Opinion ID: 1901249
Heading Depth: 2
Heading Rank: 3

Heading: Calculating Fair Share

Text: The most troublesome issue in Mount Laurel litigation is the determination of fair share. It takes the most time, produces the greatest variety of opinions, and engenders doubt as to the meaning and wisdom of Mount Laurel. Determination of fair share has required resolution of three separate issues: identifying the relevant region, determining its present and prospective housing needs, and allocating those needs to the municipality or municipalities involved. Each of these issues produces a morass of facts, statistics, projections, theories and opinions sufficient to discourage even the staunchest supporters of Mount Laurel. The problem is capable of monopolizing counsel's time for years, overwhelming trial courts and inundating reviewing courts with a record on review of superhuman dimensions. We have had enough experience with Mount Laurel litigation to warrant procedural modifications designed, over a period of time, to simplify these determinations. The procedural modification provided in this opinion (confining all Mount Laurel litigation to a limited number of judges) is well within conventional judicial techniques. The first hint of the troubles ahead in determining fair share is found in Mount Laurel I: The composition of the applicable region will necessarily vary from situation to situation and probably no hard and fast rule will serve to furnish the answer in every case. Confinement to or within a certain county appears not to be realistic, but restriction within the boundaries of the State seems practical and advisable. [67 N.J. at 189-90]. The concurrence was more specific. Referring to the three issues mentioned above, it noted that: [A]ll of these steps involve difficult factual determinations based upon expert testimony and statistical evidence. It may well be appropriate for the court to appoint independent experts or consultants for its assistance or to invite participation by the Department of Community Affairs as amicus curiae. ... [C]onflicting decisions within a given region would be highly undesirable. .. . [67 N.J. at 216 (Pashman, J., concurring) (citations omitted)]. By the time we reached Madison, the full import of what sounded like benign flexibility in Mount Laurel I had become apparent. Ruling that the trial court need not make findings either of a specific region or of the precise fair share of a municipality within that region, we noted: Firstly, numerical housing goals are not realistically translatable into specific substantive change in a zoning ordinance by any technique revealed to us by our study of the data before us. There are too many imponderables between a zone change and the actual production of housing on sites as zoned, not to mention the production of a specific number of lower cost units in a given period of time. Municipalities do not themselves have the duty to build or subsidize housing. Secondly, the breadth of approach by the experts to the factor of the appropriate region and to the criteria for allocation of regional housing goals to municipal subregions is so great and the pertinent economic and sociological considerations so diverse as to preclude judicial dictation or acceptance of any one solution as authoritative. For the same reasons, we would not mandate the formula approach as obligatory on any municipality seeking to correct a fair share deficiency. [72 N.J. at 499]. Again: The formulation of a plan for the fixing of the fair share of the regional need for lower income housing attributable to a particular developing municipality, although clearly envisaged in Mount Laurel, 67 N.J. at 162, 189-190, involves highly controversial economic, sociological and policy questions of innate difficulty and complexity. Where predictive responses are called for they are apt to be speculative or conjectural. [ Madison, 72 N.J. at 533]. A reading of Madison with its comprehensive coverage not only of the facts and expert opinions in that case but also of the voluminous literature with its wealth of contrasting doctrine and approaches is still the most convincing argument now, as it was to us then, to modify the doctrine. Confronted with the overwhelming demonstration provided by Madison that the factors that make up the Mount Laurel doctrine are simply too complex and too interwoven with social, political and economic issues to permit judicial resolution, we ruled, bluntly, that they need not be resolved. We pointed out, not once, but on numerous occasions, that the problem is better addressed by others. ([T]he basic underlying social problem is far better addressed by administrative action than litigation. 