Opinion: Appellate Court Ruling Hits the Poor Where They Live

R. William Potter | November 13, 2013 | Opinion
Decision strips New Jersey builders of economic impetus to erect low- and no-income housing

Credit: Amanda Brown
R. William Potter
Has a recent court decision dealt a mortal blow to the construction of much-needed affordable housing in New Jersey? Probably not mortal, more like a roundhouse kick, but the ruling — unless reversed by the state Supreme Court — will further slow the already glacial pace that low-income housing is built in the Garden State.

On November 1 a three-judge panel of the Appellate Division of Superior Court — the state’s second highest — sustained zoning-board and lower-court denials of a plan to build 292 multifamily units, with 59 units set aside for low- and moderate-income residents, in an industrial zone of Branchburg.

Significantly, the case — “Advance at Branchburg v. Township of Branchburg Bd. of Adjustment” — is stamped “approved for publication.” That means the court’s opinion will be printed among the official (hard-bound) judicial reports and serve as binding precedent on similar cases in the future. Hence, the implications of this decision must be carefully considered.

The key aspect of the Branchburg case that is causing angina among fair-housing advocates is the court’s explicit rejection of the principle that a developer who sets aside 20 percent of lower-income housing to be subsidized by the sale of 80 percent of market rate housing is not entitled to favorable treatment as an “inherently beneficial use.” The term includes hospitals, schools, group homes for the disabled, solar energy projects, and low-income housing — but not, apparently, if the latter is part of a larger residential complex.

In other words, the court held that only a development limited solely to Mount Laurel housing for low- and moderate-income families is considered to be “inherently beneficial” — and therefore accorded more lenient zoning code reviews by local land-use agencies. But the market-rate housing, even if necessary to finance the subsidized units, is not included within the inherently beneficial category.

In its terse 14-page opinion, handed down only three weeks after oral argument, the court summed up its reasoning pithily: The township “argued that, although a project including only affordable housing units may be ‘inherently beneficial,’ the addition of affordable units to a proposed development in which most of the proposed units are market rate housing does not make the entire project inherently beneficial. We agree.”

This decision ignores the critical reality that the most common, if not only, practical means of financing affordable housing construction in New Jersey is if municipalities provide a “density bonus” to a builder who includes 20 percent of a planned development as low- and moderate-income housing.

You don’t need an advanced degree in economics or real estate finance to appreciate why this is so. It’s why the New Jersey Supreme Court in the 1983 Mount Laurel II decision embraced the “density bonus” as the prime technique for remedying decades of antipoor “exclusionary zoning” across the state. Without direct government funding for new housing construction for the working poor, the only way to develop such housing is by giving incentives for builders to include it in their applications for zoning approval.

The standard formula found in a host of affordable housing lawsuits in the 30 years since Mount Laurel 2 was handed down, and incorporated in Council on Affordable Housing (COAH) regulations is a 5 : 1 ratio of market-rate to modest-income housing.

This means that for every one unit of subsidized housing, the developer gets to build five units of market-rate housing to pay for the lower-income units. This is what the builder, “Advance at Branchburg,” proposed in its variance applications that were later rejected by the zoning board, the trial court and now the Appellate Division.

Granted, as the court observed in a footnote, there may be other ways to break down the barriers of exclusionary zoning: “Nothing in our decision prevents the Township from deciding to change the zoning to comply with its fair-housing obligations or prevent Advance from seeking to build on its land if it’s ultimately found to be entitled to a builder’s remedy.”

Yes, and the Republicans in Congress may yet vote to raise taxes on their millionaire friends to fully fund Food Stamps for the poor. Voluntarily changing zoning to welcome more low-income housing is always possible, but it’s never probable, except maybe in the few municipalities that voted for Barbara Buono for governor.

And as for the “builder’s remedy,” that requires a new round litigation before a designated “Mt. Laurel judge,” to be followed by opposing “expert witnesses” testifying as to the locality’s and region’s “fair-share” housing needs, infrastructure capacity, and so forth — all supported by costly legal procedures, from pretrial discovery to post-hearing briefs.

Alternative routes to obtaining needed approvals do exist — at least theoretically — but at great cost to all, including the court system. Until this decision was handed down, land-use lawyers could choose to employ the existing — and well scripted — zoning board and planning-board proceedings to advance the cause of low-income housing.

That may no longer be true.

With a 9-plus percent unemployment rate in New Jersey — despite the so-called economic recovery — the need to unleash all possible means of promoting more-affordable housing could hardly be greater. As the League of Municipalities website shows, there is an estimated “unmet need” for 115,666 units of lower-income housing. Meanwhile, the governor has raided some $141 million held in Mt. Laurel housing trust funds to fill holes in the state budget.

Now is hardly the time for our courts to scale back their longstanding preferential treatment for privately funded proposals that build vitally needed housing for New Jersey’s lower-income and even no-income families.