N.J. Appellate Division Holds that Municipalities are not Obligated to Satisfy “Separate and Discrete” Gap Period Need for Affordable Housing

On July 11, 2016, in an interlocutory appeal, the Appellate Division reversed Judge Mark A. Troncone’s February 18, 2016 order, which had found, as a matter of law, that municipalities were obligated to provide realistic opportunities for the construction of affordable housing for the need that accumulated during the period from 1999-2016 (the “gap period”). In an opinion by Judge Fasciale, the Appellate Division held that municipalities were not required to discretely calculate or satisfy the housing obligations that accumulated during the gap period as part of a municipality’s “prospective need.” In the Appellate Division’s view, those who are living in dilapidated, overcrowded, or cost-burdened housing would be adequately reflected in present need calculations, and any further alterations to municipal obligations would require legislative or executive action. The opinion highlights what appears to be a distinction between the constitutional fair share housing obligation, which had been understood to accrue year after year according the Court’s decision in Mt. Laurel II, and the compliance obligations arising under the Fair Housing Act, which are limited only to satisfying the statutorily prescribed need.

In its analysis, the Appellate Division specifically examines whether the Fair Housing Act or the core principles of the Mt. Laurel doctrine would permit a “separate and discrete” gap period obligation. Relying on the definition of “prospective need” set forth in the Fair Housing Act (N.J.S.A. 52:27D-304(j)) and the guidance of the Supreme Court’s opinion in In re the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, 221 N.J. 1 (2015), the court held that there was no authority for retroactively calculating the gap period distinctly. Further, the court also held that there was no foundation for any calculation of gap period need in any of the proposed Third Round regulations, dating back to COAH’s first attempts to promulgate conforming Third Round regulations in 2004. Prospective need, according to the Appellate Division, encompasses only the next ten years, not to any previously accrued need. In reaching this determination, the court relies in part on legislative silence, noting that in the twelve revisions to the Fair Housing Act between 1999 and 2016, the Legislature never addressed the satisfaction of gap period need.

The court’s opinion calls upon the Legislature and the Executive to take steps to amend the Fair Housing Act to clarify what to do about the obligation arising during the gap period, finding that such a determination would amount to a policy position that is best left to the political branches. As the court notes, there are currently two pieces of legislation pending in the Assembly (A3821) and Senate (S2254), both of which seek to eliminate any obligation for satisfaction of gap period need between housing cycles.

The court remanded the matter back to the trial court with directions to now determine whether the municipal housing and fair share plans meet the “constitutional goal of creating ‘a realistic opportunity for producing its fair share of the present and prospective need for low- and moderate-income housing.’” (emphasis in original).

If you have a project involving an affordable housing component, the impact of this decision should be analyzed further as it relates to your specific project.

Cameron W. MacLeod is an Associate in the Gibbons Real Property & Environmental Department.
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