In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing , 221 N.J. 1 ( 2015 )

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)
In re Adoption of N.J.A.C. 5:96 & 5:97 by N.J. Council on Affordable Housing (M-392-14) (067126)
Argued January 6, 2015 -- Decided March 10, 2015
LaVECCHIA, J., writing for a unanimous Court.
This matter comes before the Court on a motion in aid of litigants’ rights, pursuant to Rule 1:10-3, from the
Court’s judgment reported at 215 N.J. 578 (2013). By this motion, the Court considers a request for relief from the
exhaustion of remedies required by the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to 329, and to allow civil
actions concerning municipal compliance with constitutional affordable housing obligations to proceed in the courts.
This Court’s Mount Laurel series of cases recognized that the power to zone carries a constitutional
obligation to do so in a manner that creates a realistic opportunity for producing a fair share of the regional present
and prospective need for low and moderate income housing. The Legislature enacted the FHA to assist in municipal
compliance with that obligation. The FHA created the Council on Affordable Housing (COAH), designed to
provide an optional administrative alternative to litigating compliance through civil exclusionary zoning actions.
The FHA encourages compliance by compelling COAH to establish and periodically update presumptive
constitutional housing obligations for each municipality and to identify the means by which a town’s proposed
affordable housing plan, housing element, and implementing ordinances can satisfy its obligation. The FHA
rewards compliance in two ways: (1) by providing a period of immunity from civil lawsuits to towns participating
in the administrative process for demonstrating constitutional compliance (the exhaustion-of-administrative-
remedies requirement); and, (2) for a town whose fair share housing plan secures substantive certification from
COAH, by providing a period during which the municipality’s implementing ordinances enjoy a presumption of
validity in any ensuing exclusionary zoning litigation. The continued viability of both rewards is subject to COAH’s
required updating of municipal housing obligations and corresponding substantive and procedural rules.
COAH’s rules governing the last round of municipal housing obligations expired in 1999. Since then
COAH has failed twice to adopt updated regulations (Third Round Rules) for the present period of municipal
housing obligations. Most recently, in September 2013, the Court affirmed the Appellate Division’s invalidation of
the second iteration of the Third Round Rules. 215 N.J. 578 (2013). In its September 2013 opinion, the Court set a
five-month compliance period, and directed COAH to adopt rules by February 26, 2014. However, on February 26,
2014, COAH filed a motion for an extension of time. On March 14, 2014, this Court granted the extension and
ordered COAH to take specific rule-promulgation steps, culminating in adoption of the required Third Round Rules
by November 17, 2014. In the event COAH did not comply, the Order provided that the parties could return to this
Court for relief, including lifting the FHA’s administrative-exhaustion requirement.
When COAH failed to promulgate Third Round Rules by November 17, 2014, Fair Share Housing Center
(FSHC) filed the instant motion pursuant to Rule 1:10-3 and the Court’s March 14 Order permitting such motion
practice. The Court heard oral argument on January 6, 2015, and COAH’s representative admitted that COAH has
not conducted or scheduled any meetings since its last meeting in October 2014, that it does not have any plans to
meet further in an effort to adopt Third Round Rules, and that staff have not been directed to perform any work in
furtherance of adoption of Third Round Rules.
HELD: The FHA’s exhaustion-of-administrative-remedies requirement is dissolved until further order of the Court.
The courts may resume their role as the forum of first resort for evaluating municipal compliance with Mount Laurel
obligations, as provided in this opinion and the Court’s corresponding Order. The effective date of the Court’s
Order is delayed by ninety days to effectuate an orderly transition to the judicial remedies authorized by the Court.
1. Rule 1:10-3 is a device to enable a litigant to enforce his or her rights. Relief does not require establishing that
1
the violator of an order acted with intention to disobey. Demonstration of willful disobedience and lack of concern
for the court’s order is necessary for a finding of contempt, but irrelevant in a proceeding designed simply to enforce
a judgment on a litigant’s behalf. Since the Court is not asked to impose any order against COAH, willful or
contumacious conduct is not a prerequisite to providing relief under Rule 1:10-3 to a litigant seeking to protect its
and third parties’ interests in municipal compliance with constitutional affordable housing obligations. (pp. 21-25).
2. Here, the administrative forum is not capable of functioning as intended by the FHA due to the lack of lawful
Third Round Rules. Because there are no Third Round Rules, the FHA’s administrative remedy for demonstrating
constitutional compliance has been rendered futile. Accordingly, towns must subject themselves to judicial review
for constitutional compliance, as was the case before the FHA was enacted. Pursuant to Rule 1:10-3, the Court
holds that the courts may resume their role as the forum of first instance for evaluating municipal compliance with
constitutional Mount Laurel obligations, as directed in the Court’s opinion and accompanying order. (pp. 25-27).
3. The relief authorized is remedial of constitutional rights. It will present an avenue for low- and moderate-income
New Jersey citizens, and entities acting on their behalf, to challenge any municipality that is believed not to have
developed a housing element and ordinances that bring the town into compliance with its fair share of regional
present and prospective need for affordable housing. It also will provide a municipality that had sought to use the
FHA’s mechanisms the opportunity to demonstrate constitutional compliance to a court’s satisfaction before being
declared noncompliant and then being subjected to the remedies available through exclusionary zoning litigation,
including a builder’s remedy. (p. 27).
4. In establishing a process by which towns can have their housing plans reviewed by the courts for constitutional
compliance, the Court’s goal is to provide a means by which towns can demonstrate compliance through submission
of a housing plan and use of processes similar to those which would have been available through COAH for the
achievement of substantive certification. The end result is to achieve adoption of a municipal housing element and
implementing ordinances deemed to be presumptively valid if thereafter subjected to challenge. (pp. 31-32).
5. The Court recognizes the various stages of municipal preparation to demonstrate Mount Laurel compliance that
exist as a result of the long period of uncertainty attributable to the lack of valid Third Round Rules. Accordingly,
the Court establishes a transitional process before allowing exclusionary zoning actions to proceed against towns
that had sought the FHA’s protections. There exist two classes of towns in that category. Some towns had acted
quickly in response to the earlier versions of Third Round Rules (before invalidated) and had been granted
substantive certification by COAH. Other towns were designated simply as “participating” in the COAH process.
Those two classes of municipalities require different treatment. (pp. 26-28).
6. During the first thirty days following the effective date of the Court’s implementing order, the only actions that
will be entertained by the courts will be declaratory judgment actions filed by any town that either (1) had achieved
substantive certification from COAH under prior iterations of Third Round Rules before they were invalidated, or
(2) had “participating” status before COAH. If any such town does not file a declaratory judgment action during
that period, an action may be brought against that town, provided the action’s sole focus is on whether the town’s
housing plan meets its Mount Laurel obligations (a constitutional compliance challenge). The court’s evaluation of
a town’s plan that had received substantive certification, or that will be submitted to the court as proof of
constitutional compliance, may result in the town’s receipt of the judicial equivalent of substantive certification and
accompanying protection as provided under the FHA. (pp. 32-39).
7. In all declaratory judgment and constitutional compliance cases brought before the courts, on notice and
opportunity to be heard, the trial court may enter temporary periods of immunity prohibiting exclusionary zoning
actions from proceeding pending a determination of the municipality’s presumptive compliance with its affordable
housing obligation as set forth in the opinion. Grants of immunity shall be subject to periodic court review. As
provided in the opinion, only after a court has had the opportunity to fully address constitutional compliance and has
found constitutional compliance wanting shall it permit exclusionary zoning actions and any builder’s remedy to
proceed in a given case. (pp. 39-40).
8. The Court provides examples of approved actions from earlier appellate decisions to guide the Mount Laurel-
designated judges that will hear the actions pertaining to a town’s housing plan. The Court notes that judges should
endeavor to secure, whenever possible, prompt voluntary compliance from municipalities. If a town is determined
2
to be constitutionally noncompliant, then the court may authorize exclusionary zoning actions seeking a builder’s
remedy to proceed against the towns. (pp. 40-46).
9. Nothing in the Court’s opinion should be understood to prevent COAH from fulfilling its statutory mission to
adopt constitutional rules to govern municipalities’ Third Round obligations in compliance with the FHA. Nor
should the action taken by the Court be regarded as impeding the Legislature from considering alternative statutory
remedies to the present FHA. (p. 47).
Relief in aid of litigants’ rights is GRANTED as specifically authorized by this opinion and its
accompanying order. The order shall take effect ninety days after its filing.
JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, and SOLOMON, and JUDGE CUFF
(temporarily assigned) join in JUSTICE LaVECCHIA’s opinion. CHIEF JUSTICE RABNER did not
participate.
