In Re Declaratory Judgment Actions Filed by Various

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3323-15T1

IN RE DECLARATORY JUDGMENT

ACTIONS FILED BY VARIOUS APPROVED FOR PUBLICATION

MUNICIPALITIES, COUNTY OF

OCEAN, PURSUANT TO THE July 11, 2016

SUPREME COURT'S DECISION IN

APPELLATE DIVISION

In Re Adoption Of N.J.A.C.

5:96, 221 N.J. 1 (2015).

____________________________

Argued June 6, 2016 – Decided July 11, 2016

Before Judges Lihotz, Fasciale and Nugent.

On appeal from an interlocutory order of

Superior Court of New Jersey, Law Division,

Ocean County, Docket No. L-2640-15.

Jeffrey R. Surenian argued the cause for

appellant Township of Barnegat (Jeffrey R.

Surenian & Associates, L.L.C., attorneys;

Mr. Surenian, Michael A. Jedziniak, Erik C.

Nolan, and Michael J. Edwards, on the

briefs).

Kevin D. Walsh argued the cause for

respondent Fair Share Housing Center (Mr.

Walsh and Adam M. Gordon, on the brief).

Stephen M. Eisdorfer argued the cause for

respondent New Jersey Builders Association

(Hill Wallack, L.L.P., attorneys; Mr.

Eisdorfer, Thomas F. Carroll, III, and Emily

P.W. Santoro, on the brief).

Edward J. Buzak argued the cause for

respondent NJ State League of Municipalities

(The Buzak Law Group, L.L.C., attorneys; Mr.

Buzak, on the brief).

Richard J. Hoff, Jr. argued the cause for

respondent Highview Homes, L.L.C. (Bisgaier

Hoff, L.L.C., attorneys; Mr. Hoff and

Danielle Novak Kinback, on the brief).

Edward J. Boccher argued the cause for

respondent Township of Brick (DeCotiis,

Fitzpatrick & Cole, L.L.P., attorneys; Mr.

Boccher, of counsel and on the brief; Louis

N. Rainone and Wendy Rubinstein, on the

brief).

Gilmore & Monahan, P.C., attorneys for

respondents Township of Jackson and Township

of Little Egg Harbor, join in the brief of

appellant Township of Barnegat.

DiFrancesco, Bateman, Kunzman, Davis, Lehrer

& Flaum, P.C., attorneys for respondent

Township of Toms River, join in the brief of

appellant Township of Barnegat.

Gluck Walrath, L.L.P., attorneys for

respondent Township of Ocean, join in the

brief of appellant Township of Barnegat.

Dasti, Murphy, McGuckin, Ulaky, Koutsouris,

& Connors, attorneys for respondent Township

of Stafford, join in the brief of appellant

Township of Barnegat.

Jonathan E. Drill argued the cause for

amicus curiae The Municipal Group (Stickel,

Koenig, Sullivan & Drill, L.L.C., attorneys;

Mr. Drill, of counsel and on the brief).

Donald J. Sears argued the cause for amicus

curiae Township of South Brunswick.

Ronald L. Israel argued the cause for amicus

curiae Colts Neck Township (Chiesa Shahinian

& Giantomasi, P.C., attorneys; Mr. Israel,

on the brief).

Archer & Greiner, P.C., attorneys for amicus

curiae Township of Middletown (Brian Michael

2 A-3323-15T1

Nelson, of counsel and on the brief; Kira S.

Dabby, on the brief).

Michael B. Steib, attorney for amicus curiae

Township of Millstone.

Lowenstein Sandler, L.L.P., attorneys for

amicus curiae American Planning Association-

New Jersey Chapter, New Jersey Future, and

the Housing & Community Development Network

of New Jersey (Catherine Weiss and Katy

Akopjan, on the brief).

Disability Rights New Jersey, amicus curiae,

for itself, and The Supportive Housing

Association of New Jersey, The Housing

Community Development Network of New Jersey,

Collaborative Support Programs of New

Jersey, The Alliance for the Betterment of

Citizens with Disabilities, The New Jersey

Association of Community Providers, The Arc

of New Jersey, New Jersey Association of

Mental Health and Addiction Agencies, The

Coalition of Mental Health Consumer

Organizations, The System of Care

Association, The New Jersey Psychiatric

Rehabilitation Association, The Mental

Health Association in New Jersey, Advancing

Opportunities, Community Access Unlimited,

The Community Health Law Project, and Autism

New Jersey (Iraisa Orihuela-Reilly, Susan

Saidel, and Joseph B. Young, on the brief).

The opinion of the court was delivered by

FASCIALE, J.A.D.

