NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5257-11T4

DOCKET NO. A-0122-13T3

IN RE FAILURE OF THE COUNCIL

ON AFFORDABLE HOUSING TO

ADOPT TRUST FUND COMMITMENT

REGULATIONS.

________________________________________________

Argued March 24, 2015 – Decided

Before Judges Fisher, Nugent and Accurso.

On appeal from the inaction of the Council 

on Affordable Housing.

Kevin D. Walsh argued the cause for 

appellant Fair Share Housing Center (Fair 

Share Housing Center, attorney; Mr. Walsh, 

Adam M. Gordon and Laura Smith-Denker, on 

the briefs).

Geraldine Callahan, Deputy Attorney General,

argued the cause for respondent Council on 

Affordable Housing (John J. Hoffman, Acting 

Attorney General, attorney; Robert T. Lougy, 

Assistant Attorney General, of counsel; Ms. 

Callahan, on the briefs).

Jeffrey R. Surenian argued the cause for 

intervenor New Jersey State League of 

Municipalities (Jeffrey R. Surenian & 

Associates and NJ State League of 

Municipalities, attorneys; Mr. Surenian, of 

counsel and on the brief; Donna A. McBarron, 

on the briefs).

Donald J. Sears argued the cause for 

intervenor Township of South Brunswick.

April 9, 2015

APPROVED FOR PUBLICATION

April 9, 2015

APPELLATE DIVISION
2 A-5257-11T4

Gerald J. Muller argued the cause for amicus 

curiae Affordable Housing Professionals of 

New Jersey (Miller, Porter & Muller, P.C., 

attorneys; Mr. Muller, on the brief).

The opinion of the court was delivered by

FISHER, P.J.A.D.

Despite the Legislature's clear and unambiguous direction

that the Council on Affordable Housing (COAH) promulgate 

regulations defining when affordable housing trust funds are 

committed, and despite previously expressing its intention to 

comply with that command, COAH has failed and refused to adopt 

regulations, leaving municipalities in a morass of uncertainty 

while facing the prospect of an arbitrary seizure of affordable 

housing trust funds. In light of COAH's inaction, Fair Share 

Housing Center (appellant)1 filed this appeal asking that we 

order COAH to adopt regulations and that we bar transfer of 

trust funds to the State pursuant to N.J.S.A. 52:27D-329.1 to -

329.3 (the 2008 amendments) to the Fair Housing Act, N.J.S.A.

52:27D-301 to -329.19 (FHA), in the interim.

2 During the 

 

1The New Jersey State League of Municipalities and the Township 

of South Brunswick intervened; Affordable Housing Professionals 

of New Jersey was permitted to participate as amicus curiae.

2A second appeal (A-0122-13) – regarding COAH's failure to adopt 

an annual meeting schedule – was filed and consolidated with 

this appeal. Shortly before oral argument, we were advised the 

parties had settled their disputes in that appeal, which we now 

dismiss.
3 A-5257-11T4

pendency of this appeal, we issued orders to fill gaps caused by

COAH's inaction. More recently, despite recognizing the 

preference for an "administrative forum, and its special 

processes, for addressing constitutional affordable housing 

obligations," In re Adoption of N.J.A.C. 5:96 and 5:97, __ N.J.

__ (2015) (slip op. at 2-3), our Supreme Court determined that 

because of COAH's chronic failure to adopt Third Round Rules, 

"there no longer exists a legitimate basis to block access to 

the courts," id. at __ (slip op. at 4). In light of the Court's 

determination and COAH's abject failure to adopt the regulations 

required by the 2008 amendments, we now enjoin the seizure of 

any trust funds by COAH or the executive branch; the future 

disposition of the trust funds will be directed by our courts on 

a case-by-case basis.

We need not canvass the earlier proceedings in this appeal

except to mention that circumstances required entry of orders on 

July 13, 2012, and June 6, 2013,3 dealing with the problems 

caused by the absence of regulations and the threat of seizure.

4 

 

3In the earlier stages of this appeal, the Supreme Court provided 

COAH with partial relief from our stay so as to allow it to 

"gather[] and evaluat[e] municipalities' submissions" regarding 

fund expenditures while leaving in place our injunction against 

the transfer of funds.

4Since the filing of the appeal, the Governor's effort to 

unilaterally abolish COAH was invalidated. In re Plan for 

(continued)
4 A-5257-11T4

Instead, we focus on what lies at the heart of this appeal: the 

2008 amendments to the FHA. These amendments include N.J.S.A.

52:27D-329.2(a), which: first, declares that COAH "may authorize 

a municipality that has petitioned for substantive certification 

. . . to impose and collect development fees from developers of 

residential property"; second, provides that "[a] municipality 

may not spend or commit to spend any affordable housing 

development fees . . . without first obtaining [COAH's] approval 

of the expenditure"; and, third, mandated that COAH "shall

promulgate regulations regarding the establishment, 

administration and enforcement of the expenditure of affordable 

housing development fees by municipalities."5

Of critical importance, the Legislature provided that "all 

fees shall be committed for expenditure within four years from 

the date of collection," and that "[a] municipality that fails 

 

(continued)

Abolition of Council on Affordable Hous., 424 N.J. Super. 410, 

438 (App. Div. 2012), aff’d as modified, 214 N.J. 444, 479

(2013).

