Opinion ID: 2002109
Heading Depth: 2
Heading Rank: 1

Heading: The Occupancy Preference and State Affordable-Housing Policy

Text: The occupancy-preference regulation itself cannot be sensibly reconciled with the overall regulatory scheme that has been adopted by COAH to implement the Fair Housing Act and therefore cannot coexist within the present regulatory framework. There is a fundamental inconsistency between the occupancy preference and COAH's methodology for calculating regional fair share and allocating that fair share among the region's municipalities. As noted, supra at 16-17, 622 A. 2d at 1264-1265, regional prospective need for 1987-1993 is calculated primarily on the basis of county-wide population forecasts, county-wide age cohort statistics, county-based statistics estimating household formations, and statewide income statistics projecting the percentage of households in each age cohort that will be eligible for low- and moderate-income housing. The affordable-housing needs of municipal residents are reflected only in the calculation of substandard housing units, in order to determine each municipality's indigenous need, and no party has challenged the principle that all housing units built or rehabilitated to satisfy indigenous present need are to be allocated to eligible residents. But to the extent that financially-needy local residents, currently living in standard housing units or otherwise not identified by COAH's equating of indigenous need with substandard-housing stock, are eligible to occupy low- and moderate-income housing units, that pool of residents has not been included directly in the calculation of regional prospective need. Supra at 14-15, 622 A. 2d at 1263-1264. To the contrary, COAH's methodology for calculating such need relies almost exclusively on county-wide statistics. By implication, to the extent the occupancy preference favors local residents, the likelihood is that the housing needs of those who benefit from the preference were not considered in calculating the prospective regional need for affordable housing. The inconsistency between the occupancy preference and COAH's methodology may be illustrated simply by reference to Bloomingdale. That municipality's regional fair-share obligation of 117 units is to be satisfied by construction of 118 new units, fifty-nine of which are reserved for local residents and workers. To the extent that the reserved units are occupied by financially-needy Bloomingdale residents not considered in the calculation of Bloomingdale's fair share, the preference will defeat COAH's formula by reducing below its fair-share obligation the number of housing units actually available in Bloomingdale to meet the regional need. COAH's current methodology also ignores eligible residents in its allocation formula but assigns fifty percent of the weight in the allocation formula to each municipality's proportionate share of the region's employment and its proportionate share of the region's employment growth. Offsetting the weight accorded to employment-related data are the municipality's growth-area land in proportion to that of the region, and the municipality's per-capita income as a percentage of the region's per-capita income. The result is that COAH's allocation methodology balances job-related housing demand with a municipality's physical and financial capacity to absorb affordable housing. Supra at 17-19, 622 A. 2d at 1265-1266. In the aggregate, we conclude that the weight COAH has assigned to housing demand by eligible local residents and eligible local workers in calculating and allocating prospective regional need and reallocated present need does not justify a fifty-percent occupancy preference for eligible residents and workers. Although job-related housing demand is significant in the allocation formula, it is unidentified in the prospective-fair-share calculation. Nor has COAH attempted to relate the grant of an occupancy preference for workers to its fair-share calculation or allocation methodology. That local workers are taken into account in the allocation to a municipality of its regional fair share neither compels nor justifies a regulation that accords a preference to both residents and workers for housing constructed to fulfill a regional need, although we acknowledge that a limited preference only for workers would be less vulnerable to challenge than the resident and worker preference in its present form. Absent evidence of the agency's rationale or attempted correlation between the occupancy preference and the fair-share methodology, we conclude that both the authorization and the extent of the occupancy preference are inconsistent with COAH's methodology for calculating regional fair share. Consequently, we conclude that the occupancy-preference regulation is invalid and cannot survive in its present context as a valid exercise of agency rule-making. That conclusion indicates that the occupancy preference as currently adopted does not comport with the Fair Housing Act. The underlying theme of the Fair Housing Act is found in the Legislature's acknowledgment that the zoning ordinance of every growth-area municipality must provide a realistic opportunity for a fair share of its region's present and prospective needs for housing for low and moderate income families. N.J.S.A. 52:27D-302a. The Act is declared by the Legislature to comprehend[] a low and moderate income housing planning and financing mechanism in accordance with regional considerations    which satisfies the constitutional obligation enunciated by the Supreme Court. N.J.S.A. 52:27D-303. The evident focus of the Act is regional, implying that consideration and accommodation of