In Re Declaratory Judgment Actions Filed by Various , 446 N.J. Super. 259 ( 2016 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3323-15T1
IN RE DECLARATORY JUDGMENT
ACTIONS FILED BY VARIOUS APPROVED FOR PUBLICATION
MUNICIPALITIES, COUNTY OF
OCEAN, PURSUANT TO THE July 11, 2016
SUPREME COURT'S DECISION IN
APPELLATE DIVISION
In Re Adoption Of N.J.A.C.
5:96, 221 N.J. 1 (2015).
____________________________
Argued June 6, 2016 – Decided July 11, 2016
Before Judges Lihotz, Fasciale and Nugent.
On appeal from an interlocutory order of
Superior Court of New Jersey, Law Division,
Ocean County, Docket No. L-2640-15.
Jeffrey R. Surenian argued the cause for
appellant Township of Barnegat (Jeffrey R.
Surenian & Associates, L.L.C., attorneys;
Mr. Surenian, Michael A. Jedziniak, Erik C.
Nolan, and Michael J. Edwards, on the
briefs).
Kevin D. Walsh argued the cause for
respondent Fair Share Housing Center (Mr.
Walsh and Adam M. Gordon, on the brief).
Stephen M. Eisdorfer argued the cause for
respondent New Jersey Builders Association
(Hill Wallack, L.L.P., attorneys; Mr.
Eisdorfer, Thomas F. Carroll, III, and Emily
P.W. Santoro, on the brief).
Edward J. Buzak argued the cause for
respondent NJ State League of Municipalities
(The Buzak Law Group, L.L.C., attorneys; Mr.
Buzak, on the brief).
Richard J. Hoff, Jr. argued the cause for
respondent Highview Homes, L.L.C. (Bisgaier
Hoff, L.L.C., attorneys; Mr. Hoff and
Danielle Novak Kinback, on the brief).
Edward J. Boccher argued the cause for
respondent Township of Brick (DeCotiis,
Fitzpatrick & Cole, L.L.P., attorneys; Mr.
Boccher, of counsel and on the brief; Louis
N. Rainone and Wendy Rubinstein, on the
brief).
Gilmore & Monahan, P.C., attorneys for
respondents Township of Jackson and Township
of Little Egg Harbor, join in the brief of
appellant Township of Barnegat.
DiFrancesco, Bateman, Kunzman, Davis, Lehrer
& Flaum, P.C., attorneys for respondent
Township of Toms River, join in the brief of
appellant Township of Barnegat.
Gluck Walrath, L.L.P., attorneys for
respondent Township of Ocean, join in the
brief of appellant Township of Barnegat.
Dasti, Murphy, McGuckin, Ulaky, Koutsouris,
& Connors, attorneys for respondent Township
of Stafford, join in the brief of appellant
Township of Barnegat.
Jonathan E. Drill argued the cause for
amicus curiae The Municipal Group (Stickel,
Koenig, Sullivan & Drill, L.L.C., attorneys;
Mr. Drill, of counsel and on the brief).
Donald J. Sears argued the cause for amicus
curiae Township of South Brunswick.
Ronald L. Israel argued the cause for amicus
curiae Colts Neck Township (Chiesa Shahinian
& Giantomasi, P.C., attorneys; Mr. Israel,
on the brief).
Archer & Greiner, P.C., attorneys for amicus
curiae Township of Middletown (Brian Michael
2 A-3323-15T1
Nelson, of counsel and on the brief; Kira S.
Dabby, on the brief).
Michael B. Steib, attorney for amicus curiae
Township of Millstone.
Lowenstein Sandler, L.L.P., attorneys for
amicus curiae American Planning Association-
New Jersey Chapter, New Jersey Future, and
the Housing & Community Development Network
of New Jersey (Catherine Weiss and Katy
Akopjan, on the brief).
Disability Rights New Jersey, amicus curiae,
for itself, and The Supportive Housing
Association of New Jersey, The Housing
Community Development Network of New Jersey,
Collaborative Support Programs of New
Jersey, The Alliance for the Betterment of
Citizens with Disabilities, The New Jersey
Association of Community Providers, The Arc
of New Jersey, New Jersey Association of
Mental Health and Addiction Agencies, The
Coalition of Mental Health Consumer
Organizations, The System of Care
Association, The New Jersey Psychiatric
Rehabilitation Association, The Mental
Health Association in New Jersey, Advancing
Opportunities, Community Access Unlimited,
The Community Health Law Project, and Autism
New Jersey (Iraisa Orihuela-Reilly, Susan
Saidel, and Joseph B. Young, on the brief).
The opinion of the court was delivered by
FASCIALE, J.A.D.
In the wake of the New Jersey Supreme Court's order
requiring judicial oversight of municipal housing obligations to
preclude exclusionary development schemes, see In re Adoption of
N.J.A.C. 5:96 & 5:97 by the New Jersey Council on Affordable
Housing, 221 N.J. 1 (2015) (In re N.J.A.C. 5:96 II), we granted
3 A-3323-15T1
the Township of Barnegat's1 motion for leave to appeal from an
interlocutory order entered by a designated Mount Laurel2 judge,
directing the court's Special Regional Master to include, as a
new, "separate and discrete" component, an additional
calculation for establishing a municipality's affordable housing
need from 1999 to 2015 (the gap period).3 In entering the order,
the judge concluded that a municipality's fair share affordable
housing obligation for the third-round cycle is comprised of (1)
its newly-created, court-imposed, "separate and discrete" gap-
1
We granted leave to appeal on behalf of the Township of
Barnegat, In re Twp. of Barnegat, L-1856-15, along with twelve
consolidated declaratory judgment complaints filed by Ocean
County municipalities: In re Borough of Beach Haven, L-2217-15;
In re Township of Berkeley, L-1855-15; In re Township of Brick,
L-1857-15; In re Township of Jackson, L-1879-15; In re Township
of Lacey, L-1912-15; In re Township of Little Egg Harbor,
L-1911-15; In re Township of Manchester, L-1910-15; In re
Township of Ocean, L-1884-15; In re Borough of Pine Beach,
L-1687-15; In re Borough of Point Pleasant, L-1858-15; In re
Township of Stafford, L-1913-15; and Township of Toms River,
L-1867-15.
2
S. Burlington Cty. NAACP v. Twp. of Mount Laurel, 67 N.J. 151
(Mount Laurel I), appeal dismissed and cert. denied, 423 U.S.
808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975); and S. Burlington
Cty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158 (1983) (Mount
Laurel II).
3
The February 18, 2016 order includes a signature of another
judge who handled two of these thirteen consolidated matters,
and who joined the opinion of the Mount Laurel judge. Reference
in our decision to the "court" or "judge" refers to the Mount
Laurel judge who entered the order and rendered the opinion
under review.
4 A-3323-15T1
period obligation; (2) unmet prior round obligations from 1987
to 1999; (3) present need; and (4) prospective need.
We granted amicus status to the following entities that
urged us to reverse the order: Colts Neck Township; Township of
Millstone; Township of Middletown; Township of South Brunswick;
The Municipal Consortium; and the Municipal Group.4 The New
Jersey State League of Municipalities (NJLM) also appeared
before the court as a respondent.
These entities contend the court is without legal authority
to create a "separate and discrete" gap-period obligation.
Instead, they maintain that a municipality's affordable housing
obligation for the third-round cycle is comprised of unmet prior
round obligations from 1987 to 1999, present need, and
prospective need. They argue that prospective need projects
into the future a town's housing obligation for ten years from
the current time, not from the beginning of the gap period in
1999. They acknowledge that the identifiable housing need that
arose during the gap period would be captured by a town's
present need obligation, but they are adamant that there is no
"separate and discrete" gap-period obligation.
4
The Municipal Group is a formal coalition of hundreds of
municipalities organized to address fair share methodological
issues in the aftermath of the Court's opinion in In re N.J.A.C.
5:96 II.
5 A-3323-15T1
We granted amicus status to the following entities that
urged us to affirm the order: Disability Rights New Jersey; the
New Jersey Chapter of the American Planning Association; New
Jersey Future; and the Housing and Community Development
Network.
