Attorney: Lawsuits likely in wake of COAH ruling
Appellate decision could force COAH to rethink rules
BY LAYLI WHYTE
Staff Writer

An Appellate Court decision rejecting the third round of regulations set by the state Council on Affordable Housing (COAH) may lead to lawsuits brought by developers against municipalities, according to an attorney whose practice focuses on affordable housing.

"I think this will precipitate lawsuits from developers who don't want to create any affordable housing," said Jeffrey Surenian, who represents some 40 municipalities on COAH issues, in an interview last week.

"All of those hundreds, and maybe even thousands, of developments that are in the pipelines may now try to seek relief from their affordable-housing obligation. The court didn't speak to what happens now."

Surenian represents Oceanport and Shrewsbury regarding their affordable-housing obligations.

Every municipality in the state is now faced with possible changes as a result of the Appellate Division's decision to strike down most of the third round COAH rules.

COAH now has six months to revamp its third-round rules in line with the opinion rendered last week by the Appellate Court.

The New Jersey Builders Association, along with three other appellates, brought the lawsuit against COAH and the New Jersey League of Municipalities in December 2004 claiming that the third round of COAH regulations was unconstitutional on several grounds.

The Jan. 25 court decision said many aspects of the third-round rules may even hinder the development of affordable housing.

The decision bars COAH from acting on any of the more than 250 pending petitions by municipalities for approval of their housing plans until it adopts the new third-round rules.

Affordable-housing obligations are the result of a 1983 New Jersey Supreme Court decision that mandated municipalities take steps to meet their fair share of low- and moderate-income housing need. The decision is known as the Mount Laurel doctrine.

The method by which COAH calculated affordable-housing obligation for municipalities takes into account fiscal capacity, employment, wealth and vacant land availability.

Round one of COAH's Fair Housing plan focused on creating reasonable opportunities for affordable housing through the municipal zoning ordinances. The second round focused on the rehabilitation of existing housing stock.

Affordable housing is defined by the state as housing that can be bought or rented with 30 percent or less of a person's income.

The round-three rules released in August 2003 stated that for every eight new residential units built by a developer, one must be designated affordable housing.

The third-round projections that municipalities submitted to COAH for approval were based on anticipated growth between 1999 and 2014.

Stephen Eisdorfer, attorney for the New Jersey Builders Association, said in an interview last week that municipalities should not have been permitted to determine their own potential growth.

"The growth share approach says that we treat each town separately," he said. "The court said that the Mount Laurel obligation is a regional obligation. If we let every municipality decide what its growth is going to be in the future, it encourages municipalities to say: 'We're not going to grow anymore so we don't have to have any poor people.' "

Susan J. Kraham, the attorney representing the Coalition on Affordable Housing and Environment, one of the appellates, said her client's interest in the lawsuit was to bring about development that did not induce sprawl, and she said that she believed the COAH third-round regulations did not meet that criteria.

"COAH's ratios were unrealistic," Kraham said. "There was no demonstration that housing could be built in that [eight to one] ratio. There was no demonstration that there is enough land to absorb housing such as that those ratios could be built. We wanted better allocation."

Surenian said that he does not believe the decision will mean better allocation for municipalities.

"This decision means higher fair share obligations for municipalities," he said, "and loss of a valuable tool to help municipalities meet their fair share obligations."

The court's ruling states that developers, if required to construct affordable housing units, should be compensated by the municipality.

"We conclude that the Mt. Laurel doctrine requires municipalities to provide incentives to developers to construct affordable housing," the court said. "Land ordinances requiring all developers to provide some affordable housing conflict with the essence of the Mt. Laurel doctrine, which requires that municipal land use ordinances create a realistic opportunity [for the construction of affordable housing]."

The third round of COAH regulations permitted municipalities to ask for more than one affordable unit per eight market rate housing units when developers were requesting a variance for density.

Surenian said he believes this is better than letting developers have more density for constructing affordable housing units, because it puts the power in the hands of the municipal land use boards, not the developers.

Another issue the decision discussed was COAH's third round rule that permits municipalities to restrict 50 percent of their affordable housing units for use by senior citizens.

"History has shown that many municipalities believe it is in their best financial interest to exclude low- and moderate-income households," the decision reads, "especially households with children."

The decision contends that families with children are more in need of affordable housing than seniors, and that 50 percent of affordable units set aside for seniors is too high.

Eisdorfer said the decision is good for builders and developers, and the decision will likely mean more affordable housing units throughout the state.

"No one is willing to appropriate public funds to build affordable housing," he said. "You have to mobilize private resources, and you do that by creating realistic housing opportunities.

Eisdorfer said COAH's regulations do not accurately reflect the need for affordable housing in the state, and the decision will force COAH to rewrite the rules to better meet housing needs.

"COAH assumed an enormous number of units would become available to poor people because of the decline in the price of housing," he said. "There is no evidence to support that. We are at historic peaks in terms of unaffordablility."

"With each new generation of growth share ordinances," Surenian said, "they became more and more refined. This decision leaves us in limbo. COAH has six months to come up with new regulations. I don't know how that's going to be done. It's an awfully tall order. "

Surenian said that although the COAH regulations may not be perfect, he believes they are the best way to meet the needs of low- and moderate income families and were having an impact.

"The Appellate Division had the wool pulled over their eyes, he said. "This was the most realistic component to create affordable housing. It is exactly the Mt. Laurel doctrine.

"If you zoom back and look at the big picture, these ordinances were the fairest way to produce affordable housing. These ordinances were proliferating to such an extent that it was changing the way development was done in this state, which is exactly what the Mt. Laurel doctrine calls for. The ordinances were a vehicle that facilitated that objective. They are not pools of exclusion the way the developers claim."