Explainer: How New Jersey’s Court-Approved Plans for Affordable Housing Work

NJ’s plans for affordable housing are blueprints that do not require municipalities to build a single home

For the last three years, Superior Court judges in New Jersey have been approving municipal housing plans that specify how many affordable homes communities must zone for and where they may be built.

What many people don’t seem to understand is that these plans, some 220 of which are the result of settlements with the nonprofit Fair Share Housing Center, other groups and developers, do not require a municipality to build even a single home. They are blueprints allowing for the construction of affordable homes.

There are other misconceptions and questions about the process. Many mayors and citizens complain that their communities cannot handle all the high-density development at least some of these plans envision and that these plans are being forced upon them.

Here’s an overview of the process, the settlements, and what they mean for municipalities.

First, some history

The requirement that all communities have an obligation to provide their “fair share” of housing that those of modest means can afford dates to 1975, when the state Supreme Court issued its first decision in a case involving Mount Laurel. This idea that affordable housing was required by New Jersey’s state constitution and how it would be facilitated continued to be debated in court for a number of years. After the Supreme Court’s second ruling on the matter, and several Superior Court rulings that forced municipalities to allow for high-density mixed-income developments, the Legislature passed the Fair Housing Act (FHA) in 1985 that created a process for determining each community’s housing obligation. It also created an agency called the Council on Affordable Housing to oversee the process.

COAH set rules for municipal compliance with the law and calculated how many homes each municipality had to zone for. It processed two “rounds” of housing obligations, with the second ending in 1999. The council was universally hated, and it tried several times to adopt new rules regarding housing obligations, meeting opposition every time. That drew the wrath of the courts. Former Gov. Chris Christie tried to dismantle the agency and when the Supreme Court forbade that, he didn’t fill positions on the council and saw that it did not meet.

Finally, prompted by a suit filed by the Fair Share Housing Center that has been a constant combatant on these issues, the Supreme Court in March 2015 declared COAH “moribund” and kicked oversight of affordable housing back to the Superior Court, where it had been prior to the enactment of the FHA.

The court process today

No town is required to go to court, but by doing so, a municipality could receive immunity from so-called builder’s remedy lawsuits. Without a court-approved housing plan, a community leaves itself open to being sued by a developer who wants to build multi-unit housing in the town. If a judge agrees that a town practices exclusionary zoning, the judge can give the builder permission to construct a development that includes four market-rate units for every affordable one. The reason the high density is permitted is to ensure that the builder can earn a profit on the construction.

At this point, probably all the towns that wanted to receive protection already have filed. The Supreme Court’s order gave communities until mid-July of 2015 to seek court protection or be open to lawsuits.

After a municipality sought protection, it went about writing a housing plan in conjunction with Fair Share; in some cases other community groups were involved. The court also appointed a “special master” to mediate the process. Once all sides agreed to a housing obligation, usually based on calculations from Fair Share’s consultant, a settlement document was drafted and presented to a judge for approval. The municipality approved its housing plan incorporating the settlement and it received immunity from lawsuits through 2025.

What are municipalities obligated to do?

The Mount Laurel Doctrine and the FHA only require towns to have zoning in place that allows for the construction of homes affordable to those of limited means. There is no requirement for communities to actually build the units.

Municipal officials have a lot of flexibility in their planning. If a municipality has an obligation but no developer interested in building, it can zone land to accommodate affordable housing and wait for market forces to drive development there. Officials can even designate land that is already occupied by a farm or a strip mall, properties they think might someday be vacant and developable. They can also work proactively with a nonprofit developer or community group to provide land, money or both to construct a project that is comprised exclusively or mostly of affordable units and in this way minimize the number of additional homes that are built.

If a developer is interested in building a project on a certain parcel, officials can still try to negotiate the lowest density possible, but often they wind up approving developments that mirror the density of the builder’s remedy — four market-rate units for every affordable one.

A typical municipal settlement will include a number of these strategies, as well as including credits, bonuses and adjustments that wind up reducing a community’s total obligation. For instance, homes for very low-income residents may receive double credit — each unit is counted as two — and vacant land that is environmentally sensitive or without sewers can lead to a reduction in a municipality’s obligation.

Where New Jersey communities stand

Because there is no longer a state agency overseeing this process, it is difficult to know precisely what every municipality is doing about affordable housing.

According to Fair Share, about 220 municipalities have reached settlements and will not have to worry about being sued. A number of others are still involved in settlement talks. Perhaps a dozen communities did not participate because they are in the midst of builder’s remedy lawsuits. Newark and other cities and urban areas have no requirement to build new housing because they already have large numbers of low-income residents.

About a third of municipalities had never gotten involved in the voluntary COAH process and continue to avoid either drafting a housing plan or being sued. In most cases, these are communities in areas with little or no demand for low- and moderate-income homes, in the northwest and extreme south and southwestern parts of the state. It would be counterproductive to put affordable housing in places along the Delaware River in Sussex and Warren counties or in Cumberland or Salem that have few jobs or no public transportation or other easy access to get to employment.

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