Opinion ID: 2002109
Heading Depth: 2
Heading Rank: 2

Heading: Calculation of Municipal Fair Share of Present and Prospective Need.

Text: The Fair Housing Act itself is silent with respect to how and to what extent a municipality may address needs relating to its own residents. The Act does not expressly authorize municipalities to establish occupancy preferences for their own residents and workers in respect of low- and moderate-income housing constructed to meet its fair share of the region's needs. The Public Advocate stresses that under the regulations implementing the Fair Housing Act, COAH's basic methodology for calculating each municipality's fair share of its region's need for low- and moderate-income housing cannot be reconciled with an occupancy preference for residents and workers. The Public Advocate emphasizes that the data from which those municipalities' fair shares were derived are primarily regional rather than local and, as a result, the occupancy preference provides low- and moderate-income housing on a preferential basis to households that did not comprise the data base from which municipal fair share was calculated. That contention invites a searching examination and explanation of COAH's methodology for calculating regional need and municipal fair share. COAH's methodology is substantially similar to that used by Judge Serpentelli in AMG Realty Co. v. Township of Warren, 207 N.J. Super. 388, 398-410, 504 A. 2d 692 (Law Div. 1984). Regional need is composed of a combination of present need and prospective need. COAH uses a four-factor formula to allocate the fair share of prospective regional need among municipalities in the region and applies three of those four factors in its fair-share allocation of non-indigenous present need among those same municipalities.
A municipality's present need for low- and moderate-income housing (present need) is the sum of its indigenous need and its reallocated present need. N.J.A.C. 5:92-5.5. Indigenous need in a municipality is either the actual number of deficient housing units occupied by low- and moderate-income households or, in municipalities in which the proportion of deteriorated low- and moderate-income housing units exceeds the regional percentage, a reduced number that bears the same proportion to the total number of housing units in the municipality as the number of deteriorated low- and moderate-income housing units in the region bears to the total housing units in the region. N.J.A.C. 5:92-5.2; N.J.A.C. 5:92  Appendix A at 92-41 to 43. In those municipalities whose deficient housing units, as a percentage of all housing units, exceeds the regional average, the excess deficient-housing units are accumulated in a regional pool and reallocated to all municipalities in the region's growth area, except for certain Urban Aid Cities designated in the Technical Appendix to COAH's regulations. N.J.A.C. 5:92-5.4; 5:92  Appendix A at 92-43 to 44 and 92-56. A municipality's allocated fair share of the regional pool of such excess deficient low- and moderate-income housing units constitutes that municipality's reallocated present need. N.J.A.C. 5:92-5.4; 5:92  Appendix A at 92-43 to 44. We note that the term indigenous need, as calculated by COAH, is somewhat of a misnomer in that it includes only housing units that require upgrading but does not include households in the municipality that demonstrate a present need for affordable housing. Such households may reside in standard housing units, paying a disproportionate share of their income for housing, or because of poverty may be forced to share housing with their extended families. In AMG Realty Co., supra, Judge Serpentelli also excluded that category of financially-needy households from the calculation of Warren Township's present need, observing that inclusion of those households would increase dramatically the municipality's obligation to provide affordable housing sufficient to address its indigenous need, and noting the difficulty of calculating accurately the number of households that should be included in the category of financial need. 207 N.J. Super. at 388, 504 A. 2d 692. Notwithstanding the methodology adopted by the Law Division in AMG Realty Co., the Fair Housing Act vests in COAH the responsibility for determining whether identifiable financially-needy households are to be considered in the calculation of indigenous or regional need for affordable housing.
