In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

In re Adoption of N.J.A.C. 5:96 & 5:97 by N.J. Council on Affordable Housing (M-392-14) (067126)

Argued January 6, 2015 -- Decided March 10, 2015

LaVECCHIA, J., writing for a unanimous Court.

This matter comes before the Court on a motion in aid of litigants’ rights, pursuant to Rule 1:10-3, from the
Court’s judgment reported at 215 N.J. 578 (2013). By this motion, the Court considers a request for relief from the
exhaustion of remedies required by the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to 329, and to allow civil
actions concerning municipal compliance with constitutional affordable housing obligations to proceed in the courts.

This Court’s Mount Laurel series of cases recognized that the power to zone carries a constitutional
obligation to do so in a manner that creates a realistic opportunity for producing a fair share of the regional present
and prospective need for low and moderate income housing. The Legislature enacted the FHA to assist in municipal
compliance with that obligation. The FHA created the Council on Affordable Housing (COAH), designed to
provide an optional administrative alternative to litigating compliance through civil exclusionary zoning actions.

The FHA encourages compliance by compelling COAH to establish and periodically update presumptive
constitutional housing obligations for each municipality and to identify the means by which a town’s proposed
affordable housing plan, housing element, and implementing ordinances can satisfy its obligation. The FHA
rewards compliance in two ways: (1) by providing a period of immunity from civil lawsuits to towns participating
in the administrative process for demonstrating constitutional compliance (the exhaustion-of-administrative-
remedies requirement); and, (2) for a town whose fair share housing plan secures substantive certification from
COAH, by providing a period during which the municipality’s implementing ordinances enjoy a presumption of
validity in any ensuing exclusionary zoning litigation. The continued viability of both rewards is subject to COAH’s
required updating of municipal housing obligations and corresponding substantive and procedural rules.

COAH’s rules governing the last round of municipal housing obligations expired in 1999. Since then
COAH has failed twice to adopt updated regulations (Third Round Rules) for the present period of municipal
housing obligations. Most recently, in September 2013, the Court affirmed the Appellate Division’s invalidation of
the second iteration of the Third Round Rules. 215 N.J. 578 (2013). In its September 2013 opinion, the Court set a
five-month compliance period, and directed COAH to adopt rules by February 26, 2014. However, on February 26,
2014, COAH filed a motion for an extension of time. On March 14, 2014, this Court granted the extension and
ordered COAH to take specific rule-promulgation steps, culminating in adoption of the required Third Round Rules
by November 17, 2014. In the event COAH did not comply, the Order provided that the parties could return to this
Court for relief, including lifting the FHA’s administrative-exhaustion requirement.

When COAH failed to promulgate Third Round Rules by November 17, 2014, Fair Share Housing Center
(FSHC) filed the instant motion pursuant to Rule 1:10-3 and the Court’s March 14 Order permitting such motion
practice. The Court heard oral argument on January 6, 2015, and COAH’s representative admitted that COAH has
not conducted or scheduled any meetings since its last meeting in October 2014, that it does not have any plans to
meet further in an effort to adopt Third Round Rules, and that staff have not been directed to perform any work in
furtherance of adoption of Third Round Rules.

HELD: The FHA’s exhaustion-of-administrative-remedies requirement is dissolved until further order of the Court.
The courts may resume their role as the forum of first resort for evaluating municipal compliance with Mount Laurel
obligations, as provided in this opinion and the Court’s corresponding Order. The effective date of the Court’s
Order is delayed by ninety days to effectuate an orderly transition to the judicial remedies authorized by the Court.

1. Rule 1:10-3 is a device to enable a litigant to enforce his or her rights. Relief does not require establishing that

1
the violator of an order acted with intention to disobey. Demonstration of willful disobedience and lack of concern
for the court’s order is necessary for a finding of contempt, but irrelevant in a proceeding designed simply to enforce
a judgment on a litigant’s behalf. Since the Court is not asked to impose any order against COAH, willful or
contumacious conduct is not a prerequisite to providing relief under Rule 1:10-3 to a litigant seeking to protect its
and third parties’ interests in municipal compliance with constitutional affordable housing obligations. (pp. 21-25).

2. Here, the administrative forum is not capable of functioning as intended by the FHA due to the lack of lawful
Third Round Rules. Because there are no Third Round Rules, the FHA’s administrative remedy for demonstrating
constitutional compliance has been rendered futile. Accordingly, towns must subject themselves to judicial review
for constitutional compliance, as was the case before the FHA was enacted. Pursuant to Rule 1:10-3, the Court
holds that the courts may resume their role as the forum of first instance for evaluating municipal compliance with
constitutional Mount Laurel obligations, as directed in the Court’s opinion and accompanying order. (pp. 25-27).

3. The relief authorized is remedial of constitutional rights. It will present an avenue for low- and moderate-income
New Jersey citizens, and entities acting on their behalf, to challenge any municipality that is believed not to have
developed a housing element and ordinances that bring the town into compliance with its fair share of regional
present and prospective need for affordable housing. It also will provide a municipality that had sought to use the
FHA’s mechanisms the opportunity to demonstrate constitutional compliance to a court’s satisfaction before being
declared noncompliant and then being subjected to the remedies available through exclusionary zoning litigation,
including a builder’s remedy. (p. 27).

4. In establishing a process by which towns can have their housing plans reviewed by the courts for constitutional
compliance, the Court’s goal is to provide a means by which towns can demonstrate compliance through submission
of a housing plan and use of processes similar to those which would have been available through COAH for the
achievement of substantive certification. The end result is to achieve adoption of a municipal housing element and
implementing ordinances deemed to be presumptively valid if thereafter subjected to challenge. (pp. 31-32).

5. The Court recognizes the various stages of municipal preparation to demonstrate Mount Laurel compliance that
exist as a result of the long period of uncertainty attributable to the lack of valid Third Round Rules. Accordingly,
the Court establishes a transitional process before allowing exclusionary zoning actions to proceed against towns
that had sought the FHA’s protections. There exist two classes of towns in that category. Some towns had acted
quickly in response to the earlier versions of Third Round Rules (before invalidated) and had been granted
substantive certification by COAH. Other towns were designated simply as “participating” in the COAH process.
Those two classes of municipalities require different treatment. (pp. 26-28).

6. During the first thirty days following the effective date of the Court’s implementing order, the only actions that
will be entertained by the courts will be declaratory judgment actions filed by any town that either (1) had achieved
substantive certification from COAH under prior iterations of Third Round Rules before they were invalidated, or
(2) had “participating” status before COAH. If any such town does not file a declaratory judgment action during
that period, an action may be brought against that town, provided the action’s sole focus is on whether the town’s
housing plan meets its Mount Laurel obligations (a constitutional compliance challenge). The court’s evaluation of
a town’s plan that had received substantive certification, or that will be submitted to the court as proof of
constitutional compliance, may result in the town’s receipt of the judicial equivalent of substantive certification and
accompanying protection as provided under the FHA. (pp. 32-39).

7. In all declaratory judgment and constitutional compliance cases brought before the courts, on notice and
opportunity to be heard, the trial court may enter temporary periods of immunity prohibiting exclusionary zoning
actions from proceeding pending a determination of the municipality’s presumptive compliance with its affordable
housing obligation as set forth in the opinion. Grants of immunity shall be subject to periodic court review. As
provided in the opinion, only after a court has had the opportunity to fully address constitutional compliance and has
found constitutional compliance wanting shall it permit exclusionary zoning actions and any builder’s remedy to
proceed in a given case. (pp. 39-40).

8. The Court provides examples of approved actions from earlier appellate decisions to guide the Mount Laurel-
designated judges that will hear the actions pertaining to a town’s housing plan. The Court notes that judges should
endeavor to secure, whenever possible, prompt voluntary compliance from municipalities. If a town is determined

2
to be constitutionally noncompliant, then the court may authorize exclusionary zoning actions seeking a builder’s
remedy to proceed against the towns. (pp. 40-46).

9. Nothing in the Court’s opinion should be understood to prevent COAH from fulfilling its statutory mission to
adopt constitutional rules to govern municipalities’ Third Round obligations in compliance with the FHA. Nor
should the action taken by the Court be regarded as impeding the Legislature from considering alternative statutory
remedies to the present FHA. (p. 47).

Relief in aid of litigants’ rights is GRANTED as specifically authorized by this opinion and its
accompanying order. The order shall take effect ninety days after its filing.

JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, and SOLOMON, and JUDGE CUFF
(temporarily assigned) join in JUSTICE LaVECCHIA’s opinion. CHIEF JUSTICE RABNER did not
participate.

