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Affordable Housing Argued Before State Supreme Court for Third Time

Hank Kalet | November 15, 2012

Complex issue turns on simple question: can towns be required to build housing for low- and middle-income families?

COAH is charged with developing affordable housing, like these units in Old Tappan, for New Jersey's 566 municipalities.

The fate of the so-called growth-share method of setting municipal affordable housing obligations is now in the hands of the state Supreme Court.

During five-plus hours of arguments today, housing advocates and groups representing builders sparred with representatives of state and local governments over the methodology for calculating municipal affordable housing obligations.

At stake is how -- or even whether -- towns with few housing units available to middle- and lower-income families will be required to provide for them in zoning laws. Since a landmark ruling in 1975, the state Supreme Court and towns have been wrestling with the issue, with many suburban communities balking at the requirements and saying they encouraged sprawl.

The state Supreme Court is looking at whether the newest iteration -- the third-round rules created in 2004 -- addressed the requirements of the court’s original rulings.

The proposed rules required towns to plan for one affordable housing unit for every four market-priced housing units or one housing unit for every 16 jobs created by commercial development.

The rules were created in 2004 -- five years after the second-round rules expired -- and changed the approach from a quota system that was unpopular with most municipal governments to the growth-share plan, which is supposed to tie affordable housing obligations to future growth. The rules have twice been overturned by the courts.

The state’s affordable housing rules are a product of two Supreme Court decisions commonly called Mount Laurel I and Mount Laurel II. In 1975, the court ruled that suburban Mount Laurel’s zoning laws were “exclusionary” because they made it impossible for housing for low- and moderate-income residents to be built.

Eight years later, the court revisited the Mount Laurel decision, establishing a fair-share formula as part of its ruling and creating the “builder’s remedy” as a disincentive for towns that might opt out of the new state affordable housing regime. The Council on Affordable Housing was created in 1985 as part of the Fair Housing Act, which codified the 1983 ruling.

COAH issued two rounds of quotas for towns designated as developing, in 1987 and 1993, but failed to issue numbers for round three in 1999. In 2004, the new rules were created, which included the growth-share formulas.

Growth-Share: Yea or Nay

Supporters of the growth-share system -- including the state League of Municipalities, several local governments, and the state attorney general representing COAH -- said it was a more pragmatic approach. They said the affordable housing landscape had changed significantly since the court’s original Mount Laurel rulings and that municipal governments understood the importance of making affordable housing available.

Critics of growth-share -- including the Fair Share Housing Center, the NAACP, and the builders’ groups -- said that towns would find ways not to build housing if they were not given specific targets.

The justices raised questions about whether the new rules needed legislative approval and sought to understand the proposed rules practical effect. They also questioned whether the new rules met the regional-need component of the Fair Housing Act. Fair-share obligations are supposed to be based on the needs of multi-county regions established by COAH and not just an individual municipality.

Supporters of the growth-share formula told the court today that they believed it was consistent with both the Fair Housing Act and with the Mount Laurel rulings, because COAH had discretion as to how to apportion housing obligations.

“The Fair Housing Act did not mandate a formula,” said Edward J. Buzak, who represents the state League of Municipalities. “The formula is developed by the agency.”

Under the first two rounds, COAH required towns to meet a “fixed number,” which may or may not have been realistic. In slow economies, he said, there was no way for them to meet the numbers. With growth-share, he said, towns only need to build affordable housing if market-rate units or commercial properties are developed.

“The beauty of growth-share is that you get results,” he said.

Attorney General Geraldine Callahan addressed questions from the justices about whether COAH could impose the new formula without legislative approval. She said COAH has latitude under the Fair Housing Act to promulgate rules.

The appellate court, in overturning the rules, “undermined the deference due to COAH,” she said.

Jonathan E. Drill, of Stickel Koenig & Sullivan, who represented several municipalities, agreed that the growth-share formula was in compliance with legislative directives.

“We don’t see anything in the Fair Housing Act that says that growth-share cannot be used,” he said.

He also said that the Mount Laurel doctrine was predicated on the State Development and Redevelopment Plan, which has not been updated since 2001 and which failed to win approval on Tuesday.

“That is an indication that it is a perfect time to segue into growth-share,” he said.

Buzak argued that the court needed to consider the changes in the affordable housing landscape that have occurred since the court’s 1983 Mount Laurel II decision before making a ruling.

Callahan argued that the original Mount Laurel decisions had to be “read within the context of its timeframe -- the world that existed before the doctrine.”

“Every municipality is aware of the construction mandate,” she said. “Towns know they can’t enact the same kind of zoning ordinances they did before the Mount Laurel decisions.”

Applying the Builder's Remedy

Supporters of the growth-share model said that towns that failed to construct affordable housing could have their COAH certification stripped and would then be subject to the builder’s remedy – a builder’s lawsuit seeking increased residential density.

“There never will be an ability to meet the first prong of a builder’s remedy under the growth-share because the defense will be able to argue, ‘when we grow, we grow,’” said Kevin D. Walsh, of the Fair Share Housing Center.

He described the growth-share plan as the “deregulation of Mount Laurel to the point where anything goes,” because the “municipalities are setting the numbers.”

Stephen M. Eishdorfer, of Hill Wallack, who was representing the New Jersey Builders Association, agreed.

“The towns are in the same place as they were 29 years ago, except that the law forced them to act differently,” he said. “It is about the nature of the suburbs. It is why people move to the suburbs and what they think they’re getting and the tax structure.”

Eishdorfer called the growth-share approach “a burden not only on poor people, but on the whole economy,” because it could encourage towns to deny potential development to prevent having to build affordable housing. It could encourage a return to fiscal zoning, or land-use decisions designed to limit the number of school children from entering local schools.

After the arguments, Walsh summed up his organization’s position.

“We are against anything that puts municipalities in the driver’s seat,” he said. “They cannot be trusted to make regional decisions.”

Hank Kalet is a veteran journalist and editor, who has covered economic issues, government, and entertainment in central New Jersey for more than two decades.

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