In the wake of the New Jersey Supreme Court's order

requiring judicial oversight of municipal housing obligations to

preclude exclusionary development schemes, see In re Adoption of

N.J.A.C. 5:96 & 5:97 by the New Jersey Council on Affordable

Housing, 221 N.J. 1 (2015) (In re N.J.A.C. 5:96 II), we granted

3 A-3323-15T1

the Township of Barnegat's1 motion for leave to appeal from an

interlocutory order entered by a designated Mount Laurel2 judge,

directing the court's Special Regional Master to include, as a

new, "separate and discrete" component, an additional

calculation for establishing a municipality's affordable housing

need from 1999 to 2015 (the gap period).3 In entering the order,

the judge concluded that a municipality's fair share affordable

housing obligation for the third-round cycle is comprised of (1)

its newly-created, court-imposed, "separate and discrete" gap-

1

We granted leave to appeal on behalf of the Township of

Barnegat, In re Twp. of Barnegat, L-1856-15, along with twelve

consolidated declaratory judgment complaints filed by Ocean

County municipalities: In re Borough of Beach Haven, L-2217-15;

In re Township of Berkeley, L-1855-15; In re Township of Brick,

L-1857-15; In re Township of Jackson, L-1879-15; In re Township

of Lacey, L-1912-15; In re Township of Little Egg Harbor,

L-1911-15; In re Township of Manchester, L-1910-15; In re

Township of Ocean, L-1884-15; In re Borough of Pine Beach,

L-1687-15; In re Borough of Point Pleasant, L-1858-15; In re

Township of Stafford, L-1913-15; and Township of Toms River,

L-1867-15.

2

S. Burlington Cty. NAACP v. Twp. of Mount Laurel, 67 N.J. 151

(Mount Laurel I), appeal dismissed and cert. denied, 423 U.S.

808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975); and S. Burlington

Cty. NAACP v. Twp. of Mount Laurel, 92 N.J. 158 (1983) (Mount

Laurel II).

3

The February 18, 2016 order includes a signature of another

judge who handled two of these thirteen consolidated matters,

and who joined the opinion of the Mount Laurel judge. Reference

in our decision to the "court" or "judge" refers to the Mount

Laurel judge who entered the order and rendered the opinion

under review.

4 A-3323-15T1

period obligation; (2) unmet prior round obligations from 1987

to 1999; (3) present need; and (4) prospective need.

We granted amicus status to the following entities that

urged us to reverse the order: Colts Neck Township; Township of

Millstone; Township of Middletown; Township of South Brunswick;

The Municipal Consortium; and the Municipal Group.4 The New

Jersey State League of Municipalities (NJLM) also appeared

before the court as a respondent.

These entities contend the court is without legal authority

to create a "separate and discrete" gap-period obligation.

Instead, they maintain that a municipality's affordable housing

obligation for the third-round cycle is comprised of unmet prior

round obligations from 1987 to 1999, present need, and

prospective need. They argue that prospective need projects

into the future a town's housing obligation for ten years from

the current time, not from the beginning of the gap period in

1999. They acknowledge that the identifiable housing need that

arose during the gap period would be captured by a town's

present need obligation, but they are adamant that there is no

"separate and discrete" gap-period obligation.

4

The Municipal Group is a formal coalition of hundreds of

municipalities organized to address fair share methodological

issues in the aftermath of the Court's opinion in In re N.J.A.C.

5:96 II.

5 A-3323-15T1

We granted amicus status to the following entities that

urged us to affirm the order: Disability Rights New Jersey; the

New Jersey Chapter of the American Planning Association; New

Jersey Future; and the Housing and Community Development

Network.

Fair Share Housing Center (Fair Share), New Jersey Builders

Association (NJBA), and Highview Homes, L.L.C. (Highview)

appeared before the court as intervenors and, pursuant to In re

N.J.A.C. 5:96 II, Fair Share participated as an interested

party. Fair Share agrees that a municipality's affordable

housing obligation for the third-round cycle is comprised of

unmet prior round obligations from 1987 to 1999, present need,

and prospective need. Fair Share concedes that a town's

prospective need requires calculations projecting forward ten

years. Fair Share asserts, however, that prospective need also

requires a municipality to perform housing calculations

retroactively during the gap period. Therefore, Fair Share

maintains that gap-period housing need comprises part of a

town's calculation of its prospective need. As a result, Fair

Share defines prospective need differently than those entities

urging us to reverse the order. For Fair Share, prospective

need covers a period of twenty-seven years: from 1999 to the

present, and then ten years into the future. Thus, to the

6 A-3323-15T1

extent a municipality is required to establish its prospective

need from 1999 to the present, and then ten years into the

future, Fair Share urges us to uphold the court-imposed

"separate and discrete" gap-period housing obligation.

