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State Appeals Court Sides with Towns Over Affordable Housing ‘Gap Period’

Ruling could halve number of housing units for people with low and moderate incomes

affordable housing
Credit: WHYY/NewsWorks

An appellate court ruling on New Jersey's affordable housing mess appears to give a victory to municipalities, as it could cut by roughly half the total number of affordable housing units that would be required to be built statewide.

While disappointed, affordable housing advocates are looking for something in the decision’s language that may still require towns to zone for the housing need that built up during the so-called gap period, the years from 2000 to 2015 in which no affordable housing rules were in effect.

On Monday, a unanimous appeals court panel ruled that there is no "retrospective new 'separate and discrete' affordable housing gap-period obligation" on municipalities in either state law or the state Supreme Court's Mount Laurel doctrine. That doctrine, spelled out in rulings that date back to the mid-1970s affecting the South Jersey township, specify that all municipalities must provide their "fair share" of affordable housing for those of low and moderate incomes.

Since state Superior Court judges began hearing cases last year to determine individual towns’ “fair share,” municipalities had been arguing that they have no “gap” obligation.

Last year, the Supreme Court gave lower courts authority over local affordable housing obligations when towns and the Council on Affordable Housing could not reach agreement. And last winter, Ocean County Superior Court Judge Mark Troncone ruled against the municipalities’ argument, ordering that towns could not ignore any housing need that had accrued during the gap period.

Monday’s appellate court ruling reversed Troncone and sent the case back to him for further consideration.

Because the appellate court ruling was unanimous, there is no automatic appeal to the Supreme Court, although that court has had a lot to say on the issue over the years and might decide to take up the question.

Jeffrey Surenian, who represents about 60 towns on housing matters and argued their case before the appellate court, saw the decision as a clear victory for municipalities. "According to the court, there is no ambiguity here about present and prospective need," he said, "It's absolutely clear," he added, “The Legislature defined present and prospective need …There is no obligation beyond present and prospective need."

The inclusion of a gap-period obligation in a calculation of affordable housing needs makes a huge difference, accounting for about half of the estimate calculated by the Fair Share Housing Center, which is involved in affordable housing cases across the state.

Last summer, Fair Share argued that as many as 350,000 units were required to meet past, present, and future affordable housing needs — including that of the gap period — while the municipalities put the need at 155,000 with no need for the gap period. A Fair Share spokesman said the gap period need accounts for about half of the center's current need estimate of more than 200,000 units.

Fair Share has not yet decided whether to appeal the ruling or argue for the inclusion of the gap period as part of present need before the local housing judges in Superior Court. But its executive director Kevin Walsh criticized the ruling and noted ambiguities in what the judges ruled and what else they said.

"The court erred today in coming up with a new way for municipalities to account for the housing needs of families that occurred during a 15-year gap period when New Jerseyans were buffeted by the impacts of the Great Recession," Walsh said. He added that the judges also wrote that their opinion "does not ignore housing needs that arose in the gap period or a municipality's obligation to otherwise satisfy its constitutional fair share obligations."

Walsh pointed out that, in laying out eight requirements of their ruling, the judges added that "identified low and moderate-income households formed during the gap period in need of affordable housing can be captured in a municipality's calculation of present need."

Although the state Supreme Court had kicked the issue back to the courts more than a year ago, cases are still working their way through the system either via full hearings or settlements. Judges working on pending cases will now need to consider Monday's ruling in determining obligations.

Municipal officials and lawmakers cheered the ruling.

“Today the Superior Court answered our call to protect taxpayers from a catastrophic Ocean County court decision that would have caused a ripple effect, decimating municipalities statewide,” said Sen. Christopher "Kip" Bateman (R-Somerset). “This ruling brings us one step closer to passing affordable housing reforms that will preserve open space, access to high quality education and emergency services; and the integrity of unique communities statewide.”

“The Appellate Division’s common-sense ruling upholds the legislative intent of the Fair Housing Act and will facilitate municipal compliance," said Michael J. Darcy, executive director of the New Jersey State League of Municipalities, which was a party to the matter. "Further, it creates a rational path forward that we anticipate will end costly litigation and allow municipalities to move forward in meeting their community’s affordable housing needs."

The League and Surenian have been arguing for the last year that Fair Share's estimates of affordable housing need were unrealistic and could never be met. The judges seemed to agree, referring in their opinion to past housing decisions and rules that specify housing obligations should be "realistic" and "reasonably likely to occur."

Fair Share’s disappointment was echoed by other affordable housing advocates. “We’re disappointed with today’s decision by the court which could reduce the number of homes that are affordable for New Jersey’s working families, seniors and people with disabilities," said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey.

"The court’s decision creates new hurdles for too many households that have struggled to make ends meet during the gap period and continue to now, as a result of the economic tsunami we endured from superstorm Sandy, the Great Recession and the ongoing foreclosure crisis,” Berger said. “We need to build more homes more people can afford, so we can all call New Jersey home.”

The ruling is posted online.

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