NEW JERSEY & AFFORDABLE HOUSING: READY OR NOT, HERE COMES ROUND 4!!

WHY New Jersey Developers and municipalities should act now to prepare for the next Mount Laurel affordable housing round.

Next year will mark the 50^th anniversary of the “Mount Laurel doctrine,” the controversial, complex, and often counterintuitive body of law that has infuriated municipal politicians and residents and, at the same time, handsomely enriched developers and their professionals.

Since the Court released the ground-breaking Mount Laurel I opinion, the doctrine has seen a series of quiet times and turbulent events, including a “builder’s remedy” feeding frenzy in the early ‘80s, the responsive enactment of the New Jersey Fair Housing Act in 1985, the rise and fall of the New Jersey Council on Affordable Housing and, most recently, the Supreme Court’s decision in 2015 that COAH was, for all practical purposes, out of business.  The Court also effectively rewrote the FHA and threw the implementation of the doctrine back to the courts.  The impact?  The Mount Laurel doctrine, once again, became the Wild West that it was during the early 1980s.       

My firm at the time represented dozens of municipalities in every corner of the state.  In other words, I’ve been in the thick of things for the past 9 years.

After Mount Laurel IV, we had our work cut out for us.  We had no set procedures, no fair share numbers, and we weren’t even sure what set of regulations to use.  It was bad and, despite many nasty emails and uncomfortable conversations, the stakeholders (municipalities, developers, and Fair Share Housing Center (FSHC)), figured it out.  The court-appointed special masters also played a key role in our progress.  In fact, at the last count, 354 New Jersey municipalities reached settlements with FSHC and intervening developers, adopted conforming Fair Share Plans, and secured judicial approval of those Plans.

For the past year or so, things have been eerily quiet in the Wild West.  Other than occasional flare-ups, most towns have been busy implementing their court-approved Plans.   That calm, however, was merely a brief prelude to the upcoming storm currently developing in Trenton.

In January, the Assembly and Senate introduced identical bills (A4 & S50) which, if enacted, will substantially amend the FHA and codify the new Round 4 “ground rules.”  It will also put COAH out of its misery (finally) and substitute it with the New Jersey Department of Community Affairs (DCA), which will be tasked with calculating regional and local fair share obligations based on the methodology outlined in Judge Jacobson’s 200-plus page 2018 opinion.

I suspect that the new FHA will not be universally revered, and it’s a virtual certainty that one or more of the stakeholders will file challenges. 

The Future of New Jersey Affordable Housing and Mount Laurel is the Wild West.    

The manner in which towns secure and maintain “immunity” from exclusionary zoning lawsuits will also change from past practices.  In the recent past, municipalities would typically file a declaratory action asking for judicial Fair Share Plan approval, and simultaneously file a “Motion for Temporary Immunity” which was routinely granted.  To extinguish immunity, FSHC and developers carried the heavy burden of proving that the town was “determined to remain constitutionally noncompliant” per Mount Laurel IV.  Since 2015, I am aware of only two cases where a town secured, then lost, immunity.  The other 352 towns didn’t make that costly mistake.

Now, securing immunity will require a town to adopt a resolution, by January 31, 2025, accepting the numbers crunched by the DCA or substantiating its calculations, and thereafter submit it to the “Affordable Housing Dispute Resolution Program” (Program), subject to timely challenges by interested parties on or before February 28, 2025.  The numbers resolution merely creates a presumption of validity, which is much weaker than the current “determined to be noncompliant” standard mentioned above.  

In Other Words, More Mount Laurel Litigation.

Once the fair share obligations are finally established, towns must adopt a Housing Element & Fair Share Plan (HEFSP) by June 30, 2025. Interested parties will then be able to challenge the Plan by August 31, 2025.   If a challenge is filed, the municipality will face an almost impossible task of resolving it four months later, on December 31, 2025.   If the past is prologue, only a fraction of contested matters will meet this deadline, especially since a developer or FSHC could “run out the clock” on the deadline.  Any unresolved disputes will then be transferred to the Mount Laurel judges in each of the state’s 15 vicinages, which promises even more litigation.

Another dagger is that municipalities can no longer claim “rental bonus credits” against their fair share obligations, which effectively increases the fair share obligation by 25 percent.  There are several new fractional bonus credits, which will impact each town differently. 

Towns seeking “Vacant Land Adjustments” will also be impacted.  For example, a town lacking any vacant land will still have to identify enough potential redevelopment sites to address at least 25 percent of its “new construction” obligation.

Today’s Actions to Comply with Mount Laurel Regulations will Reap Tomorrow’s Benefits for New Developments?

There are other less notable aspects of the new FHA which I will address if and when Governor Murphy signs it into law.  At this point, however, one thing is clear:  Municipalities and developers should be taking specific actions NOW.   Please feel free to contact me to discuss your circumstances and our recommendations.

###Michael A. Jedziniak has over two decades practicing exclusively in the Mount Laurel arena and is one of the state’s most experienced attorneys in matters involving affordable housing development, litigation, and municipal compliance.