Justice LaVECCHIA delivered the opinion of the Court.
Our Mount Laurel decisions recognized a constitutional obligation that municipalities, in the exercise of their delegated power to zone, "afford[] a realistic opportunity for the construction of [their] fair share of the present and prospective regional need for low and moderate income housing." S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158, 205, 456 A.2d 390 (1983) [hereinafter Mount Laurel II] (citing S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 67 N.J. 151, 174, 336 A.2d 713, appeal dismissed and cert. denied, 423 U.S. 808, 96 S.Ct. 18, 46 L.Ed.2d 28 (1975) [hereinafter Mount Laurel I]). Mount Laurel I was followed by years of political inertia, failing to address the constitutional deprivation affecting the least fortunate in our society. We preferred a legislative solution. However, in the absence of a legislative response to the constitutional imperative set forth in Mount Laurel I, we were compelled in Mount Laurel II to fashion a remedy that was necessary to meet the urgency of the problem. It was designed to curb exclusionary zoning practices and to foster development of affordable housing for low- and moderate-income individuals. It also was an extraordinarily detailed remedy.
Thereafter, the Legislature enacted the Fair Housing Act (FHA), L. 1985, c. 222. See N.J.S.A. 52:27D-302; Hills Dev. Co. v. Twp. of Bernards, 103 N.J. 1, 19, 510 A.2d 621 (1986). The FHA codified the core constitutional holding undergirding the Mount Laurel obligation, see In re Petition for Substantive Certification Filed by Twp. of Warren, 132 N.J. 1, 12, 622 A.2d 1257 (1993) (citing to Mount Laurel obligation found in N.J.S.A. 52:27D-302(a), (d), (e), -311(a), -314(a), (b)), and included particularized means by which municipalities could satisfy their obligation, mirroring the judicially crafted remedy. Further, the FHA created the Council on Affordable Housing (COAH), N.J.S.A. 52:27D-305, and provided it with rulemaking and adjudicatory powers to execute the provision of affordable housing. Hills, supra, 103 N.J. at 19-20, 510 A.2d 621.
In this matter, we review the Appellate Division's invalidation of the most recent iteration of COAH regulations applicable to the third round of municipal affordable housing obligations (Third Round Rules). In the Third Round Rules, COAH proposed a new approach — a "growth share" methodology — for assessing prospective need in the allocation of a municipality's fair share of the region's need for affordable housing. In invalidating the Third Round Rules, the Appellate Division expressed doubt about whether any growth share methodology adopted by COAH could be compatible with the Mount Laurel II remedy that "appears to militate against the use of" a growth share approach for determining a municipality's affordable housing obligation. In re Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J.Super. 462, 485, 6 A.3d 445 (App.Div. 2010). That overarching question looms over all other issues in this challenge to the Third Round Rules.
Having had three decades of experience with the current affordable housing remedy, we cannot say that there may not be other remedies that may be successful at producing significant numbers of low- and moderate-income housing — remedies that
That said, our response to the overarching question previously identified is that the constitutional obligation and the judicial remedy ordered by this Court in Mount Laurel II, and in place today through the FHA, are distinct and severable. The exceptional circumstances leading this Court to create a judicial remedy thirty years ago, which required a specific approach to the identification and fulfillment of present and prospective need for affordable housing in accordance with housing regions in our state, should not foreclose efforts to assess whether alternative approaches are better suited to modern planning, development, and economic conditions in the Garden State. The policymaking branches may arrive at another approach to fulfill the constitutional obligation to promote ample affordable housing to address the needs of the people of this state and, at the same time, deter exclusionary zoning practices. We hold that our remedy, imposed thirty years ago, should not now be viewed as a constitutional straightjacket to legislative innovation.
However, unless the Legislature amends the FHA, which tracks the judicial remedy in its operative provisions, the present regulations premised on a growth share methodology cannot be sustained. The changes in the Third Round Rules are beyond the purview of the rulemaking authority delegated to COAH because they conflict with the FHA, rendering the regulations ultra vires.
Moreover, due to COAH's failure to enact lawful regulations to govern municipalities' ongoing obligations to create affordable housing under the FHA, we have no choice but to endorse the remedy imposed by the Appellate Division in order to fill the void created by COAH. COAH shall adopt regulations, as directed by the Appellate Division, without delay. As modified by this opinion, we thus affirm the Appellate Division's judgment with respect to the invalidity of the Third Round Rules under the FHA as expressed in the Honorable Stephen Skillman's comprehensive opinion.
The following summary of the Mount Laurel doctrine outlines the key points in its development through a series of cases, the FHA's enactment, and prior regulations.
In Mount Laurel I, supra, this Court held that a developing municipality could not utilize its zoning power to eliminate the realistic possibility of construction of affordable low- and moderate-income housing without acting in a manner contrary to the state's general welfare. 67 N.J. at 174, 336 A.2d 713. We explained that zoning decisions involve the exercise of police powers and have a "substantial external impact" on neighboring areas. Id. at 177, 336 A.2d 713. Thus, we reasoned
Despite the constitutional "general welfare" pronouncement in Mount Laurel I, the holding's impact was stunted by the absence of critical definitions, such as a "municipality's fair share" and the "present and prospective regional need." See, e.g., Oakwood at Madison, Inc. v. Twp. of Madison, 72 N.J. 481, 499, 371 A.2d 1192 (1977) (declining to define ambiguous term "fair share"). Its impact also was limited by its restriction to developing municipalities, rather than all communities. See, e.g., Pascack Ass'n v. Mayor & Council of Washington, 74 N.J. 470, 483-84, 379 A.2d 6 (1977) (finding Mount Laurel doctrine only applied to developing municipalities when considering challenge to zoning ordinance in "fully developed, predominantly single-family residential community"). Moreover, municipalities continued to resist applying zoning ordinances in non-exclusionary manners and failed to provide for the creation of affordable housing.
In response, our 1983 decision in Mount Laurel II, supra, strengthened the Mount Laurel doctrine. 92 N.J. at 205, 456 A.2d 390. Having already been recognized in Mount Laurel I as constitutionally required to serve human values essential to individuals beyond just those persons living within the geographic borders of a municipality, Mount Laurel II reaffirmed that a municipality's zoning power could not be utilized in contravention of the general welfare of the state and restated the legal and moral bases for its conclusion. Id. at 208-10, 456 A.2d 390. The holding emphasized that helping people secure a decent home is more than just an ideal. Ibid. It is a fundamental constitutional, and moral, general welfare obligation. Ibid. Municipalities satisfy "that constitutional obligation by affirmatively affording a realistic opportunity for the construction of [their] fair share of the present and prospective regional need for low and moderate income housing. This is the core of the Mount Laurel doctrine." Id. at 205, 456 A.2d 390 (internal citation omitted).
Thus, when exercising their power to zone, municipalities across the state — not just developing municipalities — are required to account for the housing needs of individuals residing outside of their municipalities "but within the region that contributes to the housing demand" in their municipalities. Id. at 208, 456 A.2d 390. "That is the constitutional rationale for the Mount Laurel doctrine. The doctrine is a corollary of the constitutional obligation to zone only in furtherance of the general welfare." Id. at 209, 456 A.2d 390.
Municipalities' intransigence in creating affordable housing at the time Mount Laurel II was presented to the Court triggered the imposition of the judicial remedy that then was fashioned. Id. at 199-201, 456 A.2d 390. The Court in Mount Laurel II explained that its remedy "provide[d] a method of satisfying that obligation when the zoning in question affects housing." Id. at 209, 456 A.2d 390. We stated that we would no longer tolerate a "numberless approach" as a remedy and that the "fair share" standard must be quantitative, not qualitative, in order to satisfy the constitutional obligation. Id. at 222, 456 A.2d 390.