Fair Share Housing Center (Fair Share), New Jersey Builders
Association (NJBA), and Highview Homes, L.L.C. (Highview)
appeared before the court as intervenors and, pursuant to In re
N.J.A.C. 5:96 II, Fair Share participated as an interested
party. Fair Share agrees that a municipality's affordable
housing obligation for the third-round cycle is comprised of
unmet prior round obligations from 1987 to 1999, present need,
and prospective need. Fair Share concedes that a town's
prospective need requires calculations projecting forward ten
years. Fair Share asserts, however, that prospective need also
requires a municipality to perform housing calculations
retroactively during the gap period. Therefore, Fair Share
maintains that gap-period housing need comprises part of a
town's calculation of its prospective need. As a result, Fair
Share defines prospective need differently than those entities
urging us to reverse the order. For Fair Share, prospective
need covers a period of twenty-seven years: from 1999 to the
present, and then ten years into the future. Thus, to the
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extent a municipality is required to establish its prospective
need from 1999 to the present, and then ten years into the
future, Fair Share urges us to uphold the court-imposed
"separate and discrete" gap-period housing obligation.
The narrow legal issue on appeal is whether a "separate and
discrete" gap-period affordable housing obligation is authorized
by (1) the core principles of the Mount Laurel doctrine, as
codified in the Fair Housing Act of 1985 (FHA), N.J.S.A. 52:27D-
301 to -329; and (2) In re N.J.A.C. 5:96 II. Resolution of this
legal question specifically addresses whether a municipality's
prospective need involves a retroactive housing obligation
starting in 1999. Our focus, therefore, is on the propriety of
the court's conclusion that such a "separate and discrete"
obligation is "constitutionally mandated."
Applying the core principles of the Mount Laurel doctrine
and the plain language of the FHA, including its unambiguous
definition of "prospective need" — a forward "projection of
housing needs based on development and growth which is
reasonably likely to occur in a region or a municipality,"
N.J.S.A. 52:27D-304(j) — and following the Supreme Court's
admonition not to become an alternative administrative decision
maker for unresolved policy issues surrounding the Third Round
Rules, we hold that the FHA does not require a municipality to
7 A-3323-15T1
retroactively calculate a new "separate and discrete" affordable
housing obligation arising during the gap period. Pursuant to
In re N.J.A.C. 5:96 II, "previous methodologies employed in the
First and Second Round Rules should be used to establish present
and prospective statewide and regional affordable housing need,"
and prior round unfulfilled obligations "should be the starting
point for a determination of a municipality's fair share
responsibility." Supra, 221 N.J. at 30 (emphasis added). As
the Court instructed, subject to the guidelines and principles
it outlined in In re N.J.A.C. 5:96 II, Mount Laurel judges
may confidently utilize similar discretion
[used by the Council on Affordable Housing
(COAH)] 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 housing.
[Ibid. (emphasis added).]
We emphasize that under our tripartite system of government, the
imposition of a new retrospective calculation, designed to
establish affordable housing need during the gap period — a new
methodology that essentially addresses "unresolved policy
details of replacement Third Round Rules" — is best left for
consideration by the Legislative and Executive branches of
government, where public policy issues associated with such an
8 A-3323-15T1
additional "separate and discrete" obligation can be fairly and
fully debated in the public forum. The Legislature may craft
new legislation addressing any gap period between housing cycles
if that is the course it wishes to take. Enforcement of
subsequent legislation promoting affordable housing needs — and
its effect on a municipality's Mount Laurel obligation — would
still be a matter that may be brought to the courts.
The judge did not determine whether any of the town's plans
will satisfy their constitutional affordable housing
obligations. At this point in the litigation, his main legal
concern was whether to impose a "separate and discrete"
affordable housing obligation for the gap period, in addition to
a town's unmet prior round, present, and prospective
obligations. Having resolved that legal question, the judge may
now determine whether the towns have met their constitutional
goal of creating "[a] realistic opportunity for producing its
fair share of the present and prospective need for low- and
moderate-income housing." In re N.J.A.C. 5:96 II, supra, 221
N.J. at 30 (emphasis added).
We therefore reverse the order and remand for further
proceedings.
9 A-3323-15T1
I.
We begin by reviewing the pertinent principles of the Mount
Laurel doctrine, the enactment of the FHA, the role of COAH, and
the Supreme Court's decision in In re N.J.A.C. 5:96 II.5
In Mount Laurel I, the Supreme Court concluded that
developing municipalities must "presumptively make realistically
possible an appropriate variety and choice of housing" through
land use regulations. Supra, 67 N.J. at 174. The Court stated
that such municipalities "cannot foreclose the opportunity of
the classes of people mentioned for low[-] and moderate[-income]
housing and in its regulations must affirmatively afford that
opportunity, at least to the extent of the municipality's fair
share of the present and prospective regional need." Ibid. The
Court determined that land use regulations are encompassed in
the State's police power, required such regulations to "promote
public health, safety, morals or the general welfare," and
concluded "a zoning enactment which is contrary to the general
welfare is invalid." Id. at 175.
Approximately eight years later, the Court returned to the
issue. In Mount Laurel II, supra, 92 N.J. 158, the Court
5
In general, the Court determined COAH failed to promulgate
valid Third Round Rules, concluded that exhausting
administrative remedies before COAH was therefore no longer
necessary, and established procedures for affordable housing
matters to proceed before designated Mount Laurel judges.
10 A-3323-15T1
reaffirmed the doctrine and fashioned a judicial remedy for
determining a municipality's constitutional obligation to
provide for low- and moderate-income housing. In re Adoption of
N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable
Hous., 215 N.J. 578, 587-89 (2013) (In re N.J.A.C. 5:96 I).
Adding teeth to the doctrine, the Court sanctioned a builder's
remedy, which permitted builder-plaintiffs to sue for the
opportunity to construct housing at higher densities than a
municipality would allow. Id. at 589. In strengthening the
Mount Laurel doctrine, the Court explained that the core of the
doctrine was a municipality "would satisfy [its] constitutional
obligation by affirmatively affording a realistic opportunity
for the construction of 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. The Court
stated that a realistic opportunity depends on "whether there is
in fact a likelihood — to the extent economic conditions allow —
that the lower income housing will actually be constructed."
Id. at 222. Although the Court devised a scheme to address
resolution of litigation in this field, it reiterated its
preference for legislative action. Id. at 212-13. Two years
later, and in the aftermath of AMG Realty Co. v. Township of
Warren, 207 N.J. Super. 388, 453 (Law Div. 1984), which
11 A-3323-15T1
articulated a method for calculating affordable housing
obligations that substantially impacted the likelihood of
whether lower income housing would actually be constructed, the
Legislature enacted the FHA.
The FHA codified the core constitutional holding
undergirding the Mount Laurel obligation. In re N.J.A.C. 5:96
I, supra, 215 N.J. at 584. The FHA required "reasonable fair
share housing guidelines and standards." N.J.S.A. 52:27D-
302(d). The FHA created COAH, N.J.S.A. 52:27D-305, which was
designed to provide an administrative alternative to litigating
constitutional compliance in exclusionary zoning actions. In re
N.J.A.C. 5:96 II, supra, 221 N.J. at 7-8, 11.
COAH's primary responsibility was to assign and determine
municipal affordable housing obligations. Id. at 7 (citing
N.J.S.A. 52:27D-305, -307). The FHA required COAH to enact and
thereafter update regulations that established statewide
affordable housing need; to assign an affordable housing
obligation to each municipality for its designated region; and
to identify the techniques available to municipalities in
addressing the assigned obligation. Ibid. (citing N.J.S.A.
