Appeals Court Strikes Down Third Round COAH Rules; Corzine Administration Given Six Months to Develop New Affordable Housing Plan

On Thursday, January 25, 2007, the Appellate Division sent shockwaves throughout the state by invalidating the third round affordable housing rules. The controversial third round rules were adopted by the Council on Affordable Housing (COAH) after much debate on December 20, 2004 and are designed to calculate affordable housing needs from 1999 to 2014 and establish criteria for satisfaction of the affordable housing need between 2004 and 2014. Almost immediately after their adoption, the New Jersey Builders Association, Fair Share Housing Center and several other organizations brought a challenge against the third round rules asserting that they do not satisfy or advance the state’s constitutional or statutory obligation to provide affordable housing in the calculation of housing need, the allocation of that need or through the compliance mechanisms available.

Although the Court upheld some components of the rules such as COAH’s methodology for calculating a municipality’s rehabilitation share, its decision to no longer reallocate present need, and the rules awarding credits, bonus credits and vacant land adjustments, major components of the rules were struck down including portions of the growth share rules, the rules that permit municipalities to provide affordable housing without offsetting benefits, and the rules that permit municipalities to age restrict fifty percent (50%) of affordable housing to be built in a municipality. The Court directed that the rule-making process to amend the third round rules to conform to the constitutional and statutory mandate to provide affordable housing must be completed within six (6) months from the date of the Court’s opinion, i.e., by no later than July 25, 2007.

The potential ramifications of the Court’s ruling are not fully known at this time. However, it appears that the impacts to municipalities and builders are as follows:

• • Municipalities that have been granted certification approvals prior to January 25, 2007 can continue to operate in accordance with such approvals as per the Court’s holding that it will “not disturb substantive certification approvals granted prior to the issuance of this opinion.”

• Municipalities that have not been granted certifications approvals or whose applications are pending approval as well as builder’s remedy actions for any municipality that has not been granted a certification approval prior to January 25, 2007 are on hold pending the amendment process.

Click here to read more about COAH’s Third Round Rules:
COAH Proposal Would Overhaul Affordable Housing Policy, Abandon Past Approaches to “Fair Share” Determinations by Linking Municipal Obligations to Actual Growth (By Paul M. Hauge and Howard D. Geneslaw)