Extending the doctrine's reach to all municipalities, id. at 258-59, 456 A.2d 390, Mount Laurel II added teeth to the doctrine by adopting a judicial remedy. We created a special litigation track for exclusionary zoning cases, id. at 292-93, 456 A.2d 390, enumerated certain affirmative measures that would define the tools at a municipality's disposal, id. at 260-67, 456 A.2d 390, and sanctioned a "builder's remedy," which permits builder-plaintiffs to sue for the opportunity to construct housing at higher densities than a municipality otherwise would allow, id. at 279-81, 456 A.2d 390. Despite this Court's specific enforcement enhancements to the doctrine, we repeated a preference for legislative solutions in the affordable housing arena. Id. at 352, 456 A.2d 390. In 1985, the New Jersey Legislature heeded that call by enacting the FHA. L. 1985, c. 222; see N.J.S.A. 52:27D-302.
The FHA created COAH and vested it with primary responsibility for assigning and determining municipal affordable housing obligations. N.J.S.A. 52:27D-305. The FHA charged COAH "with, among other things, determining State housing regions, estimating the State and regional present and prospective need for low and moderate income housing, and adopting criteria and guidelines for a [m]unicipal determination of its present and prospective fair share of [the region's] housing need." Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 544, 803 A.2d 53 (2002) (internal citations and quotation marks omitted); Hills, supra, 103 N.J. at 19-20, 510 A.2d 621. The FHA also contained a safe haven for municipalities that bear their fair share of their region's low- and moderate-income housing need: they can seek substantive certification from COAH, N.J.S.A. 52:27D-313, which, if granted, insulates that municipality from exclusionary zoning litigation for ten years (six years as originally passed), N.J.S.A. 52:27D-313(a). The FHA transferred all pending and future Mount Laurel litigation to COAH for resolution in the first instance through the agency's administrative processes. Hills, supra, 103 N.J. at 20, 510 A.2d 621.
This Court upheld the FHA against a constitutional challenge, determining the statute was a valid method of creating a realistic opportunity to satisfy the state's affordable housing need. Id. at 25, 41-42, 510 A.2d 621; see also id. at 43, 510 A.2d 621 (reviewing Court's requests to Legislature to act when explaining, in part, reasoning for strong deference to Legislature).
COAH adopted rules delineating the affordable housing obligations of municipalities for the periods of 1987 to 1993 — the First Round Rules — and 1993 to 1999 — the Second Round Rules. See N.J.A.C. 5:92-1.1 to -18.20, Appendices A to F; N.J.A.C. 5:93-1.1 to -15.1, Appendices A to H. COAH subsequently readopted the Second Round Rules and established May 2004 as the new expiration date for that period of obligations.
In general, the First and Second Round Rules utilized a methodology for calculating affordable housing obligations that was consistent with the mechanisms developed by trial courts prior to the FHA's enactment. In re N.J.A.C. 5:96, supra, 416
In contrast, prospective need was "a projection of low and moderate housing needs based on development and growth... reasonably likely to occur in a region or a municipality." N.J.A.C. 5:92-1.3. COAH used statistical analysis to project the number of "low- and moderate-income households" that would form between 1987 and 1993. N.J.A.C. 5:92, Appendix A at 92-49. In determining prospective need, COAH considered municipalities' "approvals of development applications, real property transfers and economic projections prepared by the State Planning Commission." N.J.A.C. 5:92-1.3.
The First Round Rules determined a municipality's allocated need "based on employment within the municipality, projected employment within the municipality, the percentage of the municipality in a growth area, and the municipality's wealth," which was similar to the calculations developed in AMG Realty, supra, 207 N.J.Super. at 398-410, 504 A.2d 692. In re N.J.A.C. 5:94, supra, 390 N.J.Super. at 23-24, 914 A.2d 348 (citing N.J.A.C. 5:92, Appendix A at 92-49 to -50). Unlike AMG Realty, however, COAH's methodology considered "secondary sources of housing supply and demand in calculating both statewide and regional need." In re N.J.A.C. 5:94, supra, 390 N.J.Super. at 24, 914 A.2d 348. COAH's First Round Rules also identified market forces that have the effect of reducing overall housing need. Ibid. (citing N.J.A.C. 5:92, Appendix A at 92-52 to -54 (addressing filtering, residential conversions, and spontaneous rehabilitation)).
The Second Round Rules maintained the methodologies adopted in the First Round Rules. N.J.A.C. 5:93, Appendix A. COAH also adopted regulations that granted credits and adjustments to municipalities to reduce their fair share figures. See N.J.A.C. 5:93-2.15, -3.2 (credits for affordable housing constructed between 1980 and 1986); N.J.A.C. 5:93-3.6 (credits for substantial compliance); N.J.A.C. 5:93-5.15 (credits for rental housing); N.J.A.C. 5:93-4.2, -4.3 (adjustments for municipalities lacking sufficient vacant land or access to water and sewerage). Additionally, the
Various legal challenges to COAH's First and Second Round Rules failed. See, e.g., Twp. of Bernards v. Dep't of Cmty. Affairs, 233 N.J.Super. 1, 12-22, 558 A.2d 1 (App.Div.), certif. denied, 118 N.J. 194, 570 A.2d 959 (1989) (rejecting numerous challenges to First Round Rules, including allegation that COAH acted arbitrarily in considering municipality's wealth as allocation factor); Van Dalen v. Washington Twp., 120 N.J. 234, 246-47, 576 A.2d 819 (1990) (upholding COAH's reliance on planning designations in State Development Guide Plan); In re Petition for Substantive Certification Filed by Twp. of Warren, 247 N.J.Super. 146, 179-83, 588 A.2d 1227 (App.Div.1991) (rejecting challenge that First and Second Round Rules violated Mount Laurel doctrine because they did not require housing for most impoverished citizens), rev'd in part on other grounds, 132 N.J. 1, 622 A.2d 1257 (1993) (invalidating occupancy preference regulation allowing municipalities to set aside fifty percent of fair share housing for low-and moderate-income persons who lived or worked in town).
In sum, until adoption of the Third Round Rules, the methodologies used by COAH largely followed the remedial approaches established in Mount Laurel II and AMG Realty. For two decades following Mount Laurel II, the process of allocating municipal affordable housing obligations proceeded in steps. COAH first would calculate the need for affordable housing in each of the state's regions and then would allocate to each municipality its fair share of the present and prospective regional need. A municipality's fair share obligation was fixed as a specific number of affordable housing units. Each municipality was assigned a proportionate fair share of the region's need for housing based on its economic projections and its capacity to accommodate affordable housing. A municipality that failed to create a realistic opportunity for satisfying its assigned fair share would leave itself vulnerable to a builder's remedy challenge, wherein a builder-plaintiff could bring suit to override a municipality's zoning autonomy and construct affordable housing.
The Third Round Rules initially were promulgated in December 2004.
See also 36 N.J.R. 5748, 5750 (Dec. 20, 2004). The third criterion was a substantial methodological departure from that used in the prior rounds. The growth share approach — that is, tying a municipality's affordable housing obligation to its own actual rate of growth — became the new and central criterion for determining a municipality's future fair share obligation.
Before exploring the nature of this approach, we detail the procedural steps that preceded this Court's consideration of the current challenge to COAH's adoption of a growth share methodological approach.
