Skip to main content

Elon Associates, L.L.C. v. Township of Howell

370 N.J. Super. 475, 851 A.2d 714 (App. Div. 2004)

MOUNT LAUREL; COAH; APPEALS—The Fair Housing Act’s requirement of exhaustion of remedies is applicable even if a grant of substantive certification by the Council On Affordable Housing is reversed on appeal and the matter is remanded to the Council for reconsideration.

A local municipality filed a petition with the Council on Affordable Housing (COAH) for substantive certification of its affordable-housing compliance plan to satisfy its “second cycle” obligations, some of which were satisfied by credits for actions it had taken while satisfying its “first cycle” obligations. One of those credits was for the rezoning of a tract of land on which a developer proposed to construct a housing development with affordable housing units. An owner of another tract of land in the municipality was proposing to construct a development that would also produce affordable-housing units. It appealed the COAH’s grant of substantive certification to the compliance plan, challenging the COAH’s recognition of the chosen site because that particular site had remained undeveloped for ten years after its inclusion in the first cycle plan. The owner claimed that the municipality’s chosen site did not present a realistic opportunity for construction of an affordable housing development. Specifically, he alleged the site was encumbered by wetlands and lacked access to water and sewer.

While this action was pending, the owner filed a Mount Laurel action against the municipality, seeking a declaration that the municipality’s plan failed to provide a realistic opportunity for the satisfaction of its fair-share obligation, and arguing that its property should have been included in the compliance plan.

In response to an earlier action involving the parties, the Appellate Division reversed COAH’s substantive certification of the second cycle compliance plan and remanded the matter to COAH. The Court concluded that the objecting owner had raised serious questions as to whether the chosen site afforded a realistic opportunity for the construction of affordable housing, and that COAH had erred in refusing even to consider the facts presented by the objecting owner. The COAH argued that it had exclusive jurisdiction to consider whether the compliance plan satisfied its second cycle.

In the present Mount Laurel action, the lower court held that completing proceedings on a municipality’s petition for substantive certification is a prerequisite to maintenance of a Mount Laurel action, and therefore the Appellate Division’s remand to COAH divested the Superior Court of jurisdiction. Accordingly, the lower court entered an order dismissing the objecting owner’s complaint, subject to reinstatement upon completion of the remand.

On appeal, the Appellate Division held that the Fair Housing Act (FHA) provides that if a municipality invokes the administrative procedures of the COAH before Mount Laurel litigation is instituted, those administrative procedures must be exhausted before a party may pursue such litigation. The FHA also provides that if COAH grants substantive certification approving a municipality’s plan for complying with its affordable housing obligations, a party may then pursue Mount Laurel litigation, but there is a strong presumption that the municipality’s plan was valid. Therefore, the Court believed that the question in front of it was whether the FHA’s requirement of exhaustion of administrative remedies is applicable if COAH’s grant of substantive certification is reversed on appeal and the matter is remanded to COAH for reconsideration.

As its answer, the Court held that exhaustion of remedies is, in fact, required under these circumstances. It stated that nothing in the language of the FHA or its underlying policies would support the conclusion that its exhaustion of remedies requirements were inapplicable in this situation. The FHA expresses a strong preference for having the COAH resolve affordable housing disputes. The Court also rejected the owner’s argument that it should have been allowed to pursue Mount Laurel litigation against the municipality because its complaint was filed five weeks before the court remanded the municipality’s petition for substantive certification to COAH. N.J.S.A. 52:27D-317(a) only allows Mount Laurel litigation to be maintained against a municipality which has a substantive certification. As a result of the Court’s reversal and remand to COAH, the municipality no longer had substantive certification. Thus, even though the owner’s action was maintainable as of the date it was filed, the Court’s remand reinstated the exhaustion of administrative remedies requirements of N.J.S.A. 52:27D-309(b).

The Court also rejected the owner’s argument that the action was maintainable under N.J.S.A. 52:27D-319, because COAH failed to complete its administrative process within six months of either the filing of the owner’s complaint or the remand to COAH of the petition for substantive certification. This statute states that if COAH has not completed its review and the mediation process for a municipality within six months of receipt of a request by a party who has instituted litigation, the party may file a motion to bypass the exhaustion of remedies requirement. The Court ruled that this statute must be read together with N.J.S.A. 52:27D-316(b), which states that any person who institutes Mount Laurel litigation shall file a notice to request review and mediation with COAH. Accordingly, these two provisions, applied together, indicate that the first applies only if the COAH’s review had been initiated by a litigant. If the statute was interpreted to allow a court to relieve a party of the exhaustion requirements when COAH fails to complete its proceedings within six months, regardless of who initiated the proceedings, it would encourage any party who wanted a prompt decision by COAH to file a complaint in the court solely for the purpose of pressuring COAH to complete review within six months. The Court held that this interpretation was inconsistent with the intent of the FHA.

Therefore, the Appellate Division affirmed the lower court’s decision and required that all the COAH administrative remedies had to be exhausted before the owner could bring suit in court.

66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 •