Landmark NJ Supreme Court Decision Presents New Framework for Municipalities, Developers & Affordable Housing Advocates

By Ravinder Bhalla, Esq. 

For decades in New Jersey, municipalities, developers and affordable housing advocates have endured an ever changing landscape of regulations surrounding affordable housing obligations and requirements.  In a landmark decision issued March 10, the New Jersey Supreme Court dramatically shifted the landscape in two important ways.

Ravinder Bhalla

First, certain municipalities will now have an opportunity to go directly to a court of law to affirmatively seek a judicial declaration of compliance with their affordable housing obligations.  Second, where a municipality is deemed to have failed to meet its obligations, both developers as well as low and moderate income residents, and those advocating on their behalf, are authorized to seek judicial relief to ensure municipalities are meeting their constitutional obligations to provide a fair share of affordable housing.

Background 

The Supreme Court’s recent ruling is a new chapter in New Jersey’s long history of judicial and legislative efforts to mandate the creation of a fair share of low and moderate income housing.  In 1975, the Supreme Court, in Mount Laurel and its progeny, recognized that municipal authority to zone in the public interest included a constitutional obligation to create a fair share of low and moderate income housing.  The Mount Laurel doctrine was expanded upon in 1985 when the Court issued its Mount Laurel II holding, requiring municipalities to provide its “fair share” of the regional need for low and moderate income housing, among other things.  Two years later, the State Legislature adopted the Fair Housing Act (FHA) which created COAH to promulgate rules in assisting municipalities in fulfilling their Mount Laurel obligations. The regulatory scheme developed by COAH rewards municipalities that satisfy their obligations through the development of an affordable housing plan, housing element and implementing ordinances.  Compliance is rewarded by providing a period of immunity from civil lawsuits to towns attempting to demonstrate compliance through participation in the administrative process, and for those municipalities that develop a fair share housing plan which obtains substantive certification from COAH, by providing a period during which the municipality’s implementing laws enjoy a presumption of validity in any ensuing exclusionary zoning litigation.

These rules developed by COAH, however, must be periodically updated in order for municipalities to benefit from the rewards of participation or certification of compliance.  COAH’s rules for the last round of municipal housing obligations, however, expired in 1999, and COAH has failed twice to adopt updated, “Third Round Obligations”, thereby prompting the Fair Share Housing Center to file a motion which was the subject matter of the Supreme Court’s recent decision.

The Supreme Court’s Ruling 

As a result of COAH’s inaction, the Supreme Court empowered the courts – not COAH – to make initial determinations regarding municipal compliance with its Mount Laurel housing obligations.  First, municipalities will now be afforded an opportunity to affirmatively seek a declaration from the courts of compliance with affordable housing obligations, prior to being declared “noncompliant” or being subjected to lawsuits alleging exclusionary zoning, including a builder’s remedy.  Second, the Court’s ruling will permit low and moderate income citizens, and those acting on their behalf, and developers the right to challenge, under certain circumstances, any municipality that fails to develop an adequate housing plan to bring the town in compliance with its fair share of regional and prospective housing needs for affordable housing.

The Court also recognized that municipalities are at different stages in their efforts to demonstrate Mount Laurel compliance as a result of the long period of uncertainty arising from the failure of COAH to promulgate valid Third Round Rules.  The Court recognized that there are three different “classes” of municipalities at varying stages of compliance – and therefore, in need of different treatment by the courts.  The first class of towns, approximately 60 in New Jersey, have been granted “substantive certification” by COAH under earlier versions of the Third Round Rules.  The second class of towns, more than 300 in New Jersey, have submitted a resolution of participation with COAH sufficient to be recognized as “participating” municipalities.  Last, there are approximately 200 towns that appear to have done nothing to subject themselves to COAH’s jurisdiction, choosing instead to remain open to civil actions by the courts.

