NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1535-12T2

 A-1537-12T2

 A-1538-12T2

 A-1731-12T2

 A-1732-12T2

FAIR SHARE HOUSING CENTER, 

INC.,

Plaintiff-Appellant,

v.

THE ZONING BOARD OF THE 

CITY OF HOBOKEN, 

Defendant-Respondent,

and 

ADVANCE AT HOBOKEN, LLC,

Defendant/Third-Party 

Plaintiff-Respondent,

v.

CITY OF HOBOKEN and THE 

MAYOR AND COUNCIL OF THE 

CITY OF HOBOKEN,

Third-Party DefendantsAppellants.

FAIR SHARE HOUSING CENTER, 

INC.,

Plaintiff-Appellant,

v.

APPROVED FOR PUBLICATION

July 28, 2015

APPELLATE DIVISION
2 A-1535-12T2

THE ZONING BOARD OF THE 

CITY OF HOBOKEN, 

Defendant-Respondent,

and 

1415 PARK AVENUE, LLC,

Defendant/Third-Party 

Plaintiff-Respondent,

v.

CITY OF HOBOKEN and THE 

MAYOR AND COUNCIL OF THE 

CITY OF HOBOKEN,

Third-Party DefendantsAppellants.

FAIR SHARE HOUSING CENTER, 

INC.,

Plaintiff-Appellant,

v.

THE ZONING BOARD OF THE 

CITY OF HOBOKEN, 

Defendant-Respondent,

and 

9TH MONROE, LLC,

Defendant/Third-Party 

Plaintiff-Respondent,

v.

CITY OF HOBOKEN and THE 
3 A-1535-12T2

MAYOR AND COUNCIL OF THE 

CITY OF HOBOKEN,

Third-Party DefendantsAppellants.

FAIR SHARE HOUSING CENTER, 

INC.,

Plaintiff-Appellant,

v.

THE ZONING BOARD OF THE 

CITY OF HOBOKEN and 

NEW JERSEY CASKET COMPANY, INC.,

Defendants-Respondents.

Argued December 3, 2014 - Decided

Before Judges Fuentes, Ashrafi and Kennedy.

On appeal from the Superior Court of New 

Jersey, Law Division, Hudson County, Docket

Nos. L-3643-11, L-5052-11, L-733-12, and L1978-12.

Kevin D. Walsh argued the cause for 

appellant Fair Share Housing Center.

Ronald D. Cucchiaro argued the cause for 

appellants City of Hoboken and Mayor and 

Council of the City of Hoboken (Weiner 

Lesniak, LLP, attorneys; Mr. Cucchiaro and 

Richard Brigliadoro, on the brief).

Jennifer Phillips Smith argued the cause for 

respondent Advance at Hoboken, LLC (Gibbons 

P.C., attorneys; Ms. Smith, on the brief).

Kevin J. Coakley argued the cause for 

respondents 1415 Park Avenue, LLC, 9th 

July 28, 2015
4 A-1535-12T2

Monroe, LLC, and New Jersey Casket Company, 

Inc., (Connell Foley, LLP, attorneys; Mr. 

Coakley, of counsel; Meghan B. Burke and 

Genevieve L. Horvath, on the brief).

Dennis M. Galvin argued the cause for

respondent Zoning Board of the City of 

Hoboken (Galvin Law Firm, attorneys; Mr. 

Galvin, on the brief).

The opinion of the court was delivered by

FUENTES, P.J.A.D.

These are five consolidated appeals filed to determine the 

enforceability of an affordable housing ordinance adopted by the 

City of Hoboken. Plaintiff Fair Share Housing Center (Fair 

Share) filed three of the appeals against four developers: 

Advance at Hoboken, LLC (Advance) and 1415 Park Avenue, LLC

(1415 Park) (both respondents in A-1535-12); 9th Monroe, LLC

(9th Monroe) (A-1537-12); and New Jersey Casket Company, Inc.

(NJ Casket) (A-1538-12). The City and the City's Mayor and 

Council (City appellants) filed the two additional appeals

against Advance and 1415 Park (A-1731-12), and against 9th 

Monroe (A-1732-12).

Each of the four developers named as defendants in this 

case received significant relief from the City's zoning laws in 

the form of variances from the Zoning Board of Adjustment 

(Zoning Board), conditioned upon the developers' compliance with 

the City's affordable housing ordinance. The trial court held 
5 A-1535-12T2

the ordinance was "null, void, and unenforceable" because it 

violated statewide affordable housing policies. The court

invalidated the zoning approval conditions imposed by the Zoning 

Board, relieved the developers from their obligation to comply 

with the ordinance's provisions, and enjoined the City from 

enforcing or imposing "any requirement against the parties to 

construct affordable housing units and/or collect any monetary 

contribution related to the affordable housing from the 

parties[.]" Ultimately, the court dismissed with prejudice Fair 

Share's complaints and denied its motion for reconsideration.

Since these appeals were filed and argued, our Supreme 

Court decided In re N.J.A.C. 5:96 & 5:97, 221 N.J. 1, 6 (2015), 

which effectively eliminated, "until further order," the 

requirement to exhaust administrative remedies under the Fair 

Housing Act (FHA), N.J.S.A. 52:27D-301 to -329.4, and directed 

trial courts to resolve municipalities' constitutional 

obligations under Mount Laurel.

1 Thus, to the extent the trial 

court's decision here depended upon the Council on Affordable 

Housing's (COAH) availability as an administrative forum or its 

obligation to perform the responsibilities imposed by the 

 

1 S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mount Laurel (Mt. 

Laurel II), 92 N.J. 158 (1983); S. Burlington Cnty. N.A.A.C.P.

v. Twp. of Mount Laurel (Mt. Laurel I), 67 N.J. 151, appeal 

dismissed and cert. denied, 423 U.S. 808, 96 S. Ct. 18, 46 L. 

Ed. 2d 28 (1975).
6 A-1535-12T2

Legislature through the FHA, those issues are now moot.

Notwithstanding the current state of affairs with respect 

to COAH, we are compelled to address the issues raised by Fair 

Share in order to dispel any doubt concerning the enforceability 

of the City's affordable housing ordinance. We now reverse the 

trial court's order invalidating the City's affordable housing 

ordinance decision. Consequently, we hold the trial court erred 

in invalidating the zoning approval conditions related to 

compliance with the ordinance's provisions as to all of the 

developers named as defendants by Fair Share and remand for the 

trial court to adjudicate the remaining legal issues raised by 

the parties.

The trial court misconstrued the FHA and the case law 

applying it. There is no provision in the FHA or regulations

promulgated by COAH requiring municipalities to submit all 

ordinances that impact a municipality's affordable housing 

obligation to COAH for approval. The "substantive 

certification" provided by COAH to those municipalities seeking 

its protection from builder's remedy suits2 is entirely 

 

2 As Judge Cuff explained in In re Adoption of N.J.A.C. 5:94 & 

5:95, 390 N.J. Super. 1, 17 (App. Div.), certif. denied, 192 

N.J. 71 (2007), a "builder's remedy" suit was a scheme devised 

by the Court in Mt. Laurel II "for the consistent and hopefully 

expeditious resolution of litigation." (Citation omitted).
7 A-1535-12T2

voluntary. N.J.S.A. 52:27D-313(a). The Legislature enacted the 

FHA and established COAH "to oversee the development of low and 

moderate income housing throughout the state through a system of 

voluntary participation by municipalities in the COAH process." 

Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 513 (2002)

(emphasis added). 

In the interest of clarity, we also expressly reverse the 

trial court's decision invalidating the section in the ordinance 

that provides for voluntary payments by developers in lieu of 

compliance with the ordinance's affordable housing requirements. 

The trial court conflated development fees under N.J.A.C. 5:97-

8.3, with the payments in lieu, created "as an option to the onsite construction of affordable housing otherwise required by 

ordinance," authorized by N.J.A.C. 5:97-8.4 and sanctioned by 

N.J.S.A. 27D:329.3. 

Before we begin our analysis, we will briefly describe the 

procedural trek these cases took before they ended up before us 

in this consolidated appeal. 

I

From July 7, 2011 to April 17, 2012, Fair Share filed four 

individual actions in lieu of prerogative writs seeking 

declaratory and injunctive relief against the Zoning Board and 

the following private developers: Advance, 1415 Park, 9th 
8 A-1535-12T2

Monroe, and NJ Casket. Fair Share sought compliance with the 

City's affordable housing ordinance in the form of a judicial 

declaration that any zoning approvals these developers received 

be deemed void or enjoined, unless each one filed a "plan of 

compliance" with the affordable housing ordinance. 

All four developers named as defendants by Fair Share filed 

answers asserting a variety of affirmative defenses including 

challenges to Fair Share's standing to raise these issues, 

attacking the timeliness of the actions in lieu of prerogative 

writs pursuant to Rule 4:69-6, and challenging the validity, 

enforceability, and constitutionality of the affordable housing 

ordinance.

Three of the four developers also filed cross-claims 

against the Zoning Board and third-party complaints against the 

City and the Mayor and Council, asserting, inter alia, estoppel 

based on the City's failure to enforce the affordable housing 

ordinance and the Zoning Board's failure to condition prior 

approvals upon compliance with the affordable housing ordinance. 

Citing 42 U.S.C.A. § 1983 and the New Jersey Civil Rights Act, 

N.J.S.A. 10:6-2, the developers also asserted violations of 

their constitutional right to due process, private property 

rights, and inverse condemnation. They all sought counsel fees 

under 42 U.S.C.A. § 1988 and N.J.S.A. 10:6-2(e).
9 A-1535-12T2

The Zoning Board and City appellants all responded to the 

cross-claims and third-party actions. 

Common Core of Operative Facts

The record before us includes the minutes from three 1988 

City Council meetings regarding the adoption of the City's 

affordable housing ordinance. Included as part of this record 

are minutes from a special session of the City Council held on 

May 4, 1988. The subject for discussion at this special meeting 

was denoted, "[t]o meet and discuss Hoboken's Affordable Housing 

with representatives from [COAH]." In attendance were the 

City's Law Director, CDA3 Director, and Arthur Bernard on behalf 

of COAH. Two weeks later, at the meeting held on May 18, 1988, 

the City Council unanimously adopted the affordable housing 

ordinance. The Mayor signed the ordinance into law on May 19, 

1988.

The Ordinance

The ordinance titled, "An Ordinance Requiring the Provision 

of Affordable Housing Units and Providing for Voluntary 

Contributions in Lieu of Such Housing as a Part of New 

Construction and Substantial Rehabilitation of Existing 

Buildings in the City of Hoboken," contains five "Whereas"

clauses setting forth the factual basis and public policy goals 

 

3 "CDA" stands for "Community Development Agency."
10 A-1535-12T2

driving its passage:

WHEREAS, the City of Hoboken has 

determined that an emergency exists in the 

city with respect to availability of 

affordable housing for household[s] of low 

and moderate income; and 

WHEREAS, the New Jersey Council on 

Affordable Housing has found that the City 

of Hoboken has a responsibility to provide 

additional low and moderate income housing, 

and whereas such obligation has been 

affirmed by the Supreme Court in [S.

Burlington Cnty. N.A.A.C.P. v. Twp. of Mount 

Laurel], 92 N.J. 158 ("Mt. Laurel II"), and 

WHEREAS, the absence of federal housing 

subsidies renders it impossible for the City 

of Hoboken to provide affordable housing 

with available public resources commensurate 

with the need for such housing or the legal 

obligation of the City of Hoboken; and

WHEREAS, the limited availability of 

vacant land in the City of Hoboken, coupled 

with the high cost of that land and the 

strength of the market demand for luxury 

housing, has resulted in a situation where 

the need for affordable housing cannot 

realistically be met through the efforts of 

private developers acting voluntarily to 

provide affordable housing through their own 

resources; and

WHEREAS, the use of an inclusionary or 

mandatory set aside ordinance as a means of 

bringing about the production of affordable 

housing is not only urged in Mt. Laurel II

and in the New Jersey Fair Housing Act, 

c.222, P.L. 1985, but has been demonstrated 

to be an effective means of producing 

affordable housing without placing 

unreasonable burdens on private developers.
11 A-1535-12T2

NOW, THEREFORE, BE IT ORDAINED by the 

Mayor and City Council of the City of 

Hoboken, New Jersey, as follows . . . . 

What "followed" is a comprehensive plan to encourage and 

bring about the development of affordable housing in Hoboken. 

In a case-specific context, the ordinance sets "General 

Standards" for the construction of new housing and the

rehabilitation of existing stock, with mandatory set-asides 

based on the scope of the projects. It includes a provision 

requiring affordable units in a particular development where it 

is "especially suited for senior citizen housing by virtue of 

physical character and location." It also provides developers 

with the option of making a "voluntary cash contribution to the 

Trust Fund created by this Ordinance, or a voluntary 

contribution of land and improvements to the City of Hoboken in 

lieu of constructing all or part of the affordable housing units 

required by this Ordinance." The ordinance is codified under

Article XVII of the City Code, §§ 196-68 to -81.

As it relates to this case, the key provisions of the 

ordinance are:

A. All development of residential property 

in the City of Hoboken, taking place either 

through the construction of new structures 

on vacant land or through the substantial 

rehabilitation of existing structures except 

as herein provided below, shall include low 

and moderate income housing in the 

proportions specified below and consistent 
12 A-1535-12T2

with the standards and conditions of this 

Article.

. . . .

C. Each development subject to this 

Article shall contain the following 

percentage of units to be provided for 

affordable housing.

(1) Where all affordable units 

provided pursuant to this Article are 

located on site, ten percent (10%) of the 

total number of units.

. . . .

(4) Pursuant to § 196-73 below, the 

city may enter into an agreement with a 

developer to allow the developer to make a 

voluntary cash contribution in lieu of 

providing the affordable units required by 

this subsection.

[Hoboken, N.J., Code § 196-69(A), (C)

(1988).]

For each development subject to the ordinance, the 

developer is required to provide a plan of compliance with 

certain described features, and no preliminary site plan 

approval (or if none is needed, then no construction permit) 

shall be granted unless and until the compliance plan has been 

approved by the City's planning board. § 196-69(D)(1)-(2). Any 

development plan that is artificially subdivided to evade the 

ordinance's provisions shall be disapproved. § 196-69(D)(4)-

(5). There are criteria for the board to permit affordable 

housing units to be provided off site, § 196-71, or for the 
13 A-1535-12T2

developer to make a payment in lieu of constructing affordable 

housing, § 196-73. 