The narrow legal issue on appeal is whether a "separate and

discrete" gap-period affordable housing obligation is authorized

by (1) the core principles of the Mount Laurel doctrine, as

codified in the Fair Housing Act of 1985 (FHA), N.J.S.A. 52:27D-

301 to -329; and (2) In re N.J.A.C. 5:96 II. Resolution of this

legal question specifically addresses whether a municipality's

prospective need involves a retroactive housing obligation

starting in 1999. Our focus, therefore, is on the propriety of

the court's conclusion that such a "separate and discrete"

obligation is "constitutionally mandated."

Applying the core principles of the Mount Laurel doctrine

and the plain language of the FHA, including its unambiguous

definition of "prospective need" — a forward "projection of

housing needs based on development and growth which is

reasonably likely to occur in a region or a municipality,"

N.J.S.A. 52:27D-304(j) — and following the Supreme Court's

admonition not to become an alternative administrative decision

maker for unresolved policy issues surrounding the Third Round

Rules, we hold that the FHA does not require a municipality to

7 A-3323-15T1

retroactively calculate a new "separate and discrete" affordable

housing obligation arising during the gap period. Pursuant to

In re N.J.A.C. 5:96 II, "previous methodologies employed in the

First and Second Round Rules should be used to establish present

and prospective statewide and regional affordable housing need,"

and prior round unfulfilled obligations "should be the starting

point for a determination of a municipality's fair share

responsibility." Supra, 221 N.J. at 30 (emphasis added). As

the Court instructed, subject to the guidelines and principles

it outlined in In re N.J.A.C. 5:96 II, Mount Laurel judges

may confidently utilize similar discretion

[used by the Council on Affordable Housing

(COAH)] when assessing a town's plan, if

persuaded that the techniques proposed by a

town will promote for that municipality and

region the constitutional goal of creating

the realistic opportunity for producing its

fair share of the present and prospective

need for low- and moderate-income housing.

[Ibid. (emphasis added).]

We emphasize that under our tripartite system of government, the

imposition of a new retrospective calculation, designed to

establish affordable housing need during the gap period — a new

methodology that essentially addresses "unresolved policy

details of replacement Third Round Rules" — is best left for

consideration by the Legislative and Executive branches of

government, where public policy issues associated with such an

8 A-3323-15T1

additional "separate and discrete" obligation can be fairly and

fully debated in the public forum. The Legislature may craft

new legislation addressing any gap period between housing cycles

if that is the course it wishes to take. Enforcement of

subsequent legislation promoting affordable housing needs — and

its effect on a municipality's Mount Laurel obligation — would

still be a matter that may be brought to the courts.

The judge did not determine whether any of the town's plans

will satisfy their constitutional affordable housing

obligations. At this point in the litigation, his main legal

concern was whether to impose a "separate and discrete"

affordable housing obligation for the gap period, in addition to

a town's unmet prior round, present, and prospective

obligations. Having resolved that legal question, the judge may

now determine whether the towns have met their constitutional

goal of creating "[a] realistic opportunity for producing its

fair share of the present and prospective need for low- and

moderate-income housing." In re N.J.A.C. 5:96 II, supra, 221

N.J. at 30 (emphasis added).

We therefore reverse the order and remand for further

proceedings.

9 A-3323-15T1

I.

We begin by reviewing the pertinent principles of the Mount

Laurel doctrine, the enactment of the FHA, the role of COAH, and

the Supreme Court's decision in In re N.J.A.C. 5:96 II.5

In Mount Laurel I, the Supreme Court concluded that

developing municipalities must "presumptively make realistically

possible an appropriate variety and choice of housing" through

land use regulations. Supra, 67 N.J. at 174. The Court stated

that such municipalities "cannot foreclose the opportunity of

the classes of people mentioned for low[-] and moderate[-income]

housing and in its regulations must affirmatively afford that

opportunity, at least to the extent of the municipality's fair

share of the present and prospective regional need." Ibid. The

Court determined that land use regulations are encompassed in

the State's police power, required such regulations to "promote

public health, safety, morals or the general welfare," and

concluded "a zoning enactment which is contrary to the general

welfare is invalid." Id. at 175.

Approximately eight years later, the Court returned to the

issue. In Mount Laurel II, supra, 92 N.J. 158, the Court

5

In general, the Court determined COAH failed to promulgate

valid Third Round Rules, concluded that exhausting

administrative remedies before COAH was therefore no longer

necessary, and established procedures for affordable housing

matters to proceed before designated Mount Laurel judges.

10 A-3323-15T1

reaffirmed the doctrine and fashioned a judicial remedy for

determining a municipality's constitutional obligation to

provide for low- and moderate-income housing. In re Adoption of

N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable

Hous., 215 N.J. 578, 587-89 (2013) (In re N.J.A.C. 5:96 I).

