – by constitutionalizing low and moderate income housing obligations and providing a remedy through the courts, the Supreme Court has boxed itself in to continuing conflicts with the legislature (which will find it difficult to take any path not specifically endorsed by the court, if indeed it takes any action at all), increasing political obstinacy and perhaps resulting in changes to the state’s Constitution. The result may be a good one for low and moderate income housing at the moment – but the danger to the respect of the Court may well be unacceptable.

In re Adoption of N.J.A.C. 5:96 & 5:97 by New Jersey Council on Affordable Housing, Case No. 067126, (September 26, 2013).

The opinion can be accessed at:

Click to access A9010COAH_TBF.pdf

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