3
SUPREME COURT OF NEW JERSEY
M-392 September Term 2014
067126
IN THE MATTER OF THE ADOPTION
OF N.J.A.C. 5:96 AND 5:97 BY
THE NEW JERSEY COUNCIL ON
AFFORDABLE HOUSING.
Argued January 6, 2015 – Decided March 10, 2015
On motion in aid of litigants’ rights from
the judgment of this Court reported at 215
N.J. 578 (2013).
Kevin D. Walsh argued the cause for movant
Fair Share Housing Center (Mr. Walsh,
attorney; Mr. Walsh, Adam M. Gordon, Peter
J. O’Connor, and Laura S. Smith-Denker, on
the brief).
Geraldine Callahan, Deputy Attorney General,
argued the cause for respondent New Jersey
Council on Affordable Housing (John J.
Hoffman, Acting Attorney General of New
Jersey, attorney).
Stephen M. Eisdorfer argued the cause for
respondent New Jersey Builders Association
(Hill Wallack, attorneys).
Jeffrey L. Kantowitz argued the cause for
respondents Kenneth Martin, Alice Martin,
and MTAE, Inc. (Law Office of Abe Rappaport,
attorney).
Jonathan E. Drill argued the cause for
respondents Bernards Township, Clinton
Township, Union Township, and Greenwich
Township (Stickel, Koenig, Sullivan & Drill,
attorneys).
Jeffrey R. Surenian argued the cause for
respondent Borough of Atlantic Highlands
(Jeffrey R. Surenian and Associates,
1
attorneys; Mr. Surenian and Michael A.
Jedziniak, on the brief).
Edward J. Buzak argued the cause for
respondent New Jersey State League of
Municipalities (The Buzak Law Group,
attorneys).
JUSTICE LaVECCHIA delivered the opinion of the Court.
The Mount Laurel series of cases1 recognized that the power
to zone carries a constitutional obligation to do so in a manner
that creates a realistic opportunity for producing a fair share
of the regional present and prospective need for housing low-
and moderate-income families. The Legislature enacted the Fair
Housing Act of 1985 (FHA or the Act), N.J.S.A. 52:27D-301 to -
329, to assist in municipal compliance with that constitutional
obligation. The FHA created the Council on Affordable Housing
(COAH), which was designed to provide an optional administrative
alternative to litigating constitutional compliance through
civil exclusionary zoning actions. Under the FHA, towns are
free to remain in the judicial forum should they prefer it as
the means to resolve any disputes over their constitutional
obligations.
That said, the FHA clearly prefers the administrative
forum, and its special processes, for addressing constitutional
1 S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158
(1983); S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 67
N.J. 151, appeal dismissed and cert. denied, 423 U.S. 808, 96 S.
Ct. 18, 46 L. Ed. 2d 28 (1975).
2
affordable housing obligations. Generally stated, the FHA
encourages and rewards voluntary municipal compliance. The Act
encourages compliance by compelling COAH to establish and
periodically update presumptive constitutional housing
obligations for each municipality and to identify the
permissible means by which a town’s proposed affordable housing
plan, housing element, and implementing ordinances can satisfy
its obligation. The Act rewards compliance in two ways: (1) by
providing a period of immunity from civil lawsuits to towns
participating in the administrative process for demonstrating
constitutional compliance (the exhaustion-of-administrative-
remedies requirement); and, (2) for a town whose fair share
housing plan secures substantive certification from COAH, by
providing a period during which the municipality’s implementing
ordinances enjoy a presumption of validity in any ensuing
exclusionary zoning litigation. The continued viability of both
rewards is subject to COAH’s required updating of municipal
housing obligations and corresponding substantive and procedural
rules.
COAH’s rules governing the last round of municipal housing
obligations expired in 1999 (Second Round Rules). Since then
COAH has failed twice to adopt updated regulations -- Third
Round Rules -- for the present period of municipal housing
obligations. The history of the state of affairs leading to our
3
Order dated March 14, 2014, is summarized hereafter. That Order
required COAH to take specific rule-promulgation steps,
culminating in adoption of the required Third Round Rules by
November 17, 2014. In the event COAH did not comply, parties
were told they could return to this Court for relief, including
lifting the FHA’s administrative-exhaustion requirements.
Fair Share Housing Center (FSHC) filed the present motion
in aid of litigants’ rights because COAH failed to promulgate
the Third Round Rules. We thus are in the exceptional situation
in which the administrative process has become nonfunctioning,
rendering futile the FHA’s administrative remedy. The FHA’s
exhaustion-of-administrative-remedies requirement, which staves
off civil actions, is premised on the existence of a functioning
agency, not a moribund one.
Due to COAH’s inaction, we agree that there no longer
exists a legitimate basis to block access to the courts.
Parties concerned about municipal compliance with constitutional
affordable housing obligations are entitled to such access, and
municipalities that believe they are constitutionally compliant
or that are ready and willing to demonstrate such compliance
should be able to secure declarations that their housing plans
and implementing ordinances are presumptively valid in the event
they later must defend against exclusionary zoning litigation.
4
It is necessary for this Court to establish an orderly means for
such proceedings to commence.
We will establish a transitional process and not
immediately allow exclusionary zoning actions to proceed in
recognition of the various stages of municipal preparation that
exist as a result of the long period of uncertainty attributable
to COAH’s failure to promulgate Third Round Rules. During the
first thirty days following the effective date of our
implementing order, the only actions that will be entertained by
the courts will be declaratory judgment actions filed by any
town that either (1) had achieved substantive certification from
COAH under prior iterations of Third Round Rules before they
were invalidated, or (2) had “participating” status before COAH.
Assuming any such town waits and does not file a declaratory
judgment action during that thirty-day period, an action may
thereafter be brought by a party against that town, provided the
action’s sole focus is on whether the town’s housing plan meets
its Mount Laurel obligations (a constitutional compliance
challenge). The court’s evaluation of a town’s plan that had
received substantive certification, or that will be submitted to
the court as proof of constitutional compliance, may result in
the town’s receipt of the judicial equivalent of substantive
certification and accompanying protection as provided under the
FHA.
5
In sum, the judicial processes authorized herein reflect as
closely as possible the FHA’s processes and provide the means
for a town transitioned from COAH’s jurisdiction to judicial
actions to demonstrate that its housing plan satisfies Mount
Laurel obligations. Our decision today sets forth in detail the
manner in which civil actions may proceed, following a ninety-
day delay in the effective date of the implementing order
accompanying this opinion. The delay allows all parties to
prepare for the actions that are authorized pursuant to that
order.
Importantly, nothing herein should be understood to prevent
COAH from fulfilling its statutory mission to adopt
constitutional rules to govern municipalities’ Third Round
obligations in compliance with the FHA. Nor should the action
taken by this Court, in the face of COAH’s failure to fulfill
its statutory mission, be regarded as impeding the Legislature
from considering alternative statutory remedies to the present
FHA. See In re Adoption of N.J.A.C. 5:96 & 5:97, 215 N.J. 578,
612, 616-17 (2013).
Our order effectively dissolves, until further order, the
FHA’s exhaustion-of-administrative-remedies requirement.
Further, as directed, the order allows resort to the courts, in
the first instance, to resolve municipalities’ constitutional
obligations under Mount Laurel.
6
I.
In 1975, this Court prohibited the discriminatory use of
zoning powers and mandated that each developing municipality
“must, by its land use regulations, make realistically possible
the opportunity for an appropriate variety and choice of housing
for all categories of people who may desire to live there, of
course including those of low and moderate income.” S.
Burlington Cnty. NAACP v. Twp. of Mount Laurel (Mount Laurel I),
67 N.J. 151, 179, 187, appeal dismissed and cert. denied, 423
U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975). In 1983, the
Court reaffirmed the constitutional obligation that towns
provide “a realistic opportunity for the construction of [their]
fair share of the present and prospective regional need for low
and moderate income housing.” S. Burlington Cnty. NAACP v. Twp.
of Mount Laurel (Mount Laurel II), 92 N.J. 158, 205 (1983)
(citing Mount Laurel I, supra, 67 N.J. at 174). Because the
Legislature had not acted to effectuate Mount Laurel I’s
recognition of municipalities’ constitutional zoning
obligations, the Court fashioned a judicial remedy. Id. at 289-
91. That remedy created a special litigation track for
exclusionary zoning cases and permitted, ultimately, a
“builder’s remedy” by which builders could file suit for the
opportunity to construct housing at higher densities than a
municipality otherwise would allow. See id. at 279-81, 287-93.