Adding teeth to the doctrine, the Court sanctioned a builder's

remedy, which permitted builder-plaintiffs to sue for the

opportunity to construct housing at higher densities than a

municipality would allow. Id. at 589. In strengthening the

Mount Laurel doctrine, the Court explained that the core of the

doctrine was a municipality "would satisfy [its] constitutional

obligation by affirmatively affording a realistic opportunity

for the construction of its fair share of the present and

prospective regional need for low[-] and moderate[-income]

housing." Mount Laurel II, supra, 92 N.J. at 205. The Court

stated that a realistic opportunity depends on "whether there is

in fact a likelihood — to the extent economic conditions allow —

that the lower income housing will actually be constructed."

Id. at 222. Although the Court devised a scheme to address

resolution of litigation in this field, it reiterated its

preference for legislative action. Id. at 212-13. Two years

later, and in the aftermath of AMG Realty Co. v. Township of

Warren, 207 N.J. Super. 388, 453 (Law Div. 1984), which

11 A-3323-15T1

articulated a method for calculating affordable housing

obligations that substantially impacted the likelihood of

whether lower income housing would actually be constructed, the

Legislature enacted the FHA.

The FHA codified the core constitutional holding

undergirding the Mount Laurel obligation. In re N.J.A.C. 5:96

I, supra, 215 N.J. at 584. The FHA required "reasonable fair

share housing guidelines and standards." N.J.S.A. 52:27D-

302(d). The FHA created COAH, N.J.S.A. 52:27D-305, which was

designed to provide an administrative alternative to litigating

constitutional compliance in exclusionary zoning actions. In re

N.J.A.C. 5:96 II, supra, 221 N.J. at 7-8, 11.

COAH's primary responsibility was to assign and determine

municipal affordable housing obligations. Id. at 7 (citing

N.J.S.A. 52:27D-305, -307). The FHA required COAH to enact and

thereafter update regulations that established statewide

affordable housing need; to assign an affordable housing

obligation to each municipality for its designated region; and

to identify the techniques available to municipalities in

addressing the assigned obligation. Ibid. (citing N.J.S.A.

52:27D-307, -308). The criteria and guidelines that the FHA

directed COAH to adopt were targeted for "[m]unicipal

determination of its present and prospective fair share of the

12 A-3323-15T1

housing need in a given region which shall be computed for a

[ten]-year period." N.J.S.A. 52:27D-307(c)(1). The FHA defined

prospective need:

"Prospective need" means a projection of

housing needs based on development and

growth which is reasonably likely to occur

in a region or a municipality, as the case

may be, as a result of actual determination

of public and private entities. In

determining prospective need, consideration

shall be given to approvals of development

applications, real property transfers and

economic projections prepared by the State

Planning Commission established by sections

1 through 12 of P.L.1985, c.398 (C.52:18A-

196 et seq.).

[N.J.S.A. 52:27D-304(j).]

Although municipalities were free to resolve constitutional

Mount Laurel obligations in the courts, the FHA preferred

resolution in an administrative forum. In re N.J.A.C. 5:96 II,

supra, 221 N.J. at 4.

The FHA encouraged and rewarded voluntary municipal

compliance by (1) providing a period of immunity from civil

lawsuits to towns that participated in the process for

demonstrating constitutional compliance (the exhaustion-of-

administrative-remedies requirement); and (2) providing a

presumption of validity in any later exclusionary zoning

litigation for municipalities who secured from COAH a

substantive fair housing plan certification. Ibid. The

13 A-3323-15T1

viability of these provisions was subject to COAH's updating of

housing obligations, as well as related substantive and

procedural rules. Ibid.

In 1986, COAH began adopting rules delineating the

affordable housing obligations of municipalities. In re

Adoption of N.J.A.C. 5:94 and 5:95 by the N.J. Coal. on

Affordable Hous., 390 N.J. Super. 1, 23 (App. Div.), certif.

denied, 192 N.J. 71 (2007) (In re N.J.A.C. 5:94). COAH adopted

rules covering the periods of 1987 to 1993 — the First Round

Rules — and 1993 to 1999 — the Second Round Rules. In re

N.J.A.C. 5:96 I, supra, 215 N.J. at 590. These rules generally

utilized a methodology for calculating affordable housing

obligations employed before the Legislature enacted the FHA.

Ibid.

In the First Round Rules, COAH defined present need as "the

total number of deficient housing units occupied by low[-] or

moderate[-income] households as of July 1, 1987." Ibid.

(quoting N.J.A.C. 5:92-1.3). COAH used several factors to

establish present need, such as "overcrowding, age of unit, and

lack of plumbing, kitchen or heating facilities as indicators of

dilapidated housing." Id. at 590-91.

The First Round Rules also incorporated the statutory

definition of prospective need as "a projection of low[-] and

14 A-3323-15T1

moderate[-income] housing needs based on development and growth

. . . reasonably likely to occur in a region or a municipality."

Id. at 591 (quoting N.J.A.C. 5:92-1.3). COAH analyzed

statistics to project forward the number of "'low- and moderate-

income households' that would form between 1987 and 1993."

