When it comes to seeking protection from a “builder’s remedy,” court-ordered affordable housing in which a municipality often has little control, a municipality’s first step can be the most important. The regulatory framework governing affordable housing in New Jersey rewards municipalities for making good-faith efforts to plan for affordable housing — even if that initial plan may be incomplete or imperfect. A municipality which takes the first step of petitioning the Council on Affordable Housing (“COAH”) with a Housing Element and Fair Share Plan (“HE&FSP”) “shall not be subject to a builder’s remedy,” unless its petition is ultimately dismissed by COAH.

Once a municipality is subject to the jurisdiction of COAH, the municipality will be protected from “exclusionary zoning litigation”; that is, litigation challenging a municipality’s zoning and land use regulations on the basis that they do not provide a “realistic opportunity” for affordable housing (a/k/a “builder’s remedy” litigation). Successful “exclusionary zoning” litigation results in the appointment by the court of a “special master” to help the parties develop a plan that will allow the “builder” the right to proceed with its project. In this context, local zoning and planning considerations are eclipsed by the effort to accommodate the successful plaintiff’s project, and years of laborious local planning efforts — often concerning redevelopment efforts — are left in shreds. Exclusionary zoning litigation may not be instituted against a municipality which is under COAH’s jurisdiction unless the complainant has first exhausted administrative remedies (i.e., engaged in the entire mediation and review process overseen by COAH). N.J.S.A. 52:27D-315. If COAH ultimately issues substantive certification after reviewing the municipality’s petition, then the municipality will not be subject to a builder’s remedy for 10 years.

Although COAH’s rules established certain deadlines for municipalities in order to remain protected under COAH’s jurisdiction, there is generally no restriction on when a municipality can file a petition for substantive certification of its HE&FSP. This is consistent with the legislative policy of removing affordable housing disputes from the courts in favor of the administrative process overseen by COAH. N.J.S.A. 52:27D-303.

Issuance of Substantive Certification Is Subject to Appeal

Substantive certification does not mean that a municipality’s affordable housing efforts are completely immune from legal challenge, however. COAH’s decision to issue substantive certification is subject to an appeal as of right to the Appellate Division of the New Jersey Superior Court. Sod Farm Associates v. Twp. of Springfield, 366 N.J.Super. 116, 131 (App. Div. 2004) (citing N.J. Court Rule 2:2-3(a)(2)). The Appellate Division will defer to COAH’s decision to issue substantive certification as long as the court finds substantial evidence in the record in support thereof, and even if the court itself might have reached a different result. In re Bor. of High Bridge Grant of Substantive Certification, 2006 WL 1520263 *3 (App. Div. 2006) (unpublished) (citing In the Matter of Taylor, 158 N.J. 644, 657 (1999)). Accordingly, COAH’s decision to issue substantive certification must stand unless it is arbitrary, capricious or unreasonable.

If upon review, the Appellate Division reverses a decision by COAH to issue a municipality substantive certification, the judicial practice is to remand the municipality’s petition back to COAH for reconsideration or revision. See e.g., In re Petition for Substantive Certification, Twp. of Southampton, 338 N.J.Super. 103, 121 (App. Div. 2001), certif. denied, 169 N.J. 610 (2001); Elon Associates, LLC v. Township of Howell, 370 N.J.Super. 475 (App. Div. 2004); Sod Farm Associates, 366 N.J.Super. 116. However, even in such cases, a would-be challenger of the municipality’s HE&FSP would still need to engage the mediation and review process prior to instituting exclusionary zoning litigation against the municipality.

Strong Presumption of Validity in any Subsequent Exclusionary Zoning Litigation

Once a municipality receives substantive certification, a strong presumption of validity attaches to the municipal HE&FSP, and the complainant in exclusionary zoning litigation has the burden of proving by “clear and convincing evidence” that the HE&FSP does not realistically plan for the provision of the municipality’s affordable housing obligation. N.J.S.A. 52:27D-317. This “heavy evidential burden” “effectively insulates a municipality from exclusionary zoning lawsuits” for ten years. Elon Associates, LLC, 370 N.J.Super. at 482. In Hills Development Co. v. Twp. of Bernards, 103 N.J. 1 (1986), the Supreme Court of New Jersey observed that the presumption of validity which attaches upon the issuance of substantive certification provides a strong incentive to municipalities to affirmatively plan for the provision of affordable housing. In the words of the Court,

“The difficulties facing any plaintiff attempting to meet such a burden of proof are best understood by noting the variety of methodologies that can be used legitimately to determine regional need and fair share as well as the many different ways in which a realistic opportunity to achieve that fair share may be provided. If the Council conscientiously performs its duties, including determining regional need and evaluating whether the proposed adjustments and ordinances provide the requisite fair share opportunity, a successful Mount Laurel lawsuit should be a rarity. There is therefore a broad range of municipal action that will withstand challenge, given this burden of proof.”

Although substantive certification of a municipal HE&FSP protects a municipality against a “builder’s remedy,” it does not mean that a zoning ordinance which is a component of the certified HE&FSP cannot be challenged in court. Substantive certification does not preclude a challenge to the validity of any zoning ordinance adopted by a municipality as part of its fair share plan; even on the ground that it fails to provide a realistic opportunity for the construction of the municipality’s fair share of affordable housing. When an individual component of a certified HE&FSP (i.e., an inclusionary zoning ordinance or development fee ordinance) is challenged, the “clear and convincing evidence” burden of proof only applies if the challenge is based on an allegation that the component fails to provide for a realistic opportunity for the construction of the municipal fair share of affordable housing. In Sartoga v. Borough of West Paterson, 346 N.J.Super. 569 (App. Div. 2002), certif. denied, 172 N.J. 357, the Appellate Division observed that

“The sole effect of a grant of substantive certification to a municipality is to create a presumption of validity in an exclusionary zoning action challenging the validity of a zoning ordinance adopted to implement a certified plan.”

Stated differently, “a zoning ordinance that furthers the constitutional and statutory goal of providing housing for lower income families is not insulated from challenge on the ground that it conflicts with other purposes of the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq.” This does not suggest, however, that a litigant who successfully challenges a municipal zoning ordinance solely on grounds which are completely unrelated to affordable housing would be entitled to a “builder’s remedy” award merely because that ordinance happens to be a component of a COAH-certified HE&FSP.

Conclusion

While substantive certification “effectively insulates” a municipality from exclusionary zoning challenges for 10 years, COAH’s rules also provide substantial protections to a municipality for taking the first step on the path toward that goal. Municipalities are protected from a builder’s remedy by virtue of making a good-faith petition to COAH for substantive certification of an adopted HE&FSP — that protection will not be lost solely because the municipality’s initial submission may be incomplete or imperfect. Municipalities which are not currently before COAH may still come within its jurisdiction by filing an up-to-date HE&FSP. Failure to do so may result in needless exposure to builder’s remedy litigation.

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