NJ Supreme Court to Hear Oral Argument on COAH Third Round Affordable Housing Regulations

On November 14, 2012, the New Jersey Supreme Court will be hearing oral argument as to whether the latest regulations adopted by the Council on Affordable Housing (“COAH”) are valid. Regardless of how the Supreme Court rules, the decision will have a far-ranging impact on the future of affordable housing in New Jersey and is being watched closely by developers, municipalities and public interest groups.

COAH’s regulations governing affordable housing, enacted pursuant to the Fair Housing Act, N.J.S.A. 52:27D-301 to -329.19, have had a tortured history. The so-called “first-round” regulations were effective from approximately 1987 to 1993. The “second-round” regulations followed thereafter. COAH initially adopted its “third-round” regulations in 2004. The “third-round” regulations were largely invalidated by the Appellate Division in In re Adoption of N.J.A.C. 5:94 and 5:95, 390 N.J. Super. 1, 73-74 (App. Div. 2007) [Third Round I].

COAH readopted revised “third-round” regulations in 2008. Those regulations were challenged by at least twenty-two municipalities and various trade organizations and public interest groups, and again were largely invalidated by the Appellate Division in In re Adoption of N.J.A.C. 5:96 and 5:97, 416 N.J. Super. 462, 488 (App. Div. 2010)[Third Round II]. The Appellate Division specifically overturned COAH’s use of a growth share methodology for calculating municipalities’ obligations to provide affordable housing and ordered that COAH adopt new regulations within five months using the methodology employed in the “first-round” and “second-round” regulations. COAH has not adopted new regulations. The New Jersey Supreme Court granted certification in the Third Round II case, 205 N.J. 317, on March 31, 2011, and will now hear oral argument on November 14, 2012. Oral argument was originally scheduled for November 7, but rescheduled because of the storm.

Interestingly, if the Supreme Court upholds the Appellate Division’s decision, there will be a question as to what State entity has the authority to enact new affordable housing regulations under the Fair Housing Act. The Governor abolished COAH by an Administrative Reorganization Plan on June 29, 2011, and replaced it with the Fair Housing Act Administration. That plan was appealed and overturned by the Appellate Division on March 8, 2012. The validity of the plan, and COAH’s future, is also now pending before the New Jersey Supreme Court. Oral argument has not been scheduled in that matter.

It has been almost a decade since unchallenged affordable housing regulations were in place, which has left municipalities and developers without a clear roadmap as to their obligations. The outcome of the case concerning the acceptable methodology for calculating municipal affordable housing obligations will certainly have an impact on the future of affordable housing laws in the State and on developers’ ultimate contributions. For those that are interested, the oral argument will be broadcast live on www.njcourts.com.

Jennifer P. Smith is an Associate in the Gibbons Real Property & Environmental Department.
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