New Jersey Supreme Court Rejects COAH’s Rules

Hot off the press, in a September 26, 2013 Opinion, the New Jersey Supreme Court rendered their decision on In re Adoption of N.J.A.C. 5:96 &5:97 by Council on Affordable. The Court found that the most recent reiteration of the Third Round Rules established by the Council of Affordable Housing (“COAH”) were contrary to the Mount Laurel Doctrine and the Fair Housing Act. The Court invalidated the Third Round Rules and upheld the Appellate Court’s remedy which requires that COAH implement revised Third Round Rules within five months.
The legal battle over these Third Round Rules stems largely from COAH’s use of a “growth share” methodology in calculating a municipality’s prospective affordable housing obligation. Under the growth share methodology, a municipality’s obligation to provide affordable housing would be based on its actual residential and nonresidential growth. The Third Round Rules established that a municipality would have to provide one affordable housing unit for every four new residential units and every sixteen newly created jobs. These ratios were based on COAH’s statewide projections for housing development, job creation and need for affordable housing.

This was a departure from the methodologies used during the First and Second Round Rules. In these prior round rules, COAH would calculate the state’s regional need for affordable housing. A municipality was then allocated their fair share obligation of the regional need based on the municipality’s economic projections and capacity to accommodate affordable housing. This resulted in a fixed number of units and the municipality had to provide a realistic opportunity for satisfying its obligation. Growth Share Does Not Work For two main reasons, the Court found that the growth share methodology is inconsistent with the Mount Laurel Fair Housing Act. First, the Fair Housing Act is clear that affordable housing obligations are to be calculated on a regional, not statewide, basis. Second, a municipality only incurs the obligation to provide affordable housing if it decides to grow. Meaning, if a municipality has no actual growth, it has no affordable housing obligation. The Court found that the Third Round Rules failure to provide firm, fair share allocations was inconsistent with the Fair Housing Act.

Since the growth share methodology is so “intertwined” with the Third Round Rules, the Court ruled that COAH needed to start anew and draft regulations which comply with the Fair Housing Act. However, the Court was insistent that there may be alternative approaches in calculating affordable housing requirements in New Jersey. This could include the use of a growth share methodology. However, that must be determined by the Legislature and not the courts. Until the Legislature decides to act, the Court is bound to adhere to the methodologies set forth in the Fair Housing Act.

Please feel free to contact our office directly if you have any questions concerning the Court’s decision or if you would like a more in-depth analysis of its findings.

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