DeCotiis News

Court decision provides opportunity to make major changes in Affordable Housing regulations

By Andrew George
Michael McGuinness sees last month's court decision on the Council on Affordable Housing as a win.
Just not the kind you crack open a bottle of Bollinger over.

"This win ... might need some additional work," said McGuinness, CEO of the development group NAIOP's New Jersey chapter.

The case centered largely on COAH guidelines that say a municipality accrues its affordable housing obligation as a percentage of the residential building and job growth that occurs within its borders. Under that so-called growth share formula, the ratios are based on statewide data on projected housing need, employment and residential growth.??

But the state Supreme Court in late September agreed with opponents of the concept, noting towns can effectively avoid building affordable units by not allowing development. The 3-2 majority also took issue with the formula because its initial calculations are not specific to individual regions.??

The court ordered COAH back to the drawing board, demanding the much-maligned council create new rules within five months.

That's an opportunity, said McGuinness, who said an end to the growth share formula may soften some of the negative connotations towns sometimes have regarding commercial development.

"It at least removes that stigma that connects the two," McGuinness said.

There's also a legislative opportunity. The door is open for the Legislature to amend the Fair Housing Act to allow for some form of growth share that would then be constitutionally permitted. McGuinness expects legislators to seize the opportunity.

But while McGuinness isn't speculating on what will take growth share's place, he does have a firm opinion on the 2.5 percent commercial development tax that was included in the third round rules and, by default, removed: Don't bring it back.

"That would be our hope," McGuinness said. "(It's) something that we'll shoot for."

McGuinness said many other states don't feature the tax at all, and with the recent passage of New Jersey's incentives bill, it would make sense to leave it off and make development in the state that much more attractive.

Kevin Moore, an attorney with Sills, Cummis & Gross P.C. who argued before the Supreme Court on behalf of NAIOP, said while it's "quite conceivable" that the Legislature will look to amend the FHA, it's impossible at this point to predict what's next for COAH.

One thing he is pretty certain about, however, is that the fight is far from over.

"I don't think this was the last chapter, so to speak," Moore said.

But Ed Boccher, an attorney at DeCotiis, FitzPatrick, Cole & Giblin LLP, said the court reversed its hard-line stance on affordable housing regulations in its latest ruling.

Mr. Boccher, who represented COAH in its early days while working in the state attorney general's office, said the court punted to the Legislature and Gov. Chris Christie's administration for help.

"All it's really done is assured years more of debate and litigation," he said.

The majority opinion is "lacking in any kind of guidance," Boccher said, and given that COAH has met only twice in as many years - with more vacancies than it has appointed members - it's "perhaps a tad unrealistic" to imagine the agency coming up with any meaningful progress in five months.

Nor has he been given any indication that COAH will even try.

"I think the question is going to be, 'What happens in five months, when COAH doesn't adopt the rules?'" Boccher said.

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