5N.J.S.A. 52:27D-329.2(c)(1) emphasizes that "[a] municipality 

may only spend development fees for an activity approved by the 

council to address the municipal fair share obligation." COAH 

rules were also to provide guidance for the requirement that a 

portion of the municipality's development fee trust fund must be 

set aside to provide "affordability assistance" to low and 

moderate income households including such items as down payment 

assistance, security deposit and rental assistance, low interest 

loans, and common maintenance expenses for condominium units. 

N.J.S.A. 52:27D-329.2(c)(3).
5 A-5257-11T4

to commit to expend the balance required in the development fee 

trust fund by the time set forth in this section shall be 

required by the council to transfer the remaining unspent 

balance at the end of the four-year period to the 'New Jersey 

Affordable Housing Trust Fund,' . . . to be used in the housing 

region of the transferring municipality for the authorized 

purposes of that fund." N.J.S.A. 52:27D-329.2(d). These and 

other funds6 would be deposited into a trust fund and accounted 

for separately and would also be subject to transfer to the 

State if not used within a four-year period, as follows:

A municipality shall commit to expend 

collections from payments-in-lieu imposed 

pursuant to subsection a. of this section 

within four years of the date of collection. 

The council may extend this deadline if the 

municipality submits sufficient proof of 

building or other permits, or other efforts 

concerning land acquisition or project 

development. The council shall provide such 

administrative assistance as may be required 

to aid in the construction of affordable 

housing units. A municipality that fails to 

commit to expend the amounts collected 

pursuant to this section within the 

timeframes established shall be required to 

transfer any unexpended revenue collected

pursuant to subsection a. of this section to 

the "New Jersey Affordable Housing Trust 

Fund," . . . to be used within the same 

 

6Another provision allowed municipalities "to impose and collect 

payments-in-lieu of constructing affordable units on site upon 

the construction of residential development, which payments may 

be imposed and collected as provided pursuant to the rules of 

the council." N.J.S.A. 52:27D-329.3(a).
6 A-5257-11T4

housing region for the authorized purposes 

of that fund, in accordance with regulations 

promulgated by the council.

[N.J.S.A. 52:27D-329.3(b) (emphasis added).]

In 2008, COAH's then-Executive Director Lucy Vandenberg 

wrote to all New Jersey mayors explaining these provisions and 

noting that COAH was authorized to promulgate regulations 

regarding the expenditure of development fees in the municipal 

trust funds. In 2012, Department of Community Affairs (DCA) 

Commissioner Richard E. Constable prepared amendments purporting 

to define when funds were considered to be expended or committed 

for expenditure.7 But regulations were never adopted and, in 

their absence, municipalities were left to try other less formal 

methods, without success, including an entreaty by one group of 

municipalities to the Governor regarding the uncertainty 

presented by the status quo. Those municipalities argued that, 

without a clear and present understanding about the meaning and 

scope of "commit to expend," they would be placed in the unhappy 

position of committing funds while remaining liable to reimburse 

from their own funds or by raising taxes if COAH later devised 

 

7This action took place during the approximately six-month period 

when COAH's authority had been transferred to DCA pursuant to a 

gubernatorial reorganization plan. We invalidated that action 

on March 8, 2012, Abolition of Council on Affordable Hous., 

supra, 424 N.J. Super. at 438; the Supreme Court affirmed that 

determination on July 10, 2013, Abolition of Council on 

Affordable Housing, supra, 214 N.J. at 479.
7 A-5257-11T4

more stringent guidelines.

8

As the four-year deadline approached, legislation was 

proposed and passed to extend the four-year deadline for two 

years. On June 29, 2012, the Governor vetoed that legislation 

and, also, line-item-vetoed language in the 2012-2013 budget, 

adopted as L. 2012, c. 18, which would have defined what funds 

were "committed" and therefore ineligible for transfer to the 

State. With that proposed definitional language excised, the 

2012 budget bill as signed into law provided that an "amount not 

to exceed $200,000,000" from the municipal affordable housing 

trust funds and transferred to the New Jersey Affordable Housing 

Trust Fund as funds that have not been committed "shall be 

deposited in the General Fund as State revenue."

No administration action regarding the needed regulations

has occurred. It also does not appear that proceedings 

anticipated by a 2012 resolution adopted by COAH, or proceedings 

in the manner tailored by our interim orders in this appeal, 

have commenced or proceeded to completion. And COAH has not met 

since October 2014. In re Adoption of N.J.A.C. 5:96 & 5:97, 

 

8According to appellant, since July 2012, "COAH staff has only 

approved two municipal spending plans despite hundreds of such 

spending plans before it[, and] [i]n both cases, . . . these 

plans were only approved after litigation was filed." And, even 

at that, COAH still refused "to make a determination of whether 

such approval constituted a commitment of funds."
8 A-5257-11T4

supra, __ N.J. at __ (slip at 13-14). Appellant seeks our 

intervention to relieve the uncertainty.