3
 SUPREME COURT OF NEW JERSEY
M-392 September Term 2014
067126

IN THE MATTER OF THE ADOPTION
OF N.J.A.C. 5:96 AND 5:97 BY
THE NEW JERSEY COUNCIL ON
AFFORDABLE HOUSING.

Argued January 6, 2015 – Decided March 10, 2015

On motion in aid of litigants’ rights from
the judgment of this Court reported at 215
N.J. 578 (2013).

Kevin D. Walsh argued the cause for movant
Fair Share Housing Center (Mr. Walsh,
attorney; Mr. Walsh, Adam M. Gordon, Peter
J. O’Connor, and Laura S. Smith-Denker, on
the brief).

Geraldine Callahan, Deputy Attorney General,
argued the cause for respondent New Jersey
Council on Affordable Housing (John J.
Hoffman, Acting Attorney General of New
Jersey, attorney).

Stephen M. Eisdorfer argued the cause for
respondent New Jersey Builders Association
(Hill Wallack, attorneys).

Jeffrey L. Kantowitz argued the cause for
respondents Kenneth Martin, Alice Martin,
and MTAE, Inc. (Law Office of Abe Rappaport,
attorney).

Jonathan E. Drill argued the cause for
respondents Bernards Township, Clinton
Township, Union Township, and Greenwich
Township (Stickel, Koenig, Sullivan & Drill,
attorneys).

Jeffrey R. Surenian argued the cause for
respondent Borough of Atlantic Highlands
(Jeffrey R. Surenian and Associates,

1
 attorneys; Mr. Surenian and Michael A.
Jedziniak, on the brief).

Edward J. Buzak argued the cause for
respondent New Jersey State League of
Municipalities (The Buzak Law Group,
attorneys).

JUSTICE LaVECCHIA delivered the opinion of the Court.

The Mount Laurel series of cases1 recognized that the power

to zone carries a constitutional obligation to do so in a manner

that creates a realistic opportunity for producing a fair share

of the regional present and prospective need for housing low-

and moderate-income families. The Legislature enacted the Fair

Housing Act of 1985 (FHA or the Act), N.J.S.A. 52:27D-301 to -

329, to assist in municipal compliance with that constitutional

obligation. The FHA created the Council on Affordable Housing

(COAH), which was designed to provide an optional administrative

alternative to litigating constitutional compliance through

civil exclusionary zoning actions. Under the FHA, towns are

free to remain in the judicial forum should they prefer it as

the means to resolve any disputes over their constitutional

obligations.

That said, the FHA clearly prefers the administrative

forum, and its special processes, for addressing constitutional

1 S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158
(1983); S. Burlington Cnty. NAACP v. Twp. of Mount Laurel, 67
N.J. 151, appeal dismissed and cert. denied, 423 U.S. 808, 96 S.
Ct. 18, 46 L. Ed. 2d 28 (1975).

2
affordable housing obligations. Generally stated, the FHA

encourages and rewards voluntary municipal compliance. The Act

encourages compliance by compelling COAH to establish and

periodically update presumptive constitutional housing

obligations for each municipality and to identify the

permissible means by which a town’s proposed affordable housing

plan, housing element, and implementing ordinances can satisfy

its obligation. The Act rewards compliance in two ways: (1) by

providing a period of immunity from civil lawsuits to towns

participating in the administrative process for demonstrating

constitutional compliance (the exhaustion-of-administrative-

remedies requirement); and, (2) for a town whose fair share

housing plan secures substantive certification from COAH, by

providing a period during which the municipality’s implementing

ordinances enjoy a presumption of validity in any ensuing

exclusionary zoning litigation. The continued viability of both

rewards is subject to COAH’s required updating of municipal

housing obligations and corresponding substantive and procedural

rules.

COAH’s rules governing the last round of municipal housing

obligations expired in 1999 (Second Round Rules). Since then

COAH has failed twice to adopt updated regulations -- Third

Round Rules -- for the present period of municipal housing

obligations. The history of the state of affairs leading to our

3
Order dated March 14, 2014, is summarized hereafter. That Order

required COAH to take specific rule-promulgation steps,

culminating in adoption of the required Third Round Rules by

November 17, 2014. In the event COAH did not comply, parties

were told they could return to this Court for relief, including

lifting the FHA’s administrative-exhaustion requirements.

Fair Share Housing Center (FSHC) filed the present motion

in aid of litigants’ rights because COAH failed to promulgate

the Third Round Rules. We thus are in the exceptional situation

in which the administrative process has become nonfunctioning,

rendering futile the FHA’s administrative remedy. The FHA’s

exhaustion-of-administrative-remedies requirement, which staves

off civil actions, is premised on the existence of a functioning

agency, not a moribund one.

Due to COAH’s inaction, we agree that there no longer

exists a legitimate basis to block access to the courts.

Parties concerned about municipal compliance with constitutional

affordable housing obligations are entitled to such access, and

municipalities that believe they are constitutionally compliant

or that are ready and willing to demonstrate such compliance

should be able to secure declarations that their housing plans

and implementing ordinances are presumptively valid in the event

they later must defend against exclusionary zoning litigation.

4
It is necessary for this Court to establish an orderly means for

such proceedings to commence.

We will establish a transitional process and not

immediately allow exclusionary zoning actions to proceed in

recognition of the various stages of municipal preparation that

exist as a result of the long period of uncertainty attributable

to COAH’s failure to promulgate Third Round Rules. During the

first thirty days following the effective date of our

implementing order, the only actions that will be entertained by

the courts will be declaratory judgment actions filed by any

town that either (1) had achieved substantive certification from

COAH under prior iterations of Third Round Rules before they

were invalidated, or (2) had “participating” status before COAH.

Assuming any such town waits and does not file a declaratory

judgment action during that thirty-day period, an action may

thereafter be brought by a party against that town, provided the

action’s sole focus is on whether the town’s housing plan meets

its Mount Laurel obligations (a constitutional compliance

challenge). The court’s evaluation of a town’s plan that had

received substantive certification, or that will be submitted to

the court as proof of constitutional compliance, may result in

the town’s receipt of the judicial equivalent of substantive

certification and accompanying protection as provided under the

FHA.

5
 In sum, the judicial processes authorized herein reflect as

closely as possible the FHA’s processes and provide the means

for a town transitioned from COAH’s jurisdiction to judicial

actions to demonstrate that its housing plan satisfies Mount

Laurel obligations. Our decision today sets forth in detail the

manner in which civil actions may proceed, following a ninety-

day delay in the effective date of the implementing order

accompanying this opinion. The delay allows all parties to

prepare for the actions that are authorized pursuant to that

order.

Importantly, nothing herein should be understood to prevent

COAH from fulfilling its statutory mission to adopt

constitutional rules to govern municipalities’ Third Round

obligations in compliance with the FHA. Nor should the action

taken by this Court, in the face of COAH’s failure to fulfill

its statutory mission, be regarded as impeding the Legislature

from considering alternative statutory remedies to the present

FHA. See In re Adoption of N.J.A.C. 5:96 & 5:97, 215 N.J. 578,

612, 616-17 (2013).

Our order effectively dissolves, until further order, the

FHA’s exhaustion-of-administrative-remedies requirement.

Further, as directed, the order allows resort to the courts, in

the first instance, to resolve municipalities’ constitutional

obligations under Mount Laurel.

6
 I.

In 1975, this Court prohibited the discriminatory use of

zoning powers and mandated that each developing municipality

“must, by its land use regulations, make realistically possible

the opportunity for an appropriate variety and choice of housing

for all categories of people who may desire to live there, of

course including those of low and moderate income.” S.

Burlington Cnty. NAACP v. Twp. of Mount Laurel (Mount Laurel I),

67 N.J. 151, 179, 187, appeal dismissed and cert. denied, 423

U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975). In 1983, the

Court reaffirmed the constitutional obligation that towns

provide “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 (Mount Laurel II), 92 N.J. 158, 205 (1983)

(citing Mount Laurel I, supra, 67 N.J. at 174). Because the

Legislature had not acted to effectuate Mount Laurel I’s

recognition of municipalities’ constitutional zoning

obligations, the Court fashioned a judicial remedy. Id. at 289-

91. That remedy created a special litigation track for

exclusionary zoning cases and permitted, ultimately, a

“builder’s remedy” by which builders could file suit for the

opportunity to construct housing at higher densities than a

municipality otherwise would allow. See id. at 279-81, 287-93.

