NJ Supreme Court Rejects “Third Round” COAH Rules

The Supreme Court of New Jersey has instructed the Council on Affordable Housing (COAH) to go back to the drawing board. It rejected COAH’s proposed a “growth share” methodology for assessing prospective need in allocating a municipality’s fair share of the region’s need for affordable housing.

Under the growth share methodology, a municipality accrues its affordable housing obligation as a percentage of growth that actually occurs within its borders. The growth share obligation is based on ratios formulated from statewide—not regional—data on projected housing need, employment and residential growth.

The proposed rules invoked legal challenges from developers, municipalities and various interest groups. In In re Adoption of N.J.A.C. 5:96 & 5:97 by N.J. Council on Affordable Housing, the state’s highest court ultimately concluded that this third iteration of the “third round rules” is at odds with the Fair Housing Act (FHA).

As further detailed in the opinion, “[a]lthough that remedy imposed thirty years ago should not be viewed as a constitutional straightjacket to legislative innovation of a new remedy responsive to the constitutional obligation, the FHA remains the current framework controlling COAH’s actions. With respect to the current version of the FHA, the Third Round Rules are ultra vires.”

While the court acknowledged that there may be a reasonable basis for considering alternative approaches to promote the production of affordable housing in New Jersey, it also highlighted that any new approach must still conform to the FHA. Most notably, it found the third round rules fail to tie affordable housing obligations to prospective and present need of a housing region, as required under the FHA.

The court further concluded that the “growth share methodology is so intertwined with the new regulatory scheme that it cannot be severed.” Accordingly, it  ordered  COAH to adopt new regulations based on the previous rounds’ method of allocating fair share obligations among municipalities within five months. However, the Court also stated that “the Legislature may determine to authorize new avenues for addressing regional need and promotion of affordable housing.” The Court basically invited the Legislature to craft amendments to the FHA in lieu of more litigation.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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