local needs for affordable housing must be reconciled or integrated with the meeting of regional needs. We also noted at the outset of this opinion, supra at 9-12, 622 A. 2d at 1261-1262, that the Mount Laurel doctrine derived from this Court's concern that a municipality like Mount Laurel, through its zoning ordinances, had made it physically and economically impossible to provide low and moderate income housing in the municipality for the various categories of persons who need and want it    thereby    exclud[ing] such people from living within its confines because of the limited extent of their income and resources. Mount Laurel I, supra, 67 N.J. at 173, 336 A. 2d 713. The Mount Laurel doctrine was intended to redress the widespread use of exclusionary zoning in New Jersey. To that end, this Court rejected the view, characterized by the Mount Laurel ordinance, that a municipality adequately discharged its zoning burden by providing housing only for its own low-income population. We held that a developing municipality's obligation to afford the opportunity for decent and adequate low and moderate income housing extends at least to    the municipality's fair share of the present and prospective regional need therefor. Id. at 188, 336 A. 2d 713. Now, seventeen years after this Court's decision in Mount Laurel I, some 23,000 low- and moderate-income housing units have been scheduled for production and approximately 14,000 units have been completed. See Martha Lamar et al., Mount Laurel at Work: Affordable Housing in New Jersey, 1983-1988, 41 Rutgers L.Rev. 1197, 1209 (1989) ( Mount Laurel at Work); Future Uncertain for Mount Laurel Affordable Housing, The Star-Ledger, Nov. 15, 1992, at 1. Although COAH has not maintained statistical records concerning occupants of existing Mount Laurel housing, the available information, although limited, suggests that such housing may not be serving regional needs. See Mount Laurel at Work, supra, 41 Rutgers L.Rev. at 1264. COAH's occupancy-preference regulation may be a factor in the existing pattern of absorption of Mount Laurel housing. The Mount Laurel doctrine is generally and correctly understood as prohibiting economically exclusionary zoning practices. See John M. Payne, Title VIII and Mount Laurel: Is Affordable Housing Fair Housing?, 6 Yale L. & Pol'y Rev. 361 (1988). Although the Court in Mount Laurel I acknowledged that the plaintiffs represented minorities that had been excluded from housing opportunities, we observed that the class affected by exclusionary zoning ordinances was much broader: Plaintiffs represent the minority group poor (black and Hispanic) seeking such quarters. But they are not the only category of persons barred from so many municipalities by reason of restrictive land use regulations.    We will, therefore, consider the case from the wider viewpoint that the effect of Mount Laurel's land use regulation has been to prevent various categories of persons from living in the township because of the limited extent of their income and resources. [67 N.J at 159, 336 A. 2d 713 (footnotes omitted).] However, our Mount Laurel jurisprudence permitted no room for doubt that the urban poor were of special significance among the class of persons disadvantaged by exclusionary zoning practices: Much industry and retail business, and even the professions, have left the cities. Camden is a typical example. The testimonial and documentary evidence in this case as to what has happened to that city is depressing indeed. For various reasons, it lost thousands of jobs between 1950 and 1970, including more than half of its manufacturing jobs (a reduction from 43,267 to 20,671, while all jobs in the entire area labor market increased from 94,507 to 197,037). A large segment of retail business faded away with the erection of large suburban shopping centers. The economically better situated city residents helped fill up the miles of sprawling new housing developments, not fully served by public transit. In a society which came to depend more and more on expensive individual motor vehicle transportation for all purposes, low income employees very frequently could not afford to reach outlying places of suitable employment and they certainly could not afford the permissible housing near such locations. These people have great difficulty in obtaining work and have been forced to remain in housing which is overcrowded, and has become more and more substandard and less and less tax productive. There has been a consequent critical erosion of the city tax base and inability to provide the amount and quality of those governmental services  education, health, police, fire, housing and the like  so necessary to the very existence of safe and decent city life. This category of city dwellers desperately needs much better housing and living conditions than is available to them now, both in a rehabilitated city and in outlying municipalities. They make up, along with the other classes of persons earlier mentioned who also cannot afford the only generally permitted housing in the developing municipalities, the acknowledged great demand for low and moderate income housing. [ Id. at 172-73, 336 A. 2d 713.] In assessing realistically the impact of the occupancy preference on the entire class of economically-disadvantaged persons affected by exclusionary zoning practices  including minorities and the urban poor  we take into account the viewpoint often expressed that the pool of suburban poverty substantially exceeds the projected numbers of low- and moderate-income households used in COAH's fair-share formulas. See Payne, supra, 6 Yale L. & Pol'y Rev. at 368. Another commentator, expressing concern that