7
 In response, the Legislature enacted the FHA, which created

COAH and vested primary responsibility for assigning and

determining municipal affordable housing obligations in that

body. N.J.S.A. 52:27D-305, -307. COAH is required to enact

regulations that establish, and thereafter update, statewide

affordable housing need; to assign to each municipality an

affordable housing obligation for its designated region; and to

identify the delivery techniques available to municipalities in

addressing the assigned obligation. N.J.S.A. 52:27D-307, -308.

The FHA includes a process for substantive certification, which,

if granted, renders a municipality’s housing element and

ordinances presumptively valid in any exclusionary zoning

litigation for a finite period. N.J.S.A. 52:27D-313, -317; see

also Hills Dev. Co. v. Twp. of Bernards, 103 N.J. 1, 19-20, 33-

35 (1986) (detailing certification procedure).

The FHA also transferred pending Mount Laurel litigation to

COAH for resolution through an administrative process. Hills,

supra, 103 N.J. at 20. The FHA and its operative regulations

established a process for bringing municipalities into

compliance. The matter presently before this Court concerns

COAH’s failure to adopt regulations applicable to the third

round of affordable housing obligations -- the Third Round

Rules.

8
 As previously noted, promulgation of Third Round Rules was

due in 1999, but, when the Second Round Rules expired, COAH had

not proposed the new regulations. See 31 N.J.R. 1480 (June 7,

1999) (noting that second-round obligations expired on June 6,

1999). In August 2004, the Appellate Division characterized

COAH’s delay as frustrating the public policies embodied by the

Mount Laurel line of cases. In re Six Month Extension of

N.J.A.C. 5:91, 372 N.J. Super. 61, 95-96 (App. Div. 2004),

certif. denied, 182 N.J. 630 (2005). The panel warned that the

failure to adopt valid rules would “free interested parties from

the constraints” of the administrative process. Id. at 105.

COAH later adopted a set of Third Round Rules on December 20,

2004. 36 N.J.R. 5895(a).

On January 25, 2007, the Appellate Division affirmed

portions of COAH’s proposed methodology, but invalidated other

aspects of the Third Round Rules. In re Adoption of N.J.A.C.

5:94 & 5:95, 390 N.J. Super. 1, 86-87 (App. Div.), certif.

denied, 192 N.J. 71 (2007). That opinion remanded the matter to

COAH for promulgation of regulations compliant with the Mount

Laurel doctrine and the FHA and gave the agency six months to do

so (i.e., by July 2007). Id. at 88. The Appellate Division

granted COAH two extensions, and COAH thereafter promulgated the

revised rules. 40 N.J.R. 237(a) (Jan. 22, 2008); 40 N.J.R.

515(a) (Jan. 22, 2008).

9
 On October 8, 2010, the Appellate Division concluded that

COAH’s revised regulations suffered from “many of the same

deficiencies as the original [T]hird [R]ound [R]ules” and

invalidated substantial portions of COAH’s second set of Third

Round Rules. In re Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J.

Super. 462, 471 (App. Div. 2010). The panel again remanded to

COAH for the adoption of new Third Round Rules and specifically

directed COAH to use a methodology for determining prospective

need similar to the methodologies used in the prior rounds. Id.

at 487. The panel also ordered COAH to complete the task within

five months. Id. at 511. We subsequently granted

certification. 205 N.J. 317 (2011).

Our Court ultimately affirmed the Appellate Division’s

invalidation of the Third Round Rules. In re Adoption of

N.J.A.C. 5:96 & 5:97, supra, 215 N.J. at 586. In so doing, we

stated:

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.

[Id. at 620.]

10
Incorporating the Appellate Division’s five-month compliance

period, our September 2013 opinion directed COAH to adopt rules

by February 26, 2014. Ibid.

On February 26, 2014, COAH filed a motion for an extension

of time. The motion was supported by a certification from

COAH’s Chairperson, requesting an extension until May 1, 2014,

and specifically stating that COAH had reviewed and was

continuing to evaluate data to develop a third-round

methodology. It has since come to light that COAH retained its

primary consultant for the development of new regulations on

February 6, 2014.

On March 14, 2014, after additional Appellate Division and

Supreme Court proceedings,2 the Court granted COAH’s last motion

for an extension, subject to specific conditions. __ N.J. __

(2014) (slip op. at 1-4). The March 14, 2014, Order directed

COAH to meet firm deadlines for the adoption of the Rules and

for each interim rule-making step required by the Administrative

Procedure Act (APA), N.J.S.A. 52:14B-1 to -24. Ibid. The Court

further ordered that if COAH did not adopt Third Round Rules by

2 When COAH’s progress stalled and it appeared that compliance
with the first extended timeframe would not be forthcoming, the
Appellate Division entered an enforcement order, compelling
certain meetings and reporting actions by COAH’s members and
threatening contempt proceedings against the individual members
if violated. We vacated that order, substituting our Order of
March 14, 2014.

11
November 17, 2014, the Court would entertain applications for

relief, including “a request to lift the protection provided to

municipalities through N.J.S.A. 52:27D-313.” Id. at __ (slip

op. at 3-4). The Court stated that “if such a request is

granted, actions may be commenced on a case-by-case basis before

the Law Division or in the form of ‘builder[’]s remedy’

challenges.” Id. at __ (slip op. at 4).

On April 30, 2014, COAH’s Board met and voted to propose

its new Third Round Rules, which had been provided to the Board

roughly twenty-four hours before the meeting. The proposed

Third Round Rules were published in the New Jersey Register on

June 2. 46 N.J.R. 912(a)-1051 (June 2, 2014). Although FSHC

filed a motion in aid of litigants’ rights seeking the Court’s

intervention in the rule-making process, the request was denied

and that process continued. Meanwhile, COAH held a public

hearing on July 2 and received approximately 3000 comments

before the public comment period closed on August 1. Pursuant

to the Court’s March 14 Order, COAH was to adopt the Third Round

Rules by October 22, and to publish the notice in the November

17 edition of the New Jersey Register. However, at the October

20, 2014, meeting, the COAH members split 3-3 on the vote and

Third Round Rules were not adopted.3

3 During the public discussion, a Board member, John
Winterstella, initially moved that the adoption of the Third

12
 FSHC filed the instant motion pursuant to Rule 1:10-3 and

the Court’s language in the March 14 Order permitting such

motion practice in the event that COAH failed to adopt Third

Round Rules by November 17, 2014. We set oral argument on the

motion for January 6, 2015.

II.

A.

At oral argument, prior to hearing the parties on the

merits of this matter, we asked COAH’s representative from the

Attorney General’s Office to update the Court and parties on

what COAH had done to advance the promulgation of Third Round

Rules since its October 2014 meeting. When setting the matter

for argument, our order reminded COAH that nothing limited its

continuing ability to adopt the required regulations. Despite

that reminder, COAH’s representative admitted that COAH has not

conducted or scheduled any further meetings since its October

2014 meeting, that it does not have any plans to meet further in

an effort to adopt Third Round Rules, and that staff have not

Round Rules be tabled for sixty days, noting his belief that the
proposed regulations would not comply substantively with this
Court’s orders. The motion failed by a vote of 3-3. Another
Board member (Housing and Mortgage Finance Agency Executive
Director Anthony Marchetta) moved to adopt the proposed Third
Round Rules. The Board again split 3-3, resulting in COAH’s
failure to adopt the regulations in time for transmission to the
Office of Administrative Law (OAL) for publication in the
November 17 New Jersey Register, as required by the APA for rule
adoption.

13
been directed to perform any work in furtherance of adoption of

Third Round Rules. Those representations inform our view of the

parties’ positions.

B.

FSHC argues that COAH has violated the Court’s September

26, 2013, opinion and the March 2014 Order. FSHC asserts that a

court should grant a litigant enforcement-of-rights relief under

Rule 1:10-3 “unless [the noncompliant] party is incapable of

compliance.” (Citing P.T. v. M.S., 325 N.J. Super. 193, 218

(App. Div. 1999)). Here, FSHC argues that COAH was capable of

compliance because COAH had ample time to adopt compliant rules:

the Appellate Division invalidated the last iteration of Third

Round Rules in October 2010, over four years ago, and this Court

affirmed, over one year ago, directing COAH to adopt new revised

Third Round Rules within five months. According to FSHC, that

time period goes well beyond the time reasonably needed to

prepare a fair share methodology that determines prospective

need by means similar to the methodologies used in the prior

rounds, especially in light of COAH’s counsel’s representation

at oral argument before our Court that COAH could prepare

revised regulations within thirty days. FSHC asserts that,

rather than complying with the Court’s directive to propose

regulations “based on the previous rounds’ method,” COAH hired

consultants to develop a methodology “vastly different from the

14
[p]rior [r]ound regulations that this Court ordered COAH to

use.” FSHC contends that, as a result, draft regulations were

not proposed until eight months after the Court’s September 2013

judgment, and, ultimately, half of the Board believed that the

proposed rules did not comply with the FHA or this Court’s prior

opinion.