The Substantive Rules of the Council on Affordable Housing, which became effective in August 1986, see 18 N.J.R. 1124(b), 18 N.J.R. 1527(a), and expire in February 1996, provide that the prospective regional need for low- and moderate-income housing be calculated primarily on the basis of the estimated regional population growth from 1987, the base year for determining present need, to 1993. The population figures are divided into eight age groups or cohorts: Less than twenty-five years; twenty-five to twenty-nine years; thirty to thirty-four years; thirty-five to forty-four years; forty-five to fifty-four years; fifty-five to sixty-four years; sixty-five to seventy-four years; and seventy-five years and over. Using 1980 county-based statistics, the population growth projections are converted into estimates of growth in households, based on headship rates, which predict the expected percentages of household formation in each age group. See AMG Realty Co., supra, 207 N.J. Super. at 403, 504 A. 2d 692. After the projected number of households in each age cohort has been calculated for both 1987 and 1993, statewide 1980-based income statistics are used to project the percentage of households in each age cohort that will qualify for low- and moderate-income housing. The difference between the projected number of low- and moderate-income households in each age cohort for 1987, as compared with 1993, constitutes the projected county-wide need by age group for low- and moderate-income housing units. The county-wide figures are combined in order to arrive at the prospective need for each of the State's six regions. N.J.A.C. 5:92-5.6; 5:92  Appendix A at 92-44 to 92-46. County-wide data constitute the statistical basis from which each region's prospective need for low- and moderate-income housing has been calculated. Because prospective need is defined as the difference between the projected number of low- and moderate-income households in 1987 and 1993, and COAH's regulations became effective in 1986, the calculation of the estimated number of 1987 and 1993 low- and moderate-income households necessarily relied in part on statistical projections. The source data include the following studies: State of New Jersey, Dep't of Labor, Div. of Planning and Research, Office of Demographic and Economic Analysis, Population Estimates for New Jersey, July 1, 1984 (Trenton, NJ: Div. of Planning and Research, Sept. 1985) (1984 Population Estimates); State of New Jersey, Department of Health, New Jersey State and County Population Estimates by Age, Sex, and Race (Trenton, NJ: Center for Health Statistics, Oct. 1985) (1985 Population Estimates); State of New Jersey, Dep't of Labor, Div. of Planning and Research, Office of Demographic and Economic Analysis, Population Projections  New Jersey and Counties: 1990 to 2020 (Trenton, NJ: Div. of Planning and Research, November 1985) (1990-2020 Population Projections). See N.J.A.C. 5:92  Appendix A at 92-44, -45, and -58. The 1984 Population Estimates rely on actual 1980 census data for municipalities and counties, and include provisional estimates as of July 1, 1984, for both municipalities and counties, but without breakdowns by age cohorts. The 1985 population estimates are county-wide only, but include age-group breakdowns. The 1990-2020 Population Projections include population projections at five-year intervals on a county-wide basis only, and include breakdowns by age groups. (COAH's projections for 1993 are based on three-fifths of the difference between the 1990 and 1995 county-wide population projections.) The calculation of projected household formations is also based on county-specific headship rates. N.J.A.C. 5:92  Appendix A at 92-45. Examination of the specific underlying data used by COAH leads inescapably to the conclusion that the calculation of each region's prospective need, based on anticipated population growth and household formation by age cohort from 1987 to 1993, represents the cumulative county-wide population and household projections within each region. The underlying data do not contain municipal-population projections beyond 1984.
Each municipality's share of the region's prospective need for low- and moderate-income housing is based on four factors, the first two of which relate to municipal need for and responsibility to provide affordable housing, and the latter two relate to municipal capacity to provide such housing. Although all four factors, weighted equally, determine the allocation of prospective need, only the first three factors are applied in distributing reallocated present need. N.J.A.C. 5:92-5.3; 5.4. The allocation factors are the following: (a) Regressed annual covered employment change within a municipality from 1977-1984, as a percentage of regional regressed annual covered employment change for the same period. (Covered employment refers to employees covered by the New Jersey Unemployment Compensation Law, L. 1936, c. 270, as amended. For an explanation of the difference between an arithmetic and a regression measurement of employment growth, see AMG Realty Co., supra, 207 N.J. Super. at 441-42, 504 A. 2d 692.); (b) Covered employment in a municipality as a percentage of regional covered employment (1984); (c) Municipal land located in growth areas as a percentage of growth area in the region; (d) Municipal 1983/1984 aggregate per-capita income as a percentage of 1983/1984 regional aggregate per-capita income. N.J.A.C. 5:92  Appendix A at 92-46. We note that fifty percent of the weight accorded to the prospective-need-allocation factors derive from the municipality's proportionate share of the region's employment and the municipality's proportionate share of the region's employment growth. That emphasis on employment recognizes that an important objective of the Mount Laurel doctrine is to provide workers with housing in the vicinity of their place of employment. Mount Laurel II, supra, 92 N.J. at 256, 456 A. 2d 390; AMG Realty Co., supra, 207 N.J. Super. at 412-14, 504 A. 2d 692. Counter-balancing the weight accorded employment in the allocation formula, however, are the municipality's physical capacity to accommodate new housing units  as reflected by the growth-area factor  and its financial capacity to absorb infrastructure costs incidental to high-density development  measured by the comparison between the municipality's and the region's per-capita income. By according a municipality's physical and financial capacity to accommodate affordable housing a significance equal to that assigned to the demand for housing generated by local employment, COAH has developed an allocation formula that avoids concentrating affordable housing in less affluent industrial communities in favor of a formula that encourages the construction of affordable housing in communities with the financial capacity and adequate growth-area land to absorb high-density housing. See AMG Realty Co., supra, 207 N.J. Super. at 433-34, 504 A. 2d 692. When we compare the method of calculation with the method of allocation, we discern that COAH deems housing demand generated by municipal employment to be more relevant for purposes of allocating prospective regional need than it is for purposes of calculating the extent of that need, presumably on the basis that workers are likely to reside in the region and therefore have already been taken into account by the population projections used to forecast prospective need. That relevance is diluted, however, by COAH's decision to accord equal weight to a municipality's physical and fiscal capacity to accommodate affordable housing.