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The Council on Affordable Housing � and the McGreevey Administration � are facing substantial challenges, both legal and political, as they try to navigate very choppy waters to bring a durable affordable housing policy into port. COAH has published proposed new regulations designed to set up a whole new system of determining what every town in New Jersey must do to meet its affordable housing obligation and thus avoid being sued by builders. (See “ Growth Share Approach to Affordable Housing Paves Way for Less Growth” 173 N.J.L.J. 1209, Sept. 29, 2003.) The comment period was extended until Dec. 5, 2003, by which time COAH had received more than 2,500 pages of comments about the rules. COAH has not extended the deadline for comments and, as required by the Administrative Procedures Act, will be preparing its responses to those comments over the next several months. Problems With the New Rules The New Jersey Institute of Continuing Educations held a seminar on the new regulations on Dec. 17, 2003, with more than 160 practitioners in attendance. The attendees were startled when former New Jersey Supreme Court Justice Gary Stein, a veteran of 18 years on the bench and a member of the Court that reviewed the case challenging the first set of COAH rules, Hills v. Bernards, 103 N.J. 1 (1986), declared that the proposed rules were likely to fail judicial scrutiny. Stein recalled the Court’s long battle with various governors over educational policy in the Abbott v. Burke cases. While indicating that he was not speaking for the Court, and offering the disclaimer that he had not had the benefit of full briefing on the issues, Stein indicated that the regulations were fatally flawed. “I regret that I have to say these regulations constitute a bold attempt to undermine the Mount Laurel doctrine,” he asserted. What particularly concerned Stein was the centerpiece of the new COAH regulations � the ability of New Jersey’s 566 municipalities to select their own growth targets. “In my view the most fundamental flaw is the notion of growth share based on local growth projections,” said Stein. “The notion of growth share is something we flatly rejected in Mount Laurel II.” He noted that the late Chief Justice Robert Wilentz said in Mount Laurel II that “a municipality calculating its own growth share is unconstitutional.” In fact, said Stein, a central theme of the new COAH regulations � the notion that a municipality can select slow growth, then derive its share of affordable housing obligation from that projection � “was invalidated in Mount Laurel II.” Permitting municipalities to do so “turns back the clock 30 years” to an era of “unregulated town-by-town projections,” he said. Stein was joined on the podium at the ICLE seminar by both critics and proponents of the new regulations. It is quite clear that municipalities strongly favor the new regulations, which they believe will afford them relief from builder’s remedy suits and the sense that the Mount Laurel doctrine mandated suburban sprawl. Critics � especially those representing organized groups such as the Fair Share Housing Center, the NAACP and the Builder’s Association � hammered the regulations as leading to a far more resegregated New Jersey, with the poor living in the cities and the rich living in the suburbs. They also attacked the methodology for calculating the need, the standards which are allegedly missing from the rules, and various other features of the proposal. In reviewing the volume of material that COAH has received during the comment period, there appear to be two basic approaches that critics have taken. Throw Out the Whole System The first school of thought, represented by an articulate brief-like set of comments provided by the Camden and Burlington County branches of the NAACP and the Fair Share Housing Center, is that the whole approach to affordable housing is fatally flawed, and a whole new system is needed. The fatal flaw � not just of the COAH regulations but with other forms of land use control � is New Jersey’s widespread pattern of racial segregation. Those comments review the history of racial segregation in New Jersey, look at the impact of the past attempts to address racial and economic segregation, and conclude that “if adopted, [the proposed regulations] will complete the final step in COAH’s quest to return New Jersey to the pre- Mount Laurel days of unconstitutional exclusionary zoning.” (Comments, page 1; found at p. 151 of the ICLE Seminar Materials, S201b.03). The start-over contingent does not restrict its comments to the specifics of the proposed rules � they focus on the overall program of addressing affordable housing needs, including what they believe are the unconstitutional and destructive effects of Regional Contribution Agreements (RCAs), which were authorized in the Fair Housing Act, N.J.S.A. 52:27-301 et seq. RCAs permit one town to “buy off” a portion of its affordable housing requirements by contracting with another municipality to build those homes. Typically, this has meant a transfer of money from affluent suburbs into older cities, in effect, say these critics, exacerbating New Jersey’s racial and economic segregation. If the start-over critics were to have their way, New Jersey would have to confront the reality that the state has become racially segregated and, as a result, must make very significant changes in housing policy and overall state planning and investment. The Fair Housing Act would be thrown out; RCAs would be eliminated; and COAH, as we have come to know it, would be transformed. In its place would be an active program of social, economic and racial integration. Accepting the start-over premises requires us to address what are very fundamental issues, including the ability of local government to make basic land use planning decisions; the ability of local school boards to maintain their boundaries; the impact of state tax and investment policy, the New Jersey State Development and Redevelopment Plan, and its emphasis on urban redevelopment (which is seen as intensifying segregation); and a host of other fundamental issues. Given the very cautious nature of the McGreevey Administration, it is most unlikely that COAH