7
In response, the Legislature enacted the FHA, which created
COAH and vested primary responsibility for assigning and
determining municipal affordable housing obligations in that
body. N.J.S.A. 52:27D-305, -307. COAH is required to enact
regulations that establish, and thereafter update, statewide
affordable housing need; to assign to each municipality an
affordable housing obligation for its designated region; and to
identify the delivery techniques available to municipalities in
addressing the assigned obligation. N.J.S.A. 52:27D-307, -308.
The FHA includes a process for substantive certification, which,
if granted, renders a municipality’s housing element and
ordinances presumptively valid in any exclusionary zoning
litigation for a finite period. N.J.S.A. 52:27D-313, -317; see
also Hills Dev. Co. v. Twp. of Bernards, 103 N.J. 1, 19-20, 33-
35 (1986) (detailing certification procedure).
The FHA also transferred pending Mount Laurel litigation to
COAH for resolution through an administrative process. Hills,
supra, 103 N.J. at 20. The FHA and its operative regulations
established a process for bringing municipalities into
compliance. The matter presently before this Court concerns
COAH’s failure to adopt regulations applicable to the third
round of affordable housing obligations -- the Third Round
Rules.
8
As previously noted, promulgation of Third Round Rules was
due in 1999, but, when the Second Round Rules expired, COAH had
not proposed the new regulations. See 31 N.J.R. 1480 (June 7,
1999) (noting that second-round obligations expired on June 6,
1999). In August 2004, the Appellate Division characterized
COAH’s delay as frustrating the public policies embodied by the
Mount Laurel line of cases. In re Six Month Extension of
N.J.A.C. 5:91, 372 N.J. Super. 61, 95-96 (App. Div. 2004),
certif. denied, 182 N.J. 630 (2005). The panel warned that the
failure to adopt valid rules would “free interested parties from
the constraints” of the administrative process. Id. at 105.
COAH later adopted a set of Third Round Rules on December 20,
2004. 36 N.J.R. 5895(a).
On January 25, 2007, the Appellate Division affirmed
portions of COAH’s proposed methodology, but invalidated other
aspects of the Third Round Rules. In re Adoption of N.J.A.C.
5:94 & 5:95, 390 N.J. Super. 1, 86-87 (App. Div.), certif.
denied, 192 N.J. 71 (2007). That opinion remanded the matter to
COAH for promulgation of regulations compliant with the Mount
Laurel doctrine and the FHA and gave the agency six months to do
so (i.e., by July 2007). Id. at 88. The Appellate Division
granted COAH two extensions, and COAH thereafter promulgated the
revised rules. 40 N.J.R. 237(a) (Jan. 22, 2008); 40 N.J.R.
515(a) (Jan. 22, 2008).
9
On October 8, 2010, the Appellate Division concluded that
COAH’s revised regulations suffered from “many of the same
deficiencies as the original [T]hird [R]ound [R]ules” and
invalidated substantial portions of COAH’s second set of Third
Round Rules. In re Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J.
Super. 462, 471 (App. Div. 2010). The panel again remanded to
COAH for the adoption of new Third Round Rules and specifically
directed COAH to use a methodology for determining prospective
need similar to the methodologies used in the prior rounds. Id.
at 487. The panel also ordered COAH to complete the task within
five months. Id. at 511. We subsequently granted
certification. 205 N.J. 317 (2011).
Our Court ultimately affirmed the Appellate Division’s
invalidation of the Third Round Rules. In re Adoption of
N.J.A.C. 5:96 & 5:97, supra, 215 N.J. at 586. In so doing, we
stated:
Rules to govern the third round cannot
wait further while time is lost during
legislative deliberations on a new affordable
housing approach. A remedy must be put in
place to eliminate the limbo in which
municipalities, New Jersey citizens,
developers, and affordable housing interest
groups have lived for too long. Accordingly,
we endorse the Appellate Division’s quick
deadline for reimposing third-round
obligations based on the previous rounds’
method of allocating fair share obligations
among municipalities.
[Id. at 620.]
10
Incorporating the Appellate Division’s five-month compliance
period, our September 2013 opinion directed COAH to adopt rules
by February 26, 2014. Ibid.
On February 26, 2014, COAH filed a motion for an extension
of time. The motion was supported by a certification from
COAH’s Chairperson, requesting an extension until May 1, 2014,
and specifically stating that COAH had reviewed and was
continuing to evaluate data to develop a third-round
methodology. It has since come to light that COAH retained its
primary consultant for the development of new regulations on
February 6, 2014.
On March 14, 2014, after additional Appellate Division and
Supreme Court proceedings,2 the Court granted COAH’s last motion
for an extension, subject to specific conditions. __ N.J. __
(2014) (slip op. at 1-4). The March 14, 2014, Order directed
COAH to meet firm deadlines for the adoption of the Rules and
for each interim rule-making step required by the Administrative
Procedure Act (APA), N.J.S.A. 52:14B-1 to -24. Ibid. The Court
further ordered that if COAH did not adopt Third Round Rules by
2 When COAH’s progress stalled and it appeared that compliance
with the first extended timeframe would not be forthcoming, the
Appellate Division entered an enforcement order, compelling
certain meetings and reporting actions by COAH’s members and
threatening contempt proceedings against the individual members
if violated. We vacated that order, substituting our Order of
March 14, 2014.
11
November 17, 2014, the Court would entertain applications for
relief, including “a request to lift the protection provided to
municipalities through N.J.S.A. 52:27D-313.” Id. at __ (slip
op. at 3-4). The Court stated that “if such a request is
granted, actions may be commenced on a case-by-case basis before
the Law Division or in the form of ‘builder[’]s remedy’
challenges.” Id. at __ (slip op. at 4).
On April 30, 2014, COAH’s Board met and voted to propose
its new Third Round Rules, which had been provided to the Board
roughly twenty-four hours before the meeting. The proposed
Third Round Rules were published in the New Jersey Register on
June 2. 46 N.J.R. 912(a)-1051 (June 2, 2014). Although FSHC
filed a motion in aid of litigants’ rights seeking the Court’s
intervention in the rule-making process, the request was denied
and that process continued. Meanwhile, COAH held a public
hearing on July 2 and received approximately 3000 comments
before the public comment period closed on August 1. Pursuant
to the Court’s March 14 Order, COAH was to adopt the Third Round
Rules by October 22, and to publish the notice in the November
17 edition of the New Jersey Register. However, at the October
20, 2014, meeting, the COAH members split 3-3 on the vote and
Third Round Rules were not adopted.3
3 During the public discussion, a Board member, John
Winterstella, initially moved that the adoption of the Third
12
FSHC filed the instant motion pursuant to Rule 1:10-3 and
the Court’s language in the March 14 Order permitting such
motion practice in the event that COAH failed to adopt Third
Round Rules by November 17, 2014. We set oral argument on the
motion for January 6, 2015.
II.
A.
At oral argument, prior to hearing the parties on the
merits of this matter, we asked COAH’s representative from the
Attorney General’s Office to update the Court and parties on
what COAH had done to advance the promulgation of Third Round
Rules since its October 2014 meeting. When setting the matter
for argument, our order reminded COAH that nothing limited its
continuing ability to adopt the required regulations. Despite
that reminder, COAH’s representative admitted that COAH has not
conducted or scheduled any further meetings since its October
2014 meeting, that it does not have any plans to meet further in
an effort to adopt Third Round Rules, and that staff have not
Round Rules be tabled for sixty days, noting his belief that the
proposed regulations would not comply substantively with this
Court’s orders. The motion failed by a vote of 3-3. Another
Board member (Housing and Mortgage Finance Agency Executive
Director Anthony Marchetta) moved to adopt the proposed Third
Round Rules. The Board again split 3-3, resulting in COAH’s
failure to adopt the regulations in time for transmission to the
Office of Administrative Law (OAL) for publication in the
November 17 New Jersey Register, as required by the APA for rule
adoption.
13
been directed to perform any work in furtherance of adoption of
Third Round Rules. Those representations inform our view of the
parties’ positions.
B.