52:27D-307, -308). The criteria and guidelines that the FHA
directed COAH to adopt were targeted for "[m]unicipal
determination of its present and prospective fair share of the
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housing need in a given region which shall be computed for a
[ten]-year period." N.J.S.A. 52:27D-307(c)(1). The FHA defined
prospective need:
"Prospective need" means a projection of
housing needs based on development and
growth which is reasonably likely to occur
in a region or a municipality, as the case
may be, as a result of actual determination
of public and private entities. In
determining prospective need, consideration
shall be given to approvals of development
applications, real property transfers and
economic projections prepared by the State
Planning Commission established by sections
1 through 12 of P.L.1985, c.398 (C.52:18A-
196 et seq.).
[N.J.S.A. 52:27D-304(j).]
Although municipalities were free to resolve constitutional
Mount Laurel obligations in the courts, the FHA preferred
resolution in an administrative forum. In re N.J.A.C. 5:96 II,
supra, 221 N.J. at 4.
The FHA encouraged and rewarded voluntary municipal
compliance by (1) providing a period of immunity from civil
lawsuits to towns that participated in the process for
demonstrating constitutional compliance (the exhaustion-of-
administrative-remedies requirement); and (2) providing a
presumption of validity in any later exclusionary zoning
litigation for municipalities who secured from COAH a
substantive fair housing plan certification. Ibid. The
13 A-3323-15T1
viability of these provisions was subject to COAH's updating of
housing obligations, as well as related substantive and
procedural rules. Ibid.
In 1986, COAH began adopting rules delineating the
affordable housing obligations of municipalities. In re
Adoption of N.J.A.C. 5:94 and 5:95 by the N.J. Coal. on
Affordable Hous., 390 N.J. Super. 1, 23 (App. Div.), certif.
denied, 192 N.J. 71 (2007) (In re N.J.A.C. 5:94). COAH adopted
rules covering the periods of 1987 to 1993 — the First Round
Rules — and 1993 to 1999 — the Second Round Rules. In re
N.J.A.C. 5:96 I, supra, 215 N.J. at 590. These rules generally
utilized a methodology for calculating affordable housing
obligations employed before the Legislature enacted the FHA.
Ibid.
In the First Round Rules, COAH defined present need as "the
total number of deficient housing units occupied by low[-] or
moderate[-income] households as of July 1, 1987." Ibid.
(quoting N.J.A.C. 5:92-1.3). COAH used several factors to
establish present need, such as "overcrowding, age of unit, and
lack of plumbing, kitchen or heating facilities as indicators of
dilapidated housing." Id. at 590-91.
The First Round Rules also incorporated the statutory
definition of prospective need as "a projection of low[-] and
14 A-3323-15T1
moderate[-income] housing needs based on development and growth
. . . reasonably likely to occur in a region or a municipality."
Id. at 591 (quoting N.J.A.C. 5:92-1.3). COAH analyzed
statistics to project forward the number of "'low- and moderate-
income households' that would form between 1987 and 1993."
Ibid. (quoting N.J.A.C. 5:92, Appendix A at 92-49). In
determining prospective need, COAH considered such things as
municipalities' "approvals of development applications, real
property transfers and economic projections prepared by the
State Planning Commission." Ibid. (quoting N.J.A.C. 5:92-1.3).
For the Second Round Rules, COAH used the same
methodologies employed in the First Round Rules. Id. at 592.
COAH also adopted additional regulations granting credits and
various adjustments to reduce municipalities' fair share
figures. Ibid. (summarizing the adopted regulations granting
credits and adjustments). Various legal challenges to the First
and Second Round Rules failed. Ibid.
Essentially, the methodology of allocating municipalities'
affordable housing obligations largely followed the remedial
approaches established by Mount Laurel II and AMG Realty. Id.
at 593. COAH first calculated the need for affordable housing
in each of the State's regions, then allocated to each
municipality its fair share of the present and prospective
15 A-3323-15T1
regional need. Ibid. A municipality would be assigned a
proportionate fair share of the region's housing need based on
economic projections and its capacity to accommodate affordable
housing. Ibid. A municipality would subject itself to the
possibility of defending a builder's remedy challenge if it
failed to create a realistic opportunity for satisfying its
assigned share. Ibid.
Although the Second Round Rules expired in 1999, COAH
belatedly promulgated its first iteration of the Third Round
Rules in 2004.6 Ibid. The rule proposal published in the New
Jersey Register explained that a municipality's fair share for
the period from 1987 through January 1, 2014, would be
calculated using three criteria:
(1) a municipality's "rehabilitation share"
based on the condition of housing revealed
in the data gathered for the 2000 Census,
previously known as a municipality's
indigenous need; (2) a municipality's
unsatisfied prior round obligation (1987
through 1999), satisfaction of which will be
governed by the second round rules; and (3)
a municipality's "growth share" based on
housing need generated by statewide job
growth and residential growth from 1999
through 2014.
6
We characterized this delay as "dramatic," "inexplicable,"
and frustrating the public policies embodied by the Mount Laurel
line of cases. In re Six Month Extension of N.J.A.C. 5:91 et
seq., 372 N.J. Super. 61, 95-96 (App. Div. 2004) (In re Six
Month), certif. denied, 182 N.J. 630 (2005).
16 A-3323-15T1
[Id. at 593-94 (quoting In re N.J.A.C. 5:94,
supra, 390 N.J. Super. at 27).]
During the gap period, we considered challenges to the
validity of the Third Round Rules and remanded the matter to
COAH on two occasions with instructions to adopt revised Third
Round Rules.
Our first remand to COAH with instructions to adopt revised
rules occurred in 2007. In re N.J.A.C. 5:94, supra, 390 N.J.
Super. at 47. At that time, we sustained some but rejected many
of the challenges to the first iteration of the Third Round
Rules. Importantly, Judge Mary Catherine Cuff, writing for the
panel, noted that "municipalities are responsible for fulfilling
their prior round obligation." Id. at 28 (citing N.J.A.C. 5:94-
2.1(a)(2)).
Judge Cuff's opinion rejected
[7]
appellants' arguments that the
"rehabilitation share" of a municipality's
affordable housing obligation, sometimes
also referred to as present need, should
include "cost burdened" low- and moderate-
income households that reside in standard
housing and households that lack permanent
housing or live in overcrowded housing; that
COAH's methodology for identifying
substandard housing was "arbitrary and
unreasonable"; that the [T]hird [R]ound
7
The appellants challenged the validity of COAH's substantive
rules for the third round that calculated affordable housing
needs from 1999 to 2014, as well as the validity of several
regulations.
17 A-3323-15T1
[R]ules improperly eliminated the part of
the first and second round methodologies
that required reallocation of excess present
need in poor urban municipalities to other
municipalities in the region; that the use
of regional contribution agreements to
satisfy part of a municipality's affordable
housing obligations violates the Mount
Laurel doctrine and federal and state
statutory provisions; that the allowance of
bonus credits towards satisfaction of a
municipality's affordable housing
obligations unconstitutionally dilutes those
obligations; and that the rule relating to
vacant land adjustments violates the Mount
Laurel doctrine and the FHA.
However, Judge Cuff's opinion
invalidated the parts of the original
[T]hird [R]ound [R]ules that reduced
statewide and regional affordable housing
need based on "filtering"; adopted a growth
share approach for determining a
municipality's fair share of prospective
needs for affordable housing and excluded
job growth resulting from rehabilitation and
redevelopment in determining job growth;
compelled developers to construct affordable
housing without any compensating benefits;
authorized a municipality to give a
developer the option of payment of a fee in
lieu of constructing affordable housing, but
provided no standards for setting those
fees; and authorized a municipality to
restrict up to 50% of newly constructed
affordable housing to households with
residents aged fifty-five or over.
[In re Adoption of N.J.A.C. 5:96 and 5:97 by
the N.J. Coal. on Affordable Hous., 416 N.J.
Super. 462, 475-76 (App. Div. 2010)
(emphasis added) (citations omitted), aff'd
as modified, 215 N.J. 578 (2013).]
18 A-3323-15T1
In 2010, Judge Stephen Skillman, also writing for a
different panel, invalidated a substantial portion of the
revised Third Round Rules, including the growth share
methodology used by COAH, id. at 511-12; regulations concerning
the preparation of fair share plans, id. at 487-88; presumptive
incentives embodied in the regulations, id. at 488-93; and
regulations concerning rental credits, id. at 493-95.