In a challenge to the initial iteration of the Third Round Rules, the Appellate Division, in a decision authored by the Honorable Mary Catherine Cuff, sustained some but rejected many of the specific challenges to the regulations. In re N.J.A.C. 5:94, supra, 390 N.J.Super. at 1, 914 A.2d 348. As summarized by the appellate panel that considered the present appeal:
Because the Appellate Division invalidated a substantial number of the nascent Third Round Rules, the matter was remanded to COAH for the adoption of revised Third Round Rules. In re N.J.A.C. 5:94, supra, 390 N.J.Super. at 86-88, 914 A.2d 348. COAH was twice granted extensions from its original six-month deadline and, finally, proposed revised Third Round Rules in January 2008, adopting those revised rules on June 2, 2008, without
In the judgment under review, the Appellate Division invalidated a substantial portion of the new regulations, including the growth share methodology used by COAH, and ultimately remanded for the promulgation of a new set of rules within five months. In re N.J.A.C. 5:96, supra, 416 N.J.Super. at 511-12, 6 A.3d 445. Although several of the parties have raised new arguments before this Court, the Appellate Division's holdings concerning the various regulations in the Third Round Rules comprise the bulk of the issues on appeal.
The panel initially addressed the validity of the newly adopted growth share model, particularly as a component of computing a municipality's affordable housing obligation. See N.J.A.C. 5:97-2.2,-2.4, -2.5. Under the new model, a municipality's obligation is the sum of (1) the rehabilitation share, (2) the prior round obligation, and (3) the growth share. Ibid. The panel concluded that the growth share component is inconsistent with the Mount Laurel doctrine and expressed doubts as to whether any growth share model could survive scrutiny because a municipality's obligation should not hinge on its choice of whether or not to grow. In re N.J.A.C. 5:96, supra, 416 N.J.Super. at 483-85, 6 A.3d 445. For this reason, the panel struck down as inconsistent with Mount Laurel II the growth share methodology in the Third Round Rules. Id. at 485, 6 A.3d 445.
The panel next invalidated several other important provisions in the Third Round Rules. First, the panel struck down the regulations concerning the preparation of fair share plans. Id. at 487-88, 6 A.3d 445; see N.J.A.C. 5:97-3.2(a)(4)(iv). Several parties argued that the fair share plans were overly vague, but the panel, while finding some merit to the vagueness argument, ultimately invalidated the regulation because it was wholly dependent on the growth share methodology. In re N.J.A.C. 5:96, supra, 416 N.J.Super. at 487-88, 6 A.3d 445.
Second, the panel struck down the presumptive incentives embodied in the regulations. Id. at 488-93, 6 A.3d 445; see N.J.A.C. 5:97-6.4. Taking issue with the presumptive minimum densities and maximum set-aside percentages, the panel concluded that the incentives were insufficient to create a "realistic opportunity" for the development of affordable housing. In re N.J.A.C. 5:96, supra, 416 N.J.Super. at 493, 6 A.3d 445. The panel viewed the minimum densities as too low and the maximum set-asides as too high to properly incentivize developers. Id. at 491-93, 6 A.3d 445.
Third, the panel invalidated the provisions concerning rental bonus credits, N.J.A.C. 5:97-3.5, and compliance credits, N.J.A.C. 5:97-3.17. In re N.J.A.C. 5:96, supra, 416 N.J.Super. at 493-95, 497-98, 6 A.3d 445. The panel took issue with COAH providing credits to municipalities for rental units yet to be constructed more than one decade after the prior round. Id. at 494-95, 6 A.3d 445. And, the panel concluded that compliance credits neither furthered public policy nor assisted municipalities in fulfilling their constitutional obligations. Id. at 497-98, 6 A.3d 445.
As its remedy, the panel directed COAH to use methodologies consistent with the first two rounds. In re N.J.A.C. 5:96, supra, 416 N.J.Super. at 511, 6 A.3d 445. COAH applied for a stay from the Appellate Division, which was denied.
On December 23, 2010, COAH sought leave to apply for a stay from this Court, arguing that it should not be required to expend substantial resources formulating new rules that this Court's review might render a nullity. While that decision was pending, Fair Share Housing Center (FSHC) moved for the enforcement of litigant's rights against COAH, arguing that the agency was failing to comply with the Appellate Division's remand instructions. FSHC noted that COAH had cancelled a number of its board meetings and taken no action to comply with the Appellate Division's remand instructions. On January 13, 2011, the Appellate Division ordered COAH to comply immediately with its prior decision and to submit biweekly reports to enable the court to monitor COAH's continuing compliance. The following day, this Court granted COAH's application for a stay of the Appellate Division opinion. Reconsideration of that decision was denied. Our Court thereafter granted the instant petitions and cross-petitions for certification. 205 N.J. 317, 15 A.3d 325 (2011).
Because growth share is the backbone of the regulatory scheme adopted by COAH, the regulations' validity rises or falls on whether the growth share approach adopted in the revised Third Round Rules is permissible. That core issue permeates the arguments of the parties, and the amici, in this appeal.
COAH, in its petition seeking reversal of the Appellate Division judgment, urges this Court to look favorably on allowing a new growth share methodology. In addition to its defense of the adequacy of its rulemaking record, COAH argues that the specificity of Mount Laurel II should not preclude a growth share methodology, which is an innovative and valid administrative response to current conditions in the state, notably the dearth of vacant, developable land. That scarcity makes a growth share approach particularly appealing as the methodology promotes redevelopment rather than continued sprawl.
Also before the Court is a petition for certification filed by Clinton Township and ten other municipalities (collectively the Eleven Municipalities).
Middletown Township argues that this Court should overturn or reassess Mount Laurel II. Additionally, Middletown argues that COAH should provide a safety valve to help overburdened municipalities comply with their large affordable housing obligations.
FSHC petitions this Court to alter the remedy — a remand to COAH — entered by the Appellate Division. At the core of its argument, FSHC maintains that any growth share approach is inconsistent with the Mount Laurel constitutional obligation as implemented by this Court and in the FHA. FSHC urges the Court to "appoint a special master, require bi-monthly reporting by COAH, require the special master to calculate the need numbers according to the Appellate Division's requirements if COAH does not act, and accelerate any appeals from the regulations that are adopted." FSHC asks this Court to make clear that if COAH is unable to adopt valid regulations by some date certain, the Court should reassume exclusive responsibility for administering and enforcing the Mount Laurel doctrine.
Finally, several briefs in opposition to certification were filed, which supported the Appellate Division's rejection of COAH's new growth share approach. The New Jersey Builders Association, the New Jersey Chapter of the National Association of Industrial and Office Properties, MTAE, Inc., and Kenneth and Alice Martin each contend that the Appellate Division opinion is a direct application of existing precedent and is consistent with this Court's statements in Mount Laurel II. Further, numerous amici
With that lineup of positions, we turn to examine the key concept of growth share.
In 1997, the concept of "growth share" was advocated
Professor Payne reasoned:
Thus, as proposed, a growth share approach was envisioned as a straightforward allocation method where a municipality would accrue affordable housing obligations as a percentage of the residential and nonresidential growth that occurred within its borders. See id. at 6-7.
When COAH adopted its first iteration of the Third Round Rules in 2004, see generally N.J.A.C. 5:94 to 5:95, the agency included the growth share approach as the
According to the regulations adopted by COAH, a municipality would accrue an obligation to construct one unit of affordable housing for every eight market-rate units constructed and one unit of affordable housing for every twenty-five jobs created. N.J.A.C. 5:94-2.4. Job growth was calculated by applying a conversion factor to the gross square footage of nonresidential development constructed. N.J.A.C. 5:94, Appendix E at 94-86. The 8:1 and 25:1 growth share ratios were selected by COAH so that affordable housing construction would match adjusted projected need.
After the Appellate Division required COAH to adopt new regulations,
Specifically, COAH projected a total need of 131,297 units,
With those ratios, COAH calculated each municipality's projected growth share obligation by predicting household and employment growth for each municipality based on the "historical trends for each municipality and the extent to which each municipality approaches its physical growth capacity." N.J.A.C. 5:97-2.2(d); see also N.J.A.C. 5:97, Appendix F (displaying household and employment projections).
Although COAH initially calculates a municipality's projected growth share obligation, as the Appellate Division decision by Judge Skillman rightly notes, a municipality only incurs growth share obligations to the extent that growth actually occurs.