FSHC argues that COAH has violated the Court’s September
26, 2013, opinion and the March 2014 Order. FSHC asserts that a
court should grant a litigant enforcement-of-rights relief under
Rule 1:10-3 “unless [the noncompliant] party is incapable of
compliance.” (Citing P.T. v. M.S., 325 N.J. Super. 193, 218
(App. Div. 1999)). Here, FSHC argues that COAH was capable of
compliance because COAH had ample time to adopt compliant rules:
the Appellate Division invalidated the last iteration of Third
Round Rules in October 2010, over four years ago, and this Court
affirmed, over one year ago, directing COAH to adopt new revised
Third Round Rules within five months. According to FSHC, that
time period goes well beyond the time reasonably needed to
prepare a fair share methodology that determines prospective
need by means similar to the methodologies used in the prior
rounds, especially in light of COAH’s counsel’s representation
at oral argument before our Court that COAH could prepare
revised regulations within thirty days. FSHC asserts that,
rather than complying with the Court’s directive to propose
regulations “based on the previous rounds’ method,” COAH hired
consultants to develop a methodology “vastly different from the
14
[p]rior [r]ound regulations that this Court ordered COAH to
use.” FSHC contends that, as a result, draft regulations were
not proposed until eight months after the Court’s September 2013
judgment, and, ultimately, half of the Board believed that the
proposed rules did not comply with the FHA or this Court’s prior
opinion.
Moreover, in support of its agency-noncompliance argument,
FSHC emphasizes COAH’s counsel’s admissions to the Court about
the agency’s state of inaction. FSHC underscores that COAH has
not conducted or scheduled any further meetings since its
October 2014 meeting, has no plans to meet further in an effort
to adopt Third Round Rules, and has not directed staff to
perform any work in furtherance of the Rules’ adoption.
In the event that the Court grants FSHC’s application for
relief from exhaustion of remedies before COAH, FSHC asks the
Court to provide guidance with respect to the designation of a
limited number of judges to hear exclusionary zoning actions
filed in court. FSHC also asks that the second-round
methodology, with limited modifications, be directed for use in
such proceedings and that newly authorized judicial actions
proceed expeditiously and on a notice-and-opportunity-to-be-
heard basis.
C.
15
COAH argues that FSHC is not entitled to the extraordinary
remedy of relief under Rule 1:10-3 because COAH has not been
willfully contumacious. COAH maintains it “made all possible
efforts to comply with the Court’s order,” meeting the initial
deadlines for rule proposal, publication, and public comment.
COAH contends that the public record demonstrates that its Board
“neither ignored nor willfully violated” the Court’s Order, but
rather that it was “unable to comply” because the members did
not agree on adoption. COAH argues that this outcome was not
willful, but instead a risk inherent in any administrative
process where diverse views are represented.
COAH further maintains that returning Mount Laurel
litigation to trial courts would be punitive -- and thus
contrary to the purpose of Rule 1:10-3 -- because it would
expose towns to substantial litigation and would undermine the
FHA’s intent to provide alternatives to the use of builder’s-
remedy litigation to achieve fair share housing.
D.
The New Jersey Builders Association and Martin and MTAE,
Inc., support FSHC’s motion and largely adopt FSHC’s legal
arguments. They add that Mount Laurel litigation should be
returned to the trial courts because low- and moderate-income
families are without a forum to adjudicate municipal housing
obligations or compliance matters. These parties also contend
16
that the administrative stalemate has permitted municipalities
to “shelter themselves” from suit under COAH’s jurisdiction
without providing any additional affordable housing in years.
They urge the Court to fashion relief that will require courts
to examine what towns have done to date in attempting to satisfy
their constitutional obligations.
The remaining parties view with disfavor the prospect of a
return to the courts to resolve constitutional compliance with
Mount Laurel obligations. Accordingly, those parties first
argue that COAH should be compelled to take action completing
the rule-making process. The remaining parties also offer views
on how civil actions regarding municipalities’ constitutional
compliance should proceed if such actions must commence. Those
views encompass general ideas for the actions as well as
specifics regarding the means by which municipalities could
obtain immunity from a builder’s remedy in any subsequent
exclusionary zoning action.
Bernards Township, Clinton Township, Union Township, and
Greenwich Township (collectively the Four Towns) express concern
about the complex questions that would be thrust upon judges if
exclusionary zoning litigation were to return to the Law
Division. For example, they contend that trial courts would be
tasked with determining whether a municipality’s fair share
allocation will be “cumulative” or applicable only to one
17
compliance period. The Four Towns also contend that
adjudicating such Mount Laurel matters would require courts to
confront the myriad differences between the methodologies
utilized in the prior rounds and those contained in the various
iterations of COAH’s Third Round Rules.
With regard to immunity, the Four Towns generally urge the
Court to adopt the immunity procedure established in earlier
pre-FHA litigation and discussed in J.W. Field Co. v. Township
of Franklin, 204 N.J. Super. 445 (App. Div. 1985), and in this
Court’s Hills opinion. Specifically, they ask that the 314
municipalities, which had submitted to COAH’s jurisdiction and
were participating in the administrative process but had not
been awarded substantive certification by COAH under the earlier
Third Round Rules before the same were invalidated, be allowed
sixty days to seek immunity by filing declaratory judgment
actions. It is proposed that such actions be allowed to be
filed ex parte. If a municipality files such an action within
that time frame, the Four Towns ask that immunity remain in
effect while the trial judge establishes the municipality’s
affordable housing obligation and compliance mechanisms, and
also while the municipality works to comply with those
standards. After the sixty-day period expires, municipalities
still could file declaratory judgment actions, but would be
immune from suit only as to entities that had not already
18
initiated litigation. Trial judges would be empowered to
rescind an immunity order upon a showing that the municipality
had abused the process.
The Borough of Atlantic Highlands (Atlantic Highlands)
prefers that COAH be given a “reasonable amount of time” to
finish the rule-making process, but if this Court were to grant
FSHC’s requested relief, Atlantic Highlands asks for the
immunity mechanism endorsed by the Four Towns. Atlantic
Highlands notes that it has submitted to COAH two iterations of
Third Round Affordable Housing Plans, but COAH has not approved
them because the agency’s prior Third Round Rules were
invalidated. Atlantic Highlands also notes that thirty
municipalities have passed resolutions urging COAH to comply
with the Court’s deadlines, and it asks that municipalities not
be punished for COAH’s failure to adopt the latest set of
proposed rules.
Finally, the New Jersey State League of Municipalities
(NJLM) argues that the 314 municipalities that have submitted
affordable housing plans to COAH should not forfeit their
protection from suit. According to NJLM, exclusionary zoning
litigation would punish the municipalities, which are not
responsible for COAH’s most recent failure to adopt compliant
Third Round Rules.
19
Notably, NJLM proposes an alternate solution, arguing that
COAH has expended significant resources in developing the most
recent proposed regulations, which efforts should not be wasted.
NJLM suggests that the Court appoint “a former high-ranking
policy-making official” to recruit three “professional planners”
to assist in reviewing COAH’s proposed Third Round Rules, the
3000 public comments, and any responses prepared by COAH’s
staff. NJLM proposes that this Court authorize those planners
to revise the proposed Third Round Rules for review by the
Court-selected “policy-making official.” If the policy maker is
satisfied, NJLM further proposes that he or she would present
the revised regulations to this Court for approval, and for
entry of an order directing COAH to adopt the Third Round Rules
in that form.
III.
A.
In light of COAH’s representations to this Court that
reveal its failure to take any steps after its October 2014
deadlocked meeting on Third Round Rules -- specifically the
absence of any plan to schedule further meetings on the Rules
and the manifest lack of intention to continue work on the Rules
(as evidenced by the absence of any such direction to staff) --
the clarity of COAH’s inaction is apparent. Those parties
arguing for giving COAH more time have had their argument
20
undermined by the starkness of COAH’s posture. We reject the
argument that relief should be withheld in order to allow COAH
even “more time” than it has already been given.
COAH has had fifteen years to adopt Third Round Rules as it
is required to do in accordance with its statutory mission. It
has been under several orders of the Appellate Division and this
Court directing it to adopt Third Round Rules using a known
methodology by specific deadlines. It has not done so. More
time is not a viable response to the request for litigants’
relief under Rule 1:10-3.
COAH is noncompliant with this Court’s orders and
underlying September 2013 decision. COAH has failed to respond
(1) to the requirements of the last in the series of judicial
orders entered against it and (2) to its statutory duties that
directly affect the fulfillment of constitutional obligations.
Movant seeks relief. Importantly, we again note that the relief
sought from the present administrative stalemate does not
restrict COAH from performing its responsibilities should it
eventually determine to do so.
We thus turn specifically to the relief requested under
Rule 1:10-3.
B.
Rule 1:10-3 is, at bottom, a device to enable a litigant to
enforce his or her rights.