The payment in lieu provision includes the following:

A. Projects subject to the provisions of 

this Article may elect, with the approval of 

the Board, to make a voluntary cash 

contribution to the trust fund created by 

this Article or a voluntary contribution of 

land and improvements to the City of Hoboken 

in lieu of constructing all or part of the 

affordable housing units required by this 

Article.

B. The Board is authorized to approve a 

voluntary cash contribution under this 

section only upon written findings, 

supported by the record, that such a 

contribution will further the housing 

policies of the City of Hoboken more than 

the construction of affordable units at the 

time in question. In making such findings, 

the Board shall consider and report on the 

following factors:

(1) The number of units that can be 

built or low/moderate income households 

preserved with the cash contribution vs. the 

number of new units required to be built.

(2) The availability and stage of 

readiness of affordable housing projects on 

which the trust funds can be expended.

(3) The reasons which make the 

provision of actual units impractical.

C. The opportunity to make a voluntary 

cash contribution in lieu of providing 

affordable housing is not intended to be and 

should not be construed as a right available 

to developers at their sole option. The 

policy of this Article favors provision of 

actual affordable units.
14 A-1535-12T2

[§ 196-73.]

This provision describes, in great detail, the calculations for 

the amount of contribution permitted. § 196-73(D).

The section captioned, "Construal of contribution 

provisions," reads as follows: 

The provisions of this Article 

regarding contributions in lieu of providing 

affordable housing units are to be construed 

an alternative that may be voluntarily 

chosen by developers, which alternative has 

not generally been offered in inclusionary 

ordinances adopted by other municipalities 

and which is not required by any statutory 

provision, administrative regulation or 

court decision to be offered by the City of 

Hoboken and, therefore, rather than imposing 

a burden on developers, has the effect of 

mitigating any potential economic costs on 

developers created by the imposition of the

inclusionary affordable housing requirements 

of this Article.

[§ 196-78.]

Finally, there is a severability clause intended to 

insulate the legally viable sections of the ordinance from any 

taint created by a provision a court may find unenforceable: "If 

any provision of this Ordinance is declared invalid, such 

invalidity shall no [sic] affect any other provision of this 

Ordinance which can be given effect, and to this end the 

provisions of this Ordinance are declared to be severable."

The Hoboken Master Plan 

Part of the record Advance submitted to the trial court is 
15 A-1535-12T2

a copy of the housing element from the City's April 2004 Master 

Plan, which contained overview information about the City's

housing stock and affordable housing needs. It describes the 

City as "a mature urban community with a diverse residential 

population with respect to race, income level and age, and in 

the housing opportunities it provides for its residents." 

According to the 2004 master plan, the City's "wide array of 

housing types rang[ed] from public housing projects to milliondollar condominiums" and included "some one- and two-family 

homes, most of which [were] constructed as row-houses, 

apartments above stores, and numerous low-rise, mid-rise, and 

high-rise residential buildings." 

The plan showed a number of differences between the City's 

housing characteristics and the rest of Hudson County. Census 

figures compiled from 1990 to 2000 show the City experienced a 

higher percentage in growth in the number of housing units than 

did Hudson County, fourteen percent as compared to five percent. 

The City's median dwelling unit value was nearly three times the 

county-wide median value, and the City's median contract rent 

was more than forty percent higher than the county-wide level, 

"indicating the expensive housing stock value in [the City]." 

The City's rents were also significantly higher than the rent 

paid by the rest of the residents of Hudson County. The median 
16 A-1535-12T2

gross rent in the City in 2000 was $1002, compared to $703 for 

Hudson County. However, in Hoboken, the median rent increased 

from $511 in 1990 to $1002 in 2000. The master plan noted this 

was "a jump of just under 50 percent when adjusted for 

inflation." 

The City had a development moratorium from 1992 to 1997, 

due to a lack of sewer capacity. A construction boom followed

after the regionalization of sewer services via the North Hudson 

Sewerage Authority.4 Nearly all new residential construction 

that followed involved multi-family units. The master plan's 

authors considered it "unlikely that new affordable housing will 

be constructed without government action or other intervention 

in the real estate market. In fact, some existing affordable

units may lose their affordability controls when their 

restrictions mandating below-market rents expire."

 

4 The North Hudson Sewerage Authority was established in 1988 as 

part of a Consent Order in a regulatory enforcement action 

brought by the United States Environmental Protection Agency 

(EPA), compelling local communities to relinquish control of 

their sewer service. The Authority services the sewerage 

disposal needs of the residents of Hoboken, Union City, 

Weehawken, and West New York. The EPA and the New Jersey 

Department of Environmental Protection lifted a ten-year ban on 

sewer connections in these four municipalities in 1994. This 

sparked the reclamation and development of the Hudson River 

waterfront in Hoboken and Weehawken. N. Hudson Sewerage Auth., 

Authority History, N. Hudson Sewerage Auth.,

http://www.nhudsonsa.com/About/history.html (last visited July 

13, 2015).
17 A-1535-12T2

Between 1990 and 2000, the City's population increased 

sixteen percent, from 33,397 to 38,577 residents. Just above 

half of the City's population was in the twenty-five to fortyfour-year-old age bracket; growth in that age group increased

36.8 percent from 1990 to 2000. The largest population group 

decline over that time period was in children aged five to 

seventeen, decreasing by 29.9 percent. The City's median age in 

2000 was 30.4 years old, far below the statewide average of 

thirty-seven.

The residents of Hoboken also enjoyed a higher standard of 

living than the rest of Hudson County. As reported in the 2000 

census, over 75 percent of Hoboken's residents over the age of 

fifteen were "in the labor force[.]" Nearly two-thirds of the 

City's residents had managerial or professional occupations

during this same time period. However, although Hoboken's 

median household income was $62,550, there was a wide range of 

annual income levels; 43 percent of households earned more than

$75,000, while about 22 percent earned less than $25,000.

The 2004 Master Plan listed approximately 5000 affordable 

housing units in the City. These affordable housing units were

established under various programs; approximately 1000 of these 

units were restricted to senior citizens or residents with 

disabilities. The Master Plan also included this cautionary 
18 A-1535-12T2

note: "It is difficult to determine exactly how many units in 

the City have controls on rents that classify them as 

affordable. . . . It is noted that the affordability controls 

governing these units are at varying stages of their lifespans, 

and some are set to expire."

The plan concluded with fifteen recommendations to protect 

and increase the City's existing affordable housing stock. The 

plan recommended updating and enforcing the existing affordable 

housing regulations in the Zoning Ordinance, and providing

additional affordable housing units in new residential 

developments. Of particular relevance here, the plan 

specifically noted: "the City currently requires the provision 

of affordable units, or payment in lieu of creation, for most 

residential new construction or substantial rehabilitation. 

These regulations should be enforced, particularly for larger 

developments." The plan suggested that the City's regulations 

"should be reviewed for compliance with COAH's Substantive 

Regulations and other applicable requirements." Fair Share 

included in the appellate record the third round housing element 

and fair share plan document adopted by the Hoboken Planning 

Board on December 19, 2005. With some variations, this document 

showed statistics similar to those described in the City's 2004 

Master Plan.
19 A-1535-12T2

COAH's Jurisdiction

On December 30, 2008, the City submitted to COAH a petition 

for third round substantive certification and a draft housing 

element and fair share plan. The cover letter explained these 

documents remained in draft form because "[t]he City's finances 

have been taken over by the State[.]" This further delayed 

bringing the matter to a hearing for final adoption. Those 

matters were expected to be finalized "early in 2009."

