COAH / Fair Share Housing Obligations

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The purpose of this web page is to provide residents of the Township and interested parties with information and access to documents concerning the Township’s proposed settlement agreement with the Fair Share Housing Center and Superior Court in compliance with the New Jersey’s Supreme Court’s decision to make affordable housing available to eligible citizens of New Jersey.  The following serves as background information to help you better understand the Court’s decision.

If you are looking for information on current affordable housing options in Hanover Township please visit the Affordable Housing Opportunities page.

In 1975, the New Jersey Supreme Court issued its landmark decision known as South Burlington County NAACP v. Township of Mount Laurel. This decision virtually reshaped New Jersey’s housing market and the obligation of many municipalities, like Hanover Township, to meet its fair share obligation.

Historic Overview of the Courts and COAH

As stated above, the 1975 New Jersey Supreme Court rendered its decision in South Burlington County NAACP  v. Township of Mount. Laurel, 67 N.J. 151 (1975)(“Mount Laurel I”), in which it held that every developing municipality in the state had an affirmative constitutional obligation to provide for its fair share of affordable housing. After that, there was little movement by municipalities to produce affordable housing.  Consequently, the Supreme Court issued a second decision known as South Burlington County NAACP  v. Mount Laurel Township., 92 N.J. 158 (1983)(“Mount Laurel II”), in which it created the builder’s remedy lawsuit in an effort to get municipalities to comply with their constitutional affordable housing obligations. The Supreme Court also refined the constitutional obligation to focus primarily on those municipalities with portions of their boundaries within the growth area as shown on the New Jersey State Development and Redevelopment Plan, and called for the state legislature to enact legislation that would save municipalities from the burden of having the courts determine their affordable housing needs. As a result, the state legislature adopted the Fair Housing Act in 1985. This action resulted in the creation of the New Jersey Council on Affordable Housing (COAH), the State agency responsible for monitoring the manner in which the State’s municipalities addressed their low and moderate-income housing needs. 

COAH adopted regulations establishing housing need numbers for the First Round obligation covering the years 1987 to 1993 and established Second Round housing-need numbers that cumulatively covered the years 1987 through 1999. Under both the First and Second housing rounds, COAH utilized what is commonly referred to as the “fair share” methodology. 

COAH utilized a different methodology, called “growth share,” to prepare Third Round housing need numbers. COAH first adopted Third Round substantive and procedural rules in 2004. These regulations were challenged, and in January of 2007, the Appellate Division invalidated various aspects of the regulations and remanded considerable portions of the rules to COAH with the directive to adopt revised rules.  

 In May 2008, COAH proposed revised Third Round regulations, which became effective on June 2, 2008.  On the same day, COAH proposed amendments to the rules it just adopted and said amendments went into effect in October 2008. 

The rules and regulations adopted in 2008 were also challenged.  And, in October 2010, the Appellate Division concluded that COAH’s revised 2008 regulations suffered from many of the same deficiencies as the first iteration of COAH’s Third Round rules. The Appellate Division, therefore, invalidated substantial portions of the 2008 Third Round regulations, including all regulations that dealt with the growth-share methodology. (Refer to: Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J. Super. 462 (App. Div. 2010). The Supreme Court affirmed this decision in September 2013, and on March 14, 2014, issued an order which required COAH to adopt new Round 3 regulations by October 22, 2014.  

Unfortunately, COAH failed to adopt its newly revised Third Round regulations, deadlocking with a 3-3 vote in October of 2014. A third-party organization, known as the Fair Share Housing Center (“FSHC”), which was a party in both the 2010 and 2013 cases, responded by filing a motion in aid of litigants' rights with the New Jersey Supreme Court. The Supreme Court heard the motion in January 2015.  On March 10, 2015, it issued its decision “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)(“Mount Laurel IV”).”  In this decision, the Supreme Court held that COAH was effectively dysfunctional, and consequently, returned jurisdiction of affordable housing issues back to the trial courts, where it had been prior to the creation of COAH in 1986.  The Mount Laurel IV decision also created a process for municipalities, like Hanover, that have endeavored to address their fair share obligations in the past, but could not obtain Third Round substantive certification of their Housing Element and Fair Share Plan (HE&FSP) because of COAH’s inaction. Instead, Hanover had to work toward getting its plan approved via a Third Round Judgment of Compliance and Repose. Municipalities were entitled to file declaratory judgment actions seeking to declare their affordable housing plans constitutionally compliant, and were also entitled to apply for temporary immunity from all Mount Laurel lawsuits, including builder’s remedy lawsuits, while they prepared a new or revised affordable housing plan.   

