LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
SENATE, No. 50
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: MARCH 21, 2024
SUMMARY
Synopsis: Reforms municipal responsibilities concerning provision of affordable
housing; abolishes COAH; appropriates $16 million.
Type of Impact: State and local cost impacts.
Agencies Affected: The Judiciary, Department of Community Affairs, New Jersey
Housing and Mortgage Finance Agency, Highlands Water Protection
and Planning Council, Municipalities.
Office of Legislative Services Estimate
Fourth 10-Year Round Every 10-Year Round
Fiscal Impact (Beginning in FY 2026) Thereafter
State Cost Increase $16 million Indeterminate
Potential State Cost Decrease Indeterminate Indeterminate
Local Cost Impact Indeterminate Indeterminate
 The Office of Legislative Services (OLS) concludes that the bill will result in an indeterminate
impact to State costs associated with the role of the Department of Community Affairs to
determine the regional need for affordable housing and the prospective fair share per
municipality, as well as with certain responsibilities of the Affordable Housing Dispute
Resolution Program related to any challenge of a municipality’s obligation, housing element,
or fair share plan.
 The bill appropriates a total of $16 million for: (1) the new program to function in the fourth
round, which begins on July 1, 2025, and (2) the Department of Community Affairs to fulfill
the requirements of the bill.
 The OLS finds that the State may experience cost avoidance in implementing the provisions
of the bill, in lieu of the current Substantive Certification and Fair Share Housing Settlement
Agreement regimes.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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 The bill will also result in an indeterminate impact to municipal costs associated with the
requirement that a municipality determine its affordable housing obligation and establish a
housing element and fair share plan. The OLS notes that municipalities have incurred
significant costs in the third round of affordable housing obligations through the court process
that followed the Council on Affordable Housing becoming defunct.
BILL DESCRIPTION
This bill abolishes the Council on Affordable Housing, initially established by the Fair Housing
Act, and establishes a process to enable a municipality to determine its own present and prospective
fair share affordable housing obligation based on the formulas established in the bill, as calculated
the Department of Community Affairs. In advance of the fourth 10-year round of affordable
housing obligations, beginning on July 1, 2025, the bill requires the department to complete these
calculations, and provide for their publication, within the earlier of seven months of the effective
date of the bill or December 1, 2024.
The bill permits a municipality to diverge from Department of Community Affairs’
calculations in determining its obligation as long as it adheres to the methodology established by
the bill. In advance of the fourth round, the bill requires a municipality to adopt its obligation by
binding resolution, on or before January 31, 2025, in order to be assured of protection from
exclusionary zoning litigation through which a municipality may otherwise be compelled to permit
development, when the fourth round begins. If the municipality meets this deadline, then the
municipality’s determination of its obligation would be established by default, beginning on March
1, 2025, as the municipality’s obligation for the fourth round. However, if a challenge is filed with
the Affordable Housing Dispute Resolution Program, established in the bill, on or before February
28, 2025, the program would be required to facilitate a resolution of the dispute prior to April 1,
2025. The presence of this ongoing dispute would not change the deadline for adoption of
implementing ordinances and resolutions, but the implementing ordinances and resolutions
adopted prior to the resolution of the dispute may be subject to changes to reflect the results of the
dispute. As an alternative to adopting all necessary implementing ordinances and resolutions by
the March 15 deadline, a municipality involved in a continuing dispute over the issuance of
compliance certification would be permitted to adopt a binding resolution by this date to commit
to adopting the implementing ordinances and resolutions following resolution of the dispute, with
necessary adjustments.
The bill requires a municipality to establish a "housing element" to encompass its obligation,
and a fair share plan to meet its obligation, in advance of the fourth round, and proposes necessary
changes to associated ordinances, on or before June 30, 2025, in order to be assured of protection
from exclusionary zoning litigation.