will accept any portion of the start-over” school of thought. If It’s Broke, Fix It The bulk of the criticism, including that of Stein, can be fit into a fix-the-system approach. Neither the builders nor the smart-growth critics are ready for the kind of fundamental reform demanded by the NAACP-based critics, and appear to believe that while the growth share approach articulated by COAH is flawed, some kind of allocation of housing need within the context of the Fair Housing Act is possible. RCAs would be maintained but, if these critics were heeded, total affordable housing need would be shown as much, much higher. These critics indicate that COAH has completely ignored the cost-burdened segment of the housing need � that is, those households, numbering in the hundreds of thousands, which must spend more than 50 percent of the household income on shelter costs. Using the figure of 30 percent of household income, the 2000 Census estimates that nearly 875,000 households in New Jersey were cost-burdened. (See Bernard comments on COAH rules, p.323 of ICLE Seminar Material.) These fix-the-system critics would demand that allocations of specific need numbers, substantially larger than those made in the 1993 allocations, should be made to every community, effectively discarding the growth-share approach. The revisions of the existing procedures incorporated in the new rules have not sat well with these critics. They would return to the prior system, which would demand standards to be used to determine when a site would be determined to be suitable, and density allocations for specific kinds of sites would be made. They would strengthen the role of COAH in ensuring that reality was foremost when a municipality filed an affordable housing plan. There are, not surprisingly, comments about various ways that the regulations grant municipalities credits for existing housing occupied by lower income housing without any controls over affordability � which means substantial credits for housing occupied by retirees, who have resources but lower incomes; and the “caps” that the new regulations have which delete, rather than defer, an affordable housing obligation, and which they regard as an unconstitutional dilution of the affordable housing obligation. In short, what these critics would like to see is a return to the rules that characterized COAH’s work, particularly in the first round, when they felt that COAH was actually interested in promoting affordable housing. They do not regard the system as fatally flawed, but see the proposed rules as being so oriented toward providing municipalities with protection against builder’s lawsuits that they ignore the very real need to aggressively promote affordable housing. COAH’s Choices COAH is charged with a careful review of the comments that were presented to it, and has signaled its intentions to proceed over the next several months to address those comments. The first instinct of all bureaucracies is to delay, and this is the most likely immediate choice for COAH. After all, there are over 2,500 pages of comments. And if COAH does a very careful analysis of the implications of those comments, it can be months before anything emerges from COAH. The only real force exerting pressure on COAH to act is the court challenges to its failure to issue Round Three numbers, and COAH has an answer that most courts traditionally accept. While COAH is going through its careful review, it is unlikely that the Appellate Division will rush to tell COAH that it must make decisions with respect to the Round Three process immediately. There is a strong tradition of deference to administrative agencies, and the Appellate Division, particularly, is not likely to make COAH act. So a careful COAH could easily delay until the end of summer before it goes any further. At that point, there are two major choices � put out slightly revised regulations � which will set the challenges to the new rules in motion � or substantially revise the regulations to minimize the possibility of judicial reversal. Minimal changes would please the municipalities, who like the “growth share without numbers” approach. The governor and his allies are intent on maximizing their positives with the local government crowd, and have indicated that growth share it will be. The governor has been quoted in the press as indicating that his primary goal is to provide the municipalities with the ability to determine their own destinies. He has replaced two of the three members of COAH who had criticized the regulations (their terms had expired), and replaced them with people who have no long-term identification with affordable housing issues. But if the comments of Stein are any indication, then growth share without numbers is not going to pass muster with the courts, and smart money would bet that a wholesale set of revisions of the COAH formula would be on the horizon. From the administration’s viewpoint, this would have an excellent side benefit . . . additional delay. Substantially revised rules would have to be re-published in the Register, and another comment period, probably at least 90 days, would ensue, followed by another period of administrative review of the comments. With any luck at all, the 2005 gubernatorial election would have come and gone before the new rules for affordable housing would take effect. As most governors who have had to wrestle with the problem of affordable housing have found, there is a great tension between the constitutional doctrine enunciated in Mount Laurel and the very long and deeply held tradition of local home rule. The unhoused poor are not a powerful constituency, and maintenance of the status quo is the goal of most local elected officials. With nothing to gain and a whole lot to lose by aggressive action to uphold the principles enunciated in Mount Laurel, it would be out of character for the McGreevey administration to do more than seize the opportunity for delay. Look for careful review of comments, a thoughtful revision of the proposed rules and the continuation of the review process for the rest of this term. Hall is chair of the land-use and zoning department at Newark’s Sills Cummis Epstein & Gross.

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