By:
Mark R. Peck, Esq.
Since 1986 New Jersey's 566 municipalities
have grappled with the affordable housing
obligations set by the Council on Affordable
Housing ("COAH"). COAH was created by
the Legislature to adopt regulations
to ensure that every municipality provides
for its Constitutional obligation to
provide a realistic opportunity for
the construction of its fair share of
its region's affordable housing need.
Municipalities are advised to petition
COAH for Substantive Certification (approval
of their affordable housing plans) or
else they leave themselves vulnerable
to costly builder's remedy lawsuits
that can result in unwanted or undesirable
housing densities. By submitting to
COAH's administrative process municipalities
can better control their land use destiny.
In June of 2008, COAH adopted its Third
Round regulations, which present the
fair share obligations for the period
of January 1, 2004 to December 31, 2018.
The obligations are calculated based
upon projections of household and employment
growth, which are converted into projected
growth share affordable housing obligations
by applying a ratio of one affordable
unit for every projected five (5) market
rate residential units, as well as one
affordable unit for every sixteen (16)
projected newly created jobs. Municipalities
have until December 31, 2008, at the
latest, to submit Third Round compliance
plans. The Third Round regulations project
a present Statewide affordable housing
need of 115,000 units; inasmuch as the
prior Round estimated Statewide affordable
housing need was 52,000 units, this
represents a substantial increase in
need that has resulted in municipalities
facing unprecedented, and in some cases
overwhelming, land use challenges.
Municipalities, of course, can do nothing,
which will invite developer lawsuits.
Municipalities may also adopt zoning
amendments that permit the requisite
number of market rate and affordable
homes to be constructed, based on the
obligation set by COAH. If a municipality,
however, does not wish to have its obligation
satisfied by permitting the construction
of the COAH determined number of units,
plus five times that number in market
rate housing, there are steps that can
be taken that may reduce the number
of units constructed.
The first step a municipality should
take, prior to submitting a petition
for Substantive Certification, is to
collect and present data supporting
a request for a vacant land adjustment.
COAH's methodology to determine the
realistic development potential includes
an analysis of how much vacant, or developable,
land is within a given municipality.
The vacant land adjustment, accordingly,
is a request that COAH reassess the
developable acreage within the municipality.
Given that COAH is charged with determining
the obligations of 566 municipalities – based
in part on the amount of developable
land in each – errors in this analysis
have been made. Therefore it is incumbent
on municipalities to review the COAH
determined vacant land against the municipality's
own tax rolls, master plan, zoning map
and land use ordinances. Undevelopable
steep slopes, corporate parks, cemeteries,
deed restricted open space or recreation
areas, which may be excluded, all may
have wrongly been included in the analysis
of your developable land. Likewise,
parts of your municipality may be subject
to the Highlands Commission, Pinelands
Commission, Meadowlands Commission,
or the Land Use Regulation Division
of the NJDEP; if so, previously determined
vacant land may instead be exempted.
A careful review of COAH's vacant land
analysis of your municipality may result
in a reduction of your affordable housing
obligation.
With the request for a vacant land
adjustment having been made, municipalities
should proceed to adopt their updated
Housing Element and Fair Share Plan
to satisfy their Third Round obligations.
In doing so, at least 50% of the affordable
housing must be family units (self-contained
residential dwelling unit with own kitchen,
sanitary facilities, sleeping quarters
and a private entrance). There is also
a requirement that at least 25% of the
affordable units be rental units. The
ability to enter into a regional contribution
agreement ("RCA"), whereby one municipality
pays another to assume a portion of
its affordable housing obligation, has
been abolished by P.L. 2008, c. 46 (although
RCAs in effect prior to the legislation
will continue to receive credit). Zoning
for age-restricted housing has become
very popular, but such housing may only
account for 25% of the municipal obligation.
One of the first action steps for a
municipality is to explore extension
of expiring affordability controls.