With respect to the Mount Laurel II remedy, we felt obliged in view of the municipal inertia toward allowing affordable housing, through exclusionary zoning practices, to compel the building of units in anticipation of projected regional need as well as present need. Mount Laurel II, supra, 92 N.J. at 243-44, 456 A.2d 390. We conceived of the prospective regional need for affordable housing as an ascertainable figure to be calculated prior to determining specific municipal obligations. Id. at 248, 456 A.2d 390. The growth share approach in COAH's Third Round Rules is not premised on region-specific housing data evidencing the region's need. See supra at 601-04, 74 A.3d at 906-08. Nor is growth share as presently adopted structured to establish a firm obligation in respect of prospective affordable housing need. See supra at 603-05, 74 A.3d at 907-08. In those respects, the methodology is inconsistent with the remedy that we crafted in Mount Laurel II, but our analysis cannot, and does not, end there.
As argued in this matter, the present approach has been criticized as having produced a labyrinth of administrative processes, which has led to stagnation in defining municipal obligations, as having failed to reduce litigation, and as having promoted turmoil instead of certainty in planning. Further, parties contend that it has led to unwarranted hostility toward inclusionary zoning.
More than thirty years have passed since this Court outlined a framework through which municipalities could satisfy their obligation to provide a fair share of the regional prospective need for affordable housing in Mount Laurel II. We now have decades of data on the creation of affordable housing in New Jersey. The present approach has had demonstrable success at producing affordable housing. Although estimates vary depending on the source, approximately 36,000 to 60,000 new low- and moderate-income units have been developed between 1985 and 2010. Compare David N. Kinsey, Smart Growth, Housing Needs, and the Future of the Mount Laurel Doctrine, in Mount Laurel II at 25: The Unfinished Agenda of Fair Share Housing 57 (Timothy N. Castano & Dale Sattin eds., 2008) [hereinafter The Unfinished Agenda] (relying on COAH records), with N.J. Housing Opportunity Task Force, Findings & Recommendations 2 (2010) [hereinafter Taskforce Findings & Recommendations]. Additionally, approximately 15,000 substandard units have been refurbished, and $210 million has been generated "from suburban sources to apply to urban housing." Preface, The Unfinished Agenda, supra, at 1.
We also have data on general trends in population size and the production of housing units. The statewide population and number of housing units have steadily increased from the 1980s. According to the United States Census Bureau's 2010 Census, the New Jersey population increased from 7.37 million to 8.79 million over the last thirty years — a nineteen percent increase from 1980 to 2010. See U.S. Census Bureau, New Jersey: 2010, Population and Housing Unit Counts at Table 4 (Aug. 2012), available at http://www.census.gov/prod/cen2010/cph-2-32.pdf.
Moreover, experts in the field have analyzed housing development trends in urban and rural areas. In 1992, the State Planning Commission introduced the State Development and Redevelopment Plan (State Plan), which "prescribed patterns of development and conservation ... with precise mapping." See Kinsey, Smart Growth, in The Unfinished Agenda, supra, at 48. The State Plan categorized different types of planning areas: "metropolitan, suburban, fringe, rural, and environmentally sensitive planning areas, [each] with different delineation criteria and policies." Ibid. Despite the different planning categories and the implementation of affordable housing regulations, "about 40 percent of new growth [between 1995 and 2002] took place in the State Plan's rural and environmentally sensitive planning areas, rather than being channeled into growth areas and centers." Id. at 49.
Transportation patterns also have changed significantly since the 1980s. In 1980, the average daily commute was approximately twenty minutes, while today the average commute has grown to thirty-two minutes, indicating New Jerseyans' willingness to travel farther from home for work. See Taskforce Findings & Recommendations, supra, at 3. Finally, a number of significant road projects have been completed since the 1970s: Interstate 280, Interstate 195, and Interstate 287. Id. at 5.
Moreover, external economic factors have influenced the development of housing in New Jersey. The economic collapse of 2008 has had a significant impact on home prices, with home prices in New Jersey falling by "10 to 20 percent, sometimes even 25" percent in 2009. Antoinette Martin, A Market Going Downhill Fast, N.Y. Times, Feb. 22, 2009, at NJ1.
When we issued our decision in Mount Laurel II, we could not have predicted the precise economic and social changes of the last three decades.
Knowing now the changes wrought over the past three decades, we are compelled to acknowledge that there may well be other effective remedies that would promote inclusionary zoning at the local level, consistent with business and residential objectives, as well as statewide sound-planning objectives, which take into account industrial development, transportation and infrastructure availability, and environmental considerations. Certainly, the methodology of the prior rounds is a proven method of creating a substantial amount of affordable housing, and growth share is an untested approach that assumes municipalities will not utilize their discretion to undercut the production of affordable housing. That is not to say that another approach could not do as well or better. We do not know. A growth share approach, for example, might prove to be successful in addressing prospective need, and it might bring greater transparency to the process and engender a more favorable
Although the judicial remedy of Mount Laurel II, as adopted in the FHA, addressed the circumstances of the times, it is not necessarily the only remedy possible for achieving satisfaction of a municipality's constitutional obligations for prospective need. We do not view our pronouncement — that the remedy set forth by this Court and embraced in the FHA was constitutionally acceptable — as enshrining that particular approach as the be-all-and-end-all of remedies for the future. See, e.g., Mount Laurel II, supra, 92 N.J. at 352, 456 A.2d 390 (explaining that when legislative action is taken, "we have always preferred legislative to judicial action in this field"). Despite the decisional focus at that time on assessing a definite allotment of prospective regional need that must be produced within a specific time, we did not know then how that would practically unfold. Having lived with the present methodology for decades now, the record suggests that there might be reasonable bases for considering alternative approaches to promote the production of affordable housing consistent with present statewide-planning and other principles previously identified.
And, just as words matter, numbers matter too. Applying a growth share approach, for example, might have produced over the past thirty years roughly the same number of affordable housing units that the present allocation method has produced.
To be sure, deterring exclusionary municipal zoning practices and concomitantly encouraging development of affordable housing in housing regions where it is needed were the goals of the obligation recognized under the General Welfare Clause of the New Jersey Constitution. See Mount Laurel II, supra, 92 N.J. at 352, 456 A.2d 390 (concluding that constitutional obligation requires municipalities "to provide a realistic opportunity for housing" for low- and moderate-income persons in our state). How to respond to the constitutional obligation imposed on municipalities in the exercise of their delegated power to zone is a separate question, and one that might be adequately addressed in different ways tailored to today's circumstances. See supra at 586-89, 74 A.3d at 897-99. We therefore recognize, and hold, that the constitutional obligation identified in Mount Laurel I and refined and made applicable to all municipalities
Development merely for development's sake is not the constitutional goal. Mount Laurel II, supra, 92 N.J. at 238, 456 A.2d 390 ("The Constitution of the State of New Jersey does not require bad planning. It does not require suburban spread. It does not require rural municipalities to encourage large scale housing developments."); id. at 211, 456 A.2d 390 ("But if sound planning of an area allows the rich and middle class to live there, it must also realistically and practically allow the poor. And if the area will accommodate factories, it must also find space for workers. The specific location of such housing will of course continue to depend on sound municipal land use planning."). Nor are all aspects to the remedy fashioned in Mount Laurel II indispensable components of a remedy for the future. One can envision alternative approaches that, perhaps, might relegate a builder's remedy to a more reserved status among available solutions to encouragement of construction of affordable housing, reducing the political turmoil that has plagued voluntary compliance with the constitutional goal of advancing the delivery of affordable housing. See Payne, supra, Land Use L. & Zoning Dig., June 1997, at 6.
