But COAH is Gone, Right?

December, 2011, Red Bank - That is the typical question posed whenever I raise or mention affordable housing issues with developers, municipalities and sometimes other attorneys. My response: Yes, COAH is gone in the same way the DMV is gone; however, we are still required to have a driver’s license and to register our cars.

COAH did not create the requirement for towns to provide affordable housing. Rather, COAH was the agency charged with the responsibility of implementing the New Jersey Fair Housing Act of 1985 (FHA) and the MountLaurel doctrine – which all municipalities have a constitutional obligation to provide for its fair share of affordable housing. By the Governor “abolishing” COAH through his Reorganization Plan of June 29, 2011 (“Reorganization Plan”), he did not do away with the constitutional obligation of municipalities to provide affordable housing; he merely fulfilled a campaign promise and transferred that responsibility.

Just as the DMV became the Motor Vehicle Commission, the responsibilities of COAH now fall solely under the Commissioner of the Department of Community Affairs (“DCA”). Instead of having a “Council” of private and public sector individuals (which included the DCA Commissioner) making decisions on affordable housing matters, now just the Commissioner will be making the decision. A number of the COAH staff has been transferred to a new subdivision of the Commissioner’s office, known as Local Planning Services (“LPS”) and the Fair Housing Administration.

The abolishment of COAH and transferring all of its authority and power to the Commissioner is just the latest chapter in the affordable housing saga that has played out over the past years. The only thing that is certain with affordable housing in New Jersey is that each branch of government (the Legislature, Executive Branch and Judiciary) has attempted to address the issue, resulting in no resolution and continued uncertainty. As is the case in any business, whether it is in the financial industry, energy industry or development industry, uncertainty leads to economic stagnation and reluctance to plan for growth and the future.

The move by the Governor to abolish COAH is clearly in response to the Legislature’s failure to continue to work towards comprehensive affordable housing reform following the Governor’s conditional veto of Bill S-1. Rather, the sponsor of S-1 withdrew the bill following the conditional veto. With inaction in the Legislature and the status of COAH’s Third Round regulations in limbo before the Supreme Court, the Governor decided to issue his Reorganization Plan and abolish COAH. What this means for the future remains unclear.

Five Interim Procedures
Shortly after the Governor’s Reorganization Plan became effective at the end of August, 2011 and COAH was abolished, the Commissioner’s office announced on September 15, 2011 via a press release the issuance of five interim procedures. The five interim procedures involved: (1) Requests for Agency Review; (2) Review and Approval of Development Fee Ordinance and Amendments; (3) Administrative Agents and Municipal Building Liaisons; (4) Affordable Housing Operating Manuals and (5) Spending Plans and Amendments (“Interim Procedures”). These Interim Procedures are supposed to help stream line and expedite a resolution to affordable housing matters. The press release also indicated that new procedural rules would be adopted pursuant to the Administrative Procedure Act (APA).

After issuing the Interim Procedures press release, the Commissioner hit the circuit outlining these procedures as well as anticipated changes to the regulations, including speaking at a New Jersey Builders Association event and a New Jersey Bar Association event.

The most notable of the Interim Procedures – “Requests for Agency Review” – revised COAH’s motion procedures under N.J.A.C. 5:96-13. Rather than having a motion schedule, which could take at least thirty days to be considered, motions and requests for relief would be submitted to the Commissioner’s office on a rolling basis by letter application. The Commissioner’s office would post the motion or request for relief on its website and the municipality is supposed to provide notice to known interested parties. Opposition must be filed within 10 days. The Commissioner then renders a decision without a hearing or oral argument, unless the Commissioner believes the motion requires a hearing.

The Interim Procedures also changed the development fee ordinance and spending plan approval process where a letter request only needs to be submitted to the Commissioner’s office by the municipality rather than through a resolution from the governing body. Also, municipalities were permitted to adopt affordable housing manuals and designate affordable housing administrative agents and liaisons without agency approval.

During the Commissioner’s tour to discuss these changes, many other questions were posed about future substantive changes. Though the responses to these questions were confined to generalities, it is worth noting the stated opinion those density bonuses as a compensatory benefit was “unsustainable.” It appears the preferred compensatory benefit in the short term is the use of affordable housing trust funds. It was also clear from the Commissioner’s statements that the 10% set-aside for future development, as suggested in the Housing Opportunity Task Force report of March 19, 2010 and provided for in the original version Bill S-1 approved by the Senate, should be used as a guide for municipalities.

Shortly after the press release of these Interim Procedures, the Fair Share Housing Center (FSHC) challenged these procedures in the Appellate Division. The main argument of FSHC was that these procedures are invalid because they impact a wide range of matters under the FHA and were not adopted in accordance with the Administrative Procedure Act (APA), which requires public notice and comment. The State argues that these procedures are “intra-agency statements” that do not change substantive requirements and are exempt from the notice requirement under the APA. The State also argues that these procedures are only interim while the Commissioner’s office goes through the rule making process to adopt new regulations.

FSHC applied to the Appellate Division for emergent relief seeking a stay of the Interim Procedures and requesting that its appeal be accelerated for consideration. The State opposed the motion. On October 18, 2011 the Appellate Division granted the request for a stay and accelerated the appeal. This does not bode well for the Commissioner’s office as one of the prongs to be satisfied in requesting such relief is that there is a likelihood of success on the merits.

The merits of the appeal will be argued before the Appellate Division on February 15, 2012 back-to-back with FSHC’s other appeal challenging the Reorganization Plan and abolishment of COAH. In the meantime, the Commissioner’s office is in the process of proposing new procedural rules, with notice and public comment per the APA. Thus, the saga continues.

Many municipalities that submitted affordable housing plans to COAH or to the courts have sat tight while this all plays out. However, many of these plans contain projects or proposals that were unrealistic at the time or have become unrealistic over this passage of time. Some judges have not pressed the issue on their own. This creates an opportunity for developers to go the courts to argue that there have been lost opportunities for affordable housing and that the developer has a site that represents a solution. As stated above, uncertainty results in stagnation, which will remain unless pressed.

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Tags: Craig M. Gianetti, Real Estate, Land Use & Development, COAH