Moreover, in support of its agency-noncompliance argument,

FSHC emphasizes COAH’s counsel’s admissions to the Court about

the agency’s state of inaction. FSHC underscores that COAH has

not conducted or scheduled any further meetings since its

October 2014 meeting, has no plans to meet further in an effort

to adopt Third Round Rules, and has not directed staff to

perform any work in furtherance of the Rules’ adoption.

In the event that the Court grants FSHC’s application for

relief from exhaustion of remedies before COAH, FSHC asks the

Court to provide guidance with respect to the designation of a

limited number of judges to hear exclusionary zoning actions

filed in court. FSHC also asks that the second-round

methodology, with limited modifications, be directed for use in

such proceedings and that newly authorized judicial actions

proceed expeditiously and on a notice-and-opportunity-to-be-

heard basis.

C.

15
 COAH argues that FSHC is not entitled to the extraordinary

remedy of relief under Rule 1:10-3 because COAH has not been

willfully contumacious. COAH maintains it “made all possible

efforts to comply with the Court’s order,” meeting the initial

deadlines for rule proposal, publication, and public comment.

COAH contends that the public record demonstrates that its Board

“neither ignored nor willfully violated” the Court’s Order, but

rather that it was “unable to comply” because the members did

not agree on adoption. COAH argues that this outcome was not

willful, but instead a risk inherent in any administrative

process where diverse views are represented.

COAH further maintains that returning Mount Laurel

litigation to trial courts would be punitive -- and thus

contrary to the purpose of Rule 1:10-3 -- because it would

expose towns to substantial litigation and would undermine the

FHA’s intent to provide alternatives to the use of builder’s-

remedy litigation to achieve fair share housing.

D.

The New Jersey Builders Association and Martin and MTAE,

Inc., support FSHC’s motion and largely adopt FSHC’s legal

arguments. They add that Mount Laurel litigation should be

returned to the trial courts because low- and moderate-income

families are without a forum to adjudicate municipal housing

obligations or compliance matters. These parties also contend

16
that the administrative stalemate has permitted municipalities

to “shelter themselves” from suit under COAH’s jurisdiction

without providing any additional affordable housing in years.

They urge the Court to fashion relief that will require courts

to examine what towns have done to date in attempting to satisfy

their constitutional obligations.

The remaining parties view with disfavor the prospect of a

return to the courts to resolve constitutional compliance with

Mount Laurel obligations. Accordingly, those parties first

argue that COAH should be compelled to take action completing

the rule-making process. The remaining parties also offer views

on how civil actions regarding municipalities’ constitutional

compliance should proceed if such actions must commence. Those

views encompass general ideas for the actions as well as

specifics regarding the means by which municipalities could

obtain immunity from a builder’s remedy in any subsequent

exclusionary zoning action.

Bernards Township, Clinton Township, Union Township, and

Greenwich Township (collectively the Four Towns) express concern

about the complex questions that would be thrust upon judges if

exclusionary zoning litigation were to return to the Law

Division. For example, they contend that trial courts would be

tasked with determining whether a municipality’s fair share

allocation will be “cumulative” or applicable only to one

17
compliance period. The Four Towns also contend that

adjudicating such Mount Laurel matters would require courts to

confront the myriad differences between the methodologies

utilized in the prior rounds and those contained in the various

iterations of COAH’s Third Round Rules.

With regard to immunity, the Four Towns generally urge the

Court to adopt the immunity procedure established in earlier

pre-FHA litigation and discussed in J.W. Field Co. v. Township

of Franklin, 204 N.J. Super. 445 (App. Div. 1985), and in this

Court’s Hills opinion. Specifically, they ask that the 314

municipalities, which had submitted to COAH’s jurisdiction and

were participating in the administrative process but had not

been awarded substantive certification by COAH under the earlier

Third Round Rules before the same were invalidated, be allowed

sixty days to seek immunity by filing declaratory judgment

actions. It is proposed that such actions be allowed to be

filed ex parte. If a municipality files such an action within

that time frame, the Four Towns ask that immunity remain in

effect while the trial judge establishes the municipality’s

affordable housing obligation and compliance mechanisms, and

also while the municipality works to comply with those

standards. After the sixty-day period expires, municipalities

still could file declaratory judgment actions, but would be

immune from suit only as to entities that had not already

18
initiated litigation. Trial judges would be empowered to

rescind an immunity order upon a showing that the municipality

had abused the process.

The Borough of Atlantic Highlands (Atlantic Highlands)

prefers that COAH be given a “reasonable amount of time” to

finish the rule-making process, but if this Court were to grant

FSHC’s requested relief, Atlantic Highlands asks for the

immunity mechanism endorsed by the Four Towns. Atlantic

Highlands notes that it has submitted to COAH two iterations of

Third Round Affordable Housing Plans, but COAH has not approved

them because the agency’s prior Third Round Rules were

invalidated. Atlantic Highlands also notes that thirty

municipalities have passed resolutions urging COAH to comply

with the Court’s deadlines, and it asks that municipalities not

be punished for COAH’s failure to adopt the latest set of

proposed rules.

Finally, the New Jersey State League of Municipalities

(NJLM) argues that the 314 municipalities that have submitted

affordable housing plans to COAH should not forfeit their

protection from suit. According to NJLM, exclusionary zoning

litigation would punish the municipalities, which are not

responsible for COAH’s most recent failure to adopt compliant

Third Round Rules.

19
 Notably, NJLM proposes an alternate solution, arguing that

COAH has expended significant resources in developing the most

recent proposed regulations, which efforts should not be wasted.

NJLM suggests that the Court appoint “a former high-ranking

policy-making official” to recruit three “professional planners”

to assist in reviewing COAH’s proposed Third Round Rules, the

3000 public comments, and any responses prepared by COAH’s

staff. NJLM proposes that this Court authorize those planners

to revise the proposed Third Round Rules for review by the

Court-selected “policy-making official.” If the policy maker is

satisfied, NJLM further proposes that he or she would present

the revised regulations to this Court for approval, and for

entry of an order directing COAH to adopt the Third Round Rules

in that form.

III.

A.

In light of COAH’s representations to this Court that

reveal its failure to take any steps after its October 2014

deadlocked meeting on Third Round Rules -- specifically the

absence of any plan to schedule further meetings on the Rules

and the manifest lack of intention to continue work on the Rules

(as evidenced by the absence of any such direction to staff) --

the clarity of COAH’s inaction is apparent. Those parties

arguing for giving COAH more time have had their argument

20
undermined by the starkness of COAH’s posture. We reject the

argument that relief should be withheld in order to allow COAH

even “more time” than it has already been given.

COAH has had fifteen years to adopt Third Round Rules as it

is required to do in accordance with its statutory mission. It

has been under several orders of the Appellate Division and this

Court directing it to adopt Third Round Rules using a known

methodology by specific deadlines. It has not done so. More

time is not a viable response to the request for litigants’

relief under Rule 1:10-3.

COAH is noncompliant with this Court’s orders and

underlying September 2013 decision. COAH has failed to respond

(1) to the requirements of the last in the series of judicial

orders entered against it and (2) to its statutory duties that

directly affect the fulfillment of constitutional obligations.

Movant seeks relief. Importantly, we again note that the relief

sought from the present administrative stalemate does not

restrict COAH from performing its responsibilities should it

eventually determine to do so.

We thus turn specifically to the relief requested under

Rule 1:10-3.

B.

Rule 1:10-3 is, at bottom, a device to enable a litigant to

enforce his or her rights.

21
 Although Rule 1:10-3 encompasses the notion of civil

contempt, we have expressly stated that “we view the process

[under Rule 1:10-3] as one of relief to litigants.” In re

Daniels, 118 N.J. 51, 60 (per curiam) (emphasis added) (citing

R. 1:10-5, now R. 1:10-3), cert. denied, 498 U.S. 951, 111 S.

Ct. 371, 112 L. Ed. 2d 333 (1990). The focus being on the

vindication of litigants’ rights, relief sought pursuant to Rule

1:10-3 does not necessarily require establishing that the

violator of an order acted with intention to disobey. Indeed,

courts have recognized that “demonstration of a mens rea, wilful

disobedience and lack of concern for the order of the court, is

necessary for a finding of contempt, but irrelevant in a

proceeding designed simply to enforce a judgment on a litigant’s

behalf.” Lusardi v. Curtis Point Prop. Owners Ass’n, 138 N.J.

