Municipalities must understand the recent affordable housing legislation and prepare now for “Fourth Round” compliance.
Governor Murphy recently signed into law P.L. 2024, c. 2, which according to the Governor’s press release, “…establishes a new, streamlined framework for determining and enforcing municipalities’ affordable housing obligations under the New Jersey Supreme Court’s Mount Laurel Doctrine and the State’s Fair Housing Act.” However, the more things change, the more they stay the same. Let me explain.
Importantly, the Fair Housing Act now codifies: (1) The formulas to calculate each municipality’s affordable housing obligation, and (2) Incentivized mechanisms for meeting the affordable housing obligation including special needs and senior housing. Like in prior rounds, there are caps to the number of bonus credits a municipality may use toward satisfaction of its obligation.
Instead of trying to figure out the rules, as municipalities did in prior rounds, affordable housing requirements are now defined. Going forward, municipalities are not wasting effort trying to figure out the rules while warding off Builder’s Remedy lawsuits. By streamlining determinations of compliance, the new legislation hopes to assist municipalities in retaining control over development in their region for the entire ten-year period of the fourth round, instead of fighting for fifteen to twenty years, just to start over again.
As the process begins, here are a few highlights of what municipalities can expect over the next year in terms of timing.
(1) The Department of Community Affairs (“DCA”) will be taking over the development of each municipality’s affordable housing quota. Based on the new formula, the DCA will publish a report calculating the housing obligation for each municipality on or before October 20, 2024. Each municipality can decide to accept the DCA’s published number or develop their own number based on the Fair Housing Act’s formula.
(2) By the end of January 2025, all municipalities are required to adopt “binding resolutions” to establish the affordable housing obligation.
(3) Once the binding resolution is adopted, the determination of the obligation may be challenged on or before February 28, 2025.
(4) If no challenge is filed, the obligation is established, and the municipality proceeds to develop its Housing Element and Fair Share Plan (“HEFSP”). This plan establishes how a municipality will satisfy its obligation. It must be adopted by June 30, 2025.
There are a few foreseeable issues with the timeline to consider.
(1) In order to comply with the deadline of January 31, 2025, for adopting a binding resolution regarding the affordable housing obligation, municipalities should anticipate difficulties and potential delays related to weather conditions, onboarding newly elected officials, and time-consuming reorganization meetings.
(2) As it relates to challenges being filed by February 28, 2025, the DCA will use the Affordable Housing Dispute Resolution Program (“AHDRA”) to resolve the challenges. The AHDRA will consist of three to seven current or former judges per county. Other experts may be appointed if an insufficient number of judges are available. The AHDRP will resolve challenges by March 31, 2025. With 564 municipalities in 21 Counties in New Jersey, this one-month timeframe appears to be an ambitious goal.
(3) Adopting an HEFSP, which establishes how the municipality will meet its obligation, takes time. It must be adopted by ordinance which must be introduced at one meeting, and then adopted after a public hearing at another meeting. Additionally, the proposed HEFSP must be reviewed and endorsed by the municipal planning board prior to adoption by the governing body. Depending on the scheduling of the meetings of the planning board and governing body, it is likely that the HEFSP will need to be introduced in April or May 2025 to ensure it is adopted by June 30, 2025. Again, municipalities must plan carefully in order to meet the deadline.
The recent amendments to the Fair Housing Act bring some certainty in substance and process to the Fourth Round. However, it remains to be seen how the legislation is actually going to be implemented. There may still be obstacles which derail the legislative intent to establish an expedited process. While those issues cannot be controlled, there are many things a municipality can manage by being aware and prepared now.
Make sure you have appointed an affordable housing attorney and planner to start preparing for the municipality’s Fourth Round obligation. You should be consulting with these professionals as to the municipality’s Third Round Compliance, any Third-Round obligation that will need to be satisfied in the Fourth Round, and any available funds in the municipality’s affordable housing trust fund. Also, start discussions on the anticipated obligation for the Fourth Round, and what mechanisms may be available to satisfy those obligations. Lastly, when planning the municipality’s regularly scheduled meetings for 2025, be cognizant of the January and June 2025 deadlines. Make sure meetings are scheduled to provide the municipality with adequate meeting dates to satisfy those requirements.
If you have questions about Affordable Housing, please contact Robert Wright, rwright@malamutlaw.com.
The content of this post should not be construed as legal advice. You should consult a lawyer concerning your particular situation and any specific legal question you may have.