 In response to the Mount Laurel IV decision, the Township of Hanover filed a Declaratory Judgment Complaint, along with a simultaneous motion for temporary immunity on July 2, 2015.  This was docketed in Superior Court in Morristown as MRS-L-1635-15. The Court granted temporary immunity to the Township on August 14, 2015, which has been subsequently extended via the entry of a series of court orders through the present date. 

The Township's Historic Response to Its Affordable Housing Obligations

Hanover has prepared a number of Housing Elements and Fair Share Plans over the years to address its affordable housing obligations. The Township was initially granted a judgment of compliance and repose to address an obligation of 250 units (new construction) on September 24, 1984, by the Honorable Stephen Skillman, J.S.C. 

The 1984 Judgment of Compliance and Repose included the zoning of five sites to address the Township’s 250-unit First Round obligation. An RM Residential Multifamily district encompassing these sites was adopted (Ordinance 19-84) to implement this Judgment, permitting multifamily development, consisting of townhouse, garden apartment, and other housing types, with a 22 percent set-aside for low and moderate-income units.   

In 1994, COAH issued new housing need numbers for the combined First and Second Round period between 1987 and 1999.  Hanover was assigned a pre-credited need of 366 units, inclusive of a 355-unit new construction obligation and an 11-unit rehabilitation share.  This number was ultimately reduced to 83 units after credits and reductions for zoning in place were considered.  The calculated need of 83 units consisted of 72 new construction units and 11 rehabilitation units.  The Township’s Second Round Housing Element and Fair Share Plan (adopted July 22, 1997) addressed a twelve-year cumulative obligation for the years 1987-1999. No objections were received and COAH granted substantive certification on August 4, 1999.   

The prior round plan components are summarized in the accompanying table.  As shown, each of these plan components has been fully implemented.

Table 1: CERTIFIED PRIOR ROUND PLAN COMPONENTS 

 Hanover Township, New Jersey

Plan Component# of Affordable UnitsStatus

Regional Contribution Agreement

City of Orange Township


9


Complete

Inclusionary Housing

  Hanover Hills

  Sunrise at Hanover

  Eden Mill Village

  Oak Ridge at Hanover

Sterling Parc (formerly Cedar Glen) - Rental Units

Jewish MetroWest I Rentals


39

32

66

50

64 (56 Age-Restricted and 8 Family)


36 Age Restricted


Complete

Complete

Complete

Complete

Complete


Complete

Special Needs/Supportive Housing


21 Longview Drive ARC Group Home


Horse Hill Road I Group Home


Horse Hill Road II Group Home


Mountain Avenue Group Home



4 Bedrooms


6 Bedrooms


6 Bedrooms


5 Bedrooms



Complete


Complete


Complete


Complete

Rental Bonus Credits


Sterling Parc


Jewish MetroWest I


Group Homes



26 (18 Age Restricted and 8 Family)


3


15



Complete


Complete


Complete

TOTAL

361

COMPLETE

In December 2004, COAH adopted new substantive (N.J.A.C. 5:94) and procedural (N.J.A.C. 5:95) rules to address the Third Round period.  Subsequently, in May 2008, COAH proposed revised procedural (N.J.A.C. 5:96) and substantive (N.J.A.C. 5:97) rules for the Third Round period. However, as detailed above, the 2004 regulations were challenged and, in 2007, various aspects of those regulations were invalidated by the Appellate Division. 

The Township adopted a Housing Element & Fair Share Plan on September 28, 2010, to address this second reiteration of Third Round Rules, and, subsequently, petitioned COAH for Substantive Certification on October 27, 2010.  The Petition was deemed complete by COAH on December 7, 2010.  No objections were filed.  However, as detailed above, the Third Round methodology based upon growth share was subsequently invalidated, necessitating a new plan based upon the prior rounds’ fair share methodology.  

