Actions Speak Louder than Words: Appellate Division Will Not Disturb Third Round Substantive Certification Where Municipality has Taken Action to Create Affordable Housing

by: Katharine A. Muscalino

The Appellate Division issued an opinion on March 14, 2012 where it declined to revoke COAH’s third round substantive certification of Readington’s Fair Share Plan.  In In re Grant of Substantive Certification to Readington Township, Hunterdon County by the New Jersey Council on Affordable Housing, Valley National Bank sued to have the substantive certification granted to Readington revoked because the fair share plan certified by COAH included a 100% municipally-owned project on a to-be-determined site.  The Appellate Division reiterated its disdain for “municipally-sponsored 100% affordable housing projects ‘ without any specifics or supporting documentation, such as the location of the project, evidence the municipality controls the site, suitability of the site, source of funds to construct and operate the project, or the identity of the entities that will construct and operate the project.’”  However, the Court ultimately declined to revoke the substantive certification granted Readington because “Readington has taken substantial and concrete steps to implement the plan approved by COAH.”  These substantial steps included Readington’s submission of information designating a site for its project following substantive certification.  In declining to revoke the substantive certification, the Court emphasized that its focus is on the actions taken by a municipality to accomplish the creation of affordable housing, rather than the words contained in its Third Round Fair Share Plan.

The Appellate Division also acknowledged the lag in affordable housing development caused by the Supreme Court’s pending review of the Third Round Rules and observed that “there is no ‘present law’ to apply in place of the rules invalidated [by the Appellate Division].”  The Appellate Division stated “in the face of this void, doing nothing is simply not an option.  We cannot see how the goals of the FHA are advanced by declining to reevaluate certification decisions made by COAH under rules subsequently deemed antithetical to those goals.  This is not a mere academic conundrum.  The protections afforded a township by a grant of certification – “insulation to a substantial extent from exclusionary zoning litigation” – can significantly affect those in need of affordable housing opportunities for a substantial period of time.”  This direction by the Appellate Division is instructive to the municipalities who have delayed approval of inclusionary and affordable housing projects while waiting to see if the Third Round rules are upheld by the New Jersey Supreme Court and, if not, how they will be reformed.  The message from the Appellate Division is clear:  compliance on paper is not enough.  The New Jersey Supreme Court’s pending review of the Third Round rules is no excuse for failing to create realistic opportunities for affordable housing now. 

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