Affordable Housing

Affordable Housing

                Rarely has a municipal issue been as misunderstood and distorted lately as the issue of
affordable housing, together with its origin and current implementation. To add to the confusion,
political opportunists have seized upon this occasion and concocted a self-interested and inaccurate
narrative alluding to unsubstantiated shortcomings, citing a purported lack of “transparency.” Not
only are these claims untrue, they appear to be driven by a gross misunderstanding of the truth or,
worse, a potential desire to twist it for personal political gain. It’s time to set the record straight.
NOTE: This is not a legal opinion or legal advice. This is merely my opinion on this matter. If you
would like a legal opinion or legal advice on this matter, you need to consult and engage an attorney.

A Brief History

              These issues go back to 1975, when, after a challenge to Mt. Laurel Township’s plan to
gentrify itself, the New Jersey Supreme Court declared that every town in New Jersey has a
“constitutional obligation” to zone in a manner that permits a variety of housing and that does not
exclude lower income households. In the late 1960s and 1970s, Mt. Laurel Township decided that it
would transform itself from a largely agricultural town into an affluent suburb and amended its
zoning ordinances to provide for planned residential development that did not include housing for
people of modest means. A lawsuit was filed in an attempt to force Mt. Laurel to permit the
construction of an apartment complex, Mt. Laurel lost. What followed was lengthy history that
worked its way through the New Jersey courts and legislature.

            The practice of zoning in a manner that makes it impossible to build housing for people with low incomes was dubbed “exclusionary zoning” by the New Jersey Supreme Court, and it was declared, not only illegal, but unconstitutional. The constitutional doctrine established by the New Jersey Supreme Court in that lawsuit would come to be known as the “Mt. Laurel doctrine” and the case as “Mt. Laurel I.” Eight years later, in another Mt. Laurel decision, this time known as “Mt. Laurel II,” the New Jersey Supreme Court established a remedy to force municipalities that were still practicing exclusionary zoning to comply with the Mt. Laurel doctrine. Mt. Laurel II established what is known as the “builder’s remedy,” which was (and still is) a mechanism that allows courts to compel a town to accept, and award a developer the right to build, high density housing, regardless of the town’s existing zoning, in an effort to provide low- and moderate- income housing units, provided the developer can prove that the town was not providing for its “fair share” of the region’s need for affordable housing. In other words, the builder’s remedy gives the developer the right to build large volume housing projects that combine market rate and affordable housing in high density numbers, despite the town seeking to prevent such high density building through zoning that would otherwise preclude it.

            In 1985, in response to the Mt. Laurel cases, the New Jersey State legislature passed the Fair
Housing Act, which established an administrative agency, the Council on Affordable Housing or
“COAH,” to deal with the implementation of affordable housing plans throughout the State.
COAH’s function included rulemaking that established the number of affordable housing units that
each town would be obligated to provide a realistic opportunity to be built. COAH functioned for the
first two housing “rounds” until 1999. Thereafter, COAH failed to establish new rules for the third round that was set to begin in the year 2000 and, after several failed attempts after many years, was declared defunct and was disbanded.

           In 2015, after COAH’s demise, the New Jersey Supreme Court decided to give jurisdiction of
affordable housing implementation back to the courts, which, while not well-equipped to handle such
matters, became the only forum in which they would be addressed. The New Jersey Supreme Court
also “invited” all municipalities to file lawsuits to prove compliance with the Mt. Laurel doctrine and
to thereby insulate themselves against builder’s remedy lawsuits. These lawsuits would dictate, and
be the final determination of, each town’s affordable housing obligation from 2000 through the next
round in 2025. This decision, known as Mt. Laurel IV, was the Court’s response to a lawsuit filed by
Fair Share Housing Center (“FSHC”), a non-profit advocate for low income housing, asking the
Court to take jurisdiction of the implementation of affordable housing after COAH’s failure to come
up with rules. As a result of this ruling, FSHC became the advocate and de facto arbiter of every
municipality’s affordable housing plan and approved every affordable housing settlement agreement
in the State. Developers were also invited to “intervene” in the affordable housing cases in order to
ensure that there would be a realistic opportunity for the affordable housing to be built. To date, a
majority of New Jersey municipalities have settled their affordable housing lawsuits with FSHC.
The others are either close to settling or are engaged in builder’s remedy lawsuits.

Questions and Correcting the Misconceptions

Why didn’t towns just fight the matter?