Super. 44, 49 (App. Div. 1975) (emphasis added); see also N.J.

Dep’t of Health v. Roselle, 34 N.J. 331, 347 (1961) (“The

Appellate Division correctly held that upon a litigant’s

application for enforcement of an injunctive order, relief

should not be refused merely because the violation was not

willful.”).

It bears repeating in connection with this present

application that our Court Rules generally are to be construed

and applied to secure a just determination and to achieve

simplicity in procedure. R. 1:1-2. That admonition has

22
particular force when it comes to assisting a litigant in

securing vindication of rights.

The Court Rules overall evince an intent toward flexibility

when the enforcement of rights is at stake. They provide

various means for securing relief and allow for judicial

discretion in fashioning relief to litigants when a party does

not comply with a judgment or order. In addition to the

mechanism of Rule 1:10-3, Rule 4:59-2(a) provides related

support for assisting a litigant in securing relief:

If a judgment or order directs a party to
perform a specific act and the party fails to
comply within the time specified, the court
may direct the act to be done at the cost of
such defaulting party by some other person
appointed by the court, and the act when so
done shall have like effect as if done by the
defaulting party.

[See also Roselin v. Roselin, 208 N.J.
Super. 612, 618 (App. Div.) (citing R. 4:59-
2(a) when noting alternatives available to
trial court for enforcing party’s rights),
certif. denied, 105 N.J. 550 (1986).]

In Roselin, supra, for example, Judge Pressler invoked Rule

1:10-3’s predecessor rule when assessing the alternatives

available to a trial court where a party failed to sign a

contract as ordered. 208 N.J. Super. at 618. Highlighting the

hardship that the failure was foisting on another of the

contract’s parties, the panel observed that “[i]ntervening

rights of innocent third persons have arisen,” id. at 617, and

23
declared that the innocent’s “rights must be enforced,” id. at

618 (citing R. 1:10-5). Judge Pressler noted Rule 4:59-2(a)’s

ability to secure relief through the directed actions of others,

which adds to a court’s flexibility when vindicating the rights

of litigants. See ibid.

In sum, then, although punitive or coercive relief under

the Rule cannot be used against one who is not a willful

violator of a judgment, see, e.g., Schochet v. Schochet, 435

N.J. Super. 542, 548-49 (App. Div. 2014) (citing Pasqua v.

Council, 186 N.J. 127, 141 n.2 (2006), for same and noting

“objective of [Rule 1:10-3] hearing is simply to determine

whether . . . failure [to comply with an order] was excusable or

willful”); Milne v. Goldenberg, 428 N.J. Super. 184, 199 (App.

Div. 2012) (upholding imposition of community service under Rule

1:10-3 against plaintiff where record established willful

noncompliance), that does not foreclose the vindication of

litigants’ rights through other forms of non-punitive and non-

coercive orders entered pursuant to Rule 1:10-3’s authority

enabling the enforcement of rights.

In this matter, COAH is without a firm basis to dispute

FSHC’s ability to bring this motion in aid of litigants’ rights.

Willful or contumacious conduct by COAH is not a prerequisite to

providing the form of litigants’ relief sought here under Rule

1:10-3. We are not asked to impose any order against COAH.

24
When the application is made seeking no punitive or coercive

action against the respondent agency, Rule 1:10-3 is an

appropriate vehicle for judicial assistance in enforcing rights.

There is no question that COAH failed to comply with this

Court’s March 2014 Order that was designed to achieve the

promulgation of Third Round Rules and the maintenance of a

functioning COAH. In the face of COAH’s knowing inaction to an

order that required action, Rule 1:10-3 permits FSHC to protect

its and third parties’ interests in municipal compliance with

constitutional affordable housing obligations.

The present application reflects an acknowledgment of the

obvious: the administrative forum is not capable of functioning

as intended by the FHA due to the lack of lawful Third Round

Rules assigning constitutional obligations to municipalities.

We are asked, essentially, to permit resumed direct access to

the courts for the vindication of rights, unless and until a

viable FHA administrative agency remedy is restored. Because

there are no Third Round Rules, the FHA-established alternative

for demonstrating constitutional compliance is absent.

Constitutional compliance presently cannot be evaluated under

COAH’s jurisdiction; the FHA’s exhaustion-of-administrative-

remedies requirement has been rendered futile. See AMG Assocs.

v. Twp. of Springfield, 65 N.J. 101, 109 n.3 (1974) (noting that

25
exhaustion of administrative remedies is unnecessary if pursuing

those remedies would be futile).

Accordingly, we conclude that towns must subject themselves

to judicial review for constitutional compliance, as was the

case before the FHA was enacted. Under our tripartite form of

government, the courts always present an available forum for

redress of alleged constitutional violations or, alternatively,

for towns seeking affirmative declarations that their zoning

actions put them in compliance with Mount Laurel obligations.

As noted in Hills when approving the fledgling FHA program, if

the FHA proves that it achieves nothing but delay, the courts

would resume their role in affordable housing litigation.

Supra, 103 N.J. at 23.

Therefore, under the authority of Rule 1:10-3, we hold that

the courts may resume their role as the forum of first instance

for evaluating municipal compliance with Mount Laurel

obligations, as hereinafter directed. In the event of a

municipality’s inability or failure to adopt a compliant plan to

a court’s satisfaction, the court may consider the range of

remedies available to cure the violation, consistent with the

steps outlined herein and in our accompanying order. We

establish a transitional process before allowing exclusionary

zoning actions against towns that had sought to use the FHA’s

mechanisms in recognition of the various stages of municipal

26
preparation that exist as a result of the long period of

uncertainty attributable to COAH’s failure to promulgate Third

Round Rules.

The relief authorized is remedial of constitutional rights.

It will present an avenue for low- and moderate-income New

Jersey citizens, and entities acting on their behalf, to

challenge any municipality that is believed not to have

developed a housing element and ordinances that bring the town

into compliance with its fair share of regional present and

prospective need for affordable housing. And, it will provide a

municipality that had sought to use the FHA’s mechanisms the

opportunity to demonstrate constitutional compliance to a

court’s satisfaction before being declared noncompliant and then

being subjected to the remedies available through exclusionary

zoning litigation, including a builder’s remedy.

We next turn to the details of transitioning to the

judicial forum.

IV.

A.

In light of our 2013 decision invalidating the growth share

based Third Round Rules that COAH had adopted, returning

constitutional compliance issues to the courts and no longer

enforcing the FHA’s exhaustion-of-administrative-remedies

requirement will have the effect of upending expectations of

27
municipalities that had sought the protection of COAH’s

processes. Some even had secured from COAH substantive

certification based on prompt action taken in response to the

previous iterations of Third Round Rules before they were

invalidated.

We recognize, as a matter of basic fairness, that there

must be a brief delay before our order implementing this

decision shall take effect and actions involving a

municipality’s constitutional compliance may proceed in the

judicial forum. We therefore delay the effective date of our

accompanying order by ninety days to effectuate an orderly

transition to the judicial remedies authorized herein.

B.

1.

There exist two classes of towns that sought to make use of

the administrative remedy offered through the FHA. Some towns

had acted quickly in response to the earlier versions of Third

Round Rules (before invalidated) and had been granted

substantive certification. Other towns were designated simply

as “participating” in the COAH process. Those two classes of

municipalities require different treatment.

We are informed by the parties that as many as sixty towns

may have been granted substantive certification under earlier

versions of the Third Round Rules. The Legislature plainly

28
intended that the grant of substantive certification be

significant: the FHA attaches a presumption of validity for a

finite period to a municipality’s housing element and ordinances

enacted in furtherance thereof once the municipality has been

granted substantive certification. N.J.S.A. 52:27D-313, -317.

To rebut the presumption of validity under regular operation of

the FHA, a plaintiff must prove by clear and convincing evidence

that the municipality’s housing element and its ordinances do

not provide for a realistic opportunity for the provision of the

municipality’s fair share. N.J.S.A. 52:27D-317; see also

N.J.S.A. 52:27D-313 (filing of housing element permits

municipality to seek substantive certification from COAH or to

institute declaratory judgment action seeking grant of repose

from suit). We must determine how towns that achieved

substantive certification under later-invalidated Third Round

Rules should be treated in the transition to civil actions.