Judge Skillman upheld several of the regulations, however,
such as the elimination of reallocated present need, id. at 500-
02 (reasoning COAH possessed the authority to focus on
municipalities' own obligations, see N.J.A.C. 5:97-2.4, rather
than reallocating excess present need away from those
overburdened with substantial housing); and COAH's decision to
use the prior round obligations without updating the obligations
based on actual household growth, id. at 498-500. Consequently,
we redirected COAH to adopt new rules.
During the gap period, the New Jersey Supreme Court also
invalidated revised Third Round Rules and issued deadlines for
COAH to adopt new regulations. In re N.J.A.C. 5:96 I, supra,
215 N.J. at 619-20. Acknowledging the FHA had set a course
tracking the Mount Laurel II allocation methodology for
satisfaction of present and prospective need, the Court remarked
that "the Third Round Rules' validity hinges in whether they are
19 A-3323-15T1
consistent with the FHA." Id. at 612-17. In 2014, the Court
granted COAH an additional five months to adopt new rules. In
re N.J.A.C. 5:96 and 5:97, 220 N.J. 355, 355-56 (2014).
COAH failed to meet the extension deadline, which led the
Court to grant Fair Share's motion in aid of litigants' rights
in In re N.J.A.C. 5:96 II, supra, 221 N.J. at 5-6. The Court
recognized the administrative process had become nonfunctioning.
Id. at 5. As a result, the FHA's exhaustion-of-remedies
requirement had been rendered futile. Ibid. Therefore, there
no longer existed a legitimate basis to block access to the
courts for resolution of municipal compliance with
constitutional affordable housing. Ibid. Recognizing there
existed various stages of municipal preparation during the gap
period, the Court established a transitional process for
exclusionary zoning actions to proceed. Ibid. The Court also
emphasized:
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.
[Id. at 6 (citation omitted).]
20 A-3323-15T1
The Court developed a process which tracked the processes
provided for in the FHA. Id. at 29. It did so to facilitate a
return to agency proceedings in the event COAH promulgated new
Third Round Rules. Ibid. In establishing the process for
exclusionary zoning actions to proceed, the Court stated:
[I]t is not this Court's province to create
an alternate form of statewide
administrative decision maker for unresolved
policy details of replacement Third Round
Rules . . . . 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.
[Id. at 29-30 (emphasis added).]
The Supreme Court established procedures for addressing two
classes of municipalities that were stranded by COAH's inability
to adopt valid Third Round Rules. Id. at 24-29 (outlining the
procedures for municipalities that "made the effort to comply
promptly with the Third Round Rules and . . . received a grant
of substantive certification," and municipalities that had
"participating" status with COAH).
Although presented with numerous opportunities to do so, at
no point did the Court, the Legislature, or the Appellate
Division impose an additional separate gap-period obligation.
21 A-3323-15T1
Rather, in establishing a municipality's fair share affordable
housing obligation, the focus consistently remained on present
and prospective housing need.
II.
We now turn to the proceedings conducted by the judge
leading to his ruling that municipalities are "constitutionally
mandated" to address the gap period as a "separate and discrete"
component of their fair share Mount Laurel obligation.
Following the procedures established by the Court in In re
N.J.A.C. 5:96 II, supra, 221 N.J. at 21-34, several Ocean County
municipalities filed declaratory judgment actions seeking
resolution of their Mount Laurel obligations. The judge
undertook preliminarily to determine the present and prospective
affordable housing needs of the municipalities. To reach this
determination, the court reviewed several expert reports that
expressed differing opinions on the subject.
The judge appointed Richard B. Reading as the Special
Regional Master, who was to "assist the court in making the
preliminary determination envisioned by the Supreme Court of the
present and prospective needs." The judge allowed submissions
of expert reports and expected to conduct a plenary hearing at
which the court would address the conflicting expert opinions as
22 A-3323-15T1
to the methodology for calculating the municipalities'
affordable housing obligations.
On December 29, 2015, Mr. Reading submitted a report
entitled "COAH's Un[-]adopted Third Round Methodology
Calculation of 'Gap' Period Housing Needs." In this report, Mr.
Reading listed these questions the judge identified in a case
management order:
1) Is the methodology provided in Appendix
D[8] of the current iteration of the [un-
adopted] Third Round Rules an appropriate
and correct methodology?
2) Do the trial courts have the authority to
require a municipality to address the . . .
'gap' obligation component as part of a
municipality's prior obligation?[9]
Mr. Reading concluded that the "methodology in Appendix D
[did] not follow the methodologies utilized in the calculation
of affordable housing needs employed in the [p]rior [r]ounds."
He stated that "[a] review of the history of Mount Laurel did
not disclose a methodology that expanded the calculation of fair
share beyond [p]resent and [p]rospective [n]eed." He remarked
that Sections 304 and 307 of the FHA established "prospective
8
Mr. Reading identified the un-adopted Third Round Rules as
N.J.A.C. 5:99, Appendix D.
9
The third question, "[w]hat is the proper allocation of the
1000 unit cap . . . [and] how should the gap be applied to any
'gap period' need if one exists," is not at issue.
23 A-3323-15T1
need as a period of ten years and includes a projection of
housing needs based upon development and growth that is
reasonably likely to occur." He determined that the "inclusion
of the prior [gap period] within prospective need is contrary to
prior round methodologies, the language of the FHA and history
of determining affordable housing needs." As to "identifying
and quantifying" the housing need from the gap period, Mr.
Reading stated:
[The unmet need arising during the gap
period] was discussed in terms of the
disposition of [low- and moderate-income]
housing needs that existed . . . in the
past. These households would be partially
included by the [low- and moderate-income]
households in over[]crowded or deficient
housing units that are encompassed in the
new calculation of [p]resent [n]eed. Those
[low- and moderate-income] households that
have occupied sound (non-deficient) housing
units are already [in] housing and would not
represent an identifiable need. Some [low-
and moderate-income] households formed
during the gap period may no longer
represent an affordable housing need due to
a variety of reasons including death,
changes in income, increase or decrease in
household size, retirement and/or relocation
outside of New Jersey. . . . Although it
may be possible to generate an estimate of
such a residual need, such an estimate would
be speculative.
[(Emphasis added).]
Mr. Reading stated "there is a uniform consensus among the
interested parties that the methodology provided in Appendix D
24 A-3323-15T1
is not an appropriate and correct methodology for the
calculation of affordable housing [gap-period] needs." He
explained further that even though there existed this consensus
rejecting COAH's un-adopted methodology, "an appropriate
methodology for determining an affordable housing need [during
the 1999-2015 'gap period' was] not . . . presented."10
On February 17, 2016, Mr. Reading issued a report entitled
"Bridging the Gap, 1999-2015 'Gap' Period Affordable Housing
Needs." In this report, Mr. Reading responded to expert
opinions contained in reports submitted by Dr. David N. Kinsey,
on behalf of Fair Share, and Econsult. After reviewing these
opinions, Mr. Reading recommended to the judge that he "consider
the inclusion of the [g]ap[-p]eriod, calculated distinctly and
separately from [p]resent and [p]rospective [n]eed," which is a
markedly different recommendation than what he expressed
previously.
Mr. Reading stated Dr. Kinsey provided two alternatives for
calculating affordable housing needs arising during the gap
10
Mr. Reading acknowledged, in a later report, Fair Share's
contention that the gap-period should be included "within the
extended 1999-2025 [p]rospective [n]eed." He also considered
the NJLM and a report prepared by Econsult Solutions (Econsult),
on behalf of a consortium of municipalities, stating there is no
basis for "retrospective analysis of housing need, which has
always been based on 'present and prospective need.'" (Emphasis
added).
25 A-3323-15T1
period: calculating the entire period from 1999-2025 as a
prospective need, without a separation of the gap period and
prospective need projection; and replicating COAH's 1994
recalculation of the 1987-1993 housing need (although Mr.
