United States: NJ Supreme Court Focuses On ‘Gap Period' In Affordable Housing Case

On November 30, the New Jersey Supreme Court heard arguments regarding the affordable housing need that arose between 1999 and 2015 (the so-called "Gap Period") in reviewing the Appellate Division's opinion in In re Barnegat, County of Ocean, Regarding Fair Share Obligations during the period of 1999-2015, 446 N.J. Super. 259 (App. Div. Jul. 11, 2016). In sum, the news is positive. Based on the Justices' comments and questions, the decision may significantly increase municipal fair-share obligations throughout the state, leading to a spur of development. 

Genesis of the Gap Period Dispute

Historically, a township's affordable housing obligation encompassed: (1) Prior Round obligation (1987-1999); (2) Present Need obligation (which is undefined by the Fair Housing Act (FHA), but historically refers to substandard housing); and (3) the Third Round Prospective obligation (1999-2025). 

A sharp dispute has arisen over calculation of the Third Round.

Municipal advocates posit that municipalities do not have a Third Round affordable housing obligation for the period of 1999 through 2015. Rather, their position is that the Third Round obligation should be calculated only for the period of 2015 through 2025. Housing advocates, including Fair Share Housing Center (FSHC) and private land owners/developers, take the position that the Third Round obligation must encompass the Gap Period as part of a town's Prospective Need obligation.

The importance of this dispute is best demonstrated by the discrepancy in the fair share calculations proposed by Dr. David Kinsey (FSHC's expert) and Dr. Peter Angelides of Econsult (the Municipal Consortium's expert). In some instances, this disparity reduces the fair share obligation by 60 percent.

The underlying Appellate Division decision held that the FHA defines Prospective Need as a "projection of growth" in the future so that a retroactive look back was not authorized by the FHA. The Appellate Division stated: "In sum, to impose a gap-period requirement would inevitably add a new requirement not previously recognized under the FHA." The court reasoned that a retroactive calculation of the Gap Period did not accurately reflect the changes that occurred to low- and moderate-income households formed during the 15-year period. 

The Appellate Division, however, left all parties to ponder the meaning of the following closing comments: "our holding today does not ignore housing needs that arose in the Gap Period" and "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." Therefore, while rejecting the notion of a retrospective calculation, the Appellate Division alluded to the potential that the housing need during the Gap Period should be calculated as a subset of Present Need. 

Statewide, the only trial regarding the fair share calculation was tried in two parts before Judge Wolfson in South Brunswick. Fox took one of the leading roles at the trial together with FSHC. The trial was conducted in two parts due to the intervening Appellate Division decision and a subsequent stay of that decision by the Supreme Court and the grant of FSHC's Petition for Certification of In re Barnegat.

The first trial in May 2016 concerned the Third Round obligation, which included a calculation of the Gap Period as Prospective Need. Judge Wolfson heard expert testimony from Dr. Kinsey, Dr. Angelides and Fox's expert, Art Bernard, who is the former executive director for the Council on Affordable Housing (COAH), regarding the 23-step process involved to calculate the Third Round. 

The Appellate Division's decision in In re Barnegat was released before Judge Wolfson issued his decision in connection with the first trial. Following the Appellate Division decision, the parties proceeded to retry the Gap Period calculation by presenting expert testimony to recalculate the need as a subset of Present Need. Ultimately, because the Supreme Court stayed the Appellate Division decision and granted FSHC's petition, Judge Wolfson issued a decision calculating the Gap Period obligation for South Brunswick as Prospective Need. 

The same 23 steps are involved to calculate both the Present Need and the Prospective Need. The difference is in the timing of the data source; hence, when calculating Present Need, experts use 2015 data for the 23 steps. The data used in calculating Prospective Need relates back to 1999 to serve as a projection of housing need through 2025. Technically, the latter is the method COAH would have utilized had compliant regulations been adopted by 1999 for the Third Round. 

The difference in the amount of units to be developed? The projected need was greater than actual growth, as some would say, due to the stagnation in the economy. Hence, it is not surprising that the Present Need calculation results in a 25 to 50 percent reduction in units when compared with Prospective Need.

Supreme Court Signals That Gap Period Need Exists

FSHC appealed the Appellate Division's decision regarding the Gap Period. Oral arguments lasted more than two hours. Questions and comments by Justices LaVecchia, Albin and Patterson, the most active during the argument, telegraphed that common sense would prevail and that municipalities do indeed have an affordable housing obligation during the Gap Period. 

Municipal counsel argued that the plain language of the FHA undercut housing advocates' argument that the definition of Prospective Need in the FHA cannot be calculated retrospectively. The Justices seemed to categorically reject municipal counsel's argument that the legislative intent of the FHA allowed the elimination of the Gap Period need altogether. The Justices' comments suggested that the Legislature would never envision that an agency it created would abdicate its duties for 16 years.

The Justices intimated that because the FHA is the statutory manifestation of the Mount Laurel Doctrine, a constitutional obligation, the lack of a fair share obligation during the Gap Period may not pass constitutional muster. Consequently, the Justices mused over whether the court could broaden the FHA's definitions of Prospective or Present Need if the court determines that a Gap Period is constitutionally mandated by the Mount Laurel Doctrine.

The focus of the questions instead shifted to how to account for the need within the statutory confines of the FHA. FSHC articulated that the court and COAH have consistently considered the housing obligation to be cumulative since the time the FHA was adopted. The Justices receptively inquired about the impact to municipalities that either did or did not produce affordable housing during the Gap Period and whether towns would lose credits for housing built during that period. FSHC further urged the court to interpret Prospective Need to mean that the Legislature intended it to be calculated from the beginning of each period, even if the calculation resulted in a retroactive look back.   

Regardless of whether the court calculates the need as Prospective or Present Need, it will have to determine whether cost-burdened low- and moderate-income households should be part of the calculation. Despite the municipal counsel's argument that cost-burdened households were rejected once before as a subset of need, the court acknowledged that under the circumstances here, the reason that low- and moderate-income households may be cost-burdened is that the production of affordable housing stalled during the Gap Period because COAH failed to adopt valid regulations.

Notably, Justice LaVecchia – the author of Mount Laurel IV in March 2015 – pointed out several times that the Supreme Court in Mount Laurel IV had extended immunity to all municipalities retroactively to the beginning of the Third Round, i.e., 1999, regardless of whether substantive certification was granted. Justice LaVecchia stated that this was intended to signal to the parties that the housing obligation is continuous and intended to include the Gap Period in municipal fair share obligations. 

This time period provides a unique opportunity to engage land owners and developers to construct housing at increased densities. Based on the Justices' reactions, comments and questions, the decision is expected to enhance the municipal fair share obligations regardless of whether the Supreme Court concludes that the Gap Period is part of Present or Prospective Need.

Should this methodology be accepted, most municipalities will have higher fair-share obligations than the amount of affordable housing proposed thus far by intervening developers. Therefore, many municipalities will have unmet housing needs, which could open the door to even more development opportunities.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.