We also are informed that more than 300 towns had submitted

a resolution of participation with COAH sufficient for COAH to

have recognized those municipalities as “participating.” See

N.J.S.A. 52:27D-309 (allowing municipality to notify COAH of

intent to submit its fair share housing plan to COAH by adoption

of “resolution of participation”). Such status brings a

municipality under COAH’s jurisdiction and thereby frees it for

a period of time from suit in court if it achieves certain

29
milestones toward a grant of substantive certification.

N.J.S.A. 52:27D-309(b) exempts parties from the exhaustion-of-

administrative-remedies requirement if a participating

municipality fails to file its fair share plan and housing

element. Also, the exhaustion obligation automatically expires

pursuant to N.J.S.A. 52:27D-318 when a municipality misses the

deadlines for submitting its housing element.

We further are informed through parties’ submissions that

COAH has been maintaining participating towns in an ongoing

holding pattern, allowing such towns to enjoy insulation from

suit, pending the development of valid Third Round Rules. We

are not aware of the progress or stage of submissions by the

various towns in such status before COAH. It is not this

Court’s function to address those individual circumstances. A

town’s efforts to satisfy its housing obligations will have to

be assessed now by courts that will hear actions on

constitutional compliance.

However, we are asked to provide for a means in this

transition by which a town may obtain protection from suit if

the town had made an effort to comply with COAH’s procedures.

For completeness, we note that approximately 200 towns never

subjected themselves to COAH’s jurisdiction, choosing instead to

remain open to civil actions in the courts. Those towns will

30
continue to be subject to exclusionary zoning actions, as they

have been since inception of Mount Laurel obligations.

2.

In establishing an orderly process by which towns can have

their housing plans reviewed by the courts for constitutional

compliance, we note first that a municipality should be

permitted to choose either to seek such a review affirmatively

or to be subjected to such a review if the municipality

determines to wait until its housing plan is challenged as

noncompliant with Mount Laurel obligations. If a municipality

seeks to obtain an affirmative declaration of constitutional

compliance, it will have to do so on notice and opportunity to

be heard to FSHC and interested parties. Courts assessing the

notice requirement should understand that the term “interested

parties” presumptively includes, at a minimum, the entities on

the service list in this matter. Ex parte applications, even

for initial immunity pending review, shall not be permitted

under any circumstance.

Second, it bears emphasizing that the process established

is not intended to punish the towns represented before this

Court, or those that are not represented but which are also in a

position of unfortunate uncertainty due to COAH’s failure to

maintain the viability of the administrative remedy. Our goal

is to establish an avenue by which towns can demonstrate their

31
constitutional compliance to the courts through submission of a

housing plan and use of processes, where appropriate, that are

similar to those which would have been available through COAH

for the achievement of substantive certification. Those

processes include conciliation, mediation, and the use, when

necessary, of special masters. The end result of the processes

employed by the courts is to achieve adoption of a municipal

housing element and implementing ordinances deemed to be

presumptively valid if thereafter subjected to challenge by

third parties. Our approach in this transition is to have

courts provide a substitute for the substantive certification

process that COAH would have provided for towns that had sought

its protective jurisdiction. And as part of the court’s review,

we also authorize, as more fully set forth hereinafter, a court

to provide a town whose plan is under review immunity from

subsequently filed challenges during the court’s review

proceedings, even if supplementation of the plan is required

during the proceedings.

With those overriding principles in mind, we establish the

following procedures for the two classes of municipalities left

stranded by COAH’s failure to adopt valid Third Round Rules.

C.

We first consider the circumstances of the municipalities

that made the effort to comply promptly with the Third Round

32
Rules and that received a grant of substantive certification.

Ordinarily, N.J.S.A. 52:27D-313 and -317 would afford the

ordinances implementing the housing elements of such

municipalities a strong presumption of validity in any

exclusionary zoning action and, thus, would provide powerful

protection from a builder’s remedy. However, to provide that

same presumption of validity based solely on substantive

certification in these circumstances would be to ignore our own

acknowledgment of the problems with the “growth share”

methodology on which the invalidated Third Round Rules were

premised.

COAH’s previous Third Round Rules required COAH initially

to calculate the projected growth share obligation of a

municipality, but then permitted subsequent adjustment through

COAH’s biennial review process such that a municipality’s actual

obligation reflected the “‘actual residential growth and

employment growth in the municipality.’” In re Adoption of

N.J.A.C. 5:96 & 5:97, supra, 215 N.J. at 604 (quoting N.J.A.C.

5:96-10.1(a)). “Thus, even if a municipality were allocated a

large projected growth share obligation, if growth fell below

that rate, its actual growth share obligation would be reduced

to reflect that slowed residential and job growth.” Id. at 605.

We determined that the result was invalid Third Round Rules

predicated on non-region-specific housing data and devoid of the

33
“definitive quantitative obligations to be fulfilled within

fixed periods” that were envisioned by Mount Laurel II and

called for by the FHA. Ibid.

Because municipalities that received a grant of substantive

certification promulgated housing plans in compliance with the

invalidated growth share based Third Round Rules, additional

court review of such towns’ housing plans will be necessary.

The ordinances adopted by any such municipality, in furtherance

of an approved housing element, must be evaluated to determine

if they 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.” Mount

Laurel II, supra, 92 N.J. at 205 (citing Mount Laurel I, supra,

67 N.J. at 174). Supplementation of a plan may be necessary to

ensure to the court’s satisfaction that the town has provided a

realistic opportunity for its fair share of present and

prospective regional affordable housing need in keeping with

prior rounds’ methodologies. The considerations to be employed

in that analysis are addressed in Part V., infra.

That said, towns in this category may choose affirmatively

to seek, through a declaratory judgment action filed on notice

to FSHC and interested parties, a court order declaring its

housing element and implementing ordinances -- as is or as to be

supplemented -- constitutionally sufficient. We also

34
acknowledge that a municipality that had received a grant of

substantive certification may elect to wait to be sued. In

either case, while not entitled to the statutory presumption of

validity the FHA normally would provide, these towns deserve an

advantage in the judicial review that shall take place.

Implemented ordinances should not be lightly disturbed unless

necessary; supplemental actions to secure compliance with newly

calculated prospective need may provide a preferred course for

obtaining constitutional compliance.

While reviewing for constitutional compliance the

ordinances of a town that achieved substantive certification,

courts should be generously inclined to grant applications for

immunity from subsequently filed exclusionary zoning actions

during that necessary review process, unless such process is

unreasonably protracted. As courts adapted processes to manage

the multiplicity of pre-FHA filed Mount Laurel actions, see,

e.g., J.W. Field, supra, 204 N.J. Super. 445, the present day

courts handling these new matters should employ similar

flexibility in controlling and prioritizing litigation. We

repose such flexibility in the Mount Laurel-designated judges in

the vicinages, to whom all Mount Laurel compliance-related

matters will be assigned post-order, and trust those courts to

assiduously assess whether immunity, once granted, should be

withdrawn if a particular town abuses the process for obtaining

35
a judicial declaration of constitutional compliance. Review of

immunity orders therefore should occur with periodic regularity

and on notice.

Accordingly, and in sum, following the ninety-day delay in

the effective date of our accompanying order, all municipalities

will have an additional thirty-day period in which to file

actions if they so choose, on notice and opportunity to be heard

as described earlier, affirmatively seeking to demonstrate

constitutional compliance. After that thirty-day period

expires, a challenge to a town’s constitutional compliance may

be filed against a municipality by FSHC or any other interested

party. Only constitutional compliance actions may proceed

initially as against a town with substantive certification from

COAH. No builder’s remedy shall be authorized to proceed

against any such town unless a court determines that the

substantive certification that was granted is invalid, no

constitutionally compliant supplementing plan is developed and

approved by the court after reasonable opportunity to do so, and

the court determines that exclusionary zoning actions, including

actions for a builder’s remedy, are appropriate and may proceed

in a given case.

D.

The procedure shall differ for those towns that had only

“participating” status with COAH. If a town had devised a

36
housing element and took action toward adopting ordinances in

furtherance of its plan, then we would expect a reviewing court

to view more favorably such actions than that of a town that

merely submitted a resolution of participation and took few or

perhaps no further steps toward preparation of a formal plan

demonstrating its constitutional compliance.

We recognize that not all towns that had only

“participating” status may have well-developed plans to submit

to the court initially. A town in such circumstances poses a

difficult challenge for a reviewing court, particularly when

determining whether to provide some initial period of immunity

while the town’s compliance with affordable housing obligations

is addressed. To assist courts with this category of town, we

take our lead from the FHA.

