After almost a decade of uncertainty in the affordable housing field, a five-member Supreme Court invalidated the third-round affordable housing regulations adopted by the New Jersey Council on Affordable Housing (COAH) and ordered COAH to develop new regulations within five months of their Sept. 26 ruling. In the Matter of the Adoption of N.J. A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, 215 N.J. 578 (2013). In doing so, the 3-2 majority directed that COAH follow the methodology utilized in the first- and second-round affordable housing regulations and not the growth-share approach which underlaid the third-round regulations. Although the third-round regulations had been refined in a total of three iterations, their underpinning remained a growth-share model, which was stricken by the Supreme Court as being inconsistent with the Fair Housing Act of 1985 (N.J.S.A. 52:27D-301) (FHA) and thus ultra vires.

Despite this definitive ruling, it is likely that controversy will continue to surround affordable housing in this state because the Supreme Court, in finding the regulations inconsistent with the current FHA, left a wide-open door for the legislature to modify the current FHA in a way that could support a growth-share model. The question at this time remains whether the legislature will do so.

The dissent, in an opinion authored by former Justice Helen Hoens, agreed with much of the majority opinion as it related to the flexibility that the legislature was given with regard to remedial legislation, but departed from the majority’s view by declaring that the language of the FHA was broad enough for the court to have validated the use of a growth-share model or, at worst, that the preferred remedy should have been to direct COAH to adapt the growth-share methodology to the regional language in the current FHA. Moreover, the dissent lamented that the majority failed to give due deference to the agency’s determinations, as is normally the case.

So, the opponents of growth share have won…for now. The proponents of growth share, however, can see the proverbial glass as half full because in invalidating the growth-share regulations as ultra vires when viewed through the lens of the FHA, for the first time the court separated the constitutional obligation from the judicial remedy as ordered by the court in Mount Laurel II. This analytical model now allows the legislature to authorize a methodology that does not tie the remedy to regional needs and obligations and specific numbers. The majority stated:

[T]he constitutional obligation and judicial remedy ordered by this court in Mount Laurel II and in place today through the FHA, are distinct and severable. The exceptional circumstances leading this court to create a judicial remedy thirty years ago, which required a specific approach to the identification and fulfillment of present and prospective need for affordable housing in accordance with the housing regions in our state, should not foreclose efforts to assess whether alternative approaches are better suited to modern planning, development, and economic conditions in the Garden State. The policy making branches may arrive at another approach to fulfill the constitutional obligation to promote ample affordable housing to address the needs of the people of this state and, at the same time, deter exclusionary zoning practices. We hold that our remedy imposed thirty years ago should not now be viewed as a constitutional straightjacket to legislative innovation.

What is now known as the Mount Laurel doctrine was created with the best intentions. In 1975, the Supreme Court in Mount Laurel I—South Burlington N.A.A.C.P. v. Township of Mount Laurel, 67 N.J. 151 (1975)—declared that every developing municipality must, by its land-use regulations, presumptively make realistically possible an appropriate variety and choice of housing. The foundation for that declaration was the New Jersey Constitution, which granted the power to zone to the legislature, who in turn delegated it to municipalities under the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 et seq. That delegation carried with it the constitutional obligation to promote public health, safety, morals and the general welfare, which included the obligation of a municipality in exercising its zoning power to create that realistic affordable housing opportunity. However, the Supreme Court went a step further by expanding that obligation to require that the ordinances affirmatively afford that opportunity, at a minimum to the extent of the municipality’s fair share of the present and prospective regionalaffordable housing need.

The tying of the constitutional obligation to the present and prospective regional need became a cornerstone in a decision eight years later when a different Supreme Court, led by Chief Justice Robert Wilentz and three new justices, charted a new course in Mount Laurel II for dealing with exclusionary zoning. South Burlington County N.A.A.C.P. v. Mount Laurel Township, 92 N.J. 158 (1983). While keeping true to the same basic tenet, the Supreme Court refined the doctrine to incorporate the State Development Guide Plan (SDGP) and held that those municipalities within the growth area as shown on the concept map of the SDGP or any official revision thereof were subject to the prospective need obligation of Mount Laurel. They again, however, tied that prospective need for a fair share of the region’s low- and moderate-income housing needs. In almost 200 pages, the court went on to establish a detailed procedure to implement that doctrine while still imploring the legislature to step into the field. Furthermore, the court rejected a numberless system, requiring that municipalities be assigned specific numerical obligations, noting that left to their own devices, history had shown that municipalities will take all steps to avoid their obligation.

