CARNEYS POINT, N.J.—Plans to turn an old factory here into homes for disabled war veterans collapsed into acrimony and a string of lawsuits over the past 12 months.
There may be many more lawsuits to come, according to New Jersey housing advocates—both over the project in Carneys Point and throughout the rest of the state as developers, administrators, and the courts argue about the constitutional obligation of New Jersey towns to provide affordable housing.
“Developers say they have no legal redress,” says Adam Gordon, an attorney with Fair Share Housing Center. “They have to go to court."
For years, affordable housing developers and many town officials avoided the courts and worked out their differences through New Jersey's Council on Affordable Housing (COAH). In June 2011, Gov. Chris Christie abolished COAH and transferred its responsibilities to the New Jersey Department of Community Affairs (DCA).
Dissolving COAH removed the most visible symbol of the obligation that New Jersey towns have to provide affordable housing.
But the obligation has not gone away. Before New Jersey had COAH, developers and towns often fought in court over affordable housing. Those days may soon come again.
COAH is dead
You couldn't call the decision to close COAH unexpected: Christie ran for office in 2009 promising to shut down COAH and issued an executive order, later overturned by the courts, to close the agency almost as soon as he got to the governor's mansion. Next, the state Legislature voted to replace COAH with fixed requirements for towns to provide affordable housing—Christie thought the bill was too onerous and vetoed it in January 2011. And then in June, he finally abolished COAH and transferred its functions. The abolition is being challenged in court.
“Municipalities should be able to make their own decisions on affordable housing without being micromanaged and second-guessed from Trenton,” said Christie when he announced the abolition of COAH.
However, even if COAH is gone, towns still have a legal responsibility to provide affordable housing, thanks to a famous court case.
In its Mount Laurel decisions in 1975 and 1983, the New Jersey Supreme Court ruled that all state municipalities need to plan, zone for, and take affirmative actions to provide realistic opportunities for their “fair share” of the region's need for affordable housing for low- and moderate-income people.
The court based the Mount Laurel decisions on the “general welfare” clause in the New Jersey Constitution.
So, what exactly does that mean? Towns and developers fought for years in court over the implications of the Mount Laurel decisions. Developers who won in the courts could receive a “builder's remedy," which overturned restrictive zoning rules and allowed them to build. Large residential developers planning gigantic residential projects tended to be most able to afford the legal costs.
In 1985, New Jersey's Fair Housing Act created COAH to avoid these costly legal battles. COAH was a voluntary public process for towns and developers to plan together to meet local housing needs. If a town's plan was approved by COAH, it could consider itself safe from a developer's lawsuit.
COAH became increasingly controversial over the years as it tightened the screws on towns and local governments. Gov. Christie called the system a “nightmare."
But back in 2004, even the New Jersey State League of Municipalities (NJLM) gave COAH relatively high marks. “More towns were participating in the COAH process than ever before," says Mike Cerra, senior legislative analyst for NJLM.
In 2007, the courts demanded that COAH do more. The New Jersey Appellate Court struck down COAH's relatively relaxed requirements. It responded to the court by asking each town to provide affordable housing based on projections of population growth for the region and its own assessment of the town's responsibility to accept new development, based on available land. “There were some ridiculous discrepancies,” says Cerra. “Cemeteries and highway medians were included in vacant land analysis."
DCA's new role
Now that COAH has been abolished, its function is being filled by DCA. “The Fair Housing Act is still in force,” says DCA Commissioner Lori Grifa, who had announced she would be leaving the agency as of Jan. 2.
DCA has assigned a dozen full-time lawyers and planners to help provide guidance to municipalities on New Jersey's Fair Housing Act.
The agency is likely to be much less strict than COAH, especially after the 2007 Appellate Court decision. “COAH was always a voluntary program,” says Grifa. “This is not an enforcement agency."
Unlike the COAH board, which included affordable housing developers, DCA's panel of experts is not appointed and confirmed by the Legislature.
The Christie administration disagrees with the stringent affordable housing targets created by COAH. Instead, the administration argues that towns can meet their affordable housing obligations through “growth share."
According to the administration, towns should require that one out of every 10 newly constructed housing units be designated as affordable. Towns with no growth would have no further affordable housing obligations other than to inventory and rehabilitate its existing affordable housing stock.
This growth share standard may not stand up in court. The Mount Laurel decisions require towns to consider affordable housing “at least to the extent of the municipality's fair share of the present and prospective regional need ...” whether or not the town wants to grow.
In October 2010, New Jersey's Appellate Court ruled that growth share does not meet this standard. The New Jersey Supreme Court will hear an appeal of this case, probably by spring.
Developments grind to a halt
Some local governments seem to be betting the Supreme Court will reverse the Appellate Court's decisions. Or perhaps since COAH is now out of sight, affordable housing is out of mind for New Jersey's towns and villages.
“Before the governor did this,” says Arnold Cohen, policy director for the Housing and Community Development Network of New Jersey, “towns wanted to talk to developers. Now they don't want to answer their phone calls. They feel they can get away with doing nothing."
Heritage Redevelopment Project, the stalled affordable housing development in Carneys Point, is Exhibit A for housing advocates like Gordon. Heritage would have built 88 apartments for low-income veterans. Town officials seemed to have approved— they included Heritage in the Housing Element and Fair Share Plan that they prepared and submitted to COAH.
Based on this encouragement, affordable developer Tri-County Real Estate Maintenance Co. reportedly spent roughly $1 million buying the site of the old factory and completing predevelopment work.
But by January 2011, the town had removed Tri-County from the project, and the first lawsuit had been filed. In September, Carneys Point submitted a new Housing Element to state officials that replaces Heritage with a potential future affordable housing project with no developer yet attached to it on a city-owned public works site without sewer connections. DCA is now evaluating the revised Housing Element.
Other affordable housing developments have also run into trouble across the state. Many towns that received allocations from the state's Affordable Housing Trust Fund to help build affordable housing are not spending the cash—the unspent funds now total $250 million, according to Cohen.
“We have over 200 towns with trust fund balances,” adds Grifa. “I have been trying to get them to use this money."
As affordable housing developers face delays, growing numbers are dialing their lawyers and turning toward the court system.
“Many projects are still moving forward," says Gordon. “Although at higher costs, given that court review is often necessary."