Ibid. (quoting N.J.A.C. 5:92, Appendix A at 92-49). In

determining prospective need, COAH considered such things as

municipalities' "approvals of development applications, real

property transfers and economic projections prepared by the

State Planning Commission." Ibid. (quoting N.J.A.C. 5:92-1.3).

For the Second Round Rules, COAH used the same

methodologies employed in the First Round Rules. Id. at 592.

COAH also adopted additional regulations granting credits and

various adjustments to reduce municipalities' fair share

figures. Ibid. (summarizing the adopted regulations granting

credits and adjustments). Various legal challenges to the First

and Second Round Rules failed. Ibid.

Essentially, the methodology of allocating municipalities'

affordable housing obligations largely followed the remedial

approaches established by Mount Laurel II and AMG Realty. Id.

at 593. COAH first calculated the need for affordable housing

in each of the State's regions, then allocated to each

municipality its fair share of the present and prospective

15 A-3323-15T1

regional need. Ibid. A municipality would be assigned a

proportionate fair share of the region's housing need based on

economic projections and its capacity to accommodate affordable

housing. Ibid. A municipality would subject itself to the

possibility of defending a builder's remedy challenge if it

failed to create a realistic opportunity for satisfying its

assigned share. Ibid.

Although the Second Round Rules expired in 1999, COAH

belatedly promulgated its first iteration of the Third Round

Rules in 2004.6 Ibid. The rule proposal published in the New

Jersey Register explained that a municipality's fair share for

the period from 1987 through January 1, 2014, would be

calculated using three criteria:

(1) a municipality's "rehabilitation share"

based on the condition of housing revealed

in the data gathered for the 2000 Census,

previously known as a municipality's

indigenous need; (2) a municipality's

unsatisfied prior round obligation (1987

through 1999), satisfaction of which will be

governed by the second round rules; and (3)

a municipality's "growth share" based on

housing need generated by statewide job

growth and residential growth from 1999

through 2014.

6

We characterized this delay as "dramatic," "inexplicable,"

and frustrating the public policies embodied by the Mount Laurel

line of cases. In re Six Month Extension of N.J.A.C. 5:91 et

seq., 372 N.J. Super. 61, 95-96 (App. Div. 2004) (In re Six

Month), certif. denied, 182 N.J. 630 (2005).

16 A-3323-15T1

[Id. at 593-94 (quoting In re N.J.A.C. 5:94,

supra, 390 N.J. Super. at 27).]

During the gap period, we considered challenges to the

validity of the Third Round Rules and remanded the matter to

COAH on two occasions with instructions to adopt revised Third

Round Rules.

Our first remand to COAH with instructions to adopt revised

rules occurred in 2007. In re N.J.A.C. 5:94, supra, 390 N.J.

Super. at 47. At that time, we sustained some but rejected many

of the challenges to the first iteration of the Third Round

Rules. Importantly, Judge Mary Catherine Cuff, writing for the

panel, noted that "municipalities are responsible for fulfilling

their prior round obligation." Id. at 28 (citing N.J.A.C. 5:94-

2.1(a)(2)).

Judge Cuff's opinion rejected

[7]

appellants' arguments that the

"rehabilitation share" of a municipality's

affordable housing obligation, sometimes

also referred to as present need, should

include "cost burdened" low- and moderate-

income households that reside in standard

housing and households that lack permanent

housing or live in overcrowded housing; that

COAH's methodology for identifying

substandard housing was "arbitrary and

unreasonable"; that the [T]hird [R]ound

7

The appellants challenged the validity of COAH's substantive

rules for the third round that calculated affordable housing

needs from 1999 to 2014, as well as the validity of several

regulations.

17 A-3323-15T1

[R]ules improperly eliminated the part of

the first and second round methodologies

that required reallocation of excess present

need in poor urban municipalities to other

municipalities in the region; that the use

of regional contribution agreements to

satisfy part of a municipality's affordable

housing obligations violates the Mount

Laurel doctrine and federal and state

statutory provisions; that the allowance of

bonus credits towards satisfaction of a

municipality's affordable housing

obligations unconstitutionally dilutes those

obligations; and that the rule relating to

vacant land adjustments violates the Mount

Laurel doctrine and the FHA.

However, Judge Cuff's opinion

invalidated the parts of the original

[T]hird [R]ound [R]ules that reduced

statewide and regional affordable housing

need based on "filtering"; adopted a growth

share approach for determining a

municipality's fair share of prospective

needs for affordable housing and excluded

job growth resulting from rehabilitation and

redevelopment in determining job growth;

compelled developers to construct affordable

housing without any compensating benefits;

authorized a municipality to give a

developer the option of payment of a fee in

lieu of constructing affordable housing, but

provided no standards for setting those

fees; and authorized a municipality to

restrict up to 50% of newly constructed

affordable housing to households with

residents aged fifty-five or over.