In explanation for its failure to adopt regulations, COAH 

claims no regulations are needed – that the 2008 amendments 

provide sufficient clarity. This is not a serious response to 

the problem at hand. The 2008 amendments required COAH to 

promulgate regulations to define when trust funds are

"committed." The statute did not say that COAH "may" adopt 

regulations or that prior regulations were sufficient; the 

Legislature declared in N.J.S.A. 52:27D-329.2(a) that COAH 

"shall" promulgate regulations. COAH's own contemporaneous 

interpretation of the amendments, as noted earlier, revealed its

understanding that new regulations were required. Its current 

contention – that by enacting the 2008 amendments the 

Legislature was not using a specialized term that needed 

regulatory definition and the new law set the "generous but 

inflexible limitation" requiring relinquishment of funds unspent 

or uncommitted within four years of collection – is unworthy of 

further discussion in a written opinion. R. 2:11-3(e)(1)(E). 

The simple fact is that COAH has ignored the considered wisdom 

of our Legislature by failing to promulgate rules. The only 

legitimate debate concerns the road to now be taken.

Although our authority to intervene has not been disputed, 
9 A-5257-11T4

we nevertheless iterate what is well-established: we are 

empowered to review not just agency action but agency inaction, 

Pascucci v. Vagott, 71 N.J. 40, 52 (1976); Hosp. Ctr. at Orange 

v. Guhl, 331 N.J. Super. 322, 329 (App. Div. 2000), and, if 

necessary, prevent any resulting "denial of 'fundamental 

procedural fairness,'" id. at 333 (quoting In re Arndt, 67 N.J.

432, 436 (1975)). COAH has not acted as required by the 

Legislature, and the parties have been placed in a most 

uncertain position with respect to these funds.

The question then is whether we should fill this vacuum by 

interpreting the critical provisions of the 2008 amendments and 

imposing our own procedures for ascertaining when funds have 

been committed. Despite the need for our courts to step into 

the fray – because COAH stepped out – we remain mindful that 

"[t]he judicial role here is not to become a replacement agency 

for COAH." In re Adoption of N.J.A.C. 5:96 & 5:9-7, supra, __ 

N.J. at __ (slip op. at 40). Instead, in resolving the problems 

caused by COAH's failures, our courts are required to resolve 

disputes and settle uncertainties in their usual manner and not 

in the manner in which administrative agencies may act. 

Accordingly, because of the lack of a factual record or a 

contested case, we reject the invitation to interpret the 

legislative intent embodied by the 2008 amendments or establish 
10 A-5257-11T4

procedures for suits yet to be filed.

In adhering to the Supreme Court's recent determination, we 

conclude that interpretation and construction of the 2008 

amendments and the application or disposition of the funds in 

question must also now be adjudicated in our courts. To be 

sure, this is not the most ideal circumstance; the parties' 

concern that inconsistent determinations may be made by 

different Mount-Laurel-designated judges in different locales is 

by no means illusory. Ultimately, however, erroneous or 

inconsistent rulings can be addressed by this court or the 

Supreme Court through the parties' resort to the appellate 

process; this method may be slower and less efficient than the 

administrative process, see In re Adoption of N.J.A.C. 5:96 & 

5:97, supra, __ N.J. at __ (slip op. at 2-3), but now, in light 

of the recent action taken by the Supreme Court – and barring a 

change in the status quo – the courts are the only available 

forum for addressing these matters. The issues raised in this 

appeal can no longer be left in COAH's moribund hands.

Absent some change in circumstances,

9 we enjoin COAH or any 

 

9The Supreme Court observed that the action it took "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 re Adoption 

of N.J.A.C. 5:96 & 5:9-7, supra, __ N.J. at __ (slip op. at 47). 

The same holds true here.
11 A-5257-11T4

other part of the executive branch from engaging in any further 

attempt to seize affordable housing trust funds. The use and 

disposition of those funds will hereafter be decided, in the 

first instance, by Mount Laurel-designated trial judges.10

This remedy – compelled by COAH inaction and the logical 

application and import of the Supreme Court's recent decision –

takes effect immediately; resort to the courts on the issues 

stemming from COAH's inaction in this regard is subject to the 

same timelines and parameters contained in the Supreme Court's 

March 10, 2015 order. Our prior orders in this appeal, which 

set forth an interim procedure for COAH's disposition of 

affordable housing trust funds, are vacated.

So ordered. We do not retain jurisdiction.

 

10Our injunction by no means forbids an appropriate body of the 

State from applying to the courts for forfeiture of trust funds 

with regard to municipalities which have, under any rational 

interpretation of the relevant statutory terms, failed to commit 

funds.