Two years later, when the legislature did enact the FHA of 1985, N.J.S.A. 40:52:27D-301 et seq., not surprisingly, the legislation tracked the declarations that the Supreme Court had made in 1975 and 1983 by defining the constitutional obligation in terms of regional needs and allocated numbers. The Legislature delegated to COAH, the agency it created, the power to adopt rules and regulations to implement the FHA. The agency followed suit by implementing the constitutional obligation based upon regional needs and specified numbers. When the act was challenged in Mount Laurel III—Hills Development Co. v. Township of Bernards, 103 N.J. 1 (1986)—the Supreme Court promptly upheld it; and why not? It reflected the court’s precise articulation of what most scholars and practitioners thought the constitutional obligation to be. COAH proceeded to act through two cycles of determining obligations and allocations, from 1987 to 1993, and from 1993 to 1999, tied to the six-year period of re-examinations of master plans under the MLUL (now 10 years). Both cycles reflected regional needs and specified numbers. However, in developing regulations for the third cycle, COAH departed from the methodology used in previous rounds. In contrast, as stated by the majority, the third-round rules were:

[A] substantial methodological departure from that used in the prior rounds. The growth share approach–that is, tying a municipality’s affordable housing obligation to its own actual rate of growth–became the new and central criterion for determining a municipality’s future fair share obligation.

Those regulations were promptly challenged. In 2007, and again in 2010, the regulations were invalidated by two thoughtful and well-respected Appellate Division judges, one of whom is currently temporarily assigned to the Supreme Court (who recused herself from participation in the current Supreme Court’s decision). Among other things, both courts found that the growth share regulations were inconsistent with the Mount Laurel doctrine which, as stated above, tied the need and obligation to regions and eschewed a numberless methodology.

What is surprising about the Supreme Court’s current decision is not that they found the growth-share regulations invalid, but that they explained the constitutional obligation that their brethren had established 30 years earlier in a manner different from the prevailing explanation over that same time period. They did this not by redefining the constitutional obligation, but instead by suggesting that the Mount Laurel doctrine had never mandated the approach of identifying present and prospective need in accordance with housing regions and establishing a specified allocation. Instead, the majority found that regional needs and obligations and specific numbers were the judicial remedy, not the constitutional obligation, paving the way for them to suggest that the legislature was free (and, indeed, had always been free) to arrive at another approach to fulfill the constitutional obligation and promote the creation of ample affordable housing to address the needs of low- and moderate-income families in this state.

While this explanation clearly separates the generic constitutional obligation of municipalities to exercise their zoning power to promote the general welfare from the criteria of regional needs and specific numbers, the reality is that in 1983 the Supreme Court did indeed define the obligation as including regional need and obligation and a specific numbered system. That tenet was the thread that ran through all subsequent reviews of methodologies and was a stalwart of the constitutional obligation. In fact, the two well-respected Appellate Division panels in the 2007 and 2010 decisions challenging growth share did not perceive the nuance that the majority found so easily, i.e., the separation of the constitutional obligation from the judicial remedy, specifically finding that regional need and obligation and allocated numbers were not part of the constitutional obligation, but instead part of the remedy that the Supreme Court had established in its 1983 Mount Laurel II case.

Despite this finding, the majority declined to make an affirmative determination that the growth-share methodology would represent an adequate method to fulfill the constitutional obligation, if the Legislature amended the FHA to allow it. Rather than step into the fray as they had in their 1983 Mount Laurel II decision, the majority was content with taking on a spectator’s role, perhaps because, unlike in 1983, there is legislation governing the implementation of a municipality’s constitutional obligation (albeit structured by the Supreme Court’s Mount Laurel II decision), whereas, in 1983, there was no such legislation.

So where are we? If the governor and legislature cannot get together to forge a new or revised FHA, COAH will have no choice but to continue the path it embarked upon three decades ago and utilize a methodology that the Supreme Court has suggested may not reflect the reality of the times and the landscape in which the state exists in 2013. On the other hand, if the governor and legislature decide to embark upon a path using the roadmap provided by the majority, there could well be a refined and retooled growth-share model authorized. In either case, there is only one certainty: the professionals in the affordable housing field will continue to navigate a rough sea for the foreseeable future. •