[In re Adoption of N.J.A.C. 5:96 and 5:97 by

the N.J. Coal. on Affordable Hous., 416 N.J.

Super. 462, 475-76 (App. Div. 2010)

(emphasis added) (citations omitted), aff'd

as modified, 215 N.J. 578 (2013).]

18 A-3323-15T1

In 2010, Judge Stephen Skillman, also writing for a

different panel, invalidated a substantial portion of the

revised Third Round Rules, including the growth share

methodology used by COAH, id. at 511-12; regulations concerning

the preparation of fair share plans, id. at 487-88; presumptive

incentives embodied in the regulations, id. at 488-93; and

regulations concerning rental credits, id. at 493-95.

Judge Skillman upheld several of the regulations, however,

such as the elimination of reallocated present need, id. at 500-

02 (reasoning COAH possessed the authority to focus on

municipalities' own obligations, see N.J.A.C. 5:97-2.4, rather

than reallocating excess present need away from those

overburdened with substantial housing); and COAH's decision to

use the prior round obligations without updating the obligations

based on actual household growth, id. at 498-500. Consequently,

we redirected COAH to adopt new rules.

During the gap period, the New Jersey Supreme Court also

invalidated revised Third Round Rules and issued deadlines for

COAH to adopt new regulations. In re N.J.A.C. 5:96 I, supra,

215 N.J. at 619-20. Acknowledging the FHA had set a course

tracking the Mount Laurel II allocation methodology for

satisfaction of present and prospective need, the Court remarked

that "the Third Round Rules' validity hinges in whether they are

19 A-3323-15T1

consistent with the FHA." Id. at 612-17. In 2014, the Court

granted COAH an additional five months to adopt new rules. In

re N.J.A.C. 5:96 and 5:97, 220 N.J. 355, 355-56 (2014).

COAH failed to meet the extension deadline, which led the

Court to grant Fair Share's motion in aid of litigants' rights

in In re N.J.A.C. 5:96 II, supra, 221 N.J. at 5-6. The Court

recognized the administrative process had become nonfunctioning.

Id. at 5. As a result, the FHA's exhaustion-of-remedies

requirement had been rendered futile. Ibid. Therefore, there

no longer existed a legitimate basis to block access to the

courts for resolution of municipal compliance with

constitutional affordable housing. Ibid. Recognizing there

existed various stages of municipal preparation during the gap

period, the Court established a transitional process for

exclusionary zoning actions to proceed. Ibid. The Court also

emphasized:

Importantly, nothing herein should be

understood to prevent COAH from fulfilling

its statutory mission to adopt

constitutional rules to govern

municipalities' Third Round obligations in

compliance with the FHA. Nor should the

action taken by this Court, in the face of

COAH's failure to fulfill its statutory

mission, be regarded as impeding the

Legislature from considering alternative

statutory remedies to the present FHA.

[Id. at 6 (citation omitted).]

20 A-3323-15T1

The Court developed a process which tracked the processes

provided for in the FHA. Id. at 29. It did so to facilitate a

return to agency proceedings in the event COAH promulgated new

Third Round Rules. Ibid. In establishing the process for

exclusionary zoning actions to proceed, the Court stated:

[I]t is not this Court's province to create

an alternate form of statewide

administrative decision maker for unresolved

policy details of replacement Third Round

Rules . . . . The courts that will hear

such declaratory judgment applications or

constitutional compliance challenges will

judge them on the merits of the records

developed in individual actions before the

courts. However, certain guidelines can be

gleaned from the past and can provide

assistance to the designated Mount Laurel

judges in the vicinages.

[Id. at 29-30 (emphasis added).]

The Supreme Court established procedures for addressing two

classes of municipalities that were stranded by COAH's inability

to adopt valid Third Round Rules. Id. at 24-29 (outlining the

procedures for municipalities that "made the effort to comply

promptly with the Third Round Rules and . . . received a grant

of substantive certification," and municipalities that had

"participating" status with COAH).

Although presented with numerous opportunities to do so, at

no point did the Court, the Legislature, or the Appellate

Division impose an additional separate gap-period obligation.

21 A-3323-15T1

Rather, in establishing a municipality's fair share affordable

housing obligation, the focus consistently remained on present

and prospective housing need.

II.

We now turn to the proceedings conducted by the judge

leading to his ruling that municipalities are "constitutionally

mandated" to address the gap period as a "separate and discrete"

component of their fair share Mount Laurel obligation.

Following the procedures established by the Court in In re

N.J.A.C. 5:96 II, supra, 221 N.J. at 21-34, several Ocean County

municipalities filed declaratory judgment actions seeking

resolution of their Mount Laurel obligations. The judge

undertook preliminarily to determine the present and prospective

affordable housing needs of the municipalities. To reach this

determination, the court reviewed several expert reports that

expressed differing opinions on the subject.