Other aspects to the judicial remedy might benefit from re-examination. For example, our remedy's utilization of a pre-fixed allocation of municipal obligations based on forecasted projected growth has been criticized for the crudeness inherent whenever one presumes to anticipate development cycles. Id. at 6-7. We do not pretend to know what form or forms of alternative remedies might be devised that would suitably further the constitutional goal of addressing the prospective need for affordable housing. But, that should not prevent policymakers from considering the benefits of an alternate remedy that accounts for current economic conditions, the building that has occurred already in this state, the present-day space availability and redevelopment options, and the wisdom of requiring building in all municipalities of the state within fixed periods. Those are questions for policymakers — should our Legislature choose to address the topic.
Certainly, tools must remain in place to deal with those municipalities that would affirmatively choose not to grow — either commercially or residentially — in order to avoid having any inclusionary zoning obligation. Mandated requirements for the production of definite numbers of affordable housing units may prove to be the only way to address those municipalities that heretofore have avoided their affordable housing obligations.
In sum, the judicial remedy that was fashioned based on a record created thirty years ago should not be viewed as the only one that presently can secure satisfaction of the constitutional obligation to curb exclusionary zoning and promote the development of affordable housing in the housing regions of this state. Assuming that ordered development will continue to be used as a tool in the delivery of affordable housing, the Legislature should determine how best to utilize that means in the promotion of affordable housing suited for the needs of housing regions.
In light of our clarification that the judicial remedy imposed in Mount Laurel II is not a straightjacket to legislative innovation for satisfaction of the constitutional obligation, the Third Round Rules' validity hinges on whether they are consistent with the FHA.
The FHA sets forth the framework of a remedy that precludes COAH from taking the liberty to fashion a new growth share methodology that 1) allows for the devising of residential and commercial affordable housing ratios for projected need that are not tied to a regional need for affordable housing, and 2) leaves open-ended how or whether projected need for a housing region will be fulfilled. The FHA is replete with references tying affordable housing obligations to a region, not obligations formed on a statewide basis. And, it requires a specifically allotted number of units for satisfaction of both present and prospective need based on a housing region.
The FHA defines "prospective need" as "based on development and growth which is reasonably likely to occur in a region or a municipality." N.J.S.A. 52:27D-304(j) (emphasis added). A "housing region" is specifically defined as "a geographic area of not less than two nor more than four contiguous, whole counties which exhibit significant social, economic and income similarities." N.J.S.A. 52:27D-304(b). It is not a statewide, geographic area.
The Legislature also declared that "low income housing" must be provided to those households meeting the low-income standard "within the housing region." N.J.S.A. 52:27D-304(c). Although COAH has broad power under N.J.S.A. 52:27D-307, its duties must be consistent with the FHA's working premise that affordable housing obligations for present and prospective need for low- and moderate-income housing be determined at regional levels. See N.J.S.A. 52:27D-307(a) (requiring COAH to "[d]etermine housing regions"), (b) (requiring COAH to "[e]stimate the present and prospective need" at both "State and regional levels"), and (c) (authorizing COAH to establish criteria and guidelines for municipalities tethered to regional housing need).
Furthermore, even when COAH is placing an aggregate limit on a municipality's allocation of units, a distinct allocation nevertheless is to be made based on the housing "region's present and prospective need." N.J.S.A. 52:27D-307(e). A municipality's provision of its fair share, as presented in its housing element, may involve a variety of techniques, but there must be
Although Section 307 of the FHA permits COAH to adjust prospective need methodology and resulting estimations based on, among other things, decisions of other branches of government, we disagree that Section 307's oblique reference authorizes COAH, as an executive branch agency, to rewrite such core aspects of its enabling legislation, which are premised on an allocation basis for prospective need within a housing region. That argument is misguided. It defies the express language of Section 307, which requires the State Planning Commission to continue to provide updated information on "economic growth, development and decline projections for each housing region." N.J.S.A. 52:27D-307; see N.J. Dep't of Envtl. Prot. v. Huber, 213 N.J. 338, 365, 63 A.3d 197 (2013) (explaining that "we must examine th[e statute's plain] language sensibly, in the context of the overall scheme in which the Legislature intended the provision to operate" (citation omitted)). Such an unprecedented, open-ended delegation of authority to an administrative agency is an illogical application of Section 307's language.
This Court has recognized that, while COAH enjoys a breadth of discretion when selecting methodologies to implement the FHA, the agency may not dilute its duty to adopt regulatory methods that are consistent with statutory goals. See Warren, supra, 132 N.J. at 27, 622 A.2d 1257 (citing Van Dalen, supra, 120 N.J. at 246, 576 A.2d 819). COAH must not, "under the guise of interpretation," enact regulations that are "plainly at odds with" the FHA. In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 489-91, 852 A.2d 1083 (2004) (internal quotation marks and citation omitted) (invalidating Department of Environmental Protection regulations concerning construction near wetlands transition areas as inconsistent with enabling statute and ultra vires); see also, e.g., Kingsley v. Hawthorne Fabrics, Inc., 41 N.J. 521, 529-30, 197 A.2d 673 (1964) (invalidating Division of Taxation regulation defining "immediate family" as inconsistent with enabling statute, noting that "if the regulation attempts to add to the statute something which is not there, it can furnish no sustenance to the statute"); In re Centex Homes, LLC, 411 N.J.Super. 244, 252, 267-68, 985 A.2d 649 (App.Div. 2009) (invalidating Board of Public Utilities regulations governing service extensions, noting that "when regulations are promulgated without explicit legislative authority and implicate `important policy questions,' they are better off decided by the Legislature" (quoting Borough of Avalon v. N.J. Dep't of Envtl. Prot., 403 N.J.Super. 590, 607, 959 A.2d 1215 (App. Div.2008), certif. denied, 199 N.J. 133, 970 A.2d 1049 (2009), and citing Burlington Cnty. Evergreen Park Mental Hosp. v. Cooper, 56 N.J. 579, 598-99, 267 A.2d 533 (1970))). The policy adopted by the Legislature in the FHA cannot be ignored or rewritten by COAH to the degree that COAH has done through its wholly new growth share methodology in the Third Round Rules.
The FHA set a course that tracked the Mount Laurel II allocation methodology for satisfaction of present and prospective need based on housing region. COAH was not free to abandon that approach.
To sum up, the Legislature has to enact an alternative remedy — such as some version of the one proposed by COAH in the Third Round Rules — in order for that remedy to be statutorily permissible. The FHA's language is an impediment to COAH's unilateral decision to devise a wholly new approach to determining fair share. COAH may implement the FHA's scheme, not come up with a wholly new one. See ibid. The FHA does not authorize COAH to rewrite its substantive provisions. That power was not conferred through the FHA's inclusion of provisions containing vague references about COAH's general authority to implement the FHA.
The Legislature may determine to authorize new avenues for addressing regional need and the promotion of affordable housing. And, it may do so in ways that we do not attempt to circumscribe in this opinion because we do not know the breadth of considerations that may be brought forth through informational legislative hearings on the subject. Nevertheless, it is the Legislature that must devise the parameters to such an approach. It must craft new legislation if that is the course it wishes to take. Our courts can and should exercise caution and defer to such solutions when appropriately drafted by the Legislature. See N.J. Ass'n on Correction v. Lan, 80 N.J. 199, 220, 403 A.2d 437 (1979) (acknowledging importance of deference to legislative enactments addressing general welfare (citation omitted)); Roe v. Kervick, 42 N.J. 191, 230, 199 A.2d 834 (1964) (recognizing value of deference when reasonable minds could differ and issue to be remedied "involves a concept which varies with the needs of the times").