A municipality would be required to submit its adopted fair share plan and housing element to
the program. The bill permits an interested party to initiate a challenge to a municipal fair share
plan and housing element, if submitted through the program on or before August 31, 2025. The
program would facilitate communication over the challenge, and provide the municipality until
December 31, 2025 to commit to revising its fair share plan and housing element in response to
the challenge, or provide an explanation as to why it will not make all or the requested changes,
or both. The bill requires municipalities to adopt associated changes to municipal ordinances on
or before March 15, 2026. If a municipality fails to meet these deadlines, then the immunity of
the municipality from exclusionary zoning litigation would end unless the program determines that
the municipality’s immunity shall be extended. If a municipality fails to materially adhere to any
of these deadlines due to circumstances beyond the municipality’s control, the bill directs the
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program to permit a grace period for the municipality to come into compliance with the timeline,
the length of which, and effect of which on later deadlines, is to be determined on a case-by-case
basis.
In any challenge to a municipality’s determination of its affordable housing obligation, or to
its fair share plan and housing element, the bill requires the program to apply an objective
assessment standard to determine whether or not the municipality’s obligation determination, or
its fair share plan and housing element, fails to comply with the requirements of the bill. Further,
the challenger would be required to provide the basis for its challenge based on applicable law,
and the program would have the power to dismiss challenges that do not provide such a basis.
All parties would be required to bear their own fees and costs for proceedings within the
program. A determination by the program as to municipal obligations or compliance certification
would be considered a final decision, subject to appellate review.
The Administrative Director of the Courts would appoint an odd number of at least three and
no more than seven members to serve as program leaders for the program established by the bill,
consisting of retired and on recall judges, or other qualified experts. The members and employees
of the program would be considered State officers and employees for the purposes of the New
Jersey Conflicts of Interest Law, P.L.1971, c.182. The Administrative Director of the Courts
would also establish procedures for the purpose of efficiently resolving circumstances in which
the program is unable to address a dispute over compliance certification within the time limitations
established in the bill. As a part of these procedures, in order to facilitate an appropriate level of
localized control of affordable housing decisions, for each vicinage, the bill directs the Chief
Justice of the Supreme Court to designate a Superior Court judge who sits within the vicinage, or
a retired judge who, during his or her tenure as a judge, served within the vicinage, to serve as
county level housing judge to resolve disputes over the compliance, of fair share plans and housing
elements of municipalities within their county, with the Fair Housing Act, when those disputes are
not be resolved within the deadlines established in the bill. The Administrative Director of the
Courts would adopt and apply a Code of Ethics for the program and county level housing judges
modeled on the Code of Judicial Conduct of the American Bar Association, adopted by the State
Supreme Court, and may establish additional more restrictive ethical standards in order to meet
the specific needs of the program and of county level housing judges.
Each municipality’s determination of its fair share obligation would be made through the
guidance of preliminary calculations made by the Department of Community Affairs. No later
than August 1 of the year prior to the year when a new round of housing obligations begins, or, for
the fourth round, within seven months of the effective date of the bill or December 1, 2024,
whichever is earlier, the bill requires the department to calculate regional need and municipal
present and prospective obligations in accordance with formulas established in the bill. The
department’s calculations would be made publicly available, and provided to each municipality
for use in determining their present and prospective obligations.
Municipal fair share obligations would be determined by applying the methods provided in the
bill, along with the methods used by the Superior Court for the third round, to the extent that
applicable methodologies are not explicitly articulated in the bill. Municipal present need
obligations would be determined by estimating the existing deficient housing currently occupied
by low- and moderate- income households within the municipality.
Regional prospective need would next be determined, upon which to base the municipal
obligation, by estimating the regional growth of low- and moderate-income households during the
housing round at issue. If household change is zero or negative, the number of low- and moderate
income homes needed to address low- and moderate-income household change in the region and
the regional prospective would be zero.
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After determining regional prospective need, each municipality’s fair share prospective
obligation of that regional prospective need would be determined. To do this, the Department of
Community Affairs would first determine whether a municipality is a qualified urban aid
municipality, and if so, the municipality would not have a prospective need obligation.
If the municipality is not a qualified urban aid municipality, three factors necessary for the
prospective fair share determination would be calculated based on three factors, as specified in the
bill. The average of these three factors would be determined and multiplied by the regional
prospective need to determine the municipality’s gross prospective need.
Finally, the bill requires, where appropriate, adjustments for secondary sources of housing
supply and demand by first calculating demolitions of low- and moderate-income housing, and
housing creation through residential conversions. After applying these secondary sources, as
appropriate, the municipality’s prospective fair share obligation for the 10-year round would be
established.