Affordable housing does not continue
in perpetuity. Affordable housing units
are generally subject to affordability
restrictions that expire after ten to
twenty years; once the affordability
control lapses the unit will no longer
be credited as "affordable". Extending
the affordability control of an existing
unit permits a municipality to retain
an affordable housing credit for that
unit, rather than having to account
for a newly constructed unit and the
possible accompanying five market rate
units. Note however that to get a credit
for extending the affordability controls
the unit must satisfy a prior cycle
(post-1986) credit, the controls must
be expiring during the 1999-2018 period,
and the unit must meet all code standards.
Another means to avoid the construction
of density-bonus market rate housing
is for the municipality to sponsor 100%
affordable developments, which may be
municipally constructed and administered
developments in which all residences
are available to low and moderate income
households or are created through municipal
partnership with a non-profit or other
housing provider, and which are a means
to provide for the obligation without
the typical market-rate density bonus
of five (5) market units for every affordable
unit constructed.
A further mechanism to reduce the number
of affordable units is to permit and
attract supportive and special needs
housing, which includes residential
health care facilities, group homes
for the developmentally disabled or
mentally ill, permanent supportive housing
and supportive shared living housing.
The benefit to municipalities by making
group homes a part of the Third Round
Fair Share Plan is that the bedroom
is the unit of credit. In other words,
if a ten-bedroom group home is constructed
and operated pursuant to the Fair Share
Plan, the municipality would be credited
for ten affordable units.
The Third Round regulations are complex,
and have different rules for different
municipalities depending on their status
with COAH. There are different procedures
and requirements for municipalities
that previously received Third Round
Substantive Certification (before those
earlier regulations were invalidated
by the Appellate Division), for municipalities
that have Second Round Substantive Certification
but are seeking Third Round Substantive
Certification, and for municipalities
that have not yet petitioned or received
Substantive Certification. Whatever
your municipality's status, the compliance
mechanisms discussed above are useful
tools for a municipality to satisfy
its Constitutional affordable housing
obligation while minimizing the impacts
of urban and suburban sprawl that often
accompanies the construction of affordable
housing. Given the challenges attendant
to COAH compliance, it is important
for municipalities to retain a qualified
professional planner and attorney to
guide them through the Substantive Certification
process.
REAL ESTATE AND LAND USE
Florio Perrucci Steinhardt & Fader recognizes that each real
estate transaction is distinct. Our Real Estate and Land Use Group
has extensive and broad-based experience, allowing it to address
each matter in its own context. Their expertise, creativity, and
dedication allows them to accomplish client goals in a thorough,
but cost-effective and efficient manner.
The Real Estate and Land Use Group includes attorneys skilled in
negotiating and drafting of contracts for conveyances of title, options,
construction and re-development, easements, licenses, land use and
occupancy agreements, brokerage and commission agreements, all forms
of partnership and joint venture agreements, and lease agreements.
Owners, developers, landlords, tenants and lenders involved in all
aspects of real property rights and development are counted among
our satisfied clients. The members of the Real Estate and Land Use
Group have effectively represented clients in a variety of matters,
including commercial land acquisition, financing and development,
and zoning and planning issues, as well as related negotiation and
transaction documentation. Attorneys in the Real Estate and Land
Use Group have also been involved in the conversion of rental housing
to condominiums as well as the sale of cooperatives on behalf of
sponsors, owners and lenders including end-loan lenders. They have
represented clients, including federal government entities, in mortgage
pool transactions, primarily involving single family loans, multi-family
and strip shopping center mortgages, construction mortgages, and
commercial mortgages.
In conjunction with the attorneys in the litigation area, our real
estate and land use attorneys have successfully represented clients
in foreclosure, title, land use litigation, the defense and prosecution
of real estate tax appeals, and negotiation of tax assessments. Their
experience also includes real estate security interests, mechanics
liens, and equitable liens. The attorneys have handled many real
estate ownership and title quality issues, title insurance and re-insurance,
and survey matters. In addition, this group works closely with our
skilled environmental attorneys. More often than not, environmental
matters play an ever-increasing role in real estate considerations.
The depth of experience the firm offers in the environmental area
greatly enhances the Group's ability to effectively represent our
clients.
Mark
R. Peck 