New Jersey Municipalities Must Be Given Due Process Before COAH Funds Are Seized

New Jersey judicial vacanciesA New Jersey appeals court has ruled that Gov. Chris Christie can seize unused affordable housing trust funds from New Jersey municipalities. However, municipalities must be given adequate notice as well as an opportunity to contest the transfer.

Under current New Jersey affordable housing law, municipalities must spend money from the Affordable Housing Trust Fund by July 17, 2012. Moreover, any unused funds automatically divert to the state. Gov. Christie has already allocated the money he would claim back from these Trust Funds in his proposed state budget for the upcoming fiscal year and has thwarted legislative attempts to extend the deadline.

To stop Gov. Christie from seizing the funds, the Fair Share Housing Center and the New Jersey State League of Municipalities had sought a temporary injunction. They argued that although amendments to the Fair Share Housing Act allowed the state to seize money that has gone uncommitted for four or more years, COAH had failed to adopt regulations defining what constitutes “committed” funds.

While the Appellate Division was unwilling to grant the injunction, it did find that procedures must be implemented to ensure due process. “We are nevertheless concerned that, under these circumstances, COAH may seize affordable housing trust funds without giving the affected municipalities adequate notice and an opportunity to contest the transfer,” the opinion states.

Accordingly, the appellate court ordered that before any transfer is effectuated, COAH must provide the municipality with written notice describing the exact amount of funds intended for transfer as well as how the amount was calculated. The court further specified that the “first-in-first-out” approach must be used, whereby funds deposited in the municipal trust account will be segregated according to the date of deposit.

The ruling also states that municipalities must also be given the opportunity to object contest the transfer before COAH by demonstrating that the funds targeted for transfer have been “committed” to fund an affordable housing project by way of a legally enforceable agreement with a third party.

Of course, this is not the end of this legal battle. The Appellate Division stated that it would consider additional briefs and hold further arguments at a later date.

For a more detailed discussion of the legal issues surrounding New Jersey’s affordable housing programs, we invite you to check out Scarinci Hollenbeck’s Business Blog.


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