Real Estate Law

Light at the End of the Tunnel? New Jersey Supreme Court Issues Opinion Invalidating COAH Third Round Rules

The New Jersey Supreme Court has issued an opinion [enhanced version available to subscribers] invalidating the Council on Affordable Housing’s Third Round Rules, found at N.J.A.C. 5:96 [enhanced version available to subscribers] and 5:97 [enhanced version available to subscribers]. The now invalidated Third Round rules were grounded in a “growth share” methodology which was intended to assess prospective affordable housing demand to allocate a municipality’s fair share of the regional need for affordable housing. The growth share methodology derived a municipality’s affordable housing obligation by implementing ratios (one affordable unit out of every five units constructed and one affordable unit for every 16 new jobs) formulated on statewide, rather than regional, data on projected housing need, employment, and residential growth.

Additionally, the Third Round rules allowed municipalities to manipulate their affordable housing obligation by discouraging growth. Although COAH initially projected a municipality’s growth share obligation under the Third Round rules, the municipality only incurred if growth actually occurred.

The Supreme Court invalidated the Third Round rules because 1) the growth share methodology deviated from the Fair Housing Act to the extent it relied on state-wide data rather than region-specific data and 2) the growth share methodology is not structured to establish a firm affordable housing obligation, contrary to the Court’s holding in Mount Laurel II [enhanced version available to subscribers].

Recognizing that the uncertainty surrounding COAH has created a “limbo” to the detriment of New Jersey’s municipalities, citizens, developers, and affordable housing interest groups, the Court found that “new rules cannot wait further while time is lost.” The Court therefore ordered COAH to adopt methodologies consistent with its prior round rules within the next five months. These rules will govern the remainder of the Third Round, which began in 1999 and concludes in 2018.

If COAH adheres to this deadline, we may at last see some progress on municipal review of development applications, planning for affordable housing, and evaluation of participation in the Highlands. Please don’t hesitate to contact Porzio, Bromberg & Newman for additional information on these issues. We will provide periodic updates as information becomes available.

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