In response to “In re Adoption of N.J.A.C. 5:96 & 5:97 ex rel. New Jersey Council on Affordable Housing., 221 N.J. 1 (2015) (“Mount Laurel IV”)”, the Township of Hanover filed a Declaratory Judgment action on July 2, 2015, (Docket No. MRS-L-1635-15 along with a simultaneous motion for temporary immunity, which was granted by the Court on August 14, 2015. Subsequently, on March 15, 2016, the Township adopted a new Third Round HE&FSP based upon the prior rounds’ fair share methodology. This 2019 HE&FSP updates and revises that 2016 HE&FSP in recognition of the fluid nature of the state’s affordable housing issues and evolving case law on affordable housing, as discussed in more detail below.

The Third Round Affordable Housing Obligation and the Township's Response

The state of the Third Round affordable housing obligations for municipalities throughout New Jersey at present remains a fluid one, given the fact that neither the Courts, COAH, nor the Legislature has decided on a definitive set of housing-need numbers that has been universally accepted.  Two sets of numbers have been promulgated.  These include numbers prepared by Econsult Solutions on behalf of a consortium of municipalities known as the Municipal Joint Defense Group, of which Hanover is a part, and numbers prepared by Dr. David Kinsey on behalf of FSHC.  The statewide affordable housing-need numbers vary dramatically.  

On March 8, 2018, an opinion was rendered by the Honorable Mary C. Jacobson, A.J.S.C., in the consolidated declaratory judgment proceedings: In the Matter of the Municipality of Princeton, Docket No. MER-L-1550-15 and In the Matter of West Windsor Township, Docket No. MER-L1561-15, Superior Court of New Jersey, Law Division, Mercer County (collectively, the “Mercer Proceeding”). The opinion rendered in the Mercer Proceeding is titled: “Opinion on Fair Share Methodology to Implement the Mount Laurel Affordable Housing Doctrine for the Third Round” (the “Jacobson Opinion”). The Jacobson Opinion considered, analyzed and, ultimately, determined the appropriateness of the competing methodologies advocated by Econsult Solutions and Dr. Kinsey to determine New Jersey state-wide, regional and municipal present need rehabilitation and present need Gap + Prospective Need (1999-2015) affordable housing obligations.  On March 28, 2018, state-wide and municipal obligations using the methodology found to be most appropriate by Judge Jacobson in the Jacobson Opinion (the “Jacobson Methodology”) were released.   

The following table compares the latest Econsult report’s fair share obligation numbers for Hanover (dated November 2017) against those assigned to Hanover in Fair Share Housing Center's (FSHC) May 2016 report and the affordable housing obligations for Hanover as calculated in the March 2018 report using the Jacobson Methodology:


EconsultFSHCJacobson
1. Rehabilitation Obligation492629
2. Prior Round Obligations (1987-1999)356356356
3. Gap + Prospective Need Obligation (1999-2025)3931139*897

* Although Kinsey calculated Hanover’s total Gap+ Prospective Need (1999-2025) to be 1,549 units based on an April, 2017 Gap Period (1999-2015) calculation of 710 units and a May, 2016 Prospective Need (2015-2025) calculation of 839 units, the application of the 20% cap rule ultimately reduced Kinsey’s figure to a total Gap+ Prospective Need (1999-2025) for Hanover of 1,139 units.  (20% of the 5,654 occupied housing units in Hanover Township in 2015 equals 1,139 units).

Since the Township lacks vacant land, it decided to attempt to globally settle with FSHC, rather than engage in a trial with FSHC to determine fair share numbers.  Under the supervision of the Court Master, the Township and FSHC entered into a Settlement Agreement last executed on March 7, 2019 (hereinafter “FSHC Settlement Agreement”). A properly noticed Fairness Hearing was held on May 10, 2019, after which the Court entered an Order on May 14, 2019, which approved the FSHC Settlement Agreement and set forth the parameters with which the Township would comply. 

Under the terms of the Settlement Agreement, FSHC and the Township agreed that Hanover would accept, for settlement purposes only, the following affordable housing obligations:

  1. Rehabilitation Obligation:  26
  2. Prior Round (1987-1999) Obligation:  356
  3. Gap (1999-2015) Obligation:  975
  4. Total Units Per Settlement:  550
  5. Total Unmet Need Units:  425

The Settlement Agreement also affirms, irrespective of the above, that the Township’s Third Round realistic development potential (RDP) is 550, which was based upon a vacant land adjustment (VLA) analysis, and that its remaining Unmet Need is 425.  In addition, the Settlement Agreement details the manner in which the Township will address its affordable housing obligations, which can be summarized as follows. 