21
Although Rule 1:10-3 encompasses the notion of civil
contempt, we have expressly stated that “we view the process
[under Rule 1:10-3] as one of relief to litigants.” In re
Daniels, 118 N.J. 51, 60 (per curiam) (emphasis added) (citing
R. 1:10-5, now R. 1:10-3), cert. denied, 498 U.S. 951, 111 S.
Ct. 371, 112 L. Ed. 2d 333 (1990). The focus being on the
vindication of litigants’ rights, relief sought pursuant to Rule
1:10-3 does not necessarily require establishing that the
violator of an order acted with intention to disobey. Indeed,
courts have recognized that “demonstration of a mens rea, wilful
disobedience and lack of concern for the order of the court, is
necessary for a finding of contempt, but irrelevant in a
proceeding designed simply to enforce a judgment on a litigant’s
behalf.” Lusardi v. Curtis Point Prop. Owners Ass’n, 138 N.J.
Super. 44, 49 (App. Div. 1975) (emphasis added); see also N.J.
Dep’t of Health v. Roselle, 34 N.J. 331, 347 (1961) (“The
Appellate Division correctly held that upon a litigant’s
application for enforcement of an injunctive order, relief
should not be refused merely because the violation was not
willful.”).
It bears repeating in connection with this present
application that our Court Rules generally are to be construed
and applied to secure a just determination and to achieve
simplicity in procedure. R. 1:1-2. That admonition has
22
particular force when it comes to assisting a litigant in
securing vindication of rights.
The Court Rules overall evince an intent toward flexibility
when the enforcement of rights is at stake. They provide
various means for securing relief and allow for judicial
discretion in fashioning relief to litigants when a party does
not comply with a judgment or order. In addition to the
mechanism of Rule 1:10-3, Rule 4:59-2(a) provides related
support for assisting a litigant in securing relief:
If a judgment or order directs a party to
perform a specific act and the party fails to
comply within the time specified, the court
may direct the act to be done at the cost of
such defaulting party by some other person
appointed by the court, and the act when so
done shall have like effect as if done by the
defaulting party.
[See also Roselin v. Roselin, 208 N.J.
Super. 612, 618 (App. Div.) (citing R. 4:59-
2(a) when noting alternatives available to
trial court for enforcing party’s rights),
certif. denied, 105 N.J. 550 (1986).]
In Roselin, supra, for example, Judge Pressler invoked Rule
1:10-3’s predecessor rule when assessing the alternatives
available to a trial court where a party failed to sign a
contract as ordered. 208 N.J. Super. at 618. Highlighting the
hardship that the failure was foisting on another of the
contract’s parties, the panel observed that “[i]ntervening
rights of innocent third persons have arisen,” id. at 617, and
23
declared that the innocent’s “rights must be enforced,” id. at
618 (citing R. 1:10-5). Judge Pressler noted Rule 4:59-2(a)’s
ability to secure relief through the directed actions of others,
which adds to a court’s flexibility when vindicating the rights
of litigants. See ibid.
In sum, then, although punitive or coercive relief under
the Rule cannot be used against one who is not a willful
violator of a judgment, see, e.g., Schochet v. Schochet, 435
N.J. Super. 542, 548-49 (App. Div. 2014) (citing Pasqua v.
Council, 186 N.J. 127, 141 n.2 (2006), for same and noting
“objective of [Rule 1:10-3] hearing is simply to determine
whether . . . failure [to comply with an order] was excusable or
willful”); Milne v. Goldenberg, 428 N.J. Super. 184, 199 (App.
Div. 2012) (upholding imposition of community service under Rule
1:10-3 against plaintiff where record established willful
noncompliance), that does not foreclose the vindication of
litigants’ rights through other forms of non-punitive and non-
coercive orders entered pursuant to Rule 1:10-3’s authority
enabling the enforcement of rights.
In this matter, COAH is without a firm basis to dispute
FSHC’s ability to bring this motion in aid of litigants’ rights.
Willful or contumacious conduct by COAH is not a prerequisite to
providing the form of litigants’ relief sought here under Rule
1:10-3. We are not asked to impose any order against COAH.
24
When the application is made seeking no punitive or coercive
action against the respondent agency, Rule 1:10-3 is an
appropriate vehicle for judicial assistance in enforcing rights.
There is no question that COAH failed to comply with this
Court’s March 2014 Order that was designed to achieve the
promulgation of Third Round Rules and the maintenance of a
functioning COAH. In the face of COAH’s knowing inaction to an
order that required action, Rule 1:10-3 permits FSHC to protect
its and third parties’ interests in municipal compliance with
constitutional affordable housing obligations.
The present application reflects an acknowledgment of the
obvious: the administrative forum is not capable of functioning
as intended by the FHA due to the lack of lawful Third Round
Rules assigning constitutional obligations to municipalities.
We are asked, essentially, to permit resumed direct access to
the courts for the vindication of rights, unless and until a
viable FHA administrative agency remedy is restored. Because
there are no Third Round Rules, the FHA-established alternative
for demonstrating constitutional compliance is absent.
Constitutional compliance presently cannot be evaluated under
COAH’s jurisdiction; the FHA’s exhaustion-of-administrative-
remedies requirement has been rendered futile. See AMG Assocs.
v. Twp. of Springfield, 65 N.J. 101, 109 n.3 (1974) (noting that
25
exhaustion of administrative remedies is unnecessary if pursuing
those remedies would be futile).
Accordingly, we conclude that towns must subject themselves
to judicial review for constitutional compliance, as was the
case before the FHA was enacted. Under our tripartite form of
government, the courts always present an available forum for
redress of alleged constitutional violations or, alternatively,
for towns seeking affirmative declarations that their zoning
actions put them in compliance with Mount Laurel obligations.
As noted in Hills when approving the fledgling FHA program, if
the FHA proves that it achieves nothing but delay, the courts
would resume their role in affordable housing litigation.
Supra, 103 N.J. at 23.
Therefore, under the authority of Rule 1:10-3, we hold that
the courts may resume their role as the forum of first instance
for evaluating municipal compliance with Mount Laurel
obligations, as hereinafter directed. In the event of a
municipality’s inability or failure to adopt a compliant plan to
a court’s satisfaction, the court may consider the range of
remedies available to cure the violation, consistent with the
steps outlined herein and in our accompanying order. We
establish a transitional process before allowing exclusionary
zoning actions against towns that had sought to use the FHA’s
mechanisms in recognition of the various stages of municipal
26
preparation that exist as a result of the long period of
uncertainty attributable to COAH’s failure to promulgate Third
Round Rules.
The relief authorized is remedial of constitutional rights.
It will present an avenue for low- and moderate-income New
Jersey citizens, and entities acting on their behalf, to
challenge any municipality that is believed not to have
developed a housing element and ordinances that bring the town
into compliance with its fair share of regional present and
prospective need for affordable housing. And, it will provide a
municipality that had sought to use the FHA’s mechanisms the
opportunity to demonstrate constitutional compliance to a
court’s satisfaction before being declared noncompliant and then
being subjected to the remedies available through exclusionary
zoning litigation, including a builder’s remedy.
We next turn to the details of transitioning to the
judicial forum.
IV.
A.
In light of our 2013 decision invalidating the growth share
based Third Round Rules that COAH had adopted, returning
constitutional compliance issues to the courts and no longer
enforcing the FHA’s exhaustion-of-administrative-remedies
requirement will have the effect of upending expectations of
27
municipalities that had sought the protection of COAH’s
processes. Some even had secured from COAH substantive
certification based on prompt action taken in response to the
previous iterations of Third Round Rules before they were
invalidated.
We recognize, as a matter of basic fairness, that there
must be a brief delay before our order implementing this
decision shall take effect and actions involving a
municipality’s constitutional compliance may proceed in the
judicial forum. We therefore delay the effective date of our
accompanying order by ninety days to effectuate an orderly
transition to the judicial remedies authorized herein.
B.
1.
There exist two classes of towns that sought to make use of
the administrative remedy offered through the FHA. Some towns
had acted quickly in response to the earlier versions of Third
Round Rules (before invalidated) and had been granted
substantive certification. Other towns were designated simply
as “participating” in the COAH process. Those two classes of
municipalities require different treatment.
We are informed by the parties that as many as sixty towns
may have been granted substantive certification under earlier
versions of the Third Round Rules. The Legislature plainly
28
intended that the grant of substantive certification be
significant: the FHA attaches a presumption of validity for a
finite period to a municipality’s housing element and ordinances
enacted in furtherance thereof once the municipality has been
granted substantive certification. N.J.S.A. 52:27D-313, -317.
To rebut the presumption of validity under regular operation of
the FHA, a plaintiff must prove by clear and convincing evidence
that the municipality’s housing element and its ordinances do
not provide for a realistic opportunity for the provision of the
municipality’s fair share. N.J.S.A. 52:27D-317; see also
N.J.S.A. 52:27D-313 (filing of housing element permits
municipality to seek substantive certification from COAH or to
institute declaratory judgment action seeking grant of repose
from suit). We must determine how towns that achieved
substantive certification under later-invalidated Third Round
Rules should be treated in the transition to civil actions.
