By Joshua Burd
A ruling by the state Supreme Court on Wednesday is being hailed as a victory for affordable housing advocates and developers, but reaction from other experts and stakeholders was mixed, as they worked to understand what the decision would mean going forward.
The unanimous decision said New Jersey towns and cities must include the so-called gap period, a stretch starting in 1999 in which state officials failed to produce valid guidelines for calculating affordable housing needs, in determining those obligations going forward. As such, local officials will likely be required to zone for tens of thousands of low- and moderate-income units in their dealings with developers
“This decision clears away one of the main obstacles remaining in the fight for fair housing in New Jersey,” Kevin Walsh, executive director of the Fair Share Housing Center, said in a prepared statement. “The towns who were fighting in court are outside the mainstream and now know that they will not be rewarded for further obstruction and delay.”
Fair Share Housing has taken the lead in pushing to expand affordable housing obligations statewide, amid the controversy and confusion that plagued the state agency charged with doing so previously. The group said more than 90 towns across New Jersey have reached agreements with advocates, nonprofits and developers establishing obligations of more than 30,000 homes, all since the Supreme Court assumed oversight of the process in 2015.
That process is expected to continue, as the justices on Wednesday said it would still be up to lower courts to broker resolutions between towns and housing advocates.
“The present-need analysis must include, in addition to a calculation of overcrowded and deficient housing units, an analytic component that addresses the affordable housing need of presently existing New Jersey low- and moderate-income households, which formed during the gap period and are entitled to their delayed opportunity to seek affordable housing,” Justice Jaynee LaVecchia wrote on behalf of the court. “The trial courts must take care to ensure that the present need is not calculated in a way that includes persons who are deceased, who are income-ineligible or otherwise are no longer eligible for affordable housing, or whose households may be already captured through the historic practice of surveying for deficient housing units within the municipality.”
Steven Firkser, counsel in Greenbaum, Rowe, Smith & Davis LLP’s real estate and redevelopment and land use departments, said the decision “strikes a middle ground between the positions of housing advocates and municipalities, and requires the trial courts to use an expanded category of present need in order to capture pent-up affordable housing needs.”
“The decision directs the trial courts to include low- and moderate-income households created during the gap period by applying an analytic approach and not merely a census,” Firkser wrote in a client alert Wednesday. “The opinion will likely result in an increase in the calculation of housing needs, and this could provide an opportunity for developers who can offer affordable housing developments to assist the municipalities in meeting their obligations.”
Wednesday’s ruling was a victory for homebuilders and developers. And Devra Goldberg, chair of the New Jersey Builders Association Mixed-Use Affiliate, said it presented an opportunity that may not rely solely on new construction.
“Perhaps an overlooked benefit from this landmark decision is that it creates new opportunities for some of New Jersey’s most underutilized assets — suburban office parks — to create true mixed-use development,” said Goldberg, partner and director of government affairs with Canoe Brook. “Weaving affordable and market housing, along with retail and commercial space, creates opportunities for New Jersey residents, for the municipalities, and for the taxpayers as well as better, stronger communities.”
The New Jersey State League of Municipalities also pointed to the nuance of the ruling, but said the judges have “added to a very complicated, process, which will require the expenditure of further resources at the local level.”
“While the Supreme Court attempts to forge a middle ground, this decision is vague as to how to determine this additional present need obligation,” said Michael Darcy, executive director of the league. “Thus, the ruling provides little guidance and will likely result in additional property tax resources being expended. We again call upon the Administration and Legislature to craft long-overdue reforms and promulgate a reasonable, rational state housing policy.”
The case stemmed from an appeal last year by 13 municipalities in Ocean County, which were among some 300 declaratory judgment actions that were initiated by towns and cities after the Supreme Court’s 2015 decision. At issue was the latest set of rules crafted by the Council on Affordable Housing — the agency born from the 1985 Fair Housing Act — that municipalities used to calculate their affordable housing obligations.
COAH’s second housing cycle rules had expired in 1999. In the subsequent years, the agency failed to come up with guidelines for a third round that weren’t challenged in court, leading to years of controversy and uncertainty for local governments and developers around the state.
The Ocean County towns and the League of Municipalities argued against counting the gap years in their obligations, believing it would overwhelm their local governments with new requirements. The Fair Share Housing Center, the New Jersey Builders Association and private developers argued that that gap years must be captured.
After a trial court ruled in favor of housing advocates early last year, the municipalities appealed. That decision was reversed by the Appellate Division, causing Fair Share Housing to appeal to the Supreme Court.
In Wednesday’s opinion, the justices said they had affirmed the Appellate Division opinion, but in a modified form.
“The Appellate Division as well as the trial court (plus the other trial courts that have considered the matter) incorporated, in their own ways, the recognition that the need that arose during the gap period was a responsibility of the municipalities,” the opinion read. “Indeed, both decisions below inherently recognized that there could be no hiatus in the constitutional obligation. We agree and, therefore, affirm that important aspect to the Appellate Division judgment.
“What separated the trial court and Appellate Division panel in this matter is how to account for need arising during the gap period.”
Jeffrey Surenian, a Brielle-based attorney representing the Ocean County municipalities and several others, called the decision a “mixed bag,” but took issue with several aspects of the opinion. For instance, the Supreme Court wrote that judges in the second Mount Laurel decision said “fair share obligation is cumulative,” but Surenian said that language is nowhere to be found in the 1983 ruling.
Surenian, a member of Jeffrey R. Surenian and Associates LLC, said the positive aspects of the decision include that it “made clear that trial judges have wide discretion in defining the prospective need.” Also, he said the opinion “gives us an opportunity to reexamine the numbers based upon the decision.”