Once again, a New Jersey court has rejected affordable housing rules proposed by the Council on Affordable Housing (COAH). In ruling on 22 consolidated appeals of COAH’s revised third-round rules in a case captioned In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, the New Jersey Superior Court, Appellate Division concluded that “COAH’s revised third round rules suffer from many of the same deficiencies as the original third round rules,” and invalidated substantial portions of those rules. COAH now has five months to write new regulations.

With respect to the central issue of the case, the court declared that COAH cannot use future job and home growth – known as “growth share” – as a basis for determining a municipality’s affordable housing obligations because the growth share methodology would allow municipalities to avoid building affordable housing by adopting land use regulations that discourage growth. Instead, the court directed COAH to look to the regulations in place during the 1980s and 1990s, which assigned a specific prospective need obligation to every municipality in a growth area. In support of its recommendation to return to the prior, “fair-share” methodology, the Appellate Division noted that: (i) a previous version of the third round rules was rejected because it used the “growth share” approach; and (ii) the NJ Supreme Court, in Southern Burlington Cty. NAACP v. Twp. of Mt. Laurel, 92 N.J. 158, 257-8 (1983) (Mt. Laurel II), “pointedly rejected any methodology for determining allocations of municipal affordable housing obligations that was substantially dependent upon individual municipalities’ decisions as to whether to grow.” COAH has not operated with valid rules since 1999, when the second round rules expired.  

In addition to rejecting the growth share methodology, the Appellate Division invalidated other regulations relating to, among other things, the substantive certification of compliance plans, incentives for developers to construct inclusionary developments (or the lack thereof) and rental bonus credits for prior round obligations. The court did uphold “Smart Growth” and “Redevelopment” bonuses proffered in the revised rules and rejected other challenges to COAH’s regulations.

Not surprisingly, the court’s decision was lauded by affordable housing advocates. Kevin Walsh, attorney for the Fair Share Housing Center, said, “[The] decision is a victory for New Jersey’s families, seniors, and people with special needs. The court held that COAH’s rules simply do not do enough to produce homes and jobs on the ground in New Jersey. This is a message that it’s time to move past the game of trying to block starter homes, especially when we need economic development in New Jersey.”

However, this victory may be shortlived. In its opinion, the court noted that the NJ Senate has passed legislation that would abolish COAH and asserted that, “[E]ven if the Assembly passed the Senate bill in its current form and the Governor signed it into law, these appeals would not be mooted. Although the Senate bill as passed would abolish COAH, the bill would preserve the effectiveness, at least on a temporary basis, of the rules and regulations adopted by COAH before its abolition, including the revised third round rules challenged in these appeals.” The legislation is awaiting consideration in the Assembly and Governor Christie has urged the Assembly to act on it.

We will stay abreast of all developments relating to the proposed legislation and COAH's drafting of the third round rules and will report further as news arises.