On February 3, 2009, COAH's then-Executive Director Lucy 

Vandenberg informed the City's Mayor that the submission "[did]

not meet the criteria for a petition." Thus, "[b]ecause Hoboken 

City did not submit a petition for third round substantive 

certification by December 31, 2008, it is no longer under the 

jurisdiction of COAH." Despite this, Vandenberg made clear the 

City was "still required to impose non-residential development 

fees pursuant to . . . [N.J.S.A. 40:55D-8.1 through -8.7]." 

According to Vandenberg, developers were required to deposit 

those fees into the statewide New Jersey Affordable Housing 

Trust Fund, rather than the City's affordable housing trust 

fund. Vandenberg concluded the letter by encouraging the City 

"to once again participate in the COAH process" which could 

provide protection from builder's remedy litigation and permit 

the City to retain development fees locally.
20 A-1535-12T2

On April 12, 2011, responding to correspondence from an 

attorney representing a developer who is not a party in this 

appeal, COAH's Acting Executive Director Sean Thompson confirmed

that Hoboken was "not currently under COAH's jurisdiction."

Thompson specified two requirements the City was still bound to 

fulfill: (1) the imposition of non-residential development fees 

pursuant to N.J.S.A. 40:55D-8.1 to -8.7, to be deposited in the 

statewide New Jersey Affordable Housing Trust Fund, and (2) 

continue to provide monitoring and oversight of monies 

transferred to the City pursuant to certain specified regional 

contribution agreements.5 We note Thompson did not address or 

opine regarding the City's negotiations on a redevelopment plan

through which it sought to impose a twenty percent affordable 

housing set-aside obligation. The record includes 

correspondence from the attorneys representing the developers in 

this case and the Acting Executive Director of COAH as well as 

 

5 Both of these requirements are now moot. The Legislature 

amended the FHA and abolished "regional contributions 

agreements" effective July 17, 2008. N.J.S.A. 52:27D-312. 

Following the Supreme Court's decision in In re N.J.A.C. 5:96 & 

5:97, supra, 221 N.J. at 6, this court in In re Failure Of The 

Council On Affordable Hous. To Adopt Trust Fund Commitment 

Regulations, 440 N.J. Super. 220, 227-28 (App. Div. 2015),

enjoined "COAH or any other part of the executive branch from 

engaging in any further attempt to seize affordable housing 

trust funds" under N.J.S.A. 52:27D-329.2. We further directed 

that "[t]he use and disposition of those funds will hereafter be 

decided, in the first instance, by Mount Laurel-designated trial 

judges." Id. at 228.
21 A-1535-12T2

affidavits from other interested parties. We have opted not to 

describe these exhibits at length because they are not relevant 

to our legal determinations. 

Advance

Advance owned property at 1316-1330 Willow Avenue. In 

2006, the City's Zoning Board granted the property's prior owner

preliminary site plan approval and bulk variance relief to 

construct a mixed-use development project that included 104 

residential units, 7500 square feet of retail space, and 126 

parking spaces. Advance sought and received a total of eight 

variances: maximum lot coverage from 60 percent to 97 percent; 

minimum rear yard from 30 feet to 0 feet; maximum permitted 

distance from front property line to rear wall from 70 feet to 

195 feet; number of building stories above one level of parking 

from three to four, and a partial fifth story above two levels 

of parking; maximum building height from 40 feet to about 68 

feet for the main level, with a penthouse and tower at 80 and 

100 feet, respectively; residential density from 54 units to 104 

units; increased amount permitted of non-masonry façade 

material; and increased maximum customer service area from 1000 

square feet to 7500 square feet.

The 2006 Zoning Board resolution did not mention affordable 

housing. Condition 3 noted the application "must comply with 
22 A-1535-12T2

the necessary requirements" of the City's zoning ordinance and

the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -163. 

Condition 4 further stated:

The Applicant shall develop, prepare and 

improve the subject premises so as to 

conform with all of the details shown on the 

aforementioned plans and submissions, as 

presented to the Board and in accordance 

with the zoning ordinances, building codes 

and all other standards and ordinances 

unless expressly stated to the contrary 

within the approvals granted.

This approved project was never built. In January 2010, 

after Advance became the contract purchaser, the Zoning Board 

granted Advance an amended preliminary site plan approval, 

conditional use approval, and further variance relief. The 

Zoning Board granted Advance the following additional variance 

relief: increase the number of building stories from four to 

seven, plus a penthouse; increase the maximum building height 

from 40 feet to 84 feet for the main level, with a penthouse and 

tower at 91 feet and 9 inches, and 98 feet and 9 inches, 

respectively; increase the maximum retail area from 1000 square 

feet to 21,725 square feet; allow retail use on a block front 

which does not presently include two other retail uses; increase 

rooftop coverage for appurtenances from 10 percent to 19 

percent; decrease minimum Willow Street setback from 5 feet to 

0 feet; eliminate front yard fencing requirement; increase
23 A-1535-12T2

residential density from 61 units to 140 units; and allow

various parking garage rule changes.

The approval resolution described significant efforts 

Advance was expected to undertake to clean up the prior owners'

environmental contamination on the site. This resolution again 

did not directly mention affordable housing as a condition of 

approval. Condition 9 stated the applicant "must comply with 

the necessary requirements" of the City's zoning ordinance and

the MLUL.

Condition number 8 of the resolution also stated:

The application for Final Site Plan Approval 

shall conform with all of the details shown 

on the aforementioned Preliminary Site Plan 

Approval "Resolution Drawing Set" and 

submissions, as presented to the Board or as 

amended as required to comply with the 

conditions of this resolution and in 

accordance with the zoning ordinances, 

building codes and all other standards and 

ordinances unless expressly stated to the 

contrary within the approvals granted.

In January 2011, the Zoning Board granted Advance what it 

characterized as a "de minimus change" regarding the widening of 

the sidewalk as "dictated" by the County Planning Board. This 

resolution again failed to include any reference to the City's 

affordable housing ordinance.

In April 2011, the Zoning Board reviewed and approved 

Advance's Amended Preliminary and Final Site Plan Approval to 
24 A-1535-12T2

address egress and ingress to the parking garage and changes to 

the loading dock facilities. The record includes the following 

colloquy between a Hoboken resident and Robert Bloch, Advance's 

architect, which occurred when the application was open for 

public comment:

RESIDENT: I just have one question. Are the 

plans that you presented tonight in 

accordance with the affordable housing 

ordinance [of] the City of Hoboken?

ARCHITECT: Yes, they will be.

RESIDENT: Meaning what?

ARCHITECT: Well, I would say I am not 

completely familiar with that document.

RESIDENT: Well, then, how could you tell me 

it is in conformance? You are saying they 

intend to do that?

ARCHITECT: Maybe [Advance's attorney] could 

answer.

ADVANCE'S ATTORNEY: I think the Board is 

going to impose a condition on the approval 

relating to affordable housing[.]

