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Wall Street Journal: N.J. Towns Face Greater Liability in Housing Case

Posted by Laura Denker on June 29th 2016

By Kate King June 27, 2016

A New Jersey appellate court is expected to decide soon whether municipalities across the state must allow tens of thousands of additional units of affordable housing to be built, a ruling that could significantly expand some towns’ housing obligations.

The panel of three judges in the appellate division of state Superior Court in Burlington County is considering whether municipalities should be held liable for government-mandated affordable-housing requirements that accrued from 1999 through 2015, or whether they are responsible only for current and future needs.

The Council on Affordable Housing, a state agency responsible for determining and enforcing municipalities’ affordable-housing mandates, has been mired in bureaucratic problems and legal challenges since 1999. Last year, the state Supreme Court stripped the agency of its powers after determining it failed to enforce affordable-housing requirements.

The southern shore town of Barnegat has asked the court to rule that municipalities aren’t liable for the affordable-housing requirements that accrued during the past 16 years. Holding towns and cities responsible for those mandates would improperly dilute the municipalities’ local zoning powers, said Jeffrey Surenian, an attorney for Barnegat.

“If the numbers are so high that every site has to be zoned for affordable housing, that is a huge infringement on how the municipality is ultimately developed,” Mr. Surenian said. “You could have sites that are developed at densities 10 times greater than they were originally planned for.”

Municipalities shouldn’t be held responsible for the government’s dysfunction, Mr. Surenian said.

On the other side, affordable-housing advocates have argued that ignoring the need that went unmet from 1999 through 2015 would unfairly deprive low-income residents of affordable housing. Kevin Walsh, executive director of Fair Share Housing Center, an advocacy group that promotes affordable housing, said the municipalities have a constitutional obligation to ensure housing for low-income residents.

“You can’t just provide housing for the CEOs, you have to provide housing for the people pushing the brooms,” Mr. Walsh said. “If a town is going to allow for mansions, it also has to allow for starter homes and apartments.”

Developers seeking to build in New Jersey, the country’s most densely populated state, are closely following the case in the hopes that the ruling will pave the way for multifamily projects in towns that have historically resisted those projects.

If towns and cities are ultimately held responsible for affordable-housing obligations dating back to 1999, the scope of those obligations remains unclear.

Fair Share Housing Center has calculated that municipalities across the state could be liable for more than 100,000 affordable-housing units. Mr. Surenian called that number “patently unrealistic” and said the municipalities’ so-called gap-period obligation would be closer to 37,000 units.

In Randolph, a town in Morris County in northern New Jersey, four developers have filed court motions alleging the town isn’t meeting its constitutionally required affordable-housing mandate.

One of those developers, Canoe Brook Management, is trying to build a $40 million luxury-apartment development with 15% of the units set aside for affordable housing.

Darren Carney, Randolph’s planning administrator, said the town’s own analysis shows it has already satisfied its affordable-housing requirements through 2025.

“Randolph has constructed affordable housing and it always has in the past met prior obligations,” he said. “At the end of the day, our housing plan says we don’t need any more affordable-housing units.”

But if the developer can show that Randolph hasn’t zoned for an adequate amount of affordable housing, which the developer seeks to provide, it stands a better chance of securing the necessary zoning approvals for its project, said Devra Goldberg, a partner at Canoe Brook.

“Our project would be a great way for them to provide some of their affordable-housing obligation,” Ms. Goldberg said.

Fair Share Housing Center, which intervened in the Canoe Brook case, filed court papers claiming Randolph needs to zone for 1,447 additional affordable-housing units to meet government requirements.

The discrepancy between the two sides’ affordable housing calculations stems in part from the disagreement over whether Randolph is responsible for gap-period obligations.

If the appellate panel rules that Barnegat is responsible for the gap-period obligation, Randolph and other municipalities could be forced to approve zoning applications they otherwise wouldn’t to meet their affordable-housing mandates.

A consortium of 288 municipalities filed court documents supporting Barnegat in the appellate-court case. Mr. Surenian said he expects whichever side loses to appeal the ruling to the state Supreme Court.