Appellate Panel: State Can’t Take Towns’ COAH Funds

TRENTON – “In light of the court’s determination and COAH’s (Council on Affordable Housing) abject failure to adopt the regulations required by the 2008 amendments, we now enjoin the seizure of any trust funds by COAH or the executive branch; the future disposition of the trust funds will be directed by our courts on a case-by-case basis,” a three-judge Appellate Court panel wrote April 9 in forbidding the state from seizing funds set aside by municipalities for affordable housing and placing them into the general fund.
The case, which regarded the failure of COAH to adopt trust fund commitment regulations, was argued March 24, protects from state takeover millions of dollars set aside since July 2012.
According to the COAH website, four of Cape May County’s municipalities had unspent balances as of July 17, 2012. They were: Cape May Point, $26,153, Middle Township, $1,339,976, Ocean City, $1,844,322, and Upper Township, $136,382.
“Despite the Legislature’s clear and unambiguous direction that COAH promulgate regulations defining when affordable housing trust funds are committed, and despite previously expressing its intention to comply with that command, COAH has failed and refused to adopt regulations, leaving municipalities in a morass of uncertainty while facing the prospect of an arbitrary seizure of affordable housing trust funds,” the court wrote.
“In light of COAH’s inaction, Fair Share Housing Center (appellant) filed this appeal asking that we order COAH to adopt regulations and that we bar transfer of trust funds to the State…” it continued.
“Our Supreme Court determined that because of COAH’s chronic failure to adopt Third Round Rules, “there no longer exists a legitimate basis to block access to the courts.”
“In 2008, COAH’s then-Executive Director Lucy Vandenberg wrote to all New Jersey mayors explaining … that COAH was authorized to promulgate regulations regarding the expenditure of development fees in the municipal trust funds.
“In 2012, Department of Community Affairs (DCA) Commissioner Richard E. Constable prepared amendments purporting to define when funds were considered to be expended or committed for expenditure. But regulations were never adopted and, in their absence, municipalities were left to try other less formal methods, without success, including an entreaty by one group of municipalities to the Governor regarding the uncertainty presented by the status quo.”
“Those municipalities argued that, without a clear and present understanding about the meaning and scope of “commit to expend,” they would be placed in the unhappy position of committing funds while remaining liable to reimburse from their own funds or by raising taxes if COAH later devised more stringent guidelines.”
The deadline neared, and legislation was passed to extend the four-year deadline for another two years. On June 29, 2012, that legislation was vetoed by the governor. He further “line-item-vetoed language in the 2012-2013 budget which would have defined what funds were “committed” and thus ineligible for transfer to the state.
“With that proposed definitional language excised, the 2012 budget bill as signed into law provided that an ‘amount not to exceed $200 million from the municipal affordable housing trust funds and transferred to the New Jersey Affordable Housing Trust Fund as funds that have not been committed ‘shall be deposited in the General Fund as State revenue.’”
Since then, “It also does not appear that proceedings anticipated by a 2012 resolution adopted by COAH, or proceedings in the manner tailored to our interim orders in this appeal, have commenced or proceeded to completion. And COAH has not met since October 2014,” the court wrote.
“In explanation for its failure to adopt regulations, COAH claims no regulations are needed – that the 2008 amendments provide sufficient clarity. This is not a serious response to the problem at hand. The 2008 amendments required COAH to promulgate regulations to define when trust funds are “committed.”
The court noted that the statue did not state COAH “may” adopt regulations, but that the Legislature mandated COAH “shall” create regulations.
“The simple fact is that COAH has ignored the considered wisdom of our Legislature by failing to promulgate rules. The only legitimate debate concerns the road to now be taken,” the court continued, adding, “We are empowered to review not just agency action but agency inaction.”
“COAH has not acted as required by the Legislature, and the parties have been placed in a most uncertain position with respect to these funds… Despite the need for our courts to step into the fray – because COAH stepped out – we remain mindful that “[t]he judicial role here is not to become a replacement agency for COAH.”
“In light of the recent action taken by the Supreme Court – and barring a change in the status quo – the courts are the only available forum for addressing these matters. The issues raised in this appeal can no longer be left in COAH’s moribund hands.
“Absent some change in circumstances, we enjoin COAH or any other part of the executive branch from engaging in any further attempt to seize affordable housing trust funds. The use and disposition of those funds will hereafter be decided, in the first instance, by Mount Laurel-designated trial judges.”
The order took effect immediately.