            The short answer is they did, but it was a costly and uphill battle that they eventually
effectively lost. Since the New Jersey Supreme Court’s 1975 decision in Mt. Laurel I, it has been
apparent that no court would disturb the finding that a town had a constitutional requirement to
provide for its fair share of affordable housing. The disputes that arose thereafter over each town’s
affordable housing obligation were, as of the 2015 Mt. Laure IV decision, placed squarely back in the
courts’ hands. Left with no other forum, in 2015, towns banded together to conserve resources (in
what was called a “consortium”) and brought suit to fight the affordable housing numbers , which
could have been significant due to 15 years of COAH inaction and lack of new rules since the end of
the second round in 1999. To do this, the consortium hired experts, consisting of lawyers,
demographers, statisticians, planners, and others. The builders that intervened in these litigations
were backed by the NJ Builders’ Association and were very well-funded and aggressive. While
towns generally recognized the constitutional obligation to provide their fair share of affordable
housing, they opposed the extremely high numbers being pushed by FSHC and the builders, as well
as their methods of calculating them. Towns fought all the way up to the Supreme Court to reduce
the timeframe that would be considered toward ascertaining the obligation (from 25 years down to 10
years), which would have reduced the total obligation. But they lost that battle in a case known as
Mt. Laurel III (or the “gap” decision). Some towns, like West Windsor and Princeton, that were not
pleased with the enormity of their obligations and decided to challenge the obligation calculation by
seeking a trial on the matter (referred to as a “numbers trial”) to try to reduce their affordable housing
obligations. The result was that they spent inordinate amounts of time and taxpayer money to end up
essentially where they started, by being saddled with basically the same numbers advanced by FSHC
and the builders. These decisions set legal precedent on calculating a town’s affordable housing
obligation, which left other towns with an effective Hobson’s choice of continuing a high-cost and high-risk/no-benefit litigation or settling. Most towns, consequently, chose to seek a settlement on
the best terms possible.

What does the obligation number mean and where did it come from?

             The obligation number is not the number of actual units of affordable housing that must be
constructed, it is the number of “credits” that a town will get for each unit. For example, family
rental housing receives two credits for every one unit constructed, so 100 units means 200 credits.
With regard to where the number comes from, in a nutshell, the municipal number is derived from a
statewide number that is then divided by housing regions. There are six regions in the State, and
Somerset County is in Housing Region 3, along with Hunterdon and Middlesex. The regional need
is then allocated to each municipality. The statewide number and the ensuing allocations were
derived using a methodology developed by FSHC’s expert Dr. David Kinsey. The municipal
consortium, mentioned above, hired a consultant to come up with a methodology (which, conversely,
resulted in lower and more reasonable numbers), but FSHC would only agree to settlements based on
its expert’s methodology and resulting number. The towns mentioned above that participated in the
numbers trial tried to convince the court to use the municipal consortium’s expert’s methodology, but
the court declined to do so after a lengthy and expensive trial. In addition, almost from the inception
of the settlement negotiations throughout the State, FSHC offered an approximate 30% reduction of
its top number to towns that would agree to settle. Understanding the futility and high cost of
litigating, towns throughout the State begrudgingly sought the settlement reduction.

Why weren’t settlement negotiations conducted in public?

            While elected local officials throughout the State undoubtedly would have liked nothing
more than full disclosure of negotiations between themselves and FSHC and the builders, this is
litigation in the affordable housing context, and such a disclosure would have had multiple negative
repercussions.

            First, as every lawyer knows and anyone involved in a litigation should know, when trying to
negotiate a settlement of litigation, it is rarely—if ever—a good idea to make public any settlement
negotiations (which is why they are protected in litigation). The reasoning for this is obvious and
well-grounded, as it would chill, if not end, the negotiation process. Parties settle litigations for a
whole host of reasons that may have nothing to do with their being liable, including, for example, to
avoid the significant cost of litigation. A party would be less likely to offer or negotiate a settlement
if those communications were made public and used against that party as evidence of supposed
liability. This is why settlement negotiations in litigations are routinely, if not always, kept
confidential. Similarly, a party cannot let its adversaries know what its strategy is, which would
stifle the process. You do not see this in negotiating a business agreement, so it is not surprising that
you would not see it when negotiating a litigation settlement agreement. Conducting public meetings
would have revealed both the towns’ strategies and potentially the builders’ strategies, which would
have been counterproductive to bringing the parties to a resolution and to which the builders’ lawyers
undoubtedly would have been objected. In addition, private entities have a right to keep certain
financial and proprietary information confidential, which would not occur if they were forced to
participate in a public meeting. Thus, for all these reasons, to the extent a town tried to make the
settlement discussions public, the other parties could have sought court intervention and prevented it.

              Second, and perhaps more important in this context, making any settlement negotiations
public would have jeopardized and likely destroyed the towns’ “temporary immunity” from builder’s
remedy lawsuits they enjoyed when they filed their actions in 2015. This temporary immunity would
continue so long as towns were negotiating settlements in “good faith.” Had towns tried to force
FSHC and the builders to have the settlement negotiations held in the public arena, they undoubtedly
would have been hauled back into court on a motion to have temporary immunity removed for acting
in “bad faith.” Once immunity is removed, a town is vulnerable to builder’s remedy suits. In the
case involving Warren Township, many developers had intervened, and one would have expected
builder’s remedy lawsuits to have been filed, particularly given the high affordable housing
obligation numbers that were initially proposed. Once a builder obtains a builder’s remedy, the town
no longer has any say as to the development of the property that the builder owns; but rather, the
court, with the blessing of FSHC and a court appointed Planner, and in conjunction with the builder,
will decide what the development will look like and how dense it will be.

