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N.J. Supreme Court rules towns must fill affordable housing deficit

New Jersey's Supreme Court ruled Wednesday that municipalities must zone for the many thousands of affordable housing units not created during a 16-year "gap" period when the state failed to calculate municipalities' fair-share housing obligations.

The unanimous ruling, which could dramatically reshape the look and feel of some towns, appears to side with affordable-housing advocates, some of whom have calculated that with the gap obligation included, municipalities statewide must allow for as many as 200,000 more low- and middle-income homes by 2025.

The justices did not specify a specific number, however, or endorse a formula for calculating a township's obligation.

"Towns are constitutionally obligated to provide a realistic opportunity for their fair share of affordable housing for low- and moderate-income households formed during the gap period," the court declared in its 32-page ruling.

The Fair Share Housing Center, which had argued before the court in favor of a residual obligation, called the ruling "an important victory for tens of thousands of New Jersey families."

Had the court ruled otherwise, it said, "towns would have been able to lock in patterns of housing discrimination that make New Jersey one of the most segregated states in the country."

The New Jersey League of Municipalities, which opposes a large retroactive obligation as burdensome and unachievable, called the court's ruling "complicated," with many ambiguities still unresolved. Michael Cerra, the league's assistant executive director, predicted it would lead to much litigation at the trial court level, and said he thought it unlikely that the courts would embrace Fair Share's 200,000 figure.

Anthony Campisi, spokesman for Fair Share, disagreed.

"It's not complicated for towns that want to comply," he said. "The league is speaking for an ever-smaller group of municipalities — those who have chosen to continue attempts to exclude by making absurd arguments, rather than the nearly 100 towns that have reached settlements."

A report commissioned last year by a coalition of municipalities calculated that Burlington, Camden, and Gloucester Counties must zone for 4,404 units; Fair Share calculated 30,577 units. Critics complain that such quotas compel towns to zone for denser housing to attract developers.

The environmental group Sierra Club of New Jersey hailed the court decision but cautioned that towns must meet their affordable-housing obligations "in a way that minimizes environmental impacts" and sprawl.

"We must make sure it is done right," said Jeff Tittel, Sierra Club's executive director.

Fair Share, based in Cherry Hill, is designated by the courts to negotiate affordable-housing settlements with municipalities, subject to judicial review. The nonprofit also has the right to sue towns it believes are not honoring their affordable-housing obligations or failing to negotiate agreements in good faith.

Campisi said that since last year, more than 90 towns have committed to zoning for 30,000 units under the next, or "third round," obligation cycle that ends in 2025.

About 330 towns are engaged in the negotiations, according to Kevin Walsh, Fair Share's executive director and principal legal counsel. He argued in favor of the gap obligation before the court Nov. 30.

At its core the ruling calls for expanding the legal definition of present need as found in state law to include a gap calculation. Towns are currently required to determine both their "present" and "prospective" needs for affordable housing over the next decade, but "present need" now means only an assessment of substandard housing.

The high court's decision expands upon, and largely reverses, a July decision of the Appellate Division, which found that the law's narrow definition of present need did not admit a retroactive, or "gap," calculation.

Chief Justice Stuart Rabner recused himself from the case, citing a potential conflict of interest.

Walsh said the ruling promises to put new life into realizing the state's stalled and controversial commitment to affordable housing.

That commitment began in 1975 when the Supreme Court issued a landmark ruling named for Mount Laurel Township and declaring that zoning that excludes low- and middle-income households violates the state constitution. In 1983 it affirmed and expanded that decision in a second opinion known as Mount Laurel II.

Two years later the Legislature encoded those rulings into the newly enacted Fair Housing Act, and created the Council on Affordable Housing to assist municipalities in meeting their "fair share" obligations.

Starting in 1999, however, COAH repeatedly failed to devise an acceptable formula for calculating the number of units each town should zone for.

Frustrated by the delays, the Supreme Court in March 2015 issued its Mount Laurel IV decision dissolving COAH and instructing all the state's municipalities with affordable-housing obligations to submit new plans to county-level Superior Court judges for certification by year's end.

But the new process bogged down early last year when Fair Share insisted that towns still had a residual obligation left over from the gap period. To pick up the slack, it said, municipalities statewide needed to zone for 203,000 units by 2025.

About 300 municipalities balked at that assertion, noting that the Fair Housing Act of 1985 articulates no retroactive obligation and speaks only of the need for towns to meet their "present" and "prospective" needs. A report commissioned by the coalition estimated the statewide obligation at just 37,000 units, although Superior Court in Middlesex County last year called its analysis deeply flawed.

Then, in February, a judge in Ocean County opined in a case involving Barnegat Township that towns' housing obligations had accrued during the gap period.

Barnegat appealed, and in July the Appellate Division ruled that no such obligation had accrued. In September, however, the Supreme Court voided that ruling and agreed to hear an appeal of it.

Jeffrey R. Surenian, representing Barnegat in oral arguments, repeatedly told the judges that the Fair Housing Act contained no language that allowed for a calculation of retroactive need, and cautioned that the court should not "legislate" a gap obligation not found in law.

In some of their questioning, however, the justices seemed skeptical that the obligation could be avoided.

"Are you saying these people [in need of affordable housing] disappeared for 16 years?" asked Justice Faustino Fernandez-Vina.

Walsh countered Surenian by asserting that COAH and trial court judges had repeatedly found affordable-housing obligations to be "cumulative and gapless" and that the Legislature never challenged those positions.

Surenian, who also represents the consortium of municipalities in many of its legal challenges to affordable housing, called Wednesday's court ruling a "mixed bag."

The court misconstrued its own previous decisions and those of the Appellate Division, Surenian said, but he added that he was gratified that justices asserted that trial judges have what he called "wide discretion in defining prospective need."

Sen. Steven Oroho and Assemblyman Parker Space, North Jersey Republicans, issued statements criticized the ruling. They called affordable housing "flawed social policy" being inflicted on taxpayers by an "activist court."