Clarifying How New Jersey Counts Prospective Need and Evaluating Competing Proposals for Builder’s Remedies

Determining the municipal fair share housing obligation has been the subject of litigation for the better part of 18 years, since the last valid set of regulations for the New Jersey Council on Affordable Housing expired in 1999. As we have previously blogged, the Supreme Court’s recent decision in In re Declaratory Judgment Actions Filed by Various Municipalities, County of Ocean, – N.J. – (2017) established that the constitutional obligation to provide realistic opportunities for the construction of affordable housing is cumulative, leaving only the question of how to calculate the need during two periods: one from 1999 to 2015, and one from 2015 to 2025. The Appellate Division recently released for publication an edited version of Judge Wolfson’s trial court opinion in In the Matter of the Application of the Township of South Brunswick for a Judgment of Compliance and Repose and Temporary Immunity from Mount Laurel Lawsuits, in an effort to provide further clarity on how to calculate prospective need during the period from 2015 to 2025. The opinion addresses two fundamental questions: (1) how shall a municipality calculate its constitutional fair share housing obligation, and (2) how to evaluate competing claims for so-called “builder’s remedy” relief from intervening developers.

The decision addresses how municipalities should determine their fair share housing obligation, and which methodology is appropriate. Judge Wolfson’s opinion considers the testimony of four expert witnesses and determines whether the proposed methodologies for determining both present and prospective need were consistent with the prevailing statutes and existing COAH and UHAC regulations. On balance, the trial court’s decision finds that the methodologies proposed by Fair Share Housing Center and the developer were appropriate and conforming, while the methodology prepared by the municipality’s expert did not conform to the requirements set forth by the Supreme Court. Notably, similar questions regarding methodology are currently before Judge Jacobson in Mercer County. The decision does not address the gap period need, or the need accrued during the period from 1999 to 2015.

Because of South Brunswick’s failure to provide a compliant plan in the eyes of the trial court, Judge Wolfson also addressed the issue of appropriate remedies for developers as well. Prior to the Supreme Court’s decision in In re Adoption of N.J.A.C. 5:96 II, 221 N.J. 1 (2015), builder’s remedies were a mechanism of relief for successful plaintiffs in challenges to the constitutionality of a municipality’s compliance plan. If a municipality was found to be in violation of its constitutional obligations, any developer who sued could be granted the right to build a project in that municipality as a way of “vindicat[ing] the constitutional obligation.” Southern Burlington County NAACP v. Twp. of Mt. Laurel, 92 N.J. 158, 278-80 (1983).

In In re N.J.A.C. 5:96 II, however, the Supreme Court changed the way in which the municipality’s compliance was evaluated, which the trial court notes functionally eliminated the builder’s remedy as a mechanism of relief. Where multiple developers have intervened in a given municipality, there is no longer a race to the courthouse steps, but instead a need for the court to make determinations on site selection and assess whether the plan provides a realistic opportunity for development. Relying on Judge Serpentelli’s decision in J.W. Field Co., Inc. v. Franklin Twp., 204 N.J. Super. 445 (Law Div. 1983), the trial court here sets forth that any relief granted to developers will be through an “interactive process, guided primarily by equitable considerations” which will necessarily include the following site suitability evaluations:

  1. An assessment of whether any project was clearly more likely to result in actual construction than other projects;
  2. The availability of infrastructure;
  3. The project’s proximity to goods and services;
  4. The project’s regional accessibility; and
  5. The property’s environmental suitability and compatibility with neighboring land uses.

Once municipal fair share housing obligations are determined, a short window will open for developers to revise plans to maximize the feasibility of their proposals to the municipalities. As trials and settlements progress in this new wave of affordable housing litigation, the impact and value of these equitable considerations may prove to be the difference as to whether a developer is or is not included as part of the municipal fair share plan.

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