The Resolution of Approval adopted by the Zoning Board on 

May 17, 2011, describes in detail the evidence presented in 

support of the application and the variances requested, mentions 

the various revisions made to the original application, and 

lists the developer's witnesses who testified before the Board 

and their particular area of expertise. The resolution also 

specifically mentions the exchange between the "resident" and 
25 A-1535-12T2

Advance's architect and its attorney, as quoted above, and 

notes, "[the Resident]

[6] was informed that the Board will impose 

a condition on the approval relating to the applicant's 

affordable housing obligation." (Emphasis added). As further 

evidence that approval of the application was expressly 

conditioned on Advance's compliance with the City's affordable 

housing ordinance, the May 17, 2011 Approval Resolution also

includes the following provision:

The applicant shall be responsible for 

obtaining any other approvals or permits 

from other governmental agencies, as may be 

required by law, including but not limited 

to the Municipality's and State's affordable 

housing regulations; and the applicant shall 

comply with any requirements or conditions 

of such approvals or permits. 

[(Emphasis added).]

Advance has never requested any relief from this 

obligation. The record also does not contain a statement by the 

Zoning Board regarding how it expected Advance to comply with 

the affordable housing ordinance. See Hoboken, N.J., Code § 

196-69D (requiring each development to submit to the Planning 

Board a plan of compliance with the terms and conditions of the 

ordinance).

 

6 The Approval Resolution includes the name and address of the 

"resident." We have opted not to include this information in 

the opinion to protect the person's privacy.
26 A-1535-12T2

1415 Park

1415 Park owned property at 1415 Park Avenue in Hoboken. 

In February 2007, the Zoning Board granted preliminary site plan 

approval and variance relief for 1415 Park to demolish an 

existing parking garage and construct a twelve-story mixed-use 

development project that included 180 residential units, 

30,000 square feet of retail space, 46,055 square feet for an 

elementary charter school, and 371 parking spaces. The second 

application submitted in 2011 is the one challenged by Fair 

Share in this appeal. In this second application, 1415 Park 

sought to construct a twelve-story residential building that 

would accommodate 212 apartments, retail space, a significantly 

smaller school (reducing its proposed school facility from 

46,055 square feet in 2007 to 30,000 square feet in 2011), and 

thirty more parking spaces, resulting in a total of 401 parking 

spaces.

The transcription reflecting verbatim the discussions of 

the members of the Zoning Board during the June 28, 2011 meeting

approving the 1415 Park application indicates the Board's 

preoccupation with including in the resolution the "standard 

language pertaining to the [C]ity's affordable housing 

ordinance." The following colloquy also makes clear that the 

Board expected that mandate to be carried out as a "percentage"
27 A-1535-12T2

of the dwelling units:

BOARD CHAIRMAN: We're doing that.

BOARD MEMBER: What's the percentage, sir? I 

forgot.

BOARD COUNSEL: I don't have it in front of 

me right this second, I apologize.

BOARD MEMBER: Are we doing that on every 

application?

BOARD COUNSEL: This Board is doing it.

BOARD CHAIRMAN: Just in case, just in case.

BOARD MEMBER: Thank you. That's a biggie.

BOARD COUNSEL: We always have certain 

standardized conditions and that's one of 

them[.]

Condition number 3 of the resolution also stated:

The Applicant shall develop, prepare and 

improve the subject premises so as to 

conform with all of the details shown on the 

aforementioned plans and submissions, as 

presented to the Board and in accordance 

with the zoning ordinances, building codes 

and all other standards and ordinances 

unless expressly stated to the contrary 

within the approvals granted.

Several variances were granted: increasing maximum lot 

coverage from 65 percent to 81 percent; increasing number of 

building stories from eight to twelve; increasing maximum 

building height from 80 feet to 138 feet; decreasing minimum 

front yard and rear yard setbacks from 10 feet and 20 feet, 

respectively, to 0 feet in both yards; increasing maximum 
28 A-1535-12T2

permitted signage from 200 square feet to 345 square feet; and 

allowing parking variances for a "robotic" parking garage that 

did not use parking "spaces" or aisles. 

The resolution states, in granting the approval: 

4. The applicant shall be responsible for 

obtaining any other approvals or permits 

from other governmental agencies, as may be 

required by law, including but not limited 

to the Municipality's and State's affordable 

housing regulations; and the applicant shall 

comply with any requirements or conditions 

of such approvals or permits.

5. The applicant must comply with the 

Development Fee Ordinance of the City of 

Hoboken, if applicable, which Ordinance is 

intended to generate revenue to facilitate 

the provision of affordable housing. 

Nothing in the record before us indicates 1415 Park ever 

objected to or opposed any of these conditions at the time of 

the approval.

9th Monroe

9th Monroe owns property at 900 Monroe Street in Hoboken 

which consists of several lots as determined by the municipal 

tax assessor. In June 2007, under a prior owner (900 Monroe 

Development, LLC), the City's Zoning Board granted final site 

plan approval (preliminary site plan approval having been 

granted in October 2005) and variance relief for construction on 

this site, which previously had industrial uses. As amended in 

the final approval, the site was approved for construction of a 
29 A-1535-12T2

mixed-use development project that included 112 residential 

units, 7608 square feet of retail space, 10 townhouses, and 151 

parking spaces. 9th Monroe received variances regarding the 

following: permitted use; maximum number of stories; minimum lot 

width; maximum lot coverage; and minimum side yard. The 

approval resolution did not mention affordable housing, but 

stated, as condition 3, that the application "must comply with

the necessary requirements" of the City's zoning ordinances and 

of the MLUL.

Condition number 4 of the resolution also stated:

The Applicant shall develop, prepare and 

improve the subject premises so as to 

conform with all of the details shown on the 

aforementioned plans and submissions, as 

presented to the Board and in accordance 

with the zoning ordinances, building codes 

and all other standards and ordinances 

unless expressly stated to the contrary 

within the approvals granted.

This approved project was never built. As the new owner of 

900 Monroe Street, 9th Monroe applied in 2011 to amend the 2007 

approvals. The Zoning Board approved 9th Monroe's amended 

preliminary site plan, which included the following variance 

relief: a use variance to allow residential uses; an increase of

maximum building height from 80 feet to 126.5 feet, and eleven 

stories where the zoning ordinance permitted a maximum of four 

stories; residential density of 135 units, beyond the previously 
30 A-1535-12T2

approved 112 units; an automated garage of 188 spaces, with ten 

at grade; and a decrease of the minimum amount of masonry façade 

material from 75 percent to 34 percent. 

The approval resolution conditions included the following: 

4. The applicant shall be responsible for 

obtaining any other approvals or permits 

from other governmental agencies, as may be 

required by law, including but not limited 

to the Municipality's and State's affordable 

housing regulations; and the applicant shall 

comply with any requirements or conditions 

of such approvals or permits.

5. The applicant must comply with the 

Development Fee Ordinance of the City of 

Hoboken, if applicable, which Ordinance is 

intended to generate revenue to facilitate 

the provision of affordable housing.

Nothing in the record before us indicates 9th Monroe objected to 

or opposed any of these conditions at the time of the approval.

