On September 26, 2013, the New Jersey Supreme Court issued its long awaited decision on the validity of the COAH (Council on Affordable Housing) Third Round Rules. The key issue was whether or not the new proposed “growth share” approach to defining a municipal affordable housing obligation was constitutional. In a 3-2 decision, the Court held that the “growth share ” methodology was not permitted under the current provisions of the New Jersey Fair Housing Act of 1985. The Court found that since the new formula was based on housing needs from statewide (not regional) data for projected employment and residential growth, it would not be permitted under the Act. The Court found that the “growth share” approach was not based on COAH adopted region-specific data and was not structured to establish a firm obligation for each municipality in respect to prospective affordable housing needs. The court, however, did not hold the growth share methodology unconstitutional.
The Court sent the matter back to COAH with instructions to come up with a new set of substantive rules within the next five months using the Round One and Round Two methodology. The two Justices who dissented felt that the “growth share” approach was reasonable and realistic and permitted by the Act. Both the majority and minority challenged the New Jersey Legislature to weigh in on the issue if it wanted to permit a different methodology to calculate the Third Round obligations. The decision is now three weeks old and there is still no word from COAH. It is not likely COAH will meet the five month deadline since it has only met twice in the last two years. The Administration still wants to abolish the Council. Doing so would create a staggering task by attempting to apply the old methodology to the current and future municipal obligation.
The Third Round was to have started in 1999. Assuming the new rules take effect in 2014, COAH has a fifteen-year catch up period, together with a requirement to establish the municipal obligations for the next ten years. Whatever methodology ends up being adopted will dictate each municipalityâ€™s affordable housing obligations for twenty-five years. The previous cycles assigned obligations for six year periods, so one can only imagine what the numbers are going to look like for a quarter of a century of housing obligations. Clearly this calls for a legislative solution.
Firm Director Ed Schmierer serves on the New Jersey State League of Municipalities COAH Committee and has already started working with the League on a legislative solution. Many communities were hoping that this most recent Supreme Court decision would clarify matters, but unfortunately, just the opposite has occurred. Affordable housing obligations for municipalities still remain very much up in the air and will likely remain in limbo for the foreseeable future.