Reading recognized that such a recalculation was done to adjust
a prior (1987-1993) obligation, not to establish a methodology
for addressing a lapse in assigned obligations).
Econsult provided a comprehensive methodology for
establishing the 1987-1999 prior round obligations, the 2015
present need, and the 2015-2025 prospective need. Econsult's
methodology did not include calculations for the gap period.
Econsult critiqued Dr. Kinsey's two alternatives. As to the
first alternative, Econsult maintained essentially that gap-
period low- and moderate-income households living in deficient
housing would be encompassed in present need, while low- and
moderate-income households living in adequate housing would not
represent an identifiable need. As to the second alternative,
Econsult reiterated its positon that present need and
prospective need combine to represent the entire fair share need
of, in its opinion, Dr. Kinsey's calculation of retrospective or
gap-period needs.
In his February 17, 2016 report, Mr. Reading stated that
the gap-period issue had become a legal issue. He acknowledged
26 A-3323-15T1
that all parties agreed low- and moderate-income households were
formed during the gap period and have secured housing, some of
which were deficient or overcrowded, which would be reflected in
present need. As to the proper methodology for calculating
municipalities' affordable housing need arising during the gap
period, he concluded:
The calculation of the current needs of the
affordable hous[ing] formed during the [gap
period] is not a process that is [e]mbedded
in the [p]rior [r]ound methodology, [and] is
not projected ([p]rospective) need, but
should be undertaken as a separate and
discrete component of affordable housing
need. Prior submissions provided by [Fair
Share] and Econsult on December 8, 2015
contended that the calculation for the [g]ap
[p]eriod affordable housing needs were
unnecessary because they were properly a
part of the 1999-2025 [p]rospective [n]eed
. . . or were unnecessary altogether because
the FHA does not make any provision for a
retrospective need . . . .
. . . .
Assertions that a determination of [g]ap
[p]eriod affordable housing need cannot be
reduced to a precise mathematical
calculation devoid of all assumptions and
estimates is not distinctly different than
the preparation of estimates for . . .
[p]resent . . . and [p]rospective [n]eed[,]
[which] are likewise predicated upon
estimates [and] . . . would . . . be no more
impaired.
As a result, Mr. Reading recommended the court should sanction a
completely new and different methodology than that used during
27 A-3323-15T1
the first two rounds or in the FHA, one that "should be
calculated as [a] separate and discrete component of affordable
housing need utilizing data and procedures appropriate to a
prior, rather than future period." In other words, he
recommended a methodology that retrospectively calculated gap-
period housing need, rather than, as he stated in his December
29, 2015 report, the unmet gap-period housing needs being
included in "the new calculation of present need."
The next day, on February 18, 2016, the court adopted Mr.
Reading's new recommendation and issued its opinion. As to the
gap period, the court stated:
The court finds municipalities are
constitutionally mandated to address [the
gap-period] obligation. This "gap period"
need is to be calculated as a separate and
discrete component of a municipality's fair
share obligation. This component[,]
together with a municipality's unmet prior
round obligations [from] 1987 to 1999[,] and
its present need and prospective need[,]
shall comprise its "fair share" affordable
housing obligation for the third [round]
housing cycle.
. . . .
[I]t is ironic that both parties (or
interests) appearing in [a] 2004 Appellate
Division case are now advancing arguments
before this court [that] they vehemently
opposed in [In re Six Month].
. . . .
28 A-3323-15T1
Even if the municipalities were
[therefore] not [now] estopped from
advancing their position[,] and despite
their efforts here to distinguish . . . [In
re Six Month] . . . the court finds the
underlying principles in [In re Six Month]
. . . are the same as the matter here.
[(Emphasis added).]
III.
On appeal, the entities urging us to reverse the order
argue that the judge erroneously imposed a new "separate and
discrete" component of a municipality's fair share affordable
housing obligation during the gap period. They contend the
judge erred by: (1) failing to apply the plain language of the
FHA; (2) ignoring the guidelines and principles established by
In re N.J.A.C. 5:96 II; (3) applying the doctrine of judicial
estoppel; and (4) acting as a replacement agency for COAH by
resolving unresolved policy details of replacement Third Round
Rules.
They assert that a municipality's fair share affordable
housing obligation for the third-round cycle is comprised of:
(1) the unmet prior round (before 1999) obligations; (2) present
need; and (3) prospective need. They maintain, as Mr. Reading
expressed in his December 29, 2015 report, that gap-period
affordable housing needs would be captured in a town's
calculation of its present need. They emphasize that imposing a
retrospective gap-period obligation does not allow for a
29 A-3323-15T1
realistic opportunity that the lower income housing will
actually be constructed.
The entities urging us to affirm the order under review
argue primarily that: (1) a municipality's prior round
unfulfilled affordable housing obligations includes the gap
period; (2) the FHA, as determined by COAH, provides for
cumulative and uninterrupted calculations of prospective need;
(3) COAH's interpretation of the FHA providing for gapless
affordable housing need is reasonable; and (4) the judge's
ruling complies with the FHA and In re N.J.A.C. 5:96 II.
Our standard of review is well settled. The sole question
on appeal, whether a retrospective gap-period obligation is
authorized by the core principles of the Mount Laurel doctrine,
as codified in the FHA, and In re N.J.A.C. 5:96 II, is a legal
issue not entitled to any special deference. Manalapan Realty,
L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
IV.
Applying the plain language of the FHA, the guidelines and
principles established by In re N.J.A.C. 5:96 II, and respecting
the separation of powers doctrine,11 we conclude that the judge
11
The framers of the New Jersey Constitution articulated the
separation of powers doctrine expressing that
(continued)
30 A-3323-15T1
erroneously imposed a requirement that a municipality undertake
a new, "separate and discrete" gap-period calculation – in
addition to unmet prior round obligations, present, and
prospective needs – to establish a municipality's fair share
affordable housing obligation. We also reject the contention
that judicial estoppel precludes reversal of the February 18,
2016 order under review.
A.
We start with the plain language of the FHA. Our paramount
goal in interpreting a statute is to ascertain the Legislature's
intent, and "generally[] the best indicator of that intent is
the statutory language." DiProspero v. Penn, 183 N.J. 477, 492
(2005) (citation omitted). When interpreting a statute, we give
words "their ordinary meaning and significance." Tumpson v.
Farina, 218 N.J. 450, 467 (2014) (quoting DiProspero, supra, 183
N.J. at 492). Only when the statutory language is ambiguous and
yields more than one plausible interpretation do we turn to
(continued)
[t]he powers of the government shall be
divided among three distinct branches, the
legislative, executive, and judicial. No
person or persons belonging to or
constituting one branch shall exercise any
of the powers properly belonging to either
of the others, except as expressly provided
in this Constitution.
[N.J. Const., art. III, ¶ 1.]
31 A-3323-15T1
extrinsic sources, such as legislative history. DiProspero,
supra, 183 N.J. at 492-93. Here, there is no ambiguity.
The plain language of the FHA refers to present and
prospective need. Responding to the significantly high fair
share obligations in the aftermath of AMG Realty, the
Legislature enacted the FHA, finding that one of the "essential
ingredients" to its response was "the establishment of
reasonable fair share housing guidelines and standards."
N.J.S.A. 52:27D-302(d). Consequently, the Legislature focused
on present and prospective need, N.J.S.A. 52:27D-307(b), and
charged COAH to adopt guidelines for "[m]unicipal determination
of its present and prospective fair share of the housing need in
a given region which shall be computed for a 10-year period,"
N.J.S.A. 52:27D-307(c)(1) (emphasis added).
The FHA defines prospective need not by looking backwards,
but rather as a "projection of housing needs based on
development and growth which is reasonably likely to occur in a
region or a municipality." N.J.S.A. 52:27D-304(j) (emphasis
added). In determining prospective need, COAH considered such
things as municipalities' "approvals of development
applications, real property transfers and economic projections
prepared by the State Planning Commission." In re N.J.A.C. 5:96
I, supra, 215 N.J. at 591 (quoting N.J.A.C. 5:92-1.3).