Towns that were in “participating” status before COAH and

that pursuant to our order now affirmatively come before the

courts seeking to obtain approval of an affordable housing plan

should receive like treatment to that which was afforded by the

FHA to towns that had their exclusionary zoning cases

transferred to COAH when the Act was passed. See N.J.S.A.

52:27D-316. Such towns received insulating protection due to

COAH’s jurisdiction provided that they prepared and filed a

housing element and fair share plan within five months. Ibid.

Similarly, towns that were in “participating” status before COAH

37
and that now affirmatively seek to obtain a court declaration

that their affordable housing plans are presumptively valid

should have no more than five months in which to submit their

supplemental housing element and affordable housing plan.

During that period, the court may provide initial immunity

preventing any exclusionary zoning actions from proceeding.

As in the case of the towns that had been awarded

substantive certification from COAH, the “participating” towns

will have the choice to proceed with their own actions during

the thirty-day period post the effective date of our order

before which challenges to constitutional compliance may be

brought by FSHC or other interested parties. If a town elects

to wait until its affordable housing plan is challenged for

constitutional compliance, immunity requests covering any period

of time during the court’s review shall be assessed on an

individualized basis. The five-month protected period for

submitting a housing element and plan, identified earlier, has

no parallelism in this setting. In determining whether to grant

such a town a period of immunity while responding to a

constitutional compliance action, the court’s individualized

assessment should evaluate the extent of the obligation and the

steps, if any, taken toward compliance with that obligation. In

connection with that, the factors that may be relevant, in

addition to assessing current conditions within the community,

38
include whether a housing element has been adopted, any activity

that has occurred in the town affecting need, and progress in

satisfying past obligations.

Thus, in all constitutional compliance cases to be brought

before the courts, on notice and opportunity to be heard, the

trial court may enter temporary periods of immunity prohibiting

exclusionary zoning actions from proceeding pending the court’s

determination of the municipality’s presumptive compliance with

its affordable housing obligation. Immunity, once granted,

should not continue for an undefined period of time; rather, the

trial court’s orders in furtherance of establishing municipal

affordable housing obligations and compliance should include a

brief, finite period of continued immunity, allowing a

reasonable time as determined by the court for the municipality

to achieve compliance.

In the end, a court reviewing the submission of a town that

had participating status before COAH will have to render an

individualized assessment of the town’s housing element and

affordable housing plan based on the court’s determination of

present and prospective regional need for affordable housing

applicable to that municipality. A preliminary judicial

determination of the present and prospective need will assist in

assessing the good faith and legitimacy of the town’s plan, as

proposed and as supplemented during the processes authorized

39
under the FHA –- conciliation, mediation, and use of special

masters -- and employed in the court’s discretion. The court

will be assisted in rendering its preliminary determination on

need by the fact that all initial and succeeding applications

will be on notice to FSHC and other interested parties. Only

after a court has had the opportunity to fully address

constitutional compliance and has found constitutional

compliance wanting shall it permit exclusionary zoning actions

and any builder’s remedy to proceed.

V.

The process developed herein is one that seeks to track the

processes provided for in the FHA. Doing so will facilitate a

return to a system of coordinated administrative and court

actions in the event that COAH eventually promulgates

constitutional Third Round Rules that will allow for the

reinstitution of agency proceedings.

The judicial role here is not to become a replacement

agency for COAH. The agency is sui generis –- a legislatively

created, unique device for securing satisfaction of Mount Laurel

obligations. In opening the courts for hearing challenges to,

or applications seeking declarations of, municipal compliance

with specific obligations, it is not this Court’s province to

create an alternate form of statewide administrative decision

maker for unresolved policy details of replacement Third Round

40
Rules, as was proposed by NJLM. The courts that will hear such

declaratory judgment applications or constitutional compliance

challenges will judge them on the merits of the records

developed in individual actions before the courts. However,

certain guidelines can be gleaned from the past and can provide

assistance to the designated Mount Laurel judges in the

vicinages.

First, as we said in In re Adoption of N.J.A.C. 5:96 &

5:97, supra, previous methodologies employed in the First and

Second Round Rules should be used to establish present and

prospective statewide and regional affordable housing need. 215

N.J. at 620. The parties should demonstrate to the court

computations of housing need and municipal obligations based on

those methodologies.

Second, many aspects to the two earlier versions of Third

Round Rules were found valid by the appellate courts. In

upholding those rules the appellate courts highlighted COAH’s

discretion in the rule-making process. Judges may confidently

utilize similar discretion when assessing a town’s plan, if

persuaded that the techniques proposed by a town will promote

for that municipality and region the constitutional goal of

creating the realistic opportunity for producing its fair share

of the present and prospective need for low- and moderate-income

41
housing. In guiding the courts in those matters, we identify

certain principles that the courts can and should follow.

One, our decision today does not eradicate the prior round

obligations; municipalities are expected to fulfill those

obligations. As such, prior unfulfilled housing obligations

should be the starting point for a determination of a

municipality’s fair share responsibility. Cf. In re Adoption of

N.J.A.C. 5:96 & 5:97, supra, 416 N.J. Super. at 498-500

(approving, as starting point, imposition of “the same prior

round obligations [COAH] had established as the second round

obligations in 1993”).

Two, the Appellate Division twice addressed the Third Round

Rules’ elimination of the reallocation of excess present need4

and found it permissible under both the FHA and Mount Laurel II.

Id. at 500-02; In re Adoption of N.J.A.C. 5:94 & 5:95, supra,

390 N.J. Super. at 57-60. While acknowledging that pre-FHA

courts required reallocation because “[m]unicipalities with an

excess of dilapidated housing occupied by the poor ‘should not

be expected to provide decent housing for a disproportionate

share of the need,’” the initial reviewing panel found that

4 “The [S]econd [R]ound [R]ules define[d] reallocated present
need as ‘the share of excess deterioration in a region
transferred to all communities of the region with the exception
of Urban Aid Cities.’” In re Adoption of N.J.A.C. 5:94 & 5:95,
supra, 390 N.J. Super. at 57 (quoting N.J.A.C. 5:93, Appendix A
at 93-52).

42
Mount Laurel did not require such reallocation and COAH was to

be afforded “broad discretion in implementing the Mount Laurel

doctrine.” In re Adoption of N.J.A.C. 5:94 & 5:95, supra, 390

N.J. Super. at 58-59 (quoting AMG Realty Co. v. Twp. of Warren,

207 N.J. Super. 388, 401 (Law Div. 1984)). Later, a second

Appellate Division panel “reaffirm[ed] the validity of th[at]

part of the [T]hird [R]ound [R]ules that d[id] not reallocate

any of that need,” In re Adoption of N.J.A.C. 5:96 & 5:97,

supra, 416 N.J. Super. at 502, and this Court “substantially

affirm[ed]” that opinion. In re Adoption of N.J.A.C. 5:96 &

5:97, supra, 215 N.J. at 619. The Mount Laurel judges may

proceed on this basis when reviewing the plans of

municipalities.

Three, the Appellate Division also approved the allowance

of bonus credits towards satisfaction of a municipality’s

affordable housing obligations. For example, in In re Adoption

of N.J.A.C. 5:94 & 5:95, supra, the panel affirmed the validity

of a new construction credit, N.J.A.C. 5:94-4.16(a), which

provided a municipality with credit “for each low or moderate

income for-sale housing unit that [wa]s subject to affordability

controls that [we]re scheduled to expire . . . if the

affordability controls [we]re extended in accordance with”

N.J.A.C. 5:80-26. 390 N.J. Super. at 81-84. The same panel

also approved the allocation of a bonus credit to a municipality

43
“for each unit that is affordable to the very poor, that is, a

member of the general public earning thirty percent or less of

the median income.” Ibid. (citing N.J.A.C. 5:94-4.22). In

approving those bonuses, the appellate court acknowledged COAH’s

discretion in creating a comprehensive scheme and further found

that “[t]he [T]hird [R]ound [R]ules d[id] not dilute

satisfaction of the housing need to the same degree as the

[F]irst [R]ound or [S]econd [R]ound [R]ules,” which were both

approved. Id. at 82-83. Again, the Mount Laurel judges may

exercise the same level of discretion when evaluating a

municipality’s plan for Mount Laurel compliance.