We also are informed that more than 300 towns had submitted
a resolution of participation with COAH sufficient for COAH to
have recognized those municipalities as “participating.” See
N.J.S.A. 52:27D-309 (allowing municipality to notify COAH of
intent to submit its fair share housing plan to COAH by adoption
of “resolution of participation”). Such status brings a
municipality under COAH’s jurisdiction and thereby frees it for
a period of time from suit in court if it achieves certain
29
milestones toward a grant of substantive certification.
N.J.S.A. 52:27D-309(b) exempts parties from the exhaustion-of-
administrative-remedies requirement if a participating
municipality fails to file its fair share plan and housing
element. Also, the exhaustion obligation automatically expires
pursuant to N.J.S.A. 52:27D-318 when a municipality misses the
deadlines for submitting its housing element.
We further are informed through parties’ submissions that
COAH has been maintaining participating towns in an ongoing
holding pattern, allowing such towns to enjoy insulation from
suit, pending the development of valid Third Round Rules. We
are not aware of the progress or stage of submissions by the
various towns in such status before COAH. It is not this
Court’s function to address those individual circumstances. A
town’s efforts to satisfy its housing obligations will have to
be assessed now by courts that will hear actions on
constitutional compliance.
However, we are asked to provide for a means in this
transition by which a town may obtain protection from suit if
the town had made an effort to comply with COAH’s procedures.
For completeness, we note that approximately 200 towns never
subjected themselves to COAH’s jurisdiction, choosing instead to
remain open to civil actions in the courts. Those towns will
30
continue to be subject to exclusionary zoning actions, as they
have been since inception of Mount Laurel obligations.
2.
In establishing an orderly process by which towns can have
their housing plans reviewed by the courts for constitutional
compliance, we note first that a municipality should be
permitted to choose either to seek such a review affirmatively
or to be subjected to such a review if the municipality
determines to wait until its housing plan is challenged as
noncompliant with Mount Laurel obligations. If a municipality
seeks to obtain an affirmative declaration of constitutional
compliance, it will have to do so on notice and opportunity to
be heard to FSHC and interested parties. Courts assessing the
notice requirement should understand that the term “interested
parties” presumptively includes, at a minimum, the entities on
the service list in this matter. Ex parte applications, even
for initial immunity pending review, shall not be permitted
under any circumstance.
Second, it bears emphasizing that the process established
is not intended to punish the towns represented before this
Court, or those that are not represented but which are also in a
position of unfortunate uncertainty due to COAH’s failure to
maintain the viability of the administrative remedy. Our goal
is to establish an avenue by which towns can demonstrate their
31
constitutional compliance to the courts through submission of a
housing plan and use of processes, where appropriate, that are
similar to those which would have been available through COAH
for the achievement of substantive certification. Those
processes include conciliation, mediation, and the use, when
necessary, of special masters. The end result of the processes
employed by the courts is to achieve adoption of a municipal
housing element and implementing ordinances deemed to be
presumptively valid if thereafter subjected to challenge by
third parties. Our approach in this transition is to have
courts provide a substitute for the substantive certification
process that COAH would have provided for towns that had sought
its protective jurisdiction. And as part of the court’s review,
we also authorize, as more fully set forth hereinafter, a court
to provide a town whose plan is under review immunity from
subsequently filed challenges during the court’s review
proceedings, even if supplementation of the plan is required
during the proceedings.
With those overriding principles in mind, we establish the
following procedures for the two classes of municipalities left
stranded by COAH’s failure to adopt valid Third Round Rules.
C.
We first consider the circumstances of the municipalities
that made the effort to comply promptly with the Third Round
32
Rules and that received a grant of substantive certification.
Ordinarily, N.J.S.A. 52:27D-313 and -317 would afford the
ordinances implementing the housing elements of such
municipalities a strong presumption of validity in any
exclusionary zoning action and, thus, would provide powerful
protection from a builder’s remedy. However, to provide that
same presumption of validity based solely on substantive
certification in these circumstances would be to ignore our own
acknowledgment of the problems with the “growth share”
methodology on which the invalidated Third Round Rules were
premised.
COAH’s previous Third Round Rules required COAH initially
to calculate the projected growth share obligation of a
municipality, but then permitted subsequent adjustment through
COAH’s biennial review process such that a municipality’s actual
obligation reflected the “‘actual residential growth and
employment growth in the municipality.’” In re Adoption of
N.J.A.C. 5:96 & 5:97, supra, 215 N.J. at 604 (quoting N.J.A.C.
5:96-10.1(a)). “Thus, even if a municipality were allocated a
large projected growth share obligation, if growth fell below
that rate, its actual growth share obligation would be reduced
to reflect that slowed residential and job growth.” Id. at 605.
We determined that the result was invalid Third Round Rules
predicated on non-region-specific housing data and devoid of the
33
“definitive quantitative obligations to be fulfilled within
fixed periods” that were envisioned by Mount Laurel II and
called for by the FHA. Ibid.
Because municipalities that received a grant of substantive
certification promulgated housing plans in compliance with the
invalidated growth share based Third Round Rules, additional
court review of such towns’ housing plans will be necessary.
The ordinances adopted by any such municipality, in furtherance
of an approved housing element, must be evaluated to determine
if they provide for a realistic opportunity for the municipality
to achieve its “fair share of the present and prospective
regional need for low and moderate income housing.” Mount
Laurel II, supra, 92 N.J. at 205 (citing Mount Laurel I, supra,
67 N.J. at 174). Supplementation of a plan may be necessary to
ensure to the court’s satisfaction that the town has provided a
realistic opportunity for its fair share of present and
prospective regional affordable housing need in keeping with
prior rounds’ methodologies. The considerations to be employed
in that analysis are addressed in Part V., infra.
That said, towns in this category may choose affirmatively
to seek, through a declaratory judgment action filed on notice
to FSHC and interested parties, a court order declaring its
housing element and implementing ordinances -- as is or as to be
supplemented -- constitutionally sufficient. We also
34
acknowledge that a municipality that had received a grant of
substantive certification may elect to wait to be sued. In
either case, while not entitled to the statutory presumption of
validity the FHA normally would provide, these towns deserve an
advantage in the judicial review that shall take place.
Implemented ordinances should not be lightly disturbed unless
necessary; supplemental actions to secure compliance with newly
calculated prospective need may provide a preferred course for
obtaining constitutional compliance.
While reviewing for constitutional compliance the
ordinances of a town that achieved substantive certification,
courts should be generously inclined to grant applications for
immunity from subsequently filed exclusionary zoning actions
during that necessary review process, unless such process is
unreasonably protracted. As courts adapted processes to manage
the multiplicity of pre-FHA filed Mount Laurel actions, see,
e.g., J.W. Field, supra, 204 N.J. Super. 445, the present day
courts handling these new matters should employ similar
flexibility in controlling and prioritizing litigation. We
repose such flexibility in the Mount Laurel-designated judges in
the vicinages, to whom all Mount Laurel compliance-related
matters will be assigned post-order, and trust those courts to
assiduously assess whether immunity, once granted, should be
withdrawn if a particular town abuses the process for obtaining
35
a judicial declaration of constitutional compliance. Review of
immunity orders therefore should occur with periodic regularity
and on notice.
Accordingly, and in sum, following the ninety-day delay in
the effective date of our accompanying order, all municipalities
will have an additional thirty-day period in which to file
actions if they so choose, on notice and opportunity to be heard
as described earlier, affirmatively seeking to demonstrate
constitutional compliance. After that thirty-day period
expires, a challenge to a town’s constitutional compliance may
be filed against a municipality by FSHC or any other interested
party. Only constitutional compliance actions may proceed
initially as against a town with substantive certification from
COAH. No builder’s remedy shall be authorized to proceed
against any such town unless a court determines that the
substantive certification that was granted is invalid, no
constitutionally compliant supplementing plan is developed and
approved by the court after reasonable opportunity to do so, and
the court determines that exclusionary zoning actions, including
actions for a builder’s remedy, are appropriate and may proceed
in a given case.
D.
The procedure shall differ for those towns that had only
“participating” status with COAH. If a town had devised a
36
housing element and took action toward adopting ordinances in
furtherance of its plan, then we would expect a reviewing court
to view more favorably such actions than that of a town that
merely submitted a resolution of participation and took few or
perhaps no further steps toward preparation of a formal plan
demonstrating its constitutional compliance.
