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Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing

416 N.J. Super 462, 6 A.3d 445 (App. Div. 2010)

COAH; MOUNT LAUREL — The Council on Affordable Housing’s third round rules should be adopted using the methodology similar to that applied in the first two rounds.

The Fair Housing Act established the obligation for municipalities to provide affordable housing in accordance with the Mount Laurel cases. The Council on Affordable Housing (COAH) was responsible for adopting rules and providing mechanisms to assist the municipalities in meeting their affordable housing obligations. COAH was required to adopt its “third round” rules, dealing with municipalities’ affordable housing obligations, for the period of 1999 to 2018. Even though COAH was required to adopt the “third round” rules by 1999, it did not do so until 2004.

When COAH adopted its “third round” rules, it contained major changes to its rules for the first two rounds. A key change was the adoption of a “growth share” approach for determining a municipality’s fair share of its affordable housing obligations. Under the “growth share” approach, a municipality is not required to provide a predetermined number of affordable housing units. Instead, it is only required to provide those additional units if job or housing growth occurs within the municipality. COAH’s third round rules also made a significant change that affected developers. In previous rounds, when developers were required to provide affordable housing, they also received some compensatory benefit for constructing affordable housing units, such as allowing developers to exceed the density requirements otherwise required within the municipality. The new third round rules allowed municipalities to require developers to include affordable housing without getting those benefits.

On appeal, the Appellate Division then struck down portions of the third round rules and directed COAH to adopt revised third-round rules that conformed with the Fair Housing Act and the Mount Laurel cases. COAH finally adopted its revised third-round rules in 2008, but without major changes from its original rules. Twenty-two appeals were then filed challenging the revised third round rules. The Appellate Division invalidated the portion of COAH’s revised third round rules that used a “growth share” methodology for determining a municipality’s affordable housing obligation. The Court concluded that there was no reliable data showing that the state, as a whole, and each region of the state, had sufficient developable land within growth areas to generate enough affordable housing. Without that data, COAH could not reasonably assume that the growth share methodology would provide a realistic opportunity to meet statewide and regional affordable housing needs. The Court also found that the growth share methodology allowed a municipality to void any substantial responsibility for providing affordable housing by adopting land use regulations that discouraged growth.

The Court concluded that the third round rules should not be delayed any longer by allowing COAH to adopt another methodology that relies on a growth share approach. Instead, it directed COAH to adopt third rule rules that use a methodology similar to those applied in the first two rounds. It required COAH to adopt the new third round rules within five months.

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