72 N.J. at 499 n. 5. Distinguishing fair share determinations by administrative planning agencies from courts adjudicating Mount Laurel disputes, we also noted that [t]he correlative disadvantages of a court adjudicating an individual dispute are obvious. Id. at 533.) One possible resolution of the fair share issue by an administrative agency was contained in A Revised Statewide Housing Allocation Report for New Jersey promulgated by the New Jersey Division of State and Regional Planning in May 1978. As noted in Madison, a preliminary draft of the HAR had been circulated, and but for its status as tentative and subject to further public hearings and review, we suggested we might regard the regions and fair share allocations contained therein as meriting prima facie judicial acceptance. Madison, 72 N.J. at 538. [22] Subsequent to our decision in Madison the report was updated (although still designated for public review and comment) to May 1978. Without in any way implying support for or approval of the legitimacy, method or results of that report, it was the kind of administrative action that arguably provided a means not only for resolving the litigated issues, but for achieving a much more substantial degree of voluntary compliance with Mount Laurel. On May 4, 1982, the Executive Orders that provided the legal justification for the HAR (Executive Order No. 35, April 2, 1976, and No. 46, December 8, 1976) were rescinded by Executive Order No. 6. Any regulations adopted and promulgated under Executive Orders No. 35 and 46 were to be null and void. While the basis for such rescission (said plan has proven to be inadequate to effectively meet the housing needs of the citizenry of New Jersey; the orders have proven inadequate and ineffective in meeting their stated goal; Executive Order No. 6) did not explicitly foreclose use of the HAR in Mount Laurel litigation, we believe such use would not be in keeping with the spirit of the Governor's Executive Order, which is to render the HAR a nullity. Since the Executive's authorization and approval provided the legitimacy for the use of such report in Mount Laurel litigation, our authorization of its further use after that rescission would be clearly inappropriate. With the rescission of Executive Orders 35 and 46 and the consequent unavailability of the HAR for Mount Laurel litigation, we remain confronted with precisely the same problem we faced in Madison. In that case, it was the determination of fair share that was disturbing, a determination that was comprised of the region, its need, and the allocation of that need. One must necessarily have some humility, based upon the past eight years of experience with Mount Laurel, in expressing confidence about its practical effect, but of this we are confident: our approach in Madison does not work and is not likely to. When we relieved the parties and the court of the obligation to determine with precision the region, its need, and the fair share of the municipality, we underestimated the pressures that weigh against lower income housing. Given those pressures, the test of whether the ordinance in substance provided some opportunity for either lower income or least-cost housing, and whether bona fide efforts had been made to minimize cost-generating requirements in a reasonable area of the municipality, has proven insufficient. The temptation for municipalities after our decision in Madison to ignore the Mount Laurel obligation or to provide the absolute minimum of apparently realistic opportunity for some lower income housing apparently became irresistable. Some of its results are before us today. Trial courts interpreted Madison as shifting the burden of compliance from the judiciary to the municipality and looked sympathetically on ordinances that arguably constituted a bona fide effort to comply. Sometimes, when the litigation was concluded, no one would know what the fair share of that municipality was, for no one had been required to determine it. There was no standard that municipalities could apply if they wanted to comply. This recognition of the complexities of the issue and the consequent reformulation of the rule in Madison unfortunately provided no relief from the complexities of Mount Laurel litigation, for parties could, and often did, continue to prove region, need, and fair share with the same profusion of facts and expert opinions but without knowing whether the court would regard the evidence as persuasive or even relevant. In summary, in spite of our intentions, Madison has led to little but a sigh of relief from those who oppose Mount Laurel. The situation must be remedied. In the absence of executive or legislative action to satisfy the constitutional obligation underlying Mount Laurel, the judiciary has no choice but to enforce it itself. Enforcement, to be effective, will require firm judicial management. The difficulty in making the Mount Laurel obligation a reality is perhaps unique, for it consists of determining the obligation as much as enforcing it. Litigation that at its conclusion leaves everyone in doubt as to just what the constitutional obligation was and just how it was complied with has, in the aggregate, the effect of leaving the constitutional obligation itself in doubt. Until the regions of New Jersey, their present and prospective lower income housing needs, and the allocation of those needs among all of the municipalities of the state charged with the Mount Laurel obligation are determined, uncertainty will prevail, and the weakness of the constitutional doctrine will continue. We intend today to begin a process aimed at ultimately eliminating the uncertainty that surrounds these issues. The restriction of Mount Laurel litigation to three judges should simplify and perhaps, in time, substantially eliminate the issues of region and regional need from litigation. Of the three major issues in this area, their determination is most susceptible to judicial treatment. We implied as much in Madison when we contrasted [t]he technical details of the basis for