The judge appointed Richard B. Reading as the Special

Regional Master, who was to "assist the court in making the

preliminary determination envisioned by the Supreme Court of the

present and prospective needs." The judge allowed submissions

of expert reports and expected to conduct a plenary hearing at

which the court would address the conflicting expert opinions as

22 A-3323-15T1

to the methodology for calculating the municipalities'

affordable housing obligations.

On December 29, 2015, Mr. Reading submitted a report

entitled "COAH's Un[-]adopted Third Round Methodology

Calculation of 'Gap' Period Housing Needs." In this report, Mr.

Reading listed these questions the judge identified in a case

management order:

1) Is the methodology provided in Appendix

D[8] of the current iteration of the [un-

adopted] Third Round Rules an appropriate

and correct methodology?

2) Do the trial courts have the authority to

require a municipality to address the . . .

'gap' obligation component as part of a

municipality's prior obligation?[9]

Mr. Reading concluded that the "methodology in Appendix D

[did] not follow the methodologies utilized in the calculation

of affordable housing needs employed in the [p]rior [r]ounds."

He stated that "[a] review of the history of Mount Laurel did

not disclose a methodology that expanded the calculation of fair

share beyond [p]resent and [p]rospective [n]eed." He remarked

that Sections 304 and 307 of the FHA established "prospective

8

Mr. Reading identified the un-adopted Third Round Rules as

N.J.A.C. 5:99, Appendix D.

9

The third question, "[w]hat is the proper allocation of the

1000 unit cap . . . [and] how should the gap be applied to any

'gap period' need if one exists," is not at issue.

23 A-3323-15T1

need as a period of ten years and includes a projection of

housing needs based upon development and growth that is

reasonably likely to occur." He determined that the "inclusion

of the prior [gap period] within prospective need is contrary to

prior round methodologies, the language of the FHA and history

of determining affordable housing needs." As to "identifying

and quantifying" the housing need from the gap period, Mr.

Reading stated:

[The unmet need arising during the gap

period] was discussed in terms of the

disposition of [low- and moderate-income]

housing needs that existed . . . in the

past. These households would be partially

included by the [low- and moderate-income]

households in over[]crowded or deficient

housing units that are encompassed in the

new calculation of [p]resent [n]eed. Those

[low- and moderate-income] households that

have occupied sound (non-deficient) housing

units are already [in] housing and would not

represent an identifiable need. Some [low-

and moderate-income] households formed

during the gap period may no longer

represent an affordable housing need due to

a variety of reasons including death,

changes in income, increase or decrease in

household size, retirement and/or relocation

outside of New Jersey. . . . Although it

may be possible to generate an estimate of

such a residual need, such an estimate would

be speculative.

[(Emphasis added).]

Mr. Reading stated "there is a uniform consensus among the

interested parties that the methodology provided in Appendix D

24 A-3323-15T1

is not an appropriate and correct methodology for the

calculation of affordable housing [gap-period] needs." He

explained further that even though there existed this consensus

rejecting COAH's un-adopted methodology, "an appropriate

methodology for determining an affordable housing need [during

the 1999-2015 'gap period' was] not . . . presented."10

On February 17, 2016, Mr. Reading issued a report entitled

"Bridging the Gap, 1999-2015 'Gap' Period Affordable Housing

Needs." In this report, Mr. Reading responded to expert

opinions contained in reports submitted by Dr. David N. Kinsey,

on behalf of Fair Share, and Econsult. After reviewing these

opinions, Mr. Reading recommended to the judge that he "consider

the inclusion of the [g]ap[-p]eriod, calculated distinctly and

separately from [p]resent and [p]rospective [n]eed," which is a

markedly different recommendation than what he expressed

previously.

Mr. Reading stated Dr. Kinsey provided two alternatives for

calculating affordable housing needs arising during the gap

10

Mr. Reading acknowledged, in a later report, Fair Share's

contention that the gap-period should be included "within the

extended 1999-2025 [p]rospective [n]eed." He also considered

the NJLM and a report prepared by Econsult Solutions (Econsult),

on behalf of a consortium of municipalities, stating there is no

basis for "retrospective analysis of housing need, which has

always been based on 'present and prospective need.'" (Emphasis

added).

25 A-3323-15T1

period: calculating the entire period from 1999-2025 as a

prospective need, without a separation of the gap period and

prospective need projection; and replicating COAH's 1994

recalculation of the 1987-1993 housing need (although Mr.

Reading recognized that such a recalculation was done to adjust

a prior (1987-1993) obligation, not to establish a methodology

for addressing a lapse in assigned obligations).

Econsult provided a comprehensive methodology for

establishing the 1987-1999 prior round obligations, the 2015

present need, and the 2015-2025 prospective need. Econsult's

methodology did not include calculations for the gap period.