eligible African-Americans will not benefit from the construction of Mount Laurel housing, speculates that because of the large number of eligible urban white households, selection criteria left unmonitored could result in apparent significant success for the Mount Laurel mandate without accommodating a single black family. Robert C. Holmes, A Black Perspective on Mount Laurel II: Toward a Black Fair Share, 14 Seton Hall L.Rev. 944, 950 (1984). In sum, the validity of the occupancy preference cannot be determined out of context, and the relevant context is both pragmatic and historical. The practical argument for sustaining the preference is that because the affordable housing constructed in a municipality serves the regional need, those eligible households whose members reside or work in the municipality should be given first choice, rather than be forced to move elsewhere. A related argument  but not one that can be based on the current occupancy preference  is that there may be persons among a municipality's resident poor who have special needs or concerns pertaining to age, health, or responsibilities to dependents that may justify a local housing preference tailored specifically to such persons. The pragmatic argument against the preference is that as it addresses the housing needs of local residents and workers, it simultaneously excludes from even the chance to compete for the reserved units all eligible households in the region whose members, by virtue of their own poverty, are equally deserving of affordable housing, but neither reside nor are employed in the municipality. The region's urban poor  white and minority  are among those excluded from applying for the affordable housing units subject to the preference in these six municipalities. Those considerations indicate that the occupancy preference in its current form does not comport with the doctrine of Mount Laurel. Under prevailing zoning practices prior to Mount Laurel I and II, suburban municipalities frequently excluded the poor through ordinances that did not permit construction of affordable housing. In Mount Laurel I, we held that the State Constitution requires that local zoning ordinances permit construction within each municipality of affordable-housing units sufficient to provide not only for any local need, but also for a municipality's fair share of the region's need. That constitutional objective was ratified by the Fair Housing Act, and implemented by COAH's fair-share methodology. Thus, the affordable-housing units constructed to address regional needs within these six municipalities reflect each municipality's compliance with the constitutional and statutory prohibition against exclusionary zoning, because their evolution defines them as housing units built for the region's poor, constituting the municipality's fair share of the region's need. In that historical context, the occupancy preference in its present form cannot apply to housing units built to comply with the Fair Housing Act and the Mount Laurel doctrine, because the preference without any standards excludes from eligibility for a portion of the municipality's low- and moderate-income housing members of the class for whose benefit the obligation to construct that housing was established. We understand and appreciate the concern of these and other municipalities that long-standing residents, because of economic circumstances, may be unable to continue to reside in their communities. Without any occupancy preference, such residents are eligible to compete on an equal footing for a municipality's affordable-housing units constructed to satisfy its regional obligation. State affordable housing policy, however, does not or need not constitute an absolute bar against dealing with the affordable housing needs of local residents. A municipality whose local need for affordable-housing units is not fulfilled by the construction of the units mandated by COAH's methodology may, if feasible, zone for additional affordable housing and, subject to state and federal anti-discrimination laws, reserve such units to address exclusively local needs, provided that its regional obligation pursuant to the Fair Housing Act is not diluted. In addition, COAH is free to consider alternative means by which to recognize the affordable housing needs of eligible local residents. For example, if COAH's methodology for calculating regional need took into account financially-needy households in the respective municipalities, COAH could consider authorization of an occupancy preference tailored to eligible local households with special needs, on the condition that such a preference did not frustrate compliance with a municipality's regional obligation to provide affordable housing. Infra, at 40-41, 622 A. 2d at 1277-1278. Those approaches, aside from their feasibility, would be consistent with the main principle of our affordable-housing policy with its focus on regional need because they would not diminish a municipality's regional obligation. Considerations of alternative approaches to address local needs for affordable housing, however, impel us to emphasize that we do not rule today on the validity of other possible local preferences for lower-income residents, or on the extent to which the Fair Housing Act and the Mount Laurel doctrine would permit an occupancy preference tailored to meet genuine special and cognizable needs of residents otherwise eligible for affordable housing, irrespective of a municipality's regional obligation. The complexities and varieties of that issue suggest caution in resolving such possibilities in the abstract. Accordingly, we decide only the invalidity of the preference before us.