Although the Legislature may consider enacting an alternative form of remedy for the promotion of affordable housing in the housing regions of this state, see Hills, supra, 103 N.J. at 65, 510 A.2d 621 ("No one should assume that our exercise of comity today signals a weakening of our resolve to enforce the constitutional rights of New Jersey's lower income citizens. The constitutional obligation has not changed; the judiciary's ultimate duty to enforce it has not changed; our determination to perform that duty has not
With the declaration that the growth share methodology is inconsistent with the FHA and thus COAH's regulations ultra vires, we briefly address the other numerous challenges to the Third Round Rules in this consolidated appeal. The challenges share a common theme of expressing various views on the growth share methodology on which municipal obligations would be based in the third round. In our view, the Third Round Rules are inextricably linked to the new growth share methodology that is incompatible with current FHA requirements. The growth share pillar to the Third Round Rules' allocation of municipal obligations is not severable, notwithstanding the severability clause contained in the regulations at N.J.A.C. 5:97-1.3. See Affiliated Distillers Brands Corp. v. Sills, 60 N.J. 342, 345, 289 A.2d 257 (1972) ("Severability is a question of legislative intent. That intent must be determined on the basis of whether the objectionable feature of the statute can be excised without substantial impairment of the principal object of the statute.").
For example, the procedural rules, in subchapters (2) and (3) of N.J.A.C. 5:96, which describe the filing requirements for a municipality's housing element and Fair Share Plan, and the subsequent, substantive certification that a municipality can seek from COAH, have inherent in them satisfaction of prior round, rehabilitation share, and growth share obligations. They cannot stand as adopted. Similarly, the enforcement provisions of subchapter (10) of N.J.A.C. 5:96, as well as the monitoring provisions of subchapter (11), become impractical because those agency powers are tied to evaluation and satisfaction of affordable obligations, including those obtained via growth share. See N.J.A.C. 5:96-10.4(a).
Equally, the substantive regulations codified in N.J.A.C. 5:97 are tied to municipalities' housing element plans. See N.J.A.C. 5:97-2.0 to -2.5. Subchapter 3 also is replete with explanations of how, among other things, a fair share plan, N.J.A.C. 5:97-3.2, a rental housing requirement, N.J.A.C. 5:97-3.4, rental bonuses, N.J.A.C. 5:97-3.5, -3.6, and -3.7, and other bonuses operate in conjunction with growth share, see, e.g., N.J.A.C. 5:97-3.20 (discussing cap on bonus credits as percentage of projected growth share obligation). Subsection 5 has similar difficulty surviving. See N.J.A.C. 5:97-5.6 (allowing municipality to petition for adjustment of projections underlying growth share), -5.7 (addressing potential growth share opportunities and is intertwined with -5.6), and -5.8 (setting 1000 unit cap on growth share).
Thus, the growth share methodology's intertwinement with the entire regulatory program is inseparable from the new regulatory scheme fashioned by COAH for municipal third-round obligations and how they may be satisfied because it is so pervasively woven into the entire regulatory program that it cannot be surgically removed. See Wash. Nat'l Ins. Co. v. Bd. of Review of N.J. Unemployment Comp. Comm'n, 1 N.J. 545, 556, 64 A.2d 443 (1949) ("[T]here must be such manifest independence of the parts as to clearly indicate a legislative intention that the constitutional insufficiency of the one part would not render the remainder inoperative."). It requires that the regulations be invalidated and new regulations for the third round be adopted. Because we hold
Concerning some parties' argument before this Court that subchapter 6 (zoning for inclusionary developments), does not appear tied to a growth share approach, we conclude that such an argument sounds in policy. As such, it is better advanced to the policymakers: either to the Legislature, which may choose to take up the question of whether to allow a new growth share methodology, or to the agency that must adopt new regulations to fill the void created by invalidation of the current Third Round Rules. Rule adoption is not the role of this Court.
With respect to the remainder of the Appellate Division's pronouncements on the invalidity of the Third Round Rules under the FHA, we substantially affirm its judgment with the notable exception of its invalidation of the provision addressing compliance bonus credits in N.J.A.C. 5:97-3.17. As to that provision, we express no opinion as to whether the agency's choice was so wide of the mark as to its assessment of what is necessary to promote compliance. Because the rules require that they be redone, in toto, we reserve judgment on what COAH may choose to do in its revamped rules and will review those judgments on the record then presented if the agency's choice is challenged. For now, we express no opinion on the Appellate Division's assessment of that issue.
Our conclusion requires a new adoption of regulations to govern the third round municipal obligations consistent with the strictures of the FHA.
Rules to govern the third round cannot wait further while time is lost during legislative deliberations on a new affordable housing approach. A remedy must be put in place to eliminate the limbo in which municipalities, New Jersey citizens, developers, and affordable housing interest groups have lived for too long. Accordingly, we endorse the Appellate Division's quick deadline for reimposing third-round obligations based on the previous rounds' method of allocating fair share obligations among municipalities.
In conclusion, the Third Round Rules cannot stand. They are plainly at odds
As modified by this opinion, the judgment of the Appellate Division is affirmed.
Justice HOENS, dissenting.
There is much in the opinion issued by my colleagues in the majority with which I agree. In particular, I agree with the majority that the remedy created by this Court as a way to address exclusionary zoning policies that it found to be unconstitutional, see S. Burlington Cnty. NAACP v. Twp. of Mount Laurel (Mount Laurel II), 92 N.J. 158, 204-05, 456 A.2d 390 (1983) (citing S. Burlington Cnty. NAACP v. Twp. of Mount Laurel (Mount Laurel I), 67 N.J. 151, 174, 336 A.2d 713, appeal dismissed and cert. denied, 423 U.S. 808, 96 S.Ct. 18, 46 L.Ed.2d 28 (1975)), and that the Legislature essentially embodied in the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329.4, is not the only constitutionally permissible method for achieving the goal of providing affordable housing.
Like the majority, I agree that the past three decades of experience do not mean that there can be no other way to "produc[e] significant numbers of low- and moderate-income housing" nor does that experience suggest that there are no other potential ways to do so "consistent with statewide planning principles, present space availability, and economic conditions." Ante at 585, 74 A.3d at 896-97. Moreover, like my colleagues in the majority, I agree that the remedy that this Court created and "imposed thirty years ago should not be viewed as a constitutional straightjacket to legislative innovation[.]" Ante at 620, 74 A.3d at 918.
Indeed, I applaud the majority for its willingness not only to recognize that there may be other ways to meet the mandate of Mount Laurel II, but for actively and forcefully encouraging the Legislature to explore new and innovative methods of "curb[ing] exclusionary zoning and promot[ing] the development of affordable housing[.]" Ante at 612, 74 A.3d at 913.
I write in dissent, however, because, notwithstanding those broad and sweeping pronouncements, the majority's analysis of the approach taken by COAH in the Third Round Rules, and therefore the majority's holding, is flawed. As a result, the Court needlessly demands, as its remedy, rigid adherence to the very policies of the past that the majority simultaneously denounces as a "straightjacket[.]" Ante at 619, 74 A.3d at 917.
In the end, although my colleagues in the majority invite the Legislature to chart a new path, their conclusion that the Third Round Rules adopted by COAH are inconsistent with the dictates of the FHA, and their further directive that strict adherence to the methodology of the earlier rounds is the only permissible remedy, leave the Legislature with no guidance concerning what alternate statutory approach might comply with the majority's interpretation of the Constitution. That lack of guidance, perhaps unintentionally, will greatly diminish the likelihood that the Legislature will attempt a future change of course.
Were that my only disagreement with the majority, it would not have prompted
Moreover, if, as the majority concludes, the Third Round Rules lack a sufficient focus on regional needs to meet the majority's interpretation of what the FHA requires, it would be far wiser, and more in keeping with our traditional manner of addressing challenges to administrative agency actions, for this Court to direct COAH to make that minor adjustment rather than to toss aside years of effort and force COAH to don the old straightjacket and rewrite the regulations to mirror those the Court approved in earlier rounds.