fair share allocations of regional goals among municipalities, pertaining as they do to an area of considerable complexity and theoretical diversity ... with the gross regional goal, 72 N.J. at 536, and when we noted that [t]here is much greater diversity among the experts [concerning fair share allocation] than in relation to determining pertinent regions. Id. at 541. We also noted that the determination of region was more important in achieving the goals of Mount Laurel than the fair share allocation itself (harm to the objective of securing adequate opportunity for lower income housing is less likely from imperfect allocation models than from undue restriction of the pertinent region, id. ). As noted above, following the release of this opinion the Chief Justice, with the approval of the Court, will name three judges (the number to be changed if necessary) who will thereafter handle all Mount Laurel litigation (except some of the cases before us now and except for other pending matters, as to which transfer to those three judges will be at the discretion of the Chief Justice). Each of these three judges will be exclusively responsible for a particular area of the state; any litigation challenging a land use regulation of a municipality in that judge's area on Mount Laurel grounds shall be assigned to that judge. We anticipate that after several cases have been tried before each judge, a regional pattern for the area for which he or she is responsible will emerge. Ultimately a regional pattern for the entire state will be established, as will a fairly consistent determination of regional needs on both an area and statewide basis. Given that only three judges are involved, it is also not unreasonable to assume that the method for determining the municipality's fair share of the regional need will be consistent within the judge's area and tend to promote consistency throughout the state. The determination of region and regional need by any of these judges shall be presumptively valid as to all municipalities included in the region unless the judge hearing the matter indicates otherwise for reasons stated in his or her decision. [23] Given the importance of these determinations, municipalities not named as parties may attempt to intervene or the court may require their joinder if, all things considered, it is thought advisable that such a municipality be bound by the determination even though such joinder may complicate the litigation. The extent of such litigation, whether non-party municipalities should be allowed to participate, and whether they should be joined as parties, shall all be within the discretion of the court, who will be better able to balance the various considerations involved. While it is possible that many municipalities may seek to enter such litigation, we believe that as a practical matter most will be content to abide by litigation in which others are involved. There may be exceptions, but in most cases municipalities will realize that the determination of region will probably not be substantially affected by their participation in the litigation; that while the variations in the definition and delineation of the region are infinite, its general contours are fairly predictable; and that the same applies to some extent to regional need. In short we foresee that within several years the fair share question will be confined to the allocation issue. Our use of the SDGP should end practically all disputes over the existence of the Mount Laurel obligation and, in relatively short time, adjudication by the three judges should end most disputes over region and regional need. In practically all cases the only issue (other than the adequacy of the housing opportunity provided by the ordinance) that may require serious litigation is a particular municipality's fair share of that need. And even as to that issue, the housing allocation methodologies previously adopted should simplify it considerably. It is possible, of course, that the presumptively valid region and regional need determinations may be seriously contested, but we doubt it. Except for municipalities on the outer edges of a region, the regional determinations are not likely to be significantly varied by the judges, given the desirability of consistency and predictability; only the strongest evidence is likely to lead to substantial change. If the importance given to the initial litigation by the rule of presumptive validity results in a case more complex and with more parties than it might otherwise have been, we believe the ultimate potential gains are well worth it. As implied above in our summary of rulings (Ruling 4, supra at 216-217), additional benefits may follow from this procedure. Each of the three judges will become more and more adept in handling Mount Laurel litigation, in defining and narrowing the issues early in the litigation, in expediting the case, in determining when an expert should be appointed by the court and when a master should be named to aid the municipality in its revision of a zoning ordinance, and ultimately in devising remedies suitable for the complete redress of exclusionary zoning. Such Mount Laurel litigation shall proceed using the previously accepted definitions and methods of determining region, regional need, and fair share. For example, we indicated in Madison our general approval of Judge Furman's