The Township will address its affordable housing need through the identification of existing affordable housing units and credits, proposed inclusionary housing units, alternative living arrangements, assisted living units, the extension of expiring affordability controls on existing units, the creation of inclusionary overlay zones, the creation of an Accessory Apartment Program, and the creation of a Township-wide mandatory set-aside ordinance. To address its Prior Round obligation, the Township seeks 9 credits from a completed Regional Contribution Agreement (RCA), 282 credits from existing affordable housing units, and 65 rental bonus credits. To address its Third Round RDP, the Township seeks 146 credits from existing affordable units, 262 credits for proposed inclusionary developments, 4 credits for proposed alternative living arrangement bedrooms, and 138 rental bonus credits.  To address its Unmet Need, the Township seeks 9 credits for proposed inclusionary development, 32 credits for proposed alternative living arrangement bedrooms, 4 credits for approved assisted living Medicaid waiver units, and 137 credits for extensions of affordability controls.  The Township also provides a realistic opportunity for the development of affordable housing through the creation of an Accessory Apartment Program, the adoption of overlay zoning for inclusionary development, and the adoption of a Township-wide mandatory set-aside ordinance.

In addition, the Settlement Agreement affirms, irrespective of the above, that the Township may conduct a Structural Conditions Survey in accordance with COAH’s Round 2 rules at NJAC 5:935.2(a) to reduce or eliminate its Rehabilitation obligation of 26 units. The Township prepared a Structural Conditions Survey in June 2019, the results of which reduce Hanover’s Rehabilitation obligation from 26 units to 6 units. The Township will address its 6-unit rehabilitation obligation through continued participation in the Morris County Housing Rehabilitation Program and the hiring of a rehabilitation consultant, with funding from the Township’s affordable housing trust fund. This is also discussed in more detail herein.

The HE&FSP is organized into three sections.  The first part of this plan, the Housing Element, contains background data on the Township’s population and housing characteristics.  The second part, the Fair Share Obligation, describes the Township’s obligation for the provision of affordable housing.  The Township’s plan for meeting its affordable housing obligations as detailed in the Fair Share Plan.

What's Next?

The Township has received inquiries from several residents seeking clarification as to whether a new housing rule proposed by the Trump Administration will halt the construction of new affordable housing in our Township and other municipalities. The quick answer is “no.” Municipalities across New Jersey are still required to meet its affordable housing obligations pursuant to the Mount Laurel Doctrine that was handed down by the NJ Supreme Court in 1973 and reaffirmed in 2015. The change announced by the President and HUD Secretary does not change a municipalities’ constitutional requirement to provide affordable housing opportunities or be faced with a builder’s remedy lawsuit where a court can order high-density development and affordable housing.

 The question then is what is the Trump Administration proposing and what does it mean? Here is a brief overview:

U.S. Secretary of Housing and Urban Development (HUD) Dr. Ben Carson announced in July 2020 that HUD has proposed a rule that will ultimately terminate the Obama Administration’s “Affirmatively Furthering Fair Housing” (AFFH) regulation issued in 2015, which according to HUD proved to be complicated, costly and ineffective.

The AFFH rule was meant to fulfill requirements of the Fair Housing Act which was signed into law by President Lyndon B. Johnson in 1968. The Fair Housing Act brought an end to the practice such as redlining and racial covenants in home deeds. But, the law was also supposed to require local governments to work to desegregate neighborhoods across the country.

Under the Obama AFFH, any locality that received block-grant funds from HUD (Hanover Township does not) was required to produce an assessment outlining its efforts toward assuring fair housing. The Trump Administration found this process to be unworkable and a waste of time for municipalities to comply. In the alternative, the Trump Administration has proposed a new rule called “Preserving Community and Neighborhood Choice” (PCNC) which defines fair housing broadly to mean housing that, among other attributes, is affordable, safe, decent, free of unlawful discrimination, and accessible under the civil rights laws. It further defines “affirmatively furthering fair housing” to mean any action rationally related to promoting any of the above attributes of fair housing. If HUD receives a complaint that a municipality is not complying with the PCNC criteria, it can, after conducting an investigation terminate HUD grant funds. The rule is still pending approval. 

For additional specific information concerning the proposed new HUD rule, please access the HUD website.