Mayor (All 566 Municipalities)
Page 1
March 9, 2007
Mayor (All 566 municipalities)
Re:Guidelines for Municipalities Regarding Appellate Division Decision on COAH Third Round Rules
Dear Mayor :
In light of the Appellate Division’s recent ruling on the Council on Affordable Housing’s (COAH) third round affordable housing rules, I am reaching out to every municipality in the State to apprise you of the Court’s ruling and its implications for the production of affordable housing in New Jersey. Please know that COAH remains committed to the production of affordable housing and is available to work with municipalities and your housing partners to accomplish this goal. This letter provides a summary of the decision with guidance to municipalities on how to proceed.
On January 25, 2007, the Appellate Division issued a decision on COAH’s third round rules. The decision upheld much of COAH’s rules and methodology, but also directed COAH to make certain changes to its third round growth share approach. A full summary of the Appellate Division decision and a link to the decision itself is available on COAH’s website at
On several points, the Court affirmed COAH’s regulations. Specifically, the Court upheld the concept of growth share and filtering (where market-rate units become available to lower income households), the continued use of Regional Contribution Agreements, COAH's methodology for calculating a municipality’s rehabilitation need, COAH’s regulations allowing bonus credits and vacant land adjustments and COAH’s decision to no longer reallocate present need from urban to suburban municipalities.
However, the Court sent back to COAH for further rulemaking issues relating to the calculation and allocation of the affordable housing need, the implementation of the growth share approach and the strategies available to municipalities for meeting their affordable housing need. Specifically, the Court’s opinion suggests that a municipality cannot require affordable housing to be constructed as part of an inclusionary zone without an additional financial incentive to the developer. In addition, the Court invalidated the data COAH used to determine filtering and COAH’s regulation that permitted municipalities to age-restrict fifty percent of its affordable housing obligation. The Court remanded these issues back to COAH for further rulemaking, to be completed within six months.
The Court also stayed the grant of substantive certification pending the process of amending COAH's regulations, during which time municipalities whose applications for substantive certification are affected by this decision, including municipalities who petition COAH for substantive certification, will not be subject to builder's remedy lawsuits.
COAH is committed to increasing the availability of affordable housing in New Jersey. We strongly encourage municipalities and all sectors of the housing community to continue to provide affordable housing as we move forward. We are committed to working with you to take the necessary steps to fulfill your municipality’s affordable housing obligation.
On our end, COAH has begun to work on the rule amendments required by the Appellate decision. The first step includes the issuance of a Request for Proposals (RFP) for consultants to provide up-to-date research and data relevant to COAH's third round methodology. Areas of study include the calculation of household and employment growth projections, filtering, compensatory benefits for developing affordable housing, measurement of employment growth, and age-restricted housing. COAH has proposed regulations regarding payments in lieu of construction, one of the areas addressed in the Appellate Division decision, which are available on COAH’s website at and are available for public comment until March 17.
On February 14, 2007, COAH requested a stay of the decision regarding the Court’s potential invalidation of municipal inclusionary ordinances adopted in response to COAH’s third round growth share methodology. Such ordinances, commonly known as “growth share ordinances” have now been adopted by over 130 municipalities as a result of COAH’s third round rules. The Appellate Division suggested that developers be given special financial incentives to build affordable housing in an inclusionary zone, thereby putting these municipal ordinances at risk while permitting market rate housing to go forward. For this reason, COAH has filed a request with the Appellate Division for a stay of its ruling with respect to this one matter, so that these municipal growth share ordinances are protected.
COAH also filed a Notice of Petition for certification with the New Jersey Supreme Court to review the portion of the Appellate Division decision that may be read to require the provision of compensating benefits by a municipality as a condition for enactment of an inclusionary zoning ordinance with a mandatory set-aside. COAH has petitioned the New Jersey Supreme Court to reaffirm the position it has taken in prior decisions over the past two decades, i.e., that a financial incentive is not required in all cases to build affordable housing, and reverse the Appellate division on this issue. In response, several of the appellants filed cross-petitions, challenging aspects of COAH’s rules and methodology that were upheld by the Appellate Division.
Please know that we appreciate the steps that you have taken to preserve and provide affordable housing and we know that you have many questions as a result of the recent decision. Attached is the first in what will be a series of Questions and Answers (FAQ) to provide you with guidance on how to proceed during this interim period. Updates will be posted on our website at .
We hope that these guidelines begin to address some of your concerns. If you have additional questions, please send them to . Your questions will form the basis for future communications as we continue to move forward to provide affordable housing during this interim period.
