New Jersey Law Journal, June 21, 2010, Editorials

Gutting COAH

Senate Bill No. 1 -- which would abolish the Council on Affordable Housing, significantly reduce centralized state oversight of enforcement of the Mt. Laurel affordable housing mandate and essentially allow municipalities to self-certify that they are in compliance -- has passed in the Senate and is headed for the Assembly. The governor, who has vowed to "gut COAH," has announced that he would sign the bill into law.

Once S-1 is enacted, litigation is sure to follow, and absent a significant departure from stare decisis, we predicct that its provisions defining municipalities' affordable housing obligations will be declared unconstitutional.

Abolition of COAH is not the issue. Historically, the council has caused no end of angst, frustration, and exasperation for all sides, and has become a lightning rod for criticism. It has been universally reviled by municipalities, developers, fair housing advocates, and environmentalists.

Ironically, for the first 20 years of its existence, COAH was a convenient shield for many municipalities seeking protection from the more potent builder's rememdy while not actually promoting significant new affordable housing. But in the last few years leading to the promulgation of the third-round rules, it was the municipalities who cried "Et tu COAH!" when they suddenly found that, for once, it meant business, albeit through regulations that are complex, convoluted and at times barely comprehensible.

COAH itself is only one particular process chosen by the Legislature in the Fair Housing Act in response to the Supreme Court's invitation to devise a legislative mechanism in place of a judicial remedy in order to address the constitutional mandate of Mt. Laurel. The Legislature is free to change its mind and devise another solution, and nothing in the Mt. Laurel mandate prohibits abolition of the agency and replacement with something else. We thus have no quarrel with S-1 to the extent that it transfers the functions of COAH to the Department of Community Affairs. Indeed, although COAH is statutorily "in but not of" the department, historically no one has accused it of excessive independence from the department, so the change is somewhat cosmetic.

We do think that accusations that COAH has imposed "unfunded mandates" -- the bete noire of New Jersey politics -- are a bit overdone, given that COAH is a completely voluntary process that over 200 municipalities in New Jersey ignore simply by not seeking substative certification, thus taking their chances with a judicial remedy. As the chairman of the Council on Local Mandates wrote last year when Medford challenged COAH on those grounds, "The fact that over 44 percent of New Jersey's municipalities have elected to not participate in COAH fatally undermines Medford's assertion that the FHA or the COAH regulations are unfunded mandates as defined by the N.J. Const. art. VIII, section 2, paragraph 5. Simply stated, where there is choice, there is no mandate."

But the observation that, in the eyes of some, COAH has now outlived its usefulness as a voluntary alternative to judicial remedies enforcing the Mt. Laurel doctrine, highlights what is really at stake in S-1. If substantive certification by COAH no longer provides protection against a direct judicial remedy, then does S-1's replacement concept of "inclusionary municipality" do so in a way that the courts will accept? Unless the courts are willing to revisit the Mt. Laurel doctrine itself, we think the answer is no.

The real problem with S-1 is that it utterly fails to fulfill the Mt. Laurel mandate that obligates municipalities to provide a realistic opportunity for affordable housing on a regional basis. S-1 does away with state-imposed calculations of affordable housing need, euphemistically known as quotas. Municipalities will simply be deemed to have fulfilled their housing obligation if 7.5 percent of their housing stock is price restricted, or 33 percent of their housing stock consists of multifamily housing to be included, although municipalities "may" exclude it.

And how do we know that such housing stock will satisfy the actual need for affordable housing? S-1 doesn't tell us. As pointed out by the nonpartisan Office of Legislative Services, the bill requires neither the State Planning Commission nor the municipalities to determine and allocate regional housing need among the municipalities. There is no metric to evalute and determine whether need has been satisfied. Absent some nexus between the housing provided and satisfaction of regional and statewide affordable housing needs, the OLS rightly believes that S-1 will be declared unconstitutional.

S-1 also relis upon inclusionary zoing, under which builders will be required to reserve, or set aside, 10 percent of all new housing units for people of low and moderate income. The courts have repeatedly made clear, however, that satisfaction of Mt. Laurel cannot depend upon the inclination of developers to help the poor, but must depend on affirmative inducements to make the construction of affordable housing a reality. Such inducements must include, at a minimum, density bonuses, elimination of cost-generating features and removal of excessive restrictions and exactions.

S-1 does not require municipalities to provide any such inducements. It is unfair to require builders, and the ultimate purchasers of their market rate housing units, to bear the entire cost of affordable housing. But that is what S-1 does. As the Appellate Division held in its most recent COAH decision, "A regulatory regime that relies on developers to incur the uncompensated expense of providing afforable housing is unlikely to result in municipal zoning ordinances that make it realistically probable that the statewide need for affordable housing can be met."

While S-1 satisfies the pledge to "gut COAH,' it will accomplish nothing else if, as expected, the bill is enacted and invalidated by the courts. The Legislature needs to go back to the drawing board to draft a bill which simplifies the process while actually satisfying the need for affordable housing.