New Jersey Law

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Court enjoins COAH and Executive Branch from seizing affordable housing trust funds collected by municipalities.

In the continuing fallout from the failure of COAH to adopt Third Round Regulations, including those defining when affordable housing trust funds are committed, the Appellate Division was faced with an application from the Fair Share Housing Center to order COAH to adopt regulations and to bar transfer of trust funds to the State under the Fair Housing Act (“FHA”). The N.J. Supreme Court has recently ruled that all affordable housing matters will be handled by the courts due to COAH’s failure to act. As a result, the Appellate Division directed that the handling of affordable housing trust funds will also be addressed by the courts in those proceedings.

Under the 2008 FHA amendments, COAH was permitted to authorize a municipality that has petitioned for substantive certification to collect fees from developers of residential property. Those fees could not be used, however, without COAH’s approval. COAH was also to promulgate and adopt regulations regarding the how affordable housing development fees by municipalities are to be handled. The regulations were also to provid that all such fees are to be “committed” to be spent within four years of the date of collection.” but that if the municipality “fails to commit to expend the balance” within the period of time provided, that the council will require that the unspent balance be transferred to the New Jersey Housing Trust Fund, and would also be subject to be transferred to the State. A subsequent budget bill, passed in 2012, provided that, a portion of those funds could be transferred into the General Fund as State revenue,” in other words, not directed toward development of low and moderate income housing.

Since COAH’s regulations to address these issues were never adopted, the N.J. Supreme Court transferred all affordable housing matters to the courts. The App. Div. ruled, therefore, that the funds must not be transferred until the courts have ruled on the cases presented. Although some have expressed a desire to that the courts act in the place of COAH, the Appellate Court properly noted that the courts cannot act as a surrogate administrative agency; they can only rule on disputes between parties that are brought before the court. Accordingly, the App. Div. effectively maintained the status quo by enjoining “COAH or any other part of the executive branch from engaging in any further attempt to seize affordable housing trust funds.” Accordingly, barring any move by the legislature or a revitalization of the administrative process by COAH, the Mount Laurel-designated trial judges will address these matters in the context of litigation to be filed as directed by the recent decision of the N.J. Supreme Court.

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