We recognize that not all towns that had only
“participating” status may have well-developed plans to submit
to the court initially. A town in such circumstances poses a
difficult challenge for a reviewing court, particularly when
determining whether to provide some initial period of immunity
while the town’s compliance with affordable housing obligations
is addressed. To assist courts with this category of town, we
take our lead from the FHA.
Towns that were in “participating” status before COAH and
that pursuant to our order now affirmatively come before the
courts seeking to obtain approval of an affordable housing plan
should receive like treatment to that which was afforded by the
FHA to towns that had their exclusionary zoning cases
transferred to COAH when the Act was passed. See N.J.S.A.
52:27D-316. Such towns received insulating protection due to
COAH’s jurisdiction provided that they prepared and filed a
housing element and fair share plan within five months. Ibid.
Similarly, towns that were in “participating” status before COAH
37
and that now affirmatively seek to obtain a court declaration
that their affordable housing plans are presumptively valid
should have no more than five months in which to submit their
supplemental housing element and affordable housing plan.
During that period, the court may provide initial immunity
preventing any exclusionary zoning actions from proceeding.
As in the case of the towns that had been awarded
substantive certification from COAH, the “participating” towns
will have the choice to proceed with their own actions during
the thirty-day period post the effective date of our order
before which challenges to constitutional compliance may be
brought by FSHC or other interested parties. If a town elects
to wait until its affordable housing plan is challenged for
constitutional compliance, immunity requests covering any period
of time during the court’s review shall be assessed on an
individualized basis. The five-month protected period for
submitting a housing element and plan, identified earlier, has
no parallelism in this setting. In determining whether to grant
such a town a period of immunity while responding to a
constitutional compliance action, the court’s individualized
assessment should evaluate the extent of the obligation and the
steps, if any, taken toward compliance with that obligation. In
connection with that, the factors that may be relevant, in
addition to assessing current conditions within the community,
38
include whether a housing element has been adopted, any activity
that has occurred in the town affecting need, and progress in
satisfying past obligations.
Thus, in all constitutional compliance cases to be brought
before the courts, on notice and opportunity to be heard, the
trial court may enter temporary periods of immunity prohibiting
exclusionary zoning actions from proceeding pending the court’s
determination of the municipality’s presumptive compliance with
its affordable housing obligation. Immunity, once granted,
should not continue for an undefined period of time; rather, the
trial court’s orders in furtherance of establishing municipal
affordable housing obligations and compliance should include a
brief, finite period of continued immunity, allowing a
reasonable time as determined by the court for the municipality
to achieve compliance.
In the end, a court reviewing the submission of a town that
had participating status before COAH will have to render an
individualized assessment of the town’s housing element and
affordable housing plan based on the court’s determination of
present and prospective regional need for affordable housing
applicable to that municipality. A preliminary judicial
determination of the present and prospective need will assist in
assessing the good faith and legitimacy of the town’s plan, as
proposed and as supplemented during the processes authorized
39
under the FHA –- conciliation, mediation, and use of special
masters -- and employed in the court’s discretion. The court
will be assisted in rendering its preliminary determination on
need by the fact that all initial and succeeding applications
will be on notice to FSHC and other interested parties. Only
after a court has had the opportunity to fully address
constitutional compliance and has found constitutional
compliance wanting shall it permit exclusionary zoning actions
and any builder’s remedy to proceed.
V.
The process developed herein is one that seeks to track the
processes provided for in the FHA. Doing so will facilitate a
return to a system of coordinated administrative and court
actions in the event that COAH eventually promulgates
constitutional Third Round Rules that will allow for the
reinstitution of agency proceedings.
The judicial role here is not to become a replacement
agency for COAH. The agency is sui generis –- a legislatively
created, unique device for securing satisfaction of Mount Laurel
obligations. In opening the courts for hearing challenges to,
or applications seeking declarations of, municipal compliance
with specific obligations, it is not this Court’s province to
create an alternate form of statewide administrative decision
maker for unresolved policy details of replacement Third Round
40
Rules, as was proposed by NJLM. The courts that will hear such
declaratory judgment applications or constitutional compliance
challenges will judge them on the merits of the records
developed in individual actions before the courts. However,
certain guidelines can be gleaned from the past and can provide
assistance to the designated Mount Laurel judges in the
vicinages.
First, as we said in In re Adoption of N.J.A.C. 5:96 &
5:97, supra, previous methodologies employed in the First and
Second Round Rules should be used to establish present and
prospective statewide and regional affordable housing need. 215
N.J. at 620. The parties should demonstrate to the court
computations of housing need and municipal obligations based on
those methodologies.
Second, many aspects to the two earlier versions of Third
Round Rules were found valid by the appellate courts. In
upholding those rules the appellate courts highlighted COAH’s
discretion in the rule-making process. Judges may confidently
utilize similar discretion when assessing a town’s plan, if
persuaded that the techniques proposed by a town will promote
for that municipality and region the constitutional goal of
creating the realistic opportunity for producing its fair share
of the present and prospective need for low- and moderate-income
41
housing. In guiding the courts in those matters, we identify
certain principles that the courts can and should follow.
One, our decision today does not eradicate the prior round
obligations; municipalities are expected to fulfill those
obligations. As such, prior unfulfilled housing obligations
should be the starting point for a determination of a
municipality’s fair share responsibility. Cf. In re Adoption of
N.J.A.C. 5:96 & 5:97, supra, 416 N.J. Super. at 498-500
(approving, as starting point, imposition of “the same prior
round obligations [COAH] had established as the second round
obligations in 1993”).
Two, the Appellate Division twice addressed the Third Round
Rules’ elimination of the reallocation of excess present need4
and found it permissible under both the FHA and Mount Laurel II.
Id. at 500-02; In re Adoption of N.J.A.C. 5:94 & 5:95, supra,
390 N.J. Super. at 57-60. While acknowledging that pre-FHA
courts required reallocation because “[m]unicipalities with an
excess of dilapidated housing occupied by the poor ‘should not
be expected to provide decent housing for a disproportionate
share of the need,’” the initial reviewing panel found that
4 “The [S]econd [R]ound [R]ules define[d] reallocated present
need as ‘the share of excess deterioration in a region
transferred to all communities of the region with the exception
of Urban Aid Cities.’” In re Adoption of N.J.A.C. 5:94 & 5:95,
supra, 390 N.J. Super. at 57 (quoting N.J.A.C. 5:93, Appendix A
at 93-52).
42
Mount Laurel did not require such reallocation and COAH was to
be afforded “broad discretion in implementing the Mount Laurel
doctrine.” In re Adoption of N.J.A.C. 5:94 & 5:95, supra, 390
N.J. Super. at 58-59 (quoting AMG Realty Co. v. Twp. of Warren,
207 N.J. Super. 388, 401 (Law Div. 1984)). Later, a second
Appellate Division panel “reaffirm[ed] the validity of th[at]
part of the [T]hird [R]ound [R]ules that d[id] not reallocate
any of that need,” In re Adoption of N.J.A.C. 5:96 & 5:97,
supra, 416 N.J. Super. at 502, and this Court “substantially
affirm[ed]” that opinion. In re Adoption of N.J.A.C. 5:96 &
5:97, supra, 215 N.J. at 619. The Mount Laurel judges may
proceed on this basis when reviewing the plans of
municipalities.
Three, the Appellate Division also approved the allowance
of bonus credits towards satisfaction of a municipality’s
affordable housing obligations. For example, in In re Adoption
of N.J.A.C. 5:94 & 5:95, supra, the panel affirmed the validity
of a new construction credit, N.J.A.C. 5:94-4.16(a), which
provided a municipality with credit “for each low or moderate
income for-sale housing unit that [wa]s subject to affordability
controls that [we]re scheduled to expire . . . if the
affordability controls [we]re extended in accordance with”
N.J.A.C. 5:80-26. 390 N.J. Super. at 81-84. The same panel
also approved the allocation of a bonus credit to a municipality
43
“for each unit that is affordable to the very poor, that is, a
member of the general public earning thirty percent or less of
the median income.” Ibid. (citing N.J.A.C. 5:94-4.22). In
approving those bonuses, the appellate court acknowledged COAH’s
discretion in creating a comprehensive scheme and further found
that “[t]he [T]hird [R]ound [R]ules d[id] not dilute
satisfaction of the housing need to the same degree as the
[F]irst [R]ound or [S]econd [R]ound [R]ules,” which were both
approved. Id. at 82-83. Again, the Mount Laurel judges may
exercise the same level of discretion when evaluating a
municipality’s plan for Mount Laurel compliance.