definition of region (72 N.J. at 537), slightly modified, as that general area which constitutes, more or less, the housing market area of which the subject municipality is a part, and from which the prospective population of the municipality would substantially be drawn, in the absence of exclusionary zoning. Id. at 543. A trial court's acceptance of any variant of this definition should be premised on special circumstances. Certainly in its ultimate determination the court may consider the factors mentioned in Justice Pashman's concurring opinion in Mount Laurel I, 67 N.J. at 215 n. 16. We will not attempt here to provide any further guidance for the determination of regional need, but leave that to the experts, including the experts appointed by the trial courts pursuant to our opinion. As for fair share, however, we offer some suggestions. [24] Formulas that accord substantial weight to employment opportunities in the municipality, especially new employment accompanied by substantial ratables, shall be favored; formulas that have the effect of tying prospective lower income housing needs to the present proportion of lower income residents to the total population of a municipality shall be disfavored; formulas that have the effect of unreasonably diminishing the share because of a municipality's successful exclusion of lower income housing in the past shall be disfavored. In determining fair share, the court should decide the proportion between low and moderate income housing unless there are substantial reasons not to do so. The provisions and devices needed to produce moderate income housing may fall short of those needed for lower. Since there are two fairly distinct lower income housing needs, an effort must be made to meet both. The proportion between the two is, inevitably, a matter for expert testimony. It will depend, as does the fair share itself, on a complex mix of factors. We note, without comment, the trial court's use in Carteret, for this purpose, of the actual proportion between the low and moderate income population of the county. 142 N.J. Super. at 36-37. The point here is that it is an issue that should be addressed in passing on the adequacy of land use regulations (and revisions thereof) as well as builder's remedies. Cf. Madison, 72 N.J. at 549 & n. 48, 551 (builder's remedy conditioned on allocation of at least 20% of the units to low or moderate income families; in fact, allocation would be satisfied by moderate income units only). The ultimate outcome of such litigation in most cases shall be a determination by the court of a precise region, a precise regional present and prospective need, and a precise determination of the present and prospective need that the municipality is obliged to design its ordinance to meet. We recognize that the tools for calculating present and prospective need and its allocation are imprecise and further that it is impossible to predict with precision how many units of housing will result from specific ordinances. What is required is the precision of a specific area and specific numbers. They are required not because we think scientific accuracy is possible, but because we believe the requirement is most likely to achieve the goals of Mount Laurel. While it would be simpler in these cases to calculate a municipality's fair share by determining its own probable future population (or some variant thereof), such a method would not be consistent with the constitutional obligation (although it is a factor that could be considered in a fair share calculation in the absence of other proof). Municipal population projections are based on many factors, but in no case that we know of do they include a value judgment that such municipality should bear its fair share of the region's lower income housing need. In fact, in most cases, we believe, one of the factors necessarily involved in such municipal population projections is the prior and probable future effect of the municipality's exclusionary zoning. If, because of that exclusionary zoning, a suburban municipality with substantial developable land has a very, very small probable growth as shown by the most reliable population projections (resulting in part from its very small past growth caused by exclusionary zoning), it should not be allowed to evade its obligation by basing its fair share of the lower income housing need on that small projected population growth. On the other hand, when that municipality is considered as part of the region and the region's population growth is projected, a value judgment is made, based upon the Mount Laurel obligation, that may result in a substantially greater fair share for that municipality and indeed may have the effect of changing what would otherwise be the population projection for that municipality. It may be that the overall population projections for the State of New Jersey and for its various regions are somewhat affected by the aggregate impact of exclusionary zoning  that is something for experts to determine. Even so, when gross population projections are used for a region, it is more likely that the total lower income housing need will be included and much more likely that whatever lower housing income need is in fact included will be distributed fairly, not in accordance with prior patterns of exclusionary zoning but in accordance with suitability for such housing.