Sincerely,
Lucy Voorhoeve
Executive Director
FAQ ON APPELLATE DIVISION DECISION REGARDING COAH THIRD ROUND RULES
Question: Should municipalities continue to plan for and provide affordable housing?
Answer: Yes, municipalities have a continuing constitutional obligation to provide affordable housing. COAH strongly encourages municipalities to continue to create affordable housing opportunities in this interim period. We are committed to working with you to take the necessary steps to accomplish this goal.
Question: Will COAH continue to accept third round petitions and filings?
Answer: COAH will continue to accept third round petitions and filings and to review the compliance mechanisms in the municipal fair share plans that have been submitted. We will provide written feedback to each municipality on the elements of the plan that are not affected by the decision. Municipalities with second round certification, that have not yet petitioned for third round substantive certification, will receive correspondence in the near future regarding procedures for addressing the requirement to petition for third round substantive certification by May 15, 2007, given the Appellate Division’s stay of COAH’s grant of substantive certification.
Question: Should municipalities continue to respond to COAH reports reviewing municipal affordable housing plans?
Answer: Municipalities that have received either checklist reviews of their affordable housing plans or formal COAH Reports Requesting Additional Information with a 90-day deadline are encouraged, although not required, to provide information relating to compliance mechanisms in their plans (i.e. Regional Contribution Agreements, municipal construction projects, accessory apartments programs, etc.). As always, we are also available to provide guidance to municipalities that are considering participating in the COAH process. Your participation will promote the continued production of affordable housing and greatly expedite substantive certification upon adoption of revised third round rules.
Question: Will COAH continue to conduct mediation?
Answer: COAH staff will continue to conduct mediation on a voluntary basis and encourages all parties to continue mediation. There are issues that have been brought to COAH’s attention that are not affected by the Court decision and would benefit from continuing the mediation process. Should all parties agree to enter the mediation process, COAH will act as an impartial mediator to resolve objections and facilitate the production of affordable housing. Please contact Melissa Orsen at (609) 292-3000, with questions about mediation.
Question: Will COAH continue to review and approve Regional Contribution Agreements?
Answer:In its January 25th decision, the Appellate Division upheld Regional Contribution Agreements (RCAs). Municipalities are encouraged to move forward in identifying RCA receiving municipalities, negotiating draft contracts, and obtaining reviews from the Housing and Mortgage Finance Agency (HMFA) and the County Planning Board. COAH will continue to review and approve second round RCAs, RCAs for municipalities under the jurisdiction of the Court, and will conduct a staff review, subject to adoption of revised third round rules, of third round RCAs. However, COAH is unable to approve third round RCAs during this interim period due to the Court’s stay. RCA receivers are still required to submit annual monitoring on RCA units. Please contact Eileen Brennen at (609) 292-3000 for information on the RCA approval process or RCA monitoring.
Question: Will COAH continue to review and approve development fee ordinances and spending plans?
Answer: COAH will continue to approve the adoption of municipal development fee ordinances under the percentages permitted by the third round rules. COAH is developing procedures for specific expenditures from affordable housing trust funds in furtherance of affordable housing and will provide you with additional guidance in the near future. In addition, municipalities are required to continue to submit annual monitoring on affordable housing trust funds. Please contact Keith Henderson at (609) 292-3000 for information on development fee ordinances and spending plans and Larissa DeGraw at (609) 292-3000 for information on development fee monitoring.
Question: Can Department of Community Affairs Balanced Housing Program funds be expended during this interim period?
Answer: COAH is working cooperatively with the New Jersey Department of Community Affairs Balanced Housing Program to ensure that funding for qualified affordable housing projects can be awarded during this interim period. Please contact Paul Dice, Acting Director of the DCA Division of Housing at (609) 984-2137.
Question: Will COAH continue to monitor existing affordable housing units? Answer: On January 25, 2007, in a separate companion decision to the COAH third round rules, the Appellate Court upheld the Uniform Housing Affordability Controls (UHAC), which govern the affordable housing units created under COAH. COAH will continue to monitor the creation of affordable housing units under the COAH process. Municipalities participating in the COAH process will continue to be required to submit annual monitoring on units in their fair share plans. Municipalities are encouraged to move forward with the process of identifying a municipal housing liaison and contract with an administrative agent, as necessary, to administer existing affordable housing units. Please contact Barbara Walsh at (609) 292-3000 for information on the administration of affordable units.
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