New Jersey Supreme Court Appoints Trial Court the Venue for Affordable Housing Disputes

Last week, the New Jersey Supreme Court issued a green light to developers and other interested parties to eventually pursue builders’ remedy actions in New Jersey Superior Court. The decision is the latest in a battle over affordable housing that has been in and out of the courts since the Mount Laurel decision in 1975. Most recently, in September 2013, the Supreme Court overturned the Council on Affordable Housing’s (“COAH”) latest attempt at adopting affordable housing regulations and ordered COAH to adopt new regulations within five months. That period was eventually extended to November 2014. COAH, however, did not adopt new regulations. Its inaction prompted a motion in aid of litigants’ rights, whereby parties to the prior action sought to break the bureaucratic logjam. Last week’s decision, designating trial courts as the venue for affordable housing disputes, is the New Jersey Supreme Court’s solution to the logjam.

The Supreme Court recognized that “COAH has had fifteen years to adopt Third Round Rules as it is required to do in accordance with its statutory mission,” and, thus, refused to give COAH additional time. Instead, the Supreme Court dissolved the exhaustion of remedies provision of the Fair Housing Act and designated trial courts as the initial venues for determining whether municipalities have met their constitutional obligations to provide a realistic opportunity for affordable housing. In making such determinations, the Supreme Court referenced the First Round and Second Round COAH Rules as guidelines, as well as select provisions of the Third Round Rules that have been upheld by the courts. Thus, the courts, rather than COAH, will have the task of providing a substitute for “substantive certification,” to shield municipalities from builders’ remedy suits.

Recognizing that municipalities have varied in their efforts to meet their constitutional mandates over the last fifteen years, the Supreme Court grouped municipalities into three categories and provided a judicial pathway for each:

1. municipalities which diligently applied for and received substantive certification from COAH under prior Third Round Rules;
2. municipalities which started, but did not complete, the Third Round substantive certification process; and
3. municipalities which chose not to participate in the COAH process at all under any version of the prior Third Round Regulations.

The Supreme Court then crafted pathways for the first two groups of municipalities to affirmatively and proactively seek declaratory judgments that their housing elements and affordable housing plans are constitutionally compliant, thus shielding those municipalities from future builders’ remedy actions. If those municipalities elect to proactively seek immunity, they must do so within 30 days of the effective date of the order. The third group of municipalities will remain open to constitutional challenges and builders’ remedy suits, as they had not taken efforts to shield themselves in the past.

The Supreme Court delayed the effective date of its order by 90 days. It stressed, however, that its order does not divest COAH of the ability to adopt new, compliant affordable housing regulations, and does not divest the Legislature of the authority to amend the Fair Housing Act. Until either COAH or the Legislature acts, however, the courts, and not COAH, will be the venue for the next round of affordable housing battles.