Econsult critiqued Dr. Kinsey's two alternatives. As to the

first alternative, Econsult maintained essentially that gap-

period low- and moderate-income households living in deficient

housing would be encompassed in present need, while low- and

moderate-income households living in adequate housing would not

represent an identifiable need. As to the second alternative,

Econsult reiterated its positon that present need and

prospective need combine to represent the entire fair share need

of, in its opinion, Dr. Kinsey's calculation of retrospective or

gap-period needs.

In his February 17, 2016 report, Mr. Reading stated that

the gap-period issue had become a legal issue. He acknowledged

26 A-3323-15T1

that all parties agreed low- and moderate-income households were

formed during the gap period and have secured housing, some of

which were deficient or overcrowded, which would be reflected in

present need. As to the proper methodology for calculating

municipalities' affordable housing need arising during the gap

period, he concluded:

The calculation of the current needs of the

affordable hous[ing] formed during the [gap

period] is not a process that is [e]mbedded

in the [p]rior [r]ound methodology, [and] is

not projected ([p]rospective) need, but

should be undertaken as a separate and

discrete component of affordable housing

need. Prior submissions provided by [Fair

Share] and Econsult on December 8, 2015

contended that the calculation for the [g]ap

[p]eriod affordable housing needs were

unnecessary because they were properly a

part of the 1999-2025 [p]rospective [n]eed

. . . or were unnecessary altogether because

the FHA does not make any provision for a

retrospective need . . . .

. . . .

Assertions that a determination of [g]ap

[p]eriod affordable housing need cannot be

reduced to a precise mathematical

calculation devoid of all assumptions and

estimates is not distinctly different than

the preparation of estimates for . . .

[p]resent . . . and [p]rospective [n]eed[,]

[which] are likewise predicated upon

estimates [and] . . . would . . . be no more

impaired.

As a result, Mr. Reading recommended the court should sanction a

completely new and different methodology than that used during

27 A-3323-15T1

the first two rounds or in the FHA, one that "should be

calculated as [a] separate and discrete component of affordable

housing need utilizing data and procedures appropriate to a

prior, rather than future period." In other words, he

recommended a methodology that retrospectively calculated gap-

period housing need, rather than, as he stated in his December

29, 2015 report, the unmet gap-period housing needs being

included in "the new calculation of present need."

The next day, on February 18, 2016, the court adopted Mr.

Reading's new recommendation and issued its opinion. As to the

gap period, the court stated:

The court finds municipalities are

constitutionally mandated to address [the

gap-period] obligation. This "gap period"

need is to be calculated as a separate and

discrete component of a municipality's fair

share obligation. This component[,]

together with a municipality's unmet prior

round obligations [from] 1987 to 1999[,] and

its present need and prospective need[,]

shall comprise its "fair share" affordable

housing obligation for the third [round]

housing cycle.

. . . .

[I]t is ironic that both parties (or

interests) appearing in [a] 2004 Appellate

Division case are now advancing arguments

before this court [that] they vehemently

opposed in [In re Six Month].

. . . .

28 A-3323-15T1

Even if the municipalities were

[therefore] not [now] estopped from

advancing their position[,] and despite

their efforts here to distinguish . . . [In

re Six Month] . . . the court finds the

underlying principles in [In re Six Month]

. . . are the same as the matter here.

[(Emphasis added).]

III.

On appeal, the entities urging us to reverse the order

argue that the judge erroneously imposed a new "separate and

discrete" component of a municipality's fair share affordable

housing obligation during the gap period. They contend the

judge erred by: (1) failing to apply the plain language of the

FHA; (2) ignoring the guidelines and principles established by

In re N.J.A.C. 5:96 II; (3) applying the doctrine of judicial

estoppel; and (4) acting as a replacement agency for COAH by

resolving unresolved policy details of replacement Third Round

Rules.

They assert that a municipality's fair share affordable

housing obligation for the third-round cycle is comprised of:

(1) the unmet prior round (before 1999) obligations; (2) present

need; and (3) prospective need. They maintain, as Mr. Reading

expressed in his December 29, 2015 report, that gap-period

affordable housing needs would be captured in a town's

calculation of its present need. They emphasize that imposing a

retrospective gap-period obligation does not allow for a

29 A-3323-15T1

realistic opportunity that the lower income housing will

actually be constructed.

The entities urging us to affirm the order under review

argue primarily that: (1) a municipality's prior round

unfulfilled affordable housing obligations includes the gap

period; (2) the FHA, as determined by COAH, provides for

cumulative and uninterrupted calculations of prospective need;

(3) COAH's interpretation of the FHA providing for gapless

affordable housing need is reasonable; and (4) the judge's

ruling complies with the FHA and In re N.J.A.C. 5:96 II.