The bill establishes limitations on the use of municipal affordable housing trust fund moneys
for administrative costs, attorney fees, court costs to obtain immunity from exclusionary zoning
litigation, to contest the municipality’s fair share obligation, or use of the trust fund moneys while
a municipality does not have immunity from exclusionary zoning litigation. The bill authorizes a
municipality to expend a portion of its affordable housing trust fund on actions and efforts
reasonably related to, or necessary for, certain processes of the program, as provided in the bill.
The bill requires each municipality authorized to retain and expend non-residential development
fees to periodically provide the Department of Community Affairs with an accounting of all such
fees that have been collected and expended.
The bill requires the Department of Community Affairs to maintain certain affordable housing-
related information on its website, including: (1) the start and expiration dates of deed restrictions;
(2) residential and non-residential development fees collected and expended, including purposes
and amounts of such expenditures; and (3) the current balance in the municipality’s affordable
housing trust funds. The bill also directs municipalities to provide the information to the
department necessary to comply with this requirement.
The bill appropriates $12 million to the program, and $4 million to the Department of
Community Affairs, from the General Fund, for the purposes of carrying out their respective
responsibilities for the fourth round of affordable housing obligations.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
Background
In 1975 and 1983, respectively, the New Jersey Supreme Court ruled that each municipality
has a constitutional obligation to provide a realistic opportunity for the construction of their fair
share of affordable housing and created the “builder’s remedy” suit. The purpose of the builder’s
remedy is to enable builders to commence litigation against municipalities to defend the
constitutional rights of low- and moderate-income households in return for having their properties
rezoned for high density multi-family housing which contain an affordable housing element. In
response to these Supreme Court decisions, lawmakers enacted the Fair Housing Act which
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provided an alternative administrative process for municipalities to participate in, to be overseen
by the Council on Affordable Housing. One purpose of the council was to review a municipality's
affordable housing plan and provide “substantive certification” to those plans that would provide
a realistic opportunity for the construction of affordable housing within the municipality. Any
municipality that received substantive certification would be shielded from the costly court process
of a builder's remedy lawsuit. The council was also responsible for developing regulations and
creating criteria related to each municipality's affordable housing obligation. Using its rulemaking
authority, the council was meant to determine and assign a municipality's affordable housing
obligation. Between 1986 and 1999, the council undertook two successful rounds of rulemaking
to establish a formula meant to set each municipality’s affordable housing obligation, but failed to
establish rules for the third round, which was intended to begin in 1999, but ultimately began in
2015 following a 16-year gap period.
Today, the Council on Affordable Housing has been effectively defunct through inaction in
appointing members as required by the Fair Housing Act. Municipalities are currently required to
go through the process created by the court and overseen by a court appointed special master to
obtain the functional equivalent of Substantive Certification, and to be protected from builder’s
remedy lawsuits and certain other exclusionary zoning lawsuits.
Impact
The OLS concludes that the bill will result in increases to State costs associated with the role
of the Department of Community Affairs to determine the regional need for affordable housing
and the prospective fair share per municipality, as well as with certain responsibilities of the
program related to any challenge of a municipality’s obligation, housing element, or fair share
plan. The bill appropriates a total $16 million for: (1) the new program to function in the fourth
round, which begins on July 1, 2025, and (2) the Department of Community Affairs to fulfill the
requirements of the bill. The bill will also result in an indeterminate impact to municipal costs
associated with the requirement for a municipality to determine its affordable housing obligation
and establish a housing element and fair share plan.
Under the bill, the Department of Community Affairs would be responsible for determining
regional affordable housing need and for calculating the prospective fair share for each
municipality using formulas prescribed by the bill. The bill’s regional need formula considers
factors in a method similar to what was used by the courts in the third round of affordable housing
obligations. The department would be required to make these calculations in advance of each new
10-year round. The calculations of municipal obligations would be informed by information
provided by the Highlands Water Protection and Planning Council regarding Highlands-
conforming municipalities.
Municipalities would then be required to determine their own affordable housing obligation,
using the Department of Community Affairs’ fair share calculations and local factors, and establish
a housing element to encompass their obligation and a fair share plan to meet the obligation with
accompanying