NJ Casket

NJ Casket owns property at 1400-1404 Clinton Street in 

Hoboken. The property covers several lots as determined by the 

municipal tax assessor. In August 2007, the City's Zoning Board 

granted preliminary site plan approval and variance relief for 

construction of a "mixed-use live-work loft building" on this 

site. As noted in the approval resolution, NJ Casket received 

the following variances: allowing residential uses in a district 

zoned for manufacturing and office uses; increasing maximum lot 

coverage from 65 percent to 100 percent on the ground floor and 
31 A-1535-12T2

76 percent on the higher floors; increasing the number of 

building stories from four to six; and decreasing minimum front 

yard, side yard, and rear yard setbacks from 10 feet, 10 feet, 

and 20 feet, respectively, to 0 feet in all three yards. The 

approval resolution did not mention the affordable housing

ordinance. Condition 2 included a generalized statement 

requiring the applicant to "comply with the necessary 

requirements" of the City's zoning ordinances and of the MLUL.

The original 2007 proposal was for a seven-story building 

with a mix of "live/work studios" and traditional residential 

units, in an area zoned for manufacturing and office uses. The 

studio/regular unit mix was initially proposed as 10/54, but was 

changed to 20/30 in the original preliminary site plan approval. 

In August 2010, NJ Casket sought and obtained approval to change 

the ratio again, to 10/49. That approval also noted some 

additional variances requested and approved, including for 

twenty-five percent roof coverage, where the zoned maximum was 

ten percent. In that approval resolution, adopted in January 

2011, the Zoning Board included among the terms and conditions 

the following: 

4. The applicant shall be responsible for 

the obtaining of any other approvals or 

permits from other governmental agencies, as 

may be required by law, and the applicant 

shall comply with any requirements or 

conditions of such approvals or permits.
32 A-1535-12T2

5. The applicant shall be responsible for 

the obtaining of any other approvals or 

permits from other governmental agencies, as 

may be required by law, and the applicant 

shall comply with any requirements or 

conditions of such approvals or permits, 

including compliance with COAH regulations.

6. An essential and non-severable 

condition of this approval is compliance 

with the Development Fee Ordinance of the 

City of Hoboken, if applicable, which 

Ordinance is intended to generate revenue to 

facilitate the provision of affordable 

housing.

NJ Casket received final site plan approval in early 2012, 

without any significant changes to its plans. The approval 

resolution included the following conditions: 

4. The applicant shall be responsible for 

obtaining any other approvals or permits 

from other governmental agencies, as may be 

required by law, including but not limited 

to the Municipality's and State's affordable 

housing regulations; and the applicant shall 

comply with any requirements or conditions 

of such approvals or permits[.]

5. The applicant must comply with the 

Development Fee Ordinance of the City of 

Hoboken, if applicable, which Ordinance is 

intended to generate revenue to facilitate 

the provision of affordable housing.

Consistent with the way the other developers behaved, the 

record before us does not indicate NJ Casket objected to or 

opposed any of these conditions at the time of the approval.

II

On November 9, 2012, the trial court issued a final 
33 A-1535-12T2

judgment in this consolidated matter confirming earlier rulings 

it had issued on June 1, 2012. The court found Hoboken's 

Affordable Housing Ordinance, codified as § 196-68 to -81, "is 

inconsistent with the Municipal Land Use Law, the Fair Housing 

Act, and the procedures and guidelines that have been 

promulgated by the Council on Affordable Housing[.]" The court 

"declared" the ordinance "null, void, and unenforceable as a 

matter of law[.]" The court enjoined the City from enforcing 

"any requirement" on the developers to construct affordable 

housing units and/or collect from these developers "any monetary 

contribution" related to the affordable housing. 

Without citing to any specific statute, the trial judge 

reached the following conclusion:

[I]t is the [c]ourt's view that the 

Legislature's intent was not that COAH 

review ordinances or review municipalities 

one time and leave it alone. COAH is 

intended, the [c]ourt's view, to be a 

vehicle that is permanent, fluid, consistent 

and regular. In that, the [c]ourt takes the 

position that COAH is vested with the 

authority not only to review the existing 

ordinances at the time that Mount Laurel

became effective but, also, to continue the 

review. In other words, they would be able 

to determine whether there was a need to 

alter, modify, increase or decrease a 

municipality's fair share responsibilities 

which necessarily would require their 

involvement through the entire process at 

some point. 

The trial court found support for this expansive oversight 
34 A-1535-12T2

role for COAH in Holmdel Builders Ass'n v. Holmdel, 121 N.J. 550 

(1990). Without citing to any specific language or analysis in 

Holmdel or discussing the facts of that case, the trial court 

concluded the Supreme Court in Holmdel "held that every 

municipality with an affordable housing obligation must submit

to COAH for approval of its plan to meet that need."

Fair Share and the City both argue the trial court erred in 

holding all municipal affordable housing ordinances require 

review by COAH, whether or not the municipality is under COAH 

jurisdiction seeking substantive certification. They maintain 

the trial court failed to appreciate the voluntary nature of 

COAH's jurisdiction, and the alternative route the FHA provides 

to municipalities under N.J.S.A. 52:27D-313(a).

1415 Park, 9th Monroe, and NJ Casket collectively argue 

COAH's involvement was required in all matters affecting 

affordable housing and satisfaction of obligations under the 

Mount Laurel doctrine. According to these developers, the FHA 

was intended to preempt the field, thus rendering the City's 

inconsistent affordable housing ordinance invalid.

We are satisfied the trial court misconstrued the purpose 

and role the Legislature intended COAH to play in assisting 

municipalities in fulfilling their constitutional obligation to 

provide a realistic opportunity for the construction of their 
35 A-1535-12T2

fair share of the present and prospective regional need for low 

and moderate income housing. See Mt. Laurel I, supra, 67 N.J.

at 174. The substantive certification process available to 

municipalities under N.J.S.A. 52:27D-313(a) is entirely 

voluntary. Toll Bros., Inc., supra, 173 N.J. at 513, 545. As 

Justice LaVecchia explained: 

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.

[In re N.J.A.C. 5:96 & 5:97, supra, 221 N.J.

at 4.]

There are no provisions in the FHA or regulations promulgated 

by COAH that required Hoboken in 1988 to submit its affordable 

housing ordinance for approval by COAH. This question is so 

firmly settled that it requires no further elaboration. See In 

re Adoption of N.J.A.C. 5:94 & 5:95, supra, 390 N.J. Super. at

6-9.

III

What is not settled, however, is whether the "payment in 

lieu" provisions in Hoboken's affordable housing ordinance 

needed COAH's approval under the Court's decision in Holmdel.
36 A-1535-12T2

Analysis of this issue requires a brief recitation of the legal 

landscape prior to and after the Holmdel decision. Before the 

Court issued its decision in Holmdel, COAH had proposed and 

adopted some relevant regulations. These amendments to COAH's 

first-round rules were proposed in April 1988, adopted in June 

1988, and codified at N.J.A.C. 5:92-8.4 under the heading

"Developer Agreements." 20 N.J.R. 865 (Apr. 18, 1988); 20 

N.J.R. 1689 (July 18, 1988). 

In its proposal, COAH noted its prior rules provided that 

inclusionary developments should presumptively contain a twenty 

percent set-aside of affordable housing units, at a gross 

density of six units per acre. This was intended to "provide a 

reasonable balance necessary to insure that the project is 

realistic and will actually be constructed." 20 N.J.R. 865. 

After it received several plans that deviated from those 

requirements, COAH found it necessary to develop standards 

regarding its consideration of such deviations. Ibid. COAH 

analyzed developer agreements throughout the state, and 

determined deviations from the presumptive requirements should 

be permitted if the three following conditions were met: "1.

