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On March 8, 2018, Mercer County Assignment Judge Mary C. Jacobson issued her opinion on the affordable housing obligations under New Jersey’s “Mount Laurel Doctrine” for two Mercer County municipalities, and by extension, municipalities across the state. The Mount Laurel Doctrine, established by the New Jersey Supreme Court in 1975, holds that municipalities must affirmatively use their zoning powers to provide a realistic opportunity for the production of affordable housing. The State subsequently enacted the 1985 Fair Housing Act, which created the Council on Affordable Housing (COAH), to determine the obligation for each municipality and oversee the municipal compliance process. COAH developed statewide regulations and twice successfully assigned municipal obligations, in what are known as “Round One” (1987-1993) and “Round Two” (1993-1999). However, several attempts to implement “Round Three” regulations have been unsuccessful. The New Jersey Supreme Court declared in 2015 that COAH was “not capable of functioning as intended by the Fair Housing Act” and returned the process of defining obligations and ensuring municipal compliance to the courts.
A consortium of the majority of the 565 municipalities across the state engaged ESI to calculate their Mount Laurel obligations for each municipality under the direction of ESI Principal Dr. Peter Angelides. A competing statewide methodology was issued by Dr. David Kinsey for the Fair Share Housing Center (“FSHC”). Both methodologies include a complex sequence of steps assessing or projecting components such as household growth, incomes, housing market conditions, and municipal capacity. In the winter and spring of 2017, Judge Jacobson conducted a trial to determine the appropriate obligations for municipalities in Mercer County. Dr. Angelides and Dr. Kinsey each testified as expert witnesses for several days.i The Court also appointed Special Methodology Master Richard Reading as a neutral party to evaluate the merits of the competing methodologies and offer recommendations.ii Judge Jacobson’s 217-page opinion reviews at length each component of the methodology, including both the legal principles and mathematical analysis involved, and sets forth a methodology for calculating municipal-level obligations.iii
Many of the components of ESI’s methodology were adopted in whole or in part by the Court (such as projections of population and household growth that underlie the calculation of housing need over the next decade). In other instances, the mathematical soundness of our analysis was confirmed by the Special Master and the Court, but the calculations were not adopted based on the Court’s reading of legal precedent and guidance (such as the metrics utilized to allocate regional housing need to individual municipalities). Finally, in some instances, the Court adopted an alternative calculation to the one offered by any expert.
i Note that the methodologies presented to the court in Mercer County represented earlier iterations of ESI and FSHC methodologies, which have been updated slightly in subsequent proceedings.
ii The Special Master’s report and associated workbooks presented calculations for municipalities in Mercer County only. However, sufficient information existed in the workbooks to apply the recommended methodology to the remainder of the state. Figures attributed to the Special Master’s recommendations are based on ESI’s extrapolations of the Special Master’s workbook to all municipalities statewide.
iii Figures presented for the Jacobson Opinion reflect ESI’s extrapolation of the statewide figures implied by the decision based on the workbooks prepared by Special Master Reading and relied upon by the Court. They differ slightly from the statewide results reported within the Opinion itself.
iv These methodologies have been offered as the basis for municipal obligations in various proceedings across the state, and the calculations have been revised and refined based on subsequent rulings, updated data, and the ongoing exchange of ideas and approaches. As of the most recent submissions (in November 2017 in Bergen County), ESI’s methodology determined that municipalities have an obligation plan and zone for 91,255 new units of affordable housing statewide over the 2015-2025 period, while the FSHC methodology determined an obligation of 322,122 units. Importantly, ESI’s calculations do not represent a policy determination as to the optimal level of or mechanisms for achieving affordable housing; rather, they represent an accurate quantification of affordable housing obligations under relevant law and legal precedent.
v Based on the legal guidance of the New Jersey Supreme Court’s 2017 “Mount Laurel V” decision, each municipality’s “Round 3” obligation from 2015-2025 consists of
a) Prospective Need, based on projections of growth and development likely to occur between 2015-2025;
b) Gap Present Need, based on need that arose in the 1999-2015 “gap period” during which COAH failed to successfully promulgate regulations and remains unmet today;
c) Present Need, based on deficient housing occupied by low- and moderate-income households as of the start of the period in 2015; and
d) Prior Round obligations assigned by COAH for the 1987-1999 period that remain unfulfilled.
Since no reliable statewide database of compliance with Prior Round obligations is available, these 1987-1999 obligations are presented as assigned by COAH in each methodology and can be reduced on a municipal basis through the compliance process. For the purpose of consistency in comparisons, the obligations shown in this summary are prior to the application of the 1,000 unit cap on municipal obligations, which Judge Jacobson concluded should be evaluated on a case by case basis within the municipal compliance process. Also, note that these figures do not include “Present Need” obligations, we relate to the rehabilitation of existing deficient units, or any unmet “Prior Round” obligations from the 1987-1999 period.