32 A-3323-15T1
The FHA did not define present need, but in the valid First
Round Rules, COAH defined present need as "the total number of
deficient housing units occupied by low[-] or moderate[-income]
households." Id. at 590 (quoting N.J.A.C. 5:92-1.3). COAH used
several factors to establish present need, such as
"overcrowding, age of unit, and lack of plumbing, kitchen or
heating facilities as indicators of dilapidated housing." Id.
at 590-91.
The judge noted that COAH, in each of its three
unsuccessful attempts to promulgate Third Round Rules,
referenced the gap period, albeit with different unapproved
methodologies. Although the judge acknowledged COAH's reference
to the gap period during its three iterations of the un-adopted
Third Round Rules, we note that an agency is not at liberty to
impose additional requirements onto a statute that do not exist
on its face. See In re N.J.A.C. 5:96 I, supra, 215 N.J. at 614-
15 (invalidating the growth share methodology in the Third Round
Rules and explaining that COAH may not enact regulations plainly
at odds with the FHA); see also Oberhand v. Dir., Div. of
Taxation, 193 N.J. 558, 568 (2008) (explaining "an
administrative agency's interpretation will not be followed when
the agency extends a statute 'to give it a greater effect than
its language permits'" (quoting GE Solid State v. Dir., Div. of
33 A-3323-15T1
Taxation, 132 N.J. 298, 306 (1993))); Fedders Fin. Corp. v.
Dir., Div. of Taxation, 96 N.J. 376, 392 (1984) (stating "[i]t
is well established that [an agency's] regulatory authority
cannot go beyond the Legislature's intent as expressed in the
statute"); Serv. Armament Co. v. Hyland, 70 N.J. 550, 563 (1976)
(explaining "an administrative interpretation which attempts to
add to a statute something which is not there can furnish no
sustenance to the enactment"). To the extent COAH interpreted
the FHA to include a requirement beyond present and prospective
need and fulfilling prior round obligations, we conclude such an
interpretation is "at odds with the plain meaning of the [FHA]."
Oberhand, supra, 193 N.J. at 568. The same proscription applies
to the courts.
Importantly, during the sixteen-year gap period, the
Legislature amended the FHA twelve times. It did not amend the
FHA, however, to require a retrospective determination of gap-
period obligations. Failure to so amend the FHA does not amount
to Legislative authorization to retroactively adopt a new
methodology for calculating affordable housing gap-period needs,
even if COAH's un-adopted Third Round Rules sought to
encapsulate the gap period. See GE Solid State, supra, 132 N.J.
at 312-13 (rejecting that the Legislature's failure to interfere
with an administrative interpretation is proof that the agency's
34 A-3323-15T1
interpretation conforms with legislative intent or establishes
legislative acquiescence); see also Airwork Serv. Div., Div. of
Pac. Airmotive Corp. v. Dir., Div. of Taxation, 97 N.J. 290, 296
(1984) (explaining that administrative acquiescence is only
relevant when "the Legislature's intent cannot otherwise be
determined by a critical examination of the purposes, policies,
and language of the enactment" (emphasis added)).
Fair Share, supported by Dr. Kinsey, interprets
"prospective need" to mean that a town is required to look at
affordable housing needs prospectively starting from 1999, in
addition to a separate ten-year prospective need calculation
from the present. In other words, Fair Share argues a town's
"prospective need" would cover a period of twenty-seven years,
from 1999 to ten years from now. We conclude such an
interpretation is clearly at odds with the FHA's unambiguous
definition of prospective need. As it is defined in the FHA,
prospective need refers to a "projection" of growth in the
future, namely a "projection of housing needs based on
development and growth which is reasonably likely to occur in a
region or a municipality." By its nature, it does not involve
retrospectively including a gap-period calculation.
In sum, to impose a gap-period requirement would inevitably
add a new requirement not previously recognized under the FHA.
35 A-3323-15T1
The Supreme Court has cautioned courts not to become a
replacement agency for COAH in promulgating substantive rules.
Rather, based on COAH's inaction, courts must work within the
provisions of the FHA and should employ the first and second
round methodologies to determine a municipality's compliance
with its Mount Laurel obligations. Until COAH adopts Third
Round Rules, or until the Legislature acts, the courts may not
act as a legislature by imposing new, substantive obligations
not recognized under the FHA.
B.
Next, the judge did not follow the guidelines established
by the Court in In re N.J.A.C. 5:96 II. We will address the
relief requested in In re N.J.A.C. 5:96 II, the Court's
response, and then our application of the guidelines to the
judge's ruling.
(i)
In In re N.J.A.C. 5:96 II, Fair Share, the NJBA, the NJLM,
and various towns expressed their respective positions as to the
guidance they believed the Court should provide to the
designated Mount Laurel judges. We briefly summarize these
competing positions to emphasize the Court's unwillingness to
decide "unresolved policy details of replacement Third Round
Rules" or to become a "replacement agency for COAH" by
36 A-3323-15T1
essentially endorsing a new methodology for separately and
discretely calculating affordable housing needs during the gap
period.
[Fair Share] ask[ed] that the second-round
methodology, with limited modifications, be
directed for use in such [remand]
proceedings and that newly authorized
judicial actions proceed expeditiously and
on a notice-and-opportunity-to-be-heard
basis.
. . . .
. . . [NJBA] contend[ed] that the
administrative stalemate ha[d] permitted
municipalities to "shelter themselves" from
suit under COAH's jurisdiction without
providing any additional affordable housing
in years. They urge[d] the Court to fashion
relief that [would] require courts to
examine what towns have done to date in
attempting to satisfy their constitutional
obligations.
. . . .
[Various towns] contend[ed] that trial
courts would be tasked with determining
whether a municipality's fair share
allocation will be "cumulative" or
applicable only to one compliance period.
The[y] also contend[ed] 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.
. . . .
[NJLM] argue[d] that the 314
municipalities [which had submitted to
37 A-3323-15T1
COAH's substantive certification under the
earlier Third Round Rules] should not
forfeit their protection from suit.
According to NJLM, exclusionary zoning
litigation would punish the municipalities,
which [were] not responsible for COAH's most
recent failure to adopt compliant Third
Round Rules.
Notably, NJLM propose[d] an alternate
solution, arguing that COAH ha[d] expended
significant resources in developing the most
recent proposed regulations, which efforts
should not be wasted. NJLM suggest[ed] 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 propose[d]
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 propose[d] 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.
[In re N.J.A.C. 5:96 II, supra, 221 N.J. at
12-16 (emphasis added).]
The Court responded to Fair Share's plea for guidance and, in
light of the various stages of municipal preparation that had
existed "as a result of the long period of uncertainty
attributable to COAH's failure to promulgate Third Round Rules,"
the Court devised a transitional process before allowing
exclusionary zoning actions to proceed. Id. at 20. In
articulating the transitional process, and by expressing the
38 A-3323-15T1
concomitant "guidelines . . . gleaned from the past [that] can
provide assistance to the designated Mount Laurel judges," id.
at 29-30, the Supreme Court did not include a new methodology
for calculating additional housing obligations during the gap
period. In our view, consideration of imposing such a new
policy — that essentially addresses "unresolved policy details
of replacement Third Round Rules" — is best left to the other
two branches, where important public policy considerations can
be fairly, fully, and openly debated.
(ii)
We now address the actual guidelines and principles listed
by the Court for use by designated Mount Laurel judges handling
declaratory judgment applications on constitutional-compliance
applications. In enumerating these guidelines, the Court
reiterated it did not intend to punish the towns that were "in a
position of unfortunate uncertainty due to COAH's failure to
maintain the viability of the administrative remedy." Id. at
23. Instead, the Court explained:
Our goal is to establish an avenue by which
towns can demonstrate their constitutional
compliance [i.e., present and prospective
obligations] 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,
39 A-3323-15T1
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.
[Id. at 23-24 (emphasis added).]
The Court then identified specific procedures, guidelines, and
principles.