That the agreement continues to provide the requisite realistic 

opportunity [for affordable housing]; 2. That the agreement not 

unduly burden the market units; and 3. That the developer must 
37 A-1535-12T2

have the experience and financial ability to perform its 

obligations. The burden is on the municipality proposing the 

agreement." Ibid.

The result of this process was the adoption of N.J.A.C.

5:92-8.4(d), through which COAH codified those three conditions 

and additionally provided increased densities and incentives for 

developers to build the affordable housing:

(e) All agreements where the market units 

are single family detached dwellings may 

provide that, in exchange for an increase 

over existing density, the developer either: 

construct low and moderate income units as 

part of an inclusionary development; or pay 

a voluntary fee to be utilized by the 

municipality for an RCA [regional 

contribution agreement] or municipally 

constructed low and moderate income housing.

The developer's expense in either case must 

bear a reasonable relationship to the 

increase in density, such that the agreement 

does not violate the test in (d)l.-3. above.

(f) Agreements where the market units are 

multi-family dwellings may permit deviations 

from the presumptive requirements of a 20 

percent set-aside:

l. Where there is also an increase over 

existing density. For example, in cases 

where the allowable density exceeds the 

presumptive minimum density requirement (for 

example, 10 to 16 units per acre on a multifamily development) it may be reasonable to 

have a set-aside higher than 20 percent.

2. Where the developer builds a higher 

proportion of moderate to low income units; 

or
38 A-1535-12T2

3. Where the agreement contains a comparable 

incentive.

4. Absent such incentives, a deviation from 

the presumptive requirement is not 

permitted. For example, an ordinance which 

requires a set-aside higher than 20 percent 

or a 20 percent set-aside plus additional

fees, and which permits only the minimum six 

units per acre and an equal split of low to 

moderate income units without any additional 

bonus densities or without other significant 

cost reductions or other incentives to the 

developer would not meet the test of 

(d) above since it results in a significant 

reduction of the realistic opportunity.

5. No agreement may provide for a voluntary 

developer fee without also providing for a 

comparable off-setting incentive.

[20 N.J.R. 1689-90.]7

These regulatory changes occurred before the City adopted 

its affordable housing ordinance in May 1988. A representative 

from COAH met with the City Council at a special meeting prior 

to the unanimous adoption of the City's affordable housing 

ordinance. COAH made more regulatory changes in December 1990 

in response to the Court's Holmdel decision.

Holmdel arose from "attempts by several municipalities to 

comply with their obligation to provide a realistic opportunity 

 

7 These regulations were adopted as proposed. See 20 N.J.R. 865. 

They generated only a few comments. 20 N.J.R. 1689. In 

response, COAH emphasized the need for appropriate incentives to 

developers to create a regulatory environment that provided a 

realistic opportunity for the housing to actually be built. 

Ibid. 
39 A-1535-12T2

for the construction of affordable housing under [the] ruling in 

Mt. Laurel II and the provisions of the FHA." Holmdel supra, 

121 N.J. at 556. After reviewing the history of the FHA and 

COAH's then evolving regulatory role and identity, the Supreme 

Court concluded,

agency rulemaking is reasonably required in 

order to fulfill the legislative purpose of 

the FHA with respect to inclusionary-zoning 

measures. We further conclude that COAH's 

exercise of its rulemaking authority in the 

area of inclusionary zoning is incomplete 

because COAH has not yet specifically 

addressed mandatory development fees as 

available inclusionary zoning devices. 

[Id. at 578 (emphasis added).]

As a result, "the development-fee ordinances were subject 

to review and certification by COAH as a constituent part of the 

housing-element plan of the respective municipalities." Id. at 

579. The Court determined "that COAH, through its rulemaking 

procedures, should specify standards for development fees, so 

that municipalities may consider employing such fees as 

inclusionary-zoning devices in designing their housing elements 

under the FHA." Ibid.

After discussing and rejecting various constitutional 

challenges, id. at 581-84, the Court emphasized the clear 

"similarities between mandatory set-asides and the developmentfee ordinances." Id. at 584. Harking back to Mt. Laurel II, 
40 A-1535-12T2

supra, 92 N.J. 158, the Holmdel Court reminded the litigants 

that "mandatory set-asides as a form of inclusionary zoning were 

not analogous to a tax. We viewed them as legitimate regulatory 

measures suitably addressed to the broad goals of zoning.

Development fees, to reiterate, perform an identical function." 

Ibid. Thus, the Court in Holmdel affirmed in part and reversed 

in part, holding: "Because of the absence of enabling 

administrative regulations, we hold that the current 

development-fee ordinances were not validly adopted." Id. at

586.

Three months later, in March 1991, COAH published in the 

New Jersey Register a notice of pre-proposal for Mandatory 

Developer Fee Regulations, citing COAH's intent to adopt rules 

to implement the Holmdel decision. 23 N.J.R. 646 (Mar. 4, 

1991). COAH characterized Holmdel as having held that 

municipalities were authorized under the FHA, MLUL, and the 

police power "to establish mandatory developers' fees on 

commercial and non-inc1usionary residential property to fund low 

and moderate income housing but that municipalities could not 

exercise that authority until COAH adopted rules establishing 

the circumstances under which such fees may be permissibly 

collected and spent." Ibid. To establish such rules, COAH 

wrote that it had formed a Task Force and was soliciting
41 A-1535-12T2

comments from interested parties on the following issues: 

the overall wisdom of mandatory developers'

fees in the overall context of the State's 

affordable housing policy; the type of 

developments that should be subject to fees;

the amount of the fees imposed and the 

nature of its assessment; the relationship 

of fees to other inclusionary-zoning 

measures such as mandatory set-asides and 

density bonuses, the conditions for the 

creation and administration of affordable 

housing trust funds; the requirements for

the use and application of such funds, 

whether a system of development fees should 

include counterbalancing density bonuses; 

and any other relevant concerns.

[Id. at 646-47.]

COAH also issued an order authorizing municipalities to retain 

previously collected fees pending its rules promulgation, adding 

that the anticipated rules "will address the appropriate 

disposition of any fees collected prior to the Supreme Court's 

Holmdel decision." Id. at 647.

COAH proposed its new rules in September 1991. COAH 

determined that, as a general rule, a municipality wishing to 

collect development fees would need to undertake the otherwise 

optional step of petitioning COAH for substantive certification. 

23 N.J.R. 2813 (Sept. 16, 1991). COAH would review the fee 

collection proposal as part of its comprehensive review of 

substantive certification. Ibid. Several circumstances would 

require exceptions to that rule, including these: where 
42 A-1535-12T2

municipalities already had received substantive certification or 

the court-issued alternative judgment of repose; where 

exclusionary zoning cases were in litigation; or where fees 

already had been collected. Ibid. 

COAH set forth another exception relating to "urban aid 

municipalities," which expressly included Hoboken. See 18 

N.J.R. 1547 (August 4, 1986); 26 N.J.R. 2352 (June 6, 1994)

(listing urban aid municipalities including the City in first 

and second round rule adoptions). As to these municipalities, 

COAH explained:

Urban aid municipalities present a special 

case. These municipalities have 

historically accepted a disproportionate 

share of New Jersey's poor and, as a result, 

many have exceedingly high fair share

obligations. Therefore, it would be very 

difficult for these cities, as a class, to 

address their entire obligation in a six 

year period.

