Affordable Housing Obligations & Background

 May 1, 2017

Recent discussions about the Nelson Street development plan reveal that many residents are, understandably, unfamiliar with the history and obligations associated with affordable housing. Meeting our affordable housing requirements is an issue that has shaped and will shape Readington’s future for many years. After holding public hearings Readington Township Committee voted in 2009 and 2014 to purchase land in downtown Whitehouse Station (Nelson Street) to implement its State certified, third round Council on Affordable Housing (COAH) plan. Readington Township was one of only 68 municipalities granted third round substantive certification by COAH.  The land was funded in part by bonds which are expected to be covered by the Township's Housing Trust Fund in part or in total. By State law the Housing Trust Fund is funded through fees collected from new market-rate residential and non-residential construction.​ COAH was the State agency responsible for establishing and monitoring municipal affordable housing obligations in New Jersey.

COAH was created by the Fair Housing Act of 1985 in response to a series of New Jersey Supreme Court cases known as the Mount Laurel decisions. In those decisions, the NJ Supreme Court established a constitutional obligation for each of New Jersey’s 566 municipalities to provide for affordable housing opportunities through land use and zoning powers. Towns that do not demonstrate plans to be in compliance with these obligations risk “builder’s remedy” lawsuits in which the courts overturn local zoning or other restrictions that prevent the proposed housing development. This means towns unprotected from these lawsuits could lose the ability to control when and where housing developments (typically multi-family developments) will be constructed. These lawsuits also are likely to result in builders being able to build 4 or 5 ‘market price’ homes for each ‘affordable’ unit they build at a minimum density of 6 units per acre.

Readington was given immunity from builder’s remedy lawsuits for a period of time due to the proactive steps the town took to address affordable housing requirements in Rounds 1, 2, and 3. A town’s fair share obligation is generally broken into a “new construction” and “rehabilitation” obligation. Over the decades, the Township has implemented or participated in rehabilitation programs to address its rehabilitation obligations. Through Round 2 of the COAH requirements, the town had a new construction obligation of 394 units which the Township fully addressed. COAH issued third round obligations and Readington developed the corresponding plans for additional units, including the Nelson Street development.  In the first two rounds, Readington was able to transfer funds that helped other towns or cities renovate existing deteriorated housing or build new affordable units.  The rules changed in the current third round; cities and towns have to create or build the units within their borders. Because Readington met its obligation in the first two rounds and had started to implement the plan for the third round, Readington was able to get the temporary immunity from ‘builder’s remedy’ lawsuits.

In the meantime, COAH became ineffective due to actions by NJ executive and legislative branches.  The NJ Supreme Court then divested COAH of its role in reviewing and certifying municipal plans and transferred affordable housing matters to the NJ Superior Courts. The courts are expected to hold a trial soon to provide municipalities with their Round 3 obligations, though it’s not known exactly when the trial will be held. The courts have ruled that municipalities not only need to address their  rehabilitation obligation and their prior round and third round prospective need (2015 to 2025), but must also account for housing needs that were not fulfilled between 1999 – 2015, the period during which COAH failed to enact lawful regulations. 

​CFR has heard widely-ranging estimates what the 1999 to 2025 third round number might be, likely somewhere between 500 and 1500 additional units, which may be capped at 1,000 units. Just for estimating purposes, if we use the 1,000-unit cap, falling subject to ‘builder’s remedy’ lawsuits could result in an additional 5,000 new homes built in Readington. Considering there are about 6000 homes in Readington currently it is easy to see the magnitude of potential impact.  The courts will allow some units to be built in concentrated areas, such as Nelson Street, but will not allow all units to be built this way.

Except for small scale affordable developments such as group homes, affordable units generally can’t be built where septic systems or well water are required, so the town’s infrastructure will be challenged to meet this requirement. This could become an extremely expensive proposition for the town.

CFR is reviewing the approved Nelson Street plan and will share our assessment shortly. It is critical, though, that all residents become familiar with the obligations the town is under. There is no doubt that complying with these obligations will create changes in Readington. However, failing to be proactive on affordable housing will have devastating effects on our careful planning, our infrastructure, our schools and our support services.