I base my disagreement, and therefore my dissent, on what I believe to be two flaws in the majority's analytical approach, which, taken together, have led the majority to impose upon COAH a remedy that is both unnecessary and inappropriate.
First, the statutory construction on which the opinion is based is flawed because the majority has read its view of what the FHA should say into the language that the Legislature chose. That is, instead of considering the language that the Legislature used when declaring its purpose and instead of interpreting the operative sections of the statute in context, the majority has focused narrowly on references to regional approaches. More to the point, in maintaining that narrow focus, the majority has divorced those references from immediately surrounding words that permit a municipal, rather than regional, approach and has ignored the broad statutory language that tethers COAH's role to sound planning principles.
The majority's error is not in its explanation of the history of Mount Laurel I and Mount Laurel II, all of which is fully, faithfully, and carefully recounted. Nor does the error lie in the majority's recitation of the essential facts that led this Court to mandate a solution, borne of frustration at the failure of the other branches of government to achieve a way to end unconstitutional exclusionary zoning practices. Nor is it controversial to observe that the Legislature enacted the FHA at the direction of, and to be consistent with, this Court's requirements in Mount Laurel II.
The FHA, however, bespeaks a more dynamic approach than the one that the majority sees when reading the statute solely through its Mount Laurel II lens. Indeed, only by reading the FHA with the language of the Court in Mount Laurel II in mind, can the majority conclude that there is no room in that statute for the regulatory approach that COAH has adopted in the Third Round Rules. Using standard tools of statutory construction, however, yields a different result.
When called upon to interpret the Legislature's intent, few tools are as helpful as the Legislature's own expression thereof. The FHA, as an example, includes just such language in the Legislature's statement of its findings, which my colleagues have overlooked, but which is of enormous assistance in the task assigned. Principal among the findings included by the Legislature in the FHA is the expression of that body's understanding of the meaning of Mount Laurel I and Mount Laurel II. The Legislature declared:
That expression is entirely faithful to the historical context in which the dispute over low and moderate income housing arose. The Mount Laurel litigation had its roots in a geographic area of the state in which growth in both housing and population was taking place, but where that growth was being artificially burdened by an exclusionary zoning scheme. See Mount Laurel I, supra, 67 N.J. at 161-64, 336 A.2d 713. It was not the growth or lack of growth that created the constitutional crisis; it was the manner in which the municipality attempted to divert low and moderate income families away from wealthier areas in the municipality when growing. See id. at 169-70, 336 A.2d 713.
That is not to say that the Legislature made no reference to regional concerns in the FHA, indeed it did, see N.J.S.A. 52:27D-302(e) (referring to regional need in terms of way in which low and moderate housing may be maximized), as had this Court in the Mount Laurel II opinion, see Mount Laurel II, supra, 92 N.J. at 213, 237-38, 456 A.2d 390 (recognizing that "zoning in accordance with regional considerations is not only permissible, it is mandated").
But the expressed focus of the Legislature was on growth areas, as a result of which the FHA leaves open the route that COAH, in adopting a Growth Share approach, utilized in the Third Round Rules. If, as I understand it, the Legislature intended to embrace the concept that growth, to the extent that it is occurring, may not be exclusionary, then the Growth Share model adopted by COAH in the Third Round Rules advances that goal and is entirely consistent with the FHA.
My colleagues in the majority, however, read into the FHA their own view of how growth should be channeled, finding a requirement that regional considerations predominate to the exclusion of municipal concerns. There are two shortcomings with that approach.
For one thing, in addition to being inconsistent with the context of the Mount Laurel litigation and the expression of the Legislature in its findings, see N.J.S.A. 52:27D-302(a), it is not faithful to the statutory text. Notably, in the majority's quotation from the FHA that is intended to prove the point that the statute is largely based on regional concerns, the opinion underscores the words that tend to support that conclusion while ignoring the words "or a municipality" that follow. Ante at 613, 74 A.3d at 913 (reciting definition of "prospective need" and quoting N.J.S.A. 52:27D-304(j) with partial emphasis).
For another thing, that approach, and the conclusion that only the regulations from the prior rounds that this Court has previously approved will suffice, creates a never-ending cycle of forced growth everywhere. It does that by requiring COAH to project what regional needs will be and then by demanding that COAH force municipalities to comply with those projections in an endless, self-fulfilling prophesy of sprawl.
Unlike my colleagues, I see different principles at work in the statute that the Legislature enacted. The FHA is fundamentally based on concepts that professional
The reliance on sound planning principles so permeates the FHA that only a few examples are needed to prove the point. The Legislature included references to the need to revitalize our urban areas through "construction, conversion and rehabilitation of housing in our urban centers[, which] should be encouraged." N.J.S.A. 52:27D-302(g). It included those concepts when it directed COAH to adopt criteria and guidelines:
Each of those concerns is directly derived from sound planning principles; each makes clear that the Legislature's intent was not simply to comply with this Court's view of how low and moderate income housing would best be created in accordance with the Constitution. Instead, the Legislature was trying to ensure that there would be careful recognition of the need to embrace sound planning principles generally.
Nor was COAH directed to perform its duties in some purely mathematically driven manner. Instead, the Legislature directed COAH as follows:
The reference to the State Plan is particularly significant because that document divides the state into regions with an eye toward sound planning, in which growth and development are encouraged in areas where infrastructure already exists and discouraged in regions of our state that are environmentally sensitive or in which development would require addition of new infrastructure. The State Plan, moreover, seeks to revitalize cities and urban areas rather than to channel new development in ways that simply create sprawl.
Significantly, in adopting the Growth Share model for use in the Third Round Rules, COAH did not utilize a "pure" Growth Share approach, see ante at 611 n. 15, 74 A.3d at 912 n. 15 (citing Payne, supra, Land Use L. & Zoning Dig., June 1997, at 6-9), because it did not erase the obligations that had been imposed on municipalities in earlier rounds but that had never been satisfied. Instead, those prior, unmet, obligations were retained in the Third Round Rules adopted by COAH. As a result, this Growth Share model, that my colleagues in the majority now reject as being incompatible with the FHA, remained faithful to the statute by honoring the residual effects of prior round obligations on municipalities that this Court had previously deemed constitutional.
The several references in the FHA to regional concerns on which the majority relies are not inconsistent with a Growth Share model. On the contrary, seen in light of the expressed Legislative findings, see N.J.S.A. 52:27D-302, the theory is aligned with the statutory focus on areas in which growth is occurring. The references to regional concerns, at most, would require only that the calculation of a municipality's fair share be made not only on a state-wide basis, as the Third Round Rules require, but would include a regional component as well.
Therefore, if the majority is correct that the FHA is essentially driven by regional considerations, then it is only in that minute regard that they can conclude that the version of a Growth Share approach embodied in the Third Round Rules is inconsistent with the statute. That is, the Third Round uses a formula that requires growth anywhere in the state to carry with it the same requirement, statistically, for low and moderate income housing, rather than recognizing that different regions of the state, particularly if one considers the regions identified by the State Plan, should lead to different requirements for low and moderate income housing.
The majority concludes that the lack of a regional calculation is so inconsistent with the FHA that the Third Round Rules are ultra vires; they conclude that the inconsistency is so significant that there is no possible remedy but to reject these regulations in their entirety in favor of starting over and creating new ones that mirror the prior two rounds. Even if the majority's analysis of the purported flaw in the Third Round Rules is correct, there is nothing in that relatively minor deviation that demands so drastic a remedy.