The Legislature has recognized the 

effort of urban aid cities in Section 302 

and 320 of the Fair Housing Act. The 

Council has recognized the role urban aid 

municipalities have accepted in its 

methodology. Urban aid municipalities have 

not been assigned reallocated present need 

or prospective need. Therefore, the Council 

will allow these municipalities to collect 

fees outside of the substantive 

certification process.

[23 N.J.R. 2814 (emphasis added).]

Substantively, the proposed rule described both how fees 
43 A-1535-12T2

could be collected and how COAH would analyze whether 

municipalities could retain fees that had been paid prior to the 

rule's adoption. On the latter issue, COAH wrote:

The Council has determined that it is vital 

for purposes of implementing the Fair 

Housing Act for municipalities to have the 

opportunity to retain development fees 

collected prior to December 13, 1990. 

Millions of dollars were collected as a 

result of ordinances regulating development 

during years of substantial real estate 

activity. These residential and commercial 

projects were not directly related to the 

satisfaction of a municipality's fair share 

obligation, yet they consumed the one 

irreplaceable resource for satisfying the 

town's obligation under the Fair Housing 

Act. 

[Ibid. (emphasis added).] 

COAH further highlighted that development approvals had 

been conditioned on payment of the fees, so now the development 

sites were no longer available to satisfy the affordable housing

obligation. "Therefore, a resource that could have been used 

for low and moderate income housing will have been dissipated, 

unless municipalities can retain development fees." Ibid. It 

was thus equitable to allow the municipalities to retain the 

fees. Ibid. 

COAH explained further that it had studied available 

municipal ordinances in New Jersey and throughout the nation to 

craft fee maximums, based on a percentage of equalized assessed 
44 A-1535-12T2

valuation that would not be confiscatory. Ibid. COAH's rules 

would allow higher fees if a compensatory benefit, such as a 

density bonus, was allowed, or under a negotiated agreement with 

the developer. Ibid. With this approach, COAH deleted as no 

longer necessary its prior rule regulating voluntary agreements, 

N.J.A.C. 5:92-8.4(d) through (g). Ibid. 

As part of this 1991 rule proposal, in the sections setting 

forth the "Basic requirements" and "Urban aid municipalities"

rules, municipalities were prohibited from collecting or 

spending funds without COAH's approval. Id. at 2816 (setting 

forth the proposed rules N.J.A.C. 5:92-18.2 and -18.3).

As to the maximum fees that would be allowable under the 

rules without granting additional density bonuses, the proposed 

N.J.A.C. 5:92-18.10 allowed municipalities to collect one-half 

of one percent of the equalized assessed value for residential 

development, and proposed N.J.A.C. 5:92-18.11 allowed one 

percent of the equalized assessed value for non-residential 

developments. Id. at 2817 (setting forth the proposed rules 

N.J.A.C. 5:92-18.10 and -18.11). Negotiated agreements, subject 

to COAH's approval, could be allowed if they included incentives 

in exchange for higher fees. Ibid. 

Similar to the ordinance at issue here, the rule provided 

for payments in lieu as follows:
45 A-1535-12T2

(c) Municipalities may allow developers of 

sites zoned for inc1usionary development to 

pay a fee in lieu of building low and

moderate income units provided the Council 

determines the municipal housing element and 

fair share plan provides a realistic

opportunity for addressing the municipal 

fair share obligation. The fee may equal 

the cost of subsidizing the low and moderate 

income units that are replaced by the 

development fee. For example, an

inclusionary development may include a 20 

percent set-aside, no set-aside and a fee 

that is the equivalent of a 20 percent setaside or a combination of a fee and setaside that is the equivalent of a 20 percent 

set-aside.

[Ibid. (setting forth the proposed rule

N.J.A.C. 5:92-18.10(c)).]

These rules were adopted in December 1991, effective 

January 21, 1992, as N.J.A.C. 5:92-18.1 to -18.20, with minimal 

changes. 24 N.J.R. 235, 242-45 (Jan. 21, 1992).

As this historical recitation demonstrates, Holmdel and the 

regulatory scheme it spawned were meant to address development 

fees, not payments in lieu as described in Hoboken's affordable 

housing ordinance. Holmdel, supra, 121 N.J. at 578. Although 

the Middletown Township payment-in-lieu provision in Holmdel was 

substantially similar to the provision in Hoboken's ordinance, 

the Holmdel case involved a very dissimilar procedural posture 

from the present matter. The Holmdel case arose when 

municipalities were first tinkering with the idea of development 

fees. The Holmdel Court wanted COAH's regulatory input on this 
46 A-1535-12T2

issue before the State's numerous municipalities created a 

multitude of "cash cow" ordinances unrelated, and perhaps even 

inimical, to the public policy and constitutional underpinnings

of the Mount Laurel Doctrine. The case before us here arose 

decades later, when COAH's position on how to deal with fees had 

been long established.

Independent of this historical analysis, we also find 

support for this outcome in the FHA. N.J.S.A. 52:27D-329.3(a)

expressly authorizes "Payments in lieu" subject to regulatory 

oversight by COAH only when a municipality seeks substantive 

certification:

The council may authorize a municipality 

that has petitioned for substantive 

certification 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. 

Payment-in-lieu fees shall be deposited into 

a trust fund, and accounted for separately 

from any other fees collected by a 

municipality. Whenever a payment-in-lieu is 

charged by a municipality pursuant to this 

subsection, a development fee authorized 

pursuant to section 8 of P.L.2008, c.46 

(C.52:27D-329.2) shall not be charged in 

connection with the same development.

(Emphasis added).

This key distinction is also replicated in COAH's 

regulations. Under N.J.A.C. 5:97-8.3(b), a municipality is 
47 A-1535-12T2

authorized to impose "development fees" after it has "petitioned 

the Council" and obtained approval of its "development fee 

ordinance":

No municipality, except municipalities 

seeking to achieve or that have received a 

judgment of compliance, shall impose or 

collect development fees unless the 

municipality has petitioned the Council with 

an adopted Housing Element and Fair Share 

Plan and the Council has approved the 

municipality's development fee ordinance 

pursuant to N.J.A.C. 5:96-5.1.

[N.J.A.C. 5:97-8.3(b).]

By contrast, N.J.A.C. 5:97-8.4(a), the regulation 

permitting municipalities to include "payments in lieu" as an 

"option for onsite construction," does not contain the kind of 

COAH approval process reflected in N.J.A.C. 5:97-8.3(b). 

Indeed, N.J.A.C. 5:97-8.4(a) provides,

[a] municipality may, as an option to the 

on-site construction of affordable housing 

otherwise required by ordinance, provide for 

a payment in lieu of construction subject to 

the requirements of this section and 

N.J.A.C. 5:97-6.4.[8]

To summarize, the payment in lieu section of the Hoboken 

Affordable Housing Ordinance did not require approval by COAH as 

a condition of enforcement. 

 

8 N.J.A.C. 5:97-6.4 describes the provisions of "Zoning for 

inclusionary development."
48 A-1535-12T2

IV

Conclusion

We reverse the trial court's decision invalidating the 

Hoboken Affordable Housing Ordinance for the reasons expressed 

here. We remand these cases to the trial court for such further 

proceedings as may be necessary to address and adjudicate to 

finality the remainder of the issues raised by defendants/thirdparty plaintiffs.

Reversed and remanded. We do not retain jurisdiction.