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July 16, 2012

URGENT and TIME SENSITIVE

Re: Appellate Division Decision Regarding Trust Funds

Dear Mayor:

After a Friday morning hearing, the Appellate Division of the New Jersey Superior Court issued a nuanced decision late Friday  that will require the Council on Affordable Housing (COAH) to provide due process to municipalities before seizing any municipal housing trust fund dollars.   The decision is online at:  http://www.njslom.org/documents/COAH-ORDER-mccdoc.pdf

Here are the major developments from the decision:

  • The Court denied the request for the Court to order an injunction preventing the State from attempting to seize municipal housing trust fund dollars.   However, as detailed below, the Court also placed certain restrictions on any attempt by COAH to require a municipality to transfer trust fund money to the state.
  • The Court, however, also required COAH to provide written notice to the municipality on each occasion, and to give the municipality an opportunity to contest the transfer.

Specifically, the Court wrote,

“We are nevertheless concerned that, under these circumstances, COAH may seize affordable housing trust funds without giving the affected municipalities adequate notice and an opportunity to contest the transfer.   We, therefore, order that before any transfer is effectuated, COAH must provide the affected municipality with written notice describing the exact amount of funds intended for transfer and how such amount was calculated….The municipality shall have the right to contest before COAH the proposed transfer by demonstrating that the funds targeted for transfer have been “committed” to fund an affordable housing project by way of a legally enforceable agreement with a third party, or by such other means that show a firm and binding obligation to spend such funds in a manner consistent with the municipality’s affordable housing obligation. ”

  • Since the Court merely decided the application for emergent relief, the Court directed the parties to brief all the issues based upon a schedule to be established. This will create another opportunity to demonstrate that the PL 2008, c. 46 required the adoption of regulations to define the term “committed to expend.”   The Court will address these issues at a future date.
  • The State’s response brief, for the first time in writing, asserted that “committed to expend” requirement means that a municipality must have an executed, enforceable contract in place. 

What does this mean for your municipality?

The State must notify your municipality, starting on July 17, if it intends to demand that you forfeit any of your municipal housing trust.

However, before you can be required to forfeit any trust fund dollars, your municipality has the right to notice from COAH as to what its demand is and you have a right to contest the forfeiture. In almost every situation, it would be in the municipality’s best interest to exercise its right to contest the forfeiture

A municipality would retain its right to appeal an unfavorable decision from the agency to the Appellate Division.

As referenced in our March 20 Dear Mayor letter the membership of the COAH board is uncertain.    It is our opinion that this will require the nomination and approval, with the advice and consent of the State Senate, of a number of COAH board members. 

The criteria for “committed to expend” articulated in the State’s brief should be reviewed by every municipality that has sought to commit its trust funds. 

FSHC and the League also filed supplemental papers demonstrating that the DCA actually prepared regulations on the changes required by the PL 2008, c. 46 and sent them to the Office of Administrative Law. The fact that the DCA prepared regulations is so significant because COAH contended so strenuously that the PL 2008, c. 46 was so clear that no regulations were required to provide guidance.    

We also learned late Friday that Edison Township requested and was a granted a temporary injunction prohibiting the State from seizing its trust fund dollars until addressed by the Court.  The hearing on the Marlboro injunction has been rescheduled for July 27. We note that Friday’s decision by the Appellate Division does not inhibit any municipality from seeking relief from the Courts.

Jeffrey Surenian, Esq. argued on behalf of the League, and Matthew Weng, Esq, League staff attorney, joined Mr. Surenian in writing the League’s brief.  Michael Cerra has coordinated the League’s legislative and legal efforts on this issue.    Adam Gordon, Esq argued on behalf of the Fair Share Housing Center.

We thank and commend them for their outstanding work.

We will assess the impact of this order and how we proceed with the remaining issues before the Appellate Division, as well as any potential appeal to the State Supreme Court.

The decision from the Court is posted at: http://www.njslom.org/documents/COAH-ORDER-mccdoc.pdfThe League’s brief is posted at: http://www.njslom.org/letters/2012-0709-regs.pdf

Fair Share’s brief is at: http://goo.gl/dacsb

The State’s response brief is at: http://www.njslom.org/documents/a-5257-11-coah.pdf

We urge to bring this to the attention of your attorneys for their review and consideration.  In the meanwhile, questions can be directed to Mike Cerra at mcerra@njslom.com or 609-695-3481 x120.

Very Truly Yours,

William G. Dressel, Jr.
Executive Director

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