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New Jersey Affordable Housing Oversight: Q & A

Briefly explain the recent NJ Supreme Court decision related to affordable housing oversight. 

After sixteen years without viable and constitutional regulations for Affordable Housing, the Supreme Court created new mechanisms to meet Affordable Housing goals. To really explain this issue, we need to go back for some history. In 1975 the Supreme Court said every municipality has an obligation to provide a reasonable opportunity for Affordable Housing. In other words, there needs to be a variety of choice in housing for residents and citizens of New Jersey at all income levels. In the eighties, the courts created a methodology to provide Builders’ Remedies, whereby builders who brought suit and established that municipalities engaged in exclusionary zoning would be granted the remedy of rezoning of their property for an inclusionary development, providing for a percentage of affordable housing within a market rate project. In response the legislature adopted the Fair Housing Act (FHA) whereby the Council on Affordable Housing (COAH) was delegated as the authority to create and enforce regulations concerning affordable housing. Since 1999, COAH has failed to act in a responsible manner to create those regulations—we’ve been without constitutionally satisfactory regulations for sixteen (16) years.

The Supreme Court said that because COAH has been “moribund” and failed to act in the manner designed, the court was going to take back that responsibility. With that decision we return to procedures that existed in the mid-eighties—the courts are going to decide the obligations of municipalities and how they are going to create Affordable Housing opportunities.

What are the immediate consequences or ramifications for interested parties?

Before this ruling, we didn’t know very clearly how to accomplish obligations under Affordable Housing regulations. We were basically in the Wild West. Municipalities didn’t know the scope of housing regulations; developers didn’t know how they were going to satisfy components of those regulations; housing advocates didn’t know how they were going to get Affordable Housing built. Now we have a path forward. The Supreme Court gave us a methodology and a path:

  1. Municipalities can apply to the courts for approval of Affordable Housing Plans;

  2. Developers’ can take part in that process by:

    • Determining the number of Affordable Housing units;

    • Defining which properties fall in the applicable zones; and/or,

    • Defining how housing will be built.

What happens after a town submits a new plan?

Once a town submits a Plan—and that is expected to include about 400 municipalities—the process starts and all other interested parties have the opportunity to join the process. These parties include builders; property owners with a property they are interested in developing for that purpose; and also housing advocates.

Does this mean the return of builders' remedy suits? Should they wait to file suit?

The answer is a definite “Maybe.” First of all to answer the question of the return of Builders’ Remedy lawsuits, “Yes,” Builders’ Remedies are still an option. First you should address the municipality saying, “I have a piece of property. I think it’s appropriate for Affordable Housing. I believe you as a municipality have not satisfied your obligations to provide a reasonable opportunity for Affordable Housing.” If the municipality won’t cooperate, you can ask the courts for a Builders’ Remedy. In this situation the Builders’ Remedy gives a builder the opportunity to create a higher density development with a “set aside” for Affordable Housing. Typically this is done over a municipality’s objection. If the municipality participates in court proceedings it may get some protection from a Builders’ Remedy suit. If it hasn’t participated in the past, and isn’t going to participate in the future, it leaves the door open for builders to pursue that remedy.

What does this mean for the voluntary rezoning process?

The Voluntary Rezoning Process can occur during the process of enacting a plan, or subsequent to it. There’s nothing that prevents voluntary rezoning. The reality is that a typical municipality is going to resolve their Affordable Housing obligation by rezoning property to allow for an inclusionary development or sometimes a 100% Affordable Housing development, but only once the affordable housing plan has been approved by the Courts.

What steps should property owners and developers take now?

This is perhaps the most critical question for property owners and developers. Municipalities will be creating a thorough plan to submit in June in most cases, but the deadlines are being set by individual courts. Property owners and developers should do the following:

  1. Identify the property or properties that are suitable for Affordable Housing

  2. Gain control of that property

    • If you are an owner you have control

    • If you are a developer you want to put it under contract

  3. Conduct due diligence on the property to make sure it’s suitable for Affordable Housing—it MUST be suitable to qualify:

    • Does it have water, sewer, etc.?

    • Does it have environmental constraints?

    • Does appropriate infrastructure, including access roads, exist?

  1. Put municipality on notice that you want to be part of their service list so you know what’s being filed and when.

  2. Put municipality on notice that you have property that is appropriate for the purpose and that you want to be involved in the court process. Do what we call a “Friendly.” Approach the municipality and say, “I have suitable property, I’d like to be included in your Affordable Housing Plan.” This is critical because the next step is a step through the core process as determined by the municipality’s response:

    • “White Hat” approach to support the municipality’s Plan

      • “Yes, we like what the municipality has done; they rezoned our property for that purpose; and we support their Affordable Housing Plan, as proposed.”

    • The “Black Hat” alternative if you are on a different page from the municipality because it chose not to rezone your property even though you feel it is suitable and appropriate; you believe it is not providing enough Affordable Housing; and or, you believe it is choosing less suitable properties.

      • “No, we don’t support the plan—we think our property should be included—and here’s why.”

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