A Setback for Real Estate Developers as Courts Begin Reviewing Municipal Affordable Housing Plans

On July 9, 2015, the Honorable Douglas K. Wolfson, J.S.C. issued an opinion in In the Matter of the Adoption of the Monroe Township Housing Element and Fair Share Plan and Implementing Ordinances, Docket No. MID-L-3365-15.  And while Trial Court decisions are not typically the subject of client alerts, this decision, which bars real estate developers from advocating the inclusion of their projects, merits some attention.

Judge Wolfson, of course, is one of the many “Mount Laurel Judges” assigned to handle the deluge of declaratory judgment actions filed by municipalities pursuant to the New Jersey Supreme Court’s decision in In re Adoption of N.J.A.C. 5:96 & 5:97 by N.J. Council on Affordable Housing, 221 N.J. 1 (2015). These Mount Laurel Judges are charged with evaluating whether municipal ordinances adopted in furtherance of an approved housing element “provide for a realistic opportunity for the municipality to achieve its ‘fair share of the present and prospective regional need for low- and moderate-income housing’ … ‘in keeping with prior round methodologies.’” In other words, determining whether or not a municipality’s affordable housing plan passes constitutional muster.

Judge Wolfson, in evaluating a declaratory judgment action filed by the Township of Monroe, granted the Township a five-month period of immunity from builder remedy lawsuits. In granting that extension, Judge Wolfson applied the process of review outlined by the Supreme Court for municipalities that had: (1) “participating” status before the Council on Affordable Housing (“COAH”); and (2) “devised housing elements and took action toward adopting ordinances in furtherance of the plan.”

In keeping with the Supreme Court’s decision, Judge Wolfson also permitted the Fair Share Housing Center and a certain real estate developer to intervene in the declaratory judgment action. And, while recognizing the right of real estate developers to be granted an opportunity to be heard as to whether or not a municipal affordable housing plan passes constitutional muster, Judge Wolfson rejected the notion that the opportunity to be heard permits an end run around the stay of builder remedy suits. As such, real estate developers cannot “contest the municipality’s site selections and/or methods of compliance by suggesting or claiming that other sites (owned or controlled by them) are superior to, or perhaps, better suited for an inclusionary development.”

According to Judge Wolfson, this protocol will apply to all declaratory judgment actions involving municipalities that had either previously been granted substantive certification by COAH or were meaningfully participating in that process (like the Township of Monroe). The goal being to foster “a prompt, efficient, and fair resolution of the constitutional compliance issues, without unnecessary distractions or impediments from builder/developers or other interested parties.”

This, of course, is a great decision for municipalities. But should you be in the business of real estate and find your development plans frustrated by this new protocol, there is still time to evaluate your position and develop a strategy.