Those towns in the first class, who made an effort and obtained substantive certification, have a total of 120 days – 90 days from the effective date of the Supreme Court’s Order, and an additional 30 days thereafter – to file a declaratory judgment action seeking a judicial declaration that its housing plan and implementing ordinances are constitutionally compliant.  Municipalities seeking such a declaration, while not entitled to the statutory presumption of validity the FHA would normally provide, will have the benefit of the Supreme Court’s direction to judges to be “generously inclined” to grant applications of immunity from exclusionary zoning actions during the review process.  After the 30 day period expires, if a municipality has failed to take any affirmative action to seek a judicial declaration of compliance, any interested party may file a lawsuit seeking to challenge a municipality’s compliance.  Initially, only constitutional compliance challenges are permitted against a town with substantive certification from COAH.  A builder’s remedy is not authorized to proceed against such a town unless a court determines that the substantive certification granted was invalid, or other circumstances justify such an action to proceed.

The Supreme Court set forth different procedures and treatment of the approximately 300 towns in the “participating” status with COAH.  These towns, if they affirmatively seek to obtain a court declaration that their affordable housing plans are presumptively valid, have 5 months to submit their supplemental housing element and affordable housing plan.  During that 5 month period, the court “may” provide initial immunity insulating these towns from exclusionary zoning actions.  As with towns which have substantive certification, participating towns will also have the choice to affirmatively proceed with a declaratory judgment action during the 30 day period after the effective date of the Supreme Court’s Order – also a total of 120 days.  These towns, however, are not automatically granted immunity from exclusionary actions if a constitutional compliance action is filed after the 120 day period.  Rather, courts will assess on an individualized basis the extent to which a grant of immunity is appropriate.

Overall, the Supreme Court directed the Mount Laurel designated judges to “employ flexibility” in assessing a town’s compliance and “endeavor to secure . . . prompt voluntary compliance from municipalities[.]”  Where these goals cannot be reached and a town is deemed noncompliant, only then may the court authorize exclusionary zoning actions seeking a builder’s remedy to proceed against towns that had received either substantive certification or had participating status.  Finally, the Court noted that its decision was not intended to prevent either COAH or the Legislature from taking steps to restore a viable administrative remedy that towns can use to satisfy their constitutional obligations, and that voluntary compliance with constitutional obligations was, in fact, preferable to litigation that results in compelled rezoning.

What Does This Mean For Municipalities, Developers and Affordable Housing Advocates? 

Municipal Officials:  First, determine which category your municipality falls under, and seek legal guidance as to the extent to which your municipality has met its affordable housing obligations. Once you are aware of what “class” your municipality falls under, it may be useful to consider filing a declaratory judgment action with the Mount Laurel judge in your vicinage to seek a declaration of compliance with your affordable housing obligations.  Filing such an action may, to varying degrees depending on your status, immunize your municipality from builder’s remedy or constitution compliance lawsuits.  For some municipalities, being proactive and filing a legal action may also provide a presumption of validity as to any existing housing plans or implementing ordinances already promulgated by your town.  If your municipality has done nothing to participate in COAH, then this decision provides no specific insulation from litigation.  Nonetheless, depending on the circumstances, affirmative steps to bring your town in compliance along with the filing of an action is certainly an option worthy of serious consideration.

Developers:  As with municipal officials, the first step is determining the extent to which the municipality in which your property is situated complies with the affordable housing mandates of Mount Laurel.  If the municipality is non-compliant, has failed to file a declaratory judgment action, and does not otherwise enjoy any degree of immunity from suit, developers may consider filing a “builder’s remedy” lawsuit.  A builder’s remedy lawsuit allows a developer to bring litigation against a municipality to change zoning on a particular site, providing for the opportunity to construct housing at higher densities than a municipality otherwise would allow, provided however, that the developer can demonstrate that the municipality is not in compliance with its Mount Laurel obligations and promises a substantial set-aside for low and moderate income housing as part of its development.

For Low and Moderate Income Residents: This decision may help low and moderate income residents who, by virtue of exclusionary zoning laws, cannot live in or near a town in which they work.  The filing of constitutional compliance actions are a means to make sure such individuals are not excluded and to ensure there are fair housing opportunities for residents to live where they work.  You may also consider utilizing the resources of advocacy groups such as the Fair Share Housing Center, an established non-profit affordable housing advocacy group dedicated to defending the rights of New Jersey’s poor by monitoring, enforcing and expanding the Mount Laurel doctrine.

For further questions, please feel free to contact Ravi S. Bhalla, Esq. at 201-843-5858 or rbhalla@fpsflawfirm.com

For a full copy of the Supreme Court’s decision, click here.

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