In In re N.J.A.C. 5:96 II, the Court reasserted that
"previous methodologies employed in the First and Second Round
Rules should be used to establish present and prospective
statewide and regional affordable housing need." Id. at 30
(emphasis added). As a result, municipalities were required to
demonstrate to the court computations of housing need and
municipal obligations "based on those methodologies." Ibid.
(emphasis added). The Court reminded the designated Mount
Laurel judges they had the same discretion that COAH enjoyed
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 housing." Ibid. (emphasis added).
Importantly, the Court did not eradicate the prior round
obligations. Ibid. Instead, the Court stated "municipalities
40 A-3323-15T1
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."
Ibid. In reaching this conclusion, the Court cited Judge Cuff's
recognition that "municipalities are responsible for fulfilling
their prior round obligation," In re N.J.A.C. 5:94, supra, 390
N.J. Super. at 28, and Judge Skillman's approval, as a starting
point, for the imposition of "the same prior round obligations
[COAH] had established as the second round obligations in 1993,"
In re N.J.A.C. 5:96, supra, 416 N.J. Super. at 498-500.
Fulfilling prior round obligations, as described by the
Court and in our 2007 and 2010 remand opinions, is decidedly
different than imposing a new, retrospective, "separate and
discrete" methodology for establishing affordable housing
obligations during the gap period. A court-imposed "separate
and discrete" retrospective gap-period calculation, on top of a
town's existing and present and prospective fair share
affordable housing obligations, would amount to the Court acting
as a replacement agency for COAH, and would contravene the
Court's unwillingness to decide unresolved policy issues
relating to replacement Third Round Rules.
In addition to this assistance, the Court identified other
principles that Mount Laurel designated judges should follow,
41 A-3323-15T1
such as: our prior treatment of reallocation of present need 12;
bonus credits; cost-burdened poor; and the reduction of fewer
surrogate indicators. In re N.J.A.C. 5:96 II, supra, 221 N.J.
at 30-33. The Court emphasized 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." Id. at 33.
Finally, the Court reiterated its "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." Id. at 34 (emphasis
added).
(iii)
Here, the judge's ruling respectfully did not comport with
In re N.J.A.C. 5:96 II. The Court repeated its instructions
that "previous methodologies employed in the First and Second
Round Rules should be used to establish present and prospective
statewide and regional affordable housing need." Id. at 30.
Further, it stated that "[t]he parties should demonstrate to the
12
"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 N.J.A.C. 5:96 II, supra, 221 N.J.
at 30 n.4 (alterations in original) (citations omitted).
42 A-3323-15T1
court computations of housing need and municipal obligations
based on those methodologies." Ibid. The Court stated that the
starting point for a determination of a municipality's fair
share responsibility is the prior round unfulfilled obligations.
Ibid. Requiring municipalities to undertake a retrospective
"separate and discrete" additional calculation for affordable
housing need does not follow the First or Second Round Rules.
It mandates an entirely new obligation unauthorized by the FHA.
The judge concluded that "New Jersey's affordable housing
need is cumulative and there can be no gaps in time left
unaddressed." He based this conclusion on his interpretation of
Mount Laurel II, stating the Court "found the obligation to meet
the prospective lower income housing need of the region is, by
definition, one that is met year after year in the future,
throughout the years of the particular projection used in
calculating prospective need." However, the Court's statement
was aimed at the practical effects of establishing prospective
need, stating:
The Mount Laurel obligation to meet the
prospective [looking forward not
retrospectively] lower income housing need
of the region is, by definition, one that is
met year after year in the future,
throughout the years of the particular
projection used in calculating prospective
need. In this sense the affirmative
obligation to provide a realistic
opportunity to construct a fair share of
43 A-3323-15T1
lower income housing is met by a "phase-in"
over those years; it need not be provided
immediately. Nevertheless, there may be
circumstances in which the obligation
requires zoning that will provide an
immediate opportunity -- for instance,
zoning to meet the region's present lower
income housing need. In some cases, the
provision of such a realistic opportunity
might result in the immediate construction
of lower income housing in such quantity as
would radically transform the municipality
overnight. Trial courts shall have the
discretion, under those circumstances, to
moderate the impact of such housing by
allowing even the present need to be phased
in over a period of years. Such power,
however, should be exercised sparingly. The
same power may be exercised in the
satisfaction of prospective need, equally
sparingly, and with special care to assure
that such further postponement will not
significantly dilute the Mount Laurel
obligation.
[Mount Laurel II, supra, 92 N.J. at 218-19
(emphasis added).]
The language quoted by the judge pertained to the Court's
recognition that phasing in was an option for municipalities in
calculating present and prospective need. Therefore, the
judge's reliance on Mount Laurel II for the proposition that
there can be no gap periods is respectfully misplaced.
Furthermore, the FHA, enacted after Mount Laurel II, and the
Court's opinion in In re N.J.A.C. 5:96 II do not support such a
conclusion.
44 A-3323-15T1
C.
Whether to establish a new methodology that imposes
retrospective calculations for determining affordable housing
needs during the gap period, which would be in addition to
satisfying prior round unmet present and prospective
obligations, is best left for consideration by the Legislative
and Executive branches. As the Court explained in 2013, when it
invalidated COAH's Third Round Rules:
The Legislature may determine to
authorize new avenues for addressing
regional need and the promotion of
affordable housing. And, it may do so in
ways that we do not attempt to circumscribe
in this opinion because we do not know the
breadth of considerations that may be
brought forth through informational
legislative hearings on the subject.
Nevertheless, it is the Legislature that
must devise the parameters to such an
approach. It must craft new legislation if
that is the course it wishes to take. Our
courts can and should exercise caution and
defer to such solutions when appropriately
drafted by the Legislature. See N.J. Ass'n
on [Corr.] v. Lan, 80 N.J. 199, 220 (1979)
(acknowledging importance of deference to
legislative enactments addressing general
welfare (citation omitted)); Roe v. Kervick,
42 N.J. 191, 230 (1964) (recognizing value
of deference when reasonable minds could
differ and issue to be remedied "involves a
concept which varies with the needs of the
times").
Although the Legislature may consider
enacting an alternative form of remedy for
the promotion of affordable housing in the
housing regions of this state, see Hills
45 A-3323-15T1
[Dev. Co. v. Twp. of Bernards, 103 N.J. 1,]
65 [(1986)] ("No one should assume that our
exercise of comity today signals a weakening
of our resolve to enforce the constitutional
rights of New Jersey's lower income
citizens. The constitutional obligation has
not changed; the judiciary's ultimate duty
to enforce it has not changed; our
determination to perform that duty has not
changed."), enforcement of the
constitutional obligation is still a matter
that may be brought to the courts.
[In re N.J.A.C. 5:96 I, supra, 215 N.J. at
616-17.]
Deferring to the Legislature on such policy considerations
is especially important here because COAH is a "legislatively
created, unique device for securing satisfaction of Mount Laurel
obligations." In re N.J.A.C. 5:96 II, supra, 221 N.J. at 29.
As the Court stated, it is not our role to become a replacement
agency for COAH by creating "an alternate form of statewide
administrative decision maker for unresolved policy details of
replacement Third Round Rules." Ibid. We discern no
constitutional basis for the judiciary, much less this court, to
intrude into the policy-making arena, an area traditionally
reserved in our tripartite system of governance to the
legislative13 and executive branches.
13
Although not dispositive on the legal question presented on
appeal, there are two identical pending bills in the Assembly
and Senate directly on point. The Legislative statement
accompanying those bills states in pertinent part:
(continued)
46 A-3323-15T1
D.
We reject the contention that the doctrine of judicial
estoppel bars the challenge to the court's holding as to the
gap-period issue. We review a trial court's decision to invoke
judicial estoppel using an abuse of discretion standard. State,
Div. of Motor Vehicles v. Caruso, 291 N.J. Super. 430, 438 (App.
Div. 1996).