Four, in In re Adoption of N.J.A.C. 5:96 & 5:97, supra, the

Appellate Division approved the “Smart Growth” and

“Redevelopment” bonuses contained in the second iteration of the

Third Round Rules. 416 N.J. Super. at 495-97. The “Smart

Growth” bonus awarded municipalities “1.33 units of credit for

each affordable housing unit addressing its growth share

obligation . . . that [wa]s included in a Transit Oriented

Development in a Planning Area 1, 2 or a designated center.”

N.J.A.C. 5:97-3.18. The “Redevelopment” bonus awarded “1.33

units of credit for each affordable housing unit addressing its

growth share obligation . . . that [wa]s included in a

designated redevelopment area or rehabilitation area pursuant to

the Local Redevelopment and Housing Law.” N.J.A.C. 5:97-3.19.

44
The Appellate Division’s opinion concluded that those bonuses

were “reasonably designed to further important state policies”

and, therefore, were valid. In re Adoption of N.J.A.C. 5:96 &

5:97, supra, 416 N.J. Super. at 497.

Five, in addressing the first iteration of Third Round

Rules, the Appellate Division also approved the “exclu[sion of]

the cost-burdened poor from the present need or rehabilitation

share calculation.” In re Adoption of N.J.A.C. 5:94 & 5:95,

supra, 390 N.J. Super. at 36. In doing so, the appellate panel

noted that pre-FHA courts also had allowed exclusion of the

“cost-burdened poor” from the fair share formula. Id. at 35

(citing AMG Realty, supra, 207 N.J. Super. at 422-23). The

court found that COAH’s decision to exclude the cost-burdened

poor was a permissible exercise of discretion. Id. at 36.

Six, the Appellate Division also approved a methodology for

identifying substandard housing that used “fewer surrogates [or

indicators] to approximate the number of deficient or

dilapidated housing units.” Id. at 38. In fact, COAH’s Second

Round Rules had approximated based on seven indicators, while

the earlier-adopted Third Round Rules considered only three.

Id. at 38-39. The appellate court acknowledged a change in the

available United States Census data that triggered the reduction

in indicators and found that COAH did not abuse its discretion

in reducing the number of factors from seven to three. Id. at

45
40. That, like the previously mentioned areas left to COAH’s

discretion, and others not directly precluded by the Appellate

Division’s decisions or ours remain legitimate considerations

for the Mount Laurel judges when evaluating the

constitutionality and reasonableness of the plans they are

called upon to review.

The above examples of approved actions from the earlier

appellate decisions are cited to guide the Mount Laurel-

designated judges that will hear the actions pertaining to a

town’s housing plan. We emphasize that the courts should employ

flexibility in assessing a town’s compliance and should exercise

caution to avoid sanctioning any expressly disapproved practices

from COAH’s invalidated Third Round Rules. Beyond those general

admonitions, the courts should endeavor to secure, whenever

possible, prompt voluntary compliance from municipalities in

view of the lengthy delay in achieving satisfaction of towns’

Third Round obligations. If that goal cannot be accomplished,

with good faith effort and reasonable speed, and the town is

determined to be constitutionally noncompliant, then the court

may authorize exclusionary zoning actions seeking a builder’s

remedy to proceed against the towns either that had substantive

certification granted from COAH under earlier iterations of

Third Round Rules or that had held “participating” status before

46
COAH until this action by our Court lifted the FHA’s exhaustion-

of-administrative-remedies requirement.

In conclusion, we note again that the action taken herein

does not prevent either COAH or the Legislature from taking

steps to restore a viable administrative remedy that towns can

use in satisfaction of their constitutional obligation. In

enacting the FHA, the Legislature clearly signaled, and we

recognized, that an administrative remedy that culminates in

voluntary municipal compliance with constitutional affordable

housing obligations is preferred to litigation that results in

compelled rezoning. See Hills, supra, 103 N.J. at 21-22. It is

our hope that an administrative remedy will again become an

option for those proactive municipalities that wish to use such

means to obtain a determination of their housing obligations and

the manner in which those obligations can be satisfied.

VI.

As specifically authorized by this opinion and its

accompanying order, relief in aid of litigants’ rights is

granted.

JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, and SOLOMON, and
JUDGE CUFF (temporarily assigned) join in JUSTICE LaVECCHIA’s
opinion. CHIEF JUSTICE RABNER did not participate.

47
 SUPREME COURT OF NEW JERSEY
M-392 September Term 2014
067126

IN THE MATTER OF THE ADOPTION
OF N.J.A.C. 5:96 AND 5:97 BY
THE NEW JERSEY COUNCIL ON
AFFORDABLE HOUSING.
O R D E R

This matter having come before the Court on motion in aid

of litigants’ rights under Rule 1:10-3 by Fair Share Housing

Center (FSHC) seeking relief from the exhaustion of remedies

before the Council on Affordable Housing (COAH) required by the

Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to 329, and allowing

civil actions concerning municipalities’ compliance with

constitutional affordable housing obligations to proceed in the

courts; and

The Court having reviewed the papers submitted in support

of and in opposition to this application, and having heard oral

argument; and

Consistent with this Court’s accompanying opinion and as

more fully set forth therein, and for good cause shown

It is ORDERED that relief in aid of litigants’ rights,

under the authority of Rule 1:10-3, is granted as follows:

1. The FHA’s exhaustion-of-administrative-remedies

requirement is dissolved until further order of the

Court and the courts may resume their role as the forum

1
 of first resort for evaluating municipal compliance with

Mount Laurel obligations, as set forth herein.

2. The courts are hereby authorized to hear and decide

actions addressing municipal compliance with

constitutional Mount Laurel obligations by

municipalities that had sought the protections of the

FHA through COAH.

3. The effective date of this Order is delayed by ninety

days to effectuate an orderly transition to the judicial

remedies authorized herein.

4. A transitional process is hereby established in

recognition of the various stages of municipal

preparation to demonstrate Mount Laurel compliance that

may exist as a result of the long period of uncertainty

attributable to COAH’s failure to promulgate Third Round

Rules.

5. During the first thirty days following the effective

date of this Order, the only actions that will be

entertained by the courts will be declaratory judgment

actions filed by any municipality that either (a) had

achieved substantive certification from COAH under prior

iterations of Third Round Rules before they were

invalidated, or (b) had “participating” status before

COAH. In a declaratory judgment action filed by such

2
 municipalities, the municipality may seek a judicial

declaration that its housing plan is presumptively valid

because it presents a realistic opportunity for the

provision of its fair share of its housing region’s

present and prospective need for low- and moderate-

income housing.

6. In the event that any municipality in either of the

aforementioned categories waits and does not file a

declaratory judgment action during that initial thirty-

day period, an action solely focused on whether the

municipality’s housing plan meets its Mount Laurel

obligations (a constitutional compliance challenge) may

thereafter be brought by a party against that

municipality.

7. In all declaratory judgment and constitutional

compliance cases to be brought before the courts, on

notice and opportunity to be heard, the trial court may

grant temporary periods of immunity prohibiting

exclusionary zoning actions from proceeding, as set

forth in our opinion.

8. Only after a court has had the opportunity to fully

address constitutional compliance and has found

constitutional compliance wanting shall it permit

3
 exclusionary zoning actions and any builder’s remedy to

proceed in a given case.

9. The court’s evaluation of a municipality’s plan that had

received substantive certification, or of a plan that

will be submitted to the court as proof of

constitutional compliance, may result ultimately in the

municipality’s receipt of the judicial equivalent of

substantive certification and accompanying protection as

provided under the FHA.

10. All civil actions authorized herein shall be directed

to the Mount Laurel-designated judges assigned in the

vicinages.

WITNESS, the Honorable Jaynee LaVecchia, Presiding Justice,

at Trenton, this 10th day of March, 2015.

CLERK OF THE SUPREME COURT

4
 SUPREME COURT OF NEW JERSEY

NO. M-392 SEPTEMBER TERM 2014

DISPOSITION Motion in Aid of Litigants’ Rights

IN THE MATTER OF THE ADOPTION
OF N.J.A.C. 5:95 AND 5:97 BY
THE NEW JERSEY COUNCIL ON
AFFORDABLE HOUSING

DECIDED March 10, 2015
Justice LaVecchia PRESIDING
OPINION BY Justice LaVecchia
CONCURRING OPINION BY
DISSENTING OPINION BY

GRANT AS
CHECKLIST AUTHORIZED
BY OPINION
AND ORDER
CHIEF JUSTICE RABNER ----------------------- --------------------

JUSTICE LaVECCHIA X

JUSTICE ALBIN X

JUSTICE PATTERSON X

JUSTICE FERNANDEZ-VINA X

JUSTICE SOLOMON X

JUDGE CUFF (t/a) X
TOTALS 6

1