That observation, that the remedy imposed by my colleagues is unnecessary,
Our case law is replete with examples of our recognition that, where a determination has been made by an administrative agency, our scope of review is both narrow and deferential. See Brady v. Bd. of Review, 152 N.J. 197, 210-11, 704 A.2d 547 (1997); see also Lourdes Med. Ctr. v. Bd. of Review, 197 N.J. 339, 360, 963 A.2d 289 (2009). We have long recognized that when the Legislature has delegated power to an agency, "[t]he grant of authority ... should be liberally construed to enable the agency to accomplish the Legislature's goals." Van Dalen v. Washington Twp., 120 N.J. 234, 245, 576 A.2d 819 (1990). When an agency acts in accordance with its delegated power, its actions are "accorded a strong presumption of validity and reasonableness." Id. at 244-45, 576 A.2d 819.
In creating COAH, the Legislature granted it authority to carry out the statutory directives, including the directive that COAH promulgate regulations in furtherance of the goals expressed in the FHA. N.J.S.A. 52:27D-307.5; see Hills Dev. Co. v. Twp. of Bernards, 103 N.J. 1, 60-61, 510 A.2d 621 (1986). More to the point, as we have held, COAH's regulations are entitled to an especially deferential standard of review because of that agency's unique mandate in implementing the FHA and its role in achieving compliance with the Mount Laurel doctrine. See In re Twp. of Warren, 132 N.J. 1, 27, 622 A.2d 1257 (1993) (observing that "principle of judicial deference to agency action is particularly well-suited to our review of administrative regulations adopted by COAH to implement the [FHA]"); Hills Dev. Co., supra, 103 N.J. at 45-46, 510 A.2d 621.
As we have directed in this precise context, "the judiciary, assuming the statutory plan functions reasonably effectively, will be responsive to the actions of the Council and conform its decisions in this field to the Council's various determinations." Hills Dev. Co., supra, 103 N.J. at 37, 510 A.2d 621; see id. at 24, 510 A.2d 621 (noting that because legislative and administrative action is preferable to judicial action relating to affordable housing, Legislature is entitled to "particularly strong deference").
To be sure, we have recognized that, if a regulation that has been promulgated is contrary to the legislative policies that underlie the administrative agency's enabling statute, or when a regulation "does not comport with [the statute's] central purpose," it cannot stand. Twp. of Warren, supra, 132 N.J. at 28, 622 A.2d 1257 (invalidating municipal occupancy preferences as inconsistent with aims of FHA). We likewise have expressed our preference for harmonizing judicial action with COAH's regulatory determinations, although recognizing that the effort to harmonize cannot be used to justify the "dilu[tion of] COAH's duty to adopt regulatory methods that are consistent with the statutory goals." Ibid.; see Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 572-73, 803 A.2d 53 (2002).
Deference to an administrative agency, including COAH, does not extend to arguments that its regulations violate our Constitution. See Abbott v. Burke, 100 N.J. 269, 298-99, 495 A.2d 376 (1985) ("[A]lthough an agency may base its decision on constitutional considerations, such legal determinations do not receive even a presumption
That being so, unless this Court can conclude with assurance that the action of the agency was ultra vires, or that its regulation is plainly unconstitutional, we ordinarily stay our hand. See Lourdes, supra, 197 N.J. at 361, 963 A.2d 289. Even when we conclude that regulations fall short, in recognition of the expertise that the agency has in the matter, the more appropriate course, and the one traditionally used in regard to COAH, is to remand to the agency to exercise its discretion as to how to proceed. See, e.g., In re Adoption of N.J.A.C. 5:94 & 5.95, 390 N.J.Super. 1, 87, 914 A.2d 348 (App.Div.), certif. denied, 192 N.J. 71, 926 A.2d 856 (2007); In re Six Month Extension of N.J.A.C. 5:91-1 et seq., 372 N.J.Super. 61, 104-05, 855 A.2d 582 (App.Div.2004), certif. denied, 182 N.J. 630, 868 A.2d 1033 (2005).
Applying these precedents to the matter now before the Court, to the extent that the majority believes that the shortcoming in the Third Round regulations is the lack of a formula with a regional component, the appropriate remedy would be a remand to COAH to make what should be a relatively routine correction. By eschewing that traditional approach and by directing that COAH essentially craft an entirely different regulatory scheme, albeit one based on the methodology embodied in the prior rounds of regulations, the majority has ignored our tradition of deference to agency expertise and has overstepped its authority.
Moreover, in doing so, the majority has failed to recognize the relatively wide scope of authority that the Legislature, through enacting the FHA, has reposed in COAH. Far from being a carefully circumscribed or limited grant of authority, the statute affords much discretion to COAH. See, e.g., N.J.S.A. 52:27D-307 (identifying duties and authority granted to COAH). The majority, however, has ignored that legislative determination and instead has concluded that it is the Legislature that must act, apparently through an amendment to the FHA, if there is to be any departure from the regulatory scheme this Court permitted in the first two rounds. See, e.g., ante at 616, 74 A.3d at 915 ("To sum up, the Legislature has to enact an alternative remedy — such as some version of the one proposed by COAH in the Third Round Rules — in order for that remedy to be statutorily permissible.").
In taking that stand, the majority has announced that only the Legislature can alter the approach as to how an adequate supply of low and moderate income housing will be achieved. In the process, the majority has removed all discretion from COAH, replacing the scheme that the Legislature enacted with a directive that prevents COAH from innovation of any kind and that serves only to perpetuate the policies that have not truly achieved the goal of ensuring that an adequate supply of affordable housing will be made available for people of all income levels in our state.
As I understand our role, we owe COAH the same deference accorded any other agency when we evaluate its decision or the exercise of its rulemaking authority. Offering no guidance and instead substituting its view of the only statutorily permissible approach, the majority greatly diminishes the likelihood that either COAH or the Legislature will take the initiative
To the extent that the extensive study and analysis undertaken by COAH in devising the Growth Share approach embodied in the Third Round Rules may be flawed, it is only because the majority remains wedded to the methodologies imposed in the past. To the extent that the majority, in substituting its view of what the FHA demands for the language that the Legislature used, reads the statute to exclude the creative and innovative approach that Growth Share represents, it risks subjecting us to an endless cycle of repeating that which has not worked in the past. To the extent that the majority concludes that the Third Round Rules fall short, the appropriate, and indeed the preferable, remedy would be to identify that shortcoming and permit it to be addressed by the agency that the Legislature created, not to mandate that the agency undertake what is essentially an overhaul of regulations so that they utilize a formula of the majority's choosing.
Because in my view the Third Round Rules are not inconsistent with the statutory mandates derived from this Court's decisions in Mount Laurel I and Mount Laurel II, I would reverse the Appellate Division's direction that we return to the approach used in the First and Second Round.
The majority's recognition that the dictates of Mount Laurel I and Mount Laurel II are not the only constitutionally permissible methods for achieving the provision of adequate low and moderate income housing is a conclusion with which I agree. To the extent, however, that the majority concludes that the Third Round Rules adopted by COAH are so flawed that they must be replaced with the approach utilized in the past, I respectfully dissent.
For affirmance as modified — Justices LaVECCHIA, ALBIN, and Judge RODRIGUEZ (temporarily assigned) — 3.
For reversal — Justices HOENS and PATTERSON — 2.
Not participating — Chief Justice RABNER and Judge CUFF (temporarily assigned) — 2.
A pure growth share approach has its flaws, which some have suggested potentially could be of constitutional dimension. See John M. Payne, The Unfinished Business of Mount Laurel II, in The Unfinished Agenda, supra, at 5-19. In contrast, the revised Third Round Rules are a hybrid approach, based on actual growth, with both residential and nonresidential components. The rules constitute a hybrid methodology because they continue to hold municipalities responsible for their rehabilitation share and for prior round obligations.
To reiterate, the FHA remains the current framework under which COAH must operate. The Legislature may review and amend the FHA if it so desires. Further, to the extent that the dissent forecasts a gloomy reaction to potential legislative change, post at 631-32, 74 A.3d at 924, this Court is not in the business of such speculation.