The law as to the doctrine of judicial estoppel is well
settled. To protect the integrity of the court system, "[w]hen
(continued)
Although the [FHA] clearly states that
the State Constitution's affordable housing
obligation is comprised of "present and
prospective need" for affordable housing
only, some courts have misunderstood the
intent of the Legislature behind the [FHA],
and imposed a retroactive obligation for the
so-called gap period. The purpose of this
bill is to eliminate any possible
misconception with respect to the
Legislature's intent to ensure that
determination of a municipality's fair share
of affordable housing will be based upon the
present and prospective need for affordable
housing, as clearly set forth in the [FHA],
and that a fair share obligation will not
include a retrospective need that may have
arisen during any "gap period" between
housing cycles.
[Statement to Assemb. No. 3821, and
Statement to S.B. No. 2254 at 7 (May 23,
2016) (emphasis added).]
47 A-3323-15T1
a party successfully asserts a position in a prior legal
proceeding, that party cannot assert a contrary position in
subsequent litigation arising out of the same events." Kress v.
La Villa, 335 N.J. Super. 400, 412 (App. Div. 2000) (emphasis
added), certif. denied, 168 N.J. 289 (2001). It has been
summarized as follows: "The principle is that if you prevail in
Suit # 1 by representing that A is true, you are stuck with A in
all later litigation growing out of the same events." Kimball
Int'l, Inc. v Northfield Metal Prods., 334 N.J. Super. 596, 607
(App. Div. 2000) (citation omitted), certif. denied, 167 N.J. 88
(2001).
Judicial estoppel is not a favored remedy because of its
draconian consequences. It is to be invoked only in limited
circumstances:
It is . . . generally recognized that
judicial estoppel is an "extraordinary
remedy," which should be invoked only "when
a party's inconsistent behavior will
otherwise result in a miscarriage of
justice." Ryan Operations G.P. v. Santiam-
Midwest Lumber Co., 81 F.3d 355, 365 (3d
Cir. 1996) (quoting Oneida Motor Freight,
Inc. v. United Jersey Bank, 848 F.2d 414,
424 (3d Cir.) (Stapleton, J., dissenting),
cert. denied, 488 U.S. 967, 109 S. Ct. 495,
102 L. Ed. 2d 532 (1988)); see also
[Teledyne Indus., Inc., v. NLRB, 911 F.2d
1214,] 1218 [(6th Cir. 1990)] ("Judicial
estoppel is applied with caution to avoid
impinging on the truth-seeking function of
the court because the doctrine precludes a
contradictory position without examining the
48 A-3323-15T1
truth of either statement."). Thus, as with
other claim and issue preclusion doctrines,
judicial estoppel should be invoked only in
those circumstances required to serve its
stated purpose, which is to protect the
integrity of the judicial process.
[Id. at 608 (footnote omitted).]
In Ali v. Rutgers, 166 N.J. 280, 288 (2000), our Supreme Court
confirmed that judicial estoppel is an "extraordinary remedy."
The facts presented on this appeal do not warrant application of
this remedy.
In invoking the doctrine of judicial estoppel and imposing
a "separate and discrete" gap-period obligation, the judge
relied on our opinion in In re Six Month. We conclude that the
court's reliance is misplaced. We reach that conclusion
primarily because the parties and issues in In re Six Month were
substantially different than here, and since issuing our opinion
in In re Six Month, the Court provided Mount Laurel judges with
further guidelines and principles in In re N.J.A.C. 5:96 II.
As to the dissimilarity of issues, our focus in In re Six
Month was on COAH's interim procedural rules designed to address
a six-year period between 1999 and 2004. Supra, 372 N.J. Super.
at 68. In In re Six Month, we identified the sole issue:
These [seven] appeals concern only N.J.A.C.
5:91-14.3, which provides a mechanism for
municipalities previously certified in the
second round to receive an extension of
their substantive certification status and,
49 A-3323-15T1
therefore, further protection from civil
action remedies, for up to one year
following the adoption of the third-round
rules, well beyond the previously scheduled
1999 expiration of second-round standards
and methodology.
[Ibid.]
Here, the issue is whether a retrospective "separate and
discrete" gap-period obligation is authorized by (1) the core
principles of the Mount Laurel doctrine, as codified in the FHA;
and (2) In re N.J.A.C. 5:96 II. There, we were not asked to
address, and we did not sanction, a gap-period affordable
housing obligation, on top of prior unfulfilled obligations and
present and prospective needs. Rather, we temporarily suspended
substantive certifications granted by COAH pursuant to N.J.A.C.
5:91-14.3, subject to rule modifications. Id. at 105. As to
the dissimilarity of parties, none of the Ocean County
municipality entities participated in In re Six Month.
V.
In sum, we conclude that the core principles of the Mount
Laurel doctrine, as codified in the FHA, and the guidelines and
principles established by the New Jersey Supreme Court in In re
N.J.A.C. 5:96 II, do not authorize a retrospective new "separate
and discrete" affordable housing gap-period obligation.
Following In re N.J.A.C. 5:96 II, a town should start with its
unfulfilled prior round obligations and then establish its
50 A-3323-15T1
present and prospective need in establishing a municipality's
fair share Mount Laurel obligation.
Finally, we emphasize that our holding today does not
ignore housing needs that arose in the gap period or a
municipality's obligation to otherwise satisfy its
constitutional fair share obligations. As Mr. Reading candidly
acknowledged, "[low- and moderate-income] households formed
during the gap period may no longer represent an affordable
housing need due to a variety of reasons including death,
changes in income, increase or decrease in household size,
retirement and/or relocation outside of New Jersey." However,
he also stated that housing need from the gap period would be
"partially included" by those living in "over[]crowded or
deficient housing units that are encompassed in the new
calculation of [p]resent [n]eed." Therefore, the scope of
present need should be dictated by identifiable housing need
characteristics as found by the reviewing Mount Laurel judge
when examining the evidence presented.14 In this context, the
focus remains – as it has for the last forty years - on the
constitutional obligation of realistically affording
14
The Municipal Group asserted in its amicus brief that
"municipalities presented facts to show that developers
constructed roughly 90,000 rental units affordable to low[-] or
moderate-income households during the gap period."
51 A-3323-15T1
opportunities for construction of a municipality's fair share of
present and prospective need for low- and moderate-income
housing.
We reach our conclusion emphasizing: (1) the core of the
Mount Laurel doctrine is a municipality "would satisfy [its]
constitutional obligation by affirmatively affording a realistic
opportunity for the construction of its fair share of the
present and prospective regional need for low[-] and moderate[-
income] income housing," Mount Laurel II, supra, 92 N.J. at 205
(emphasis added); (2) a realistic opportunity depends on
"whether there is in fact a likelihood -- to the extent economic
conditions allow -- that the lower income housing will actually
be constructed," id. at 222; (3) the FHA codified the core
constitutional holding undergirding the Mount Laurel obligation,
In re N.J.A.C. 5:96 I, supra, 215 N.J. at 584, and specifically
defined "prospective need" as a forward projection of housing
needs "based on development and growth . . . [which is]
reasonably likely to occur in a region or a municipality,"
N.J.A.C. 5:92-1.3; (4) the FHA charged COAH with determining
"State and regional present and prospective need for low[-] and
moderate[-income] housing," In re N.J.A.C. 5:96 I, supra, 215
N.J. at 589 (emphasis added); (5) although the Legislature
amended the FHA twelve times during the gap period, it did not
52 A-3323-15T1
impose a retrospective "separate and discrete" gap-period
obligation; (6) although the Appellate Division and the Supreme
Court likewise had opportunities during the gap period to
require a "separate and discrete" gap-period obligation, such an
obligation was not imposed, and instead remained steadfast to
the FHA's focus on State and regional present and prospective
need for low- and moderate-income housing; (7) identified low-
and moderate-income households formed during the gap period in
need of affordable housing can be captured in a municipality's
calculation of present need; and (8) under our tripartite system
of jurisprudence, imposing a "separate and discrete" gap-period
obligation is best left for consideration by the Legislative and
Executive branches of government where the issues can be fairly
and fully debated in the public forum.
Reversed and remanded for further proceedings consistent
with this opinion. We do not retain jurisdiction.
53 A-3323-15T1