How do towns choose the affordable housing sites?

             Governing bodies cannot just walk through town and pick and choose affordable housing
sites, unless they happen to own the sites or are able to condemn and purchase those sites (a difficult
and costly endeavor). Affordable housing sites are largely chosen by builders because they intervene
in the litigation seeking to have the township’s affordable housing obligation fulfilled through
development of property they either own or have a contract to purchase or develop. Without
developable property, there is no realistic opportunity that affordable housing will be built. Once
builders intervene in the litigation, they are litigants and afforded a seat at the negotiating table,
almost guaranteeing a place in the town’s plan. It’s difficult to exclude an intervenor-builder’s
property from consideration in the town’s affordable housing plan, unless the builder’s proposal is
completely unrealistic or the town’s affordable housing obligation is already satisfied with other
developments. The arbiter of what is “completely unrealistic” is not the town. The plans are
reviewed and must be approved by FSHC and a court appointed Planner, referred to as a “Special
Master.” This situation and process were inordinately frustrating to every elected official who had to
deal with it throughout the State.

Why are there only a few affordable housing units in each of the high-density developments?

          High density developments that have a market rate unit component and an affordable unit
component are known as “inclusionary developments.” Inclusionary developments are historically
the Court’s and FSHC’s favored way of providing affordable housing. This is the original builder’s
remedy from Mt. Laurel II. The idea is that the high density and the market rate units off-set any
losses that will be suffered by the builder for production of the affordable housing units. The ratio is
generally 80% market rate units to 20% affordable units if the affordable units are for sale and 85%
market rate to 15% affordable if the affordable units are rentals. My understanding is that all the
developments in Warren Township’s affordable housing settlement provide for a greater ratio of
affordable units to market rate units, which results in a lower overall number of units built while
satisfying the affordable housing unit obligation.

What about transparency?

            The litigation is over, the settlement has been approved by the court, but not one person throwing around the buzz-word “transparency” has challenged the court’s decision. Indeed, I am not aware of anyone making such a challenge. When you file a lawsuit, you get the chance to engage in discovery to seek documents and testimony. In fact, one of the interested parties in the town’s case (who claims to be an attorney) went to court, was granted “interested party” status (with all it has to offer), but was unable to put forth any evidence of any impropriety to thwart the town’s plan. Rather, that party merely provided a letter and testimony full of unsubstantiated complaints (with no proposed solutions), which were roundly dismissed by the judge as irrelevant. Any attorney should know what evidence would be needed to properly oppose an affordable housing plan and know how to get it or at least know the appropriate professionals to retain to do so. Certainly, had the allegations of deliberate wrongdoing truly occurred, a claimed leader, and certainly an attorney, would have been able to marshal the proper evidence and make such a case in court to prove it. That was not done here, and there has been no appeal of the court’s decision affirming the town’s plan. Perhaps the reason for this is that there was nothing wrong with the process or the town’s plan. To the extent one wants to claim lack of funding was the problem, one need only look to Long Hill’s residents who challenged a redevelopment of property in their neighborhood recently. They raised thousands of dollars to pay for an attorney and a planner and ultimately prevailed. As the saying goes: “Where there is a will, there is a way.” The use of the buzz word “transparency” here seems little more than a self-promoting political tactic, as it is unsupported by the actual facts in the record.

Where do we go from here, and how I can help?

            Affordable housing and its attendant high-density development is here and it isn’t going
away. The next steps will be to hear the applications for development of these projects through the
Planning Board, when or if they are filed. Ordinances have been put in place with the standards that
these developments will have to meet in order to obtain approval. The developers will be required to
meet all site requirements and will further be required to obtain all approvals from other outside
agencies, such as the New Jersey Department of Environmental Protection.

           I hope that I am elected and will serve as one of the governing body members required to
serve on the Planning Board, so that I can use my knowledge and experience to help ensure that these
developers satisfy all requirements before they are approved. I have attended and represented boards
during a multitude of hearings on development applications over the years and recently on affordable
housing applications. I can say, unequivocally, that I am able to navigate this area like no one else
running in this election. As an elected official, I will help to ensure that the Planning Board has all of
the appropriate professionals and tools at its disposal in order to make the best decision possible. I
have never believed that questioning things incessantly is enough or even effective. You need to
have sufficient knowledge about the matter to propose a proper and realistic solution to the problem
and then be able to execute that solution. That is what I bring to the table and what I can do. I have
never heard any of the other candidates specify any solutions, unless they are parroting something
that I already said.

           And, for the next few years, elected or not, before towns have to start planning for another
affordable housing round in 2025, I will continue to use my experience and relationships throughout
the State and to work with the League of Municipalities to lobby the legislature and help draft
common sense legislation to reform how affordable housing is provided. That would be a real and lasting solution for all municipalities, including Warren.

If you have any questions, please feel free to contact me at anytime.