Four, in In re Adoption of N.J.A.C. 5:96 & 5:97, supra, the
Appellate Division approved the “Smart Growth” and
“Redevelopment” bonuses contained in the second iteration of the
Third Round Rules. 416 N.J. Super. at 495-97. The “Smart
Growth” bonus awarded municipalities “1.33 units of credit for
each affordable housing unit addressing its growth share
obligation . . . that [wa]s included in a Transit Oriented
Development in a Planning Area 1, 2 or a designated center.”
N.J.A.C. 5:97-3.18. The “Redevelopment” bonus awarded “1.33
units of credit for each affordable housing unit addressing its
growth share obligation . . . that [wa]s included in a
designated redevelopment area or rehabilitation area pursuant to
the Local Redevelopment and Housing Law.” N.J.A.C. 5:97-3.19.
44
The Appellate Division’s opinion concluded that those bonuses
were “reasonably designed to further important state policies”
and, therefore, were valid. In re Adoption of N.J.A.C. 5:96 &
5:97, supra, 416 N.J. Super. at 497.
Five, in addressing the first iteration of Third Round
Rules, the Appellate Division also approved the “exclu[sion of]
the cost-burdened poor from the present need or rehabilitation
share calculation.” In re Adoption of N.J.A.C. 5:94 & 5:95,
supra, 390 N.J. Super. at 36. In doing so, the appellate panel
noted that pre-FHA courts also had allowed exclusion of the
“cost-burdened poor” from the fair share formula. Id. at 35
(citing AMG Realty, supra, 207 N.J. Super. at 422-23). The
court found that COAH’s decision to exclude the cost-burdened
poor was a permissible exercise of discretion. Id. at 36.
Six, the Appellate Division also approved a methodology for
identifying substandard housing that used “fewer surrogates [or
indicators] to approximate the number of deficient or
dilapidated housing units.” Id. at 38. In fact, COAH’s Second
Round Rules had approximated based on seven indicators, while
the earlier-adopted Third Round Rules considered only three.
Id. at 38-39. The appellate court acknowledged a change in the
available United States Census data that triggered the reduction
in indicators and found that COAH did not abuse its discretion
in reducing the number of factors from seven to three. Id. at
45
40. That, like the previously mentioned areas left to COAH’s
discretion, and others not directly precluded by the Appellate
Division’s decisions or ours remain legitimate considerations
for the Mount Laurel judges when evaluating the
constitutionality and reasonableness of the plans they are
called upon to review.
The above examples of approved actions from the earlier
appellate decisions are cited to guide the Mount Laurel-
designated judges that will hear the actions pertaining to a
town’s housing plan. We emphasize that the courts should employ
flexibility in assessing a town’s compliance and should exercise
caution to avoid sanctioning any expressly disapproved practices
from COAH’s invalidated Third Round Rules. Beyond those general
admonitions, the courts should endeavor to secure, whenever
possible, prompt voluntary compliance from municipalities in
view of the lengthy delay in achieving satisfaction of towns’
Third Round obligations. If that goal cannot be accomplished,
with good faith effort and reasonable speed, and the town is
determined to be constitutionally noncompliant, then the court
may authorize exclusionary zoning actions seeking a builder’s
remedy to proceed against the towns either that had substantive
certification granted from COAH under earlier iterations of
Third Round Rules or that had held “participating” status before
46
COAH until this action by our Court lifted the FHA’s exhaustion-
of-administrative-remedies requirement.
In conclusion, we note again that the action taken herein
does not prevent either COAH or the Legislature from taking
steps to restore a viable administrative remedy that towns can
use in satisfaction of their constitutional obligation. In
enacting the FHA, the Legislature clearly signaled, and we
recognized, that an administrative remedy that culminates in
voluntary municipal compliance with constitutional affordable
housing obligations is preferred to litigation that results in
compelled rezoning. See Hills, supra, 103 N.J. at 21-22. It is
our hope that an administrative remedy will again become an
option for those proactive municipalities that wish to use such
means to obtain a determination of their housing obligations and
the manner in which those obligations can be satisfied.
VI.
As specifically authorized by this opinion and its
accompanying order, relief in aid of litigants’ rights is
granted.
JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, and SOLOMON, and
JUDGE CUFF (temporarily assigned) join in JUSTICE LaVECCHIA’s
opinion. CHIEF JUSTICE RABNER did not participate.
47
SUPREME COURT OF NEW JERSEY
M-392 September Term 2014
067126
IN THE MATTER OF THE ADOPTION
OF N.J.A.C. 5:96 AND 5:97 BY
THE NEW JERSEY COUNCIL ON
AFFORDABLE HOUSING.
O R D E R
This matter having come before the Court on motion in aid
of litigants’ rights under Rule 1:10-3 by Fair Share Housing
Center (FSHC) seeking relief from the exhaustion of remedies
before the Council on Affordable Housing (COAH) required by the
Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to 329, and allowing
civil actions concerning municipalities’ compliance with
constitutional affordable housing obligations to proceed in the
courts; and
The Court having reviewed the papers submitted in support
of and in opposition to this application, and having heard oral
argument; and
Consistent with this Court’s accompanying opinion and as
more fully set forth therein, and for good cause shown
It is ORDERED that relief in aid of litigants’ rights,
under the authority of Rule 1:10-3, is granted as follows:
1. The FHA’s exhaustion-of-administrative-remedies
requirement is dissolved until further order of the
Court and the courts may resume their role as the forum
1
of first resort for evaluating municipal compliance with
Mount Laurel obligations, as set forth herein.
2. The courts are hereby authorized to hear and decide
actions addressing municipal compliance with
constitutional Mount Laurel obligations by
municipalities that had sought the protections of the
FHA through COAH.
3. The effective date of this Order is delayed by ninety
days to effectuate an orderly transition to the judicial
remedies authorized herein.
4. A transitional process is hereby established in
recognition of the various stages of municipal
preparation to demonstrate Mount Laurel compliance that
may exist as a result of the long period of uncertainty
attributable to COAH’s failure to promulgate Third Round
Rules.
5. During the first thirty days following the effective
date of this Order, the only actions that will be
entertained by the courts will be declaratory judgment
actions filed by any municipality that either (a) had
achieved substantive certification from COAH under prior
iterations of Third Round Rules before they were
invalidated, or (b) had “participating” status before
COAH. In a declaratory judgment action filed by such
2
municipalities, the municipality may seek a judicial
declaration that its housing plan is presumptively valid
because it presents a realistic opportunity for the
provision of its fair share of its housing region’s
present and prospective need for low- and moderate-
income housing.
6. In the event that any municipality in either of the
aforementioned categories waits and does not file a
declaratory judgment action during that initial thirty-
day period, an action solely focused on whether the
municipality’s housing plan meets its Mount Laurel
obligations (a constitutional compliance challenge) may
thereafter be brought by a party against that
municipality.
7. In all declaratory judgment and constitutional
compliance cases to be brought before the courts, on
notice and opportunity to be heard, the trial court may
grant temporary periods of immunity prohibiting
exclusionary zoning actions from proceeding, as set
forth in our opinion.
8. Only after a court has had the opportunity to fully
address constitutional compliance and has found
constitutional compliance wanting shall it permit
3
exclusionary zoning actions and any builder’s remedy to
proceed in a given case.
9. The court’s evaluation of a municipality’s plan that had
received substantive certification, or of a plan that
will be submitted to the court as proof of
constitutional compliance, may result ultimately in the
municipality’s receipt of the judicial equivalent of
substantive certification and accompanying protection as
provided under the FHA.
10. All civil actions authorized herein shall be directed
to the Mount Laurel-designated judges assigned in the
vicinages.
WITNESS, the Honorable Jaynee LaVecchia, Presiding Justice,
at Trenton, this 10th day of March, 2015.
CLERK OF THE SUPREME COURT
4
SUPREME COURT OF NEW JERSEY
NO. M-392 SEPTEMBER TERM 2014
DISPOSITION Motion in Aid of Litigants’ Rights
IN THE MATTER OF THE ADOPTION
OF N.J.A.C. 5:95 AND 5:97 BY
THE NEW JERSEY COUNCIL ON
AFFORDABLE HOUSING
DECIDED March 10, 2015
Justice LaVecchia PRESIDING
OPINION BY Justice LaVecchia
CONCURRING OPINION BY
DISSENTING OPINION BY
GRANT AS
CHECKLIST AUTHORIZED
BY OPINION
AND ORDER
CHIEF JUSTICE RABNER ----------------------- --------------------
JUSTICE LaVECCHIA X
JUSTICE ALBIN X
JUSTICE PATTERSON X
JUSTICE FERNANDEZ-VINA X
JUSTICE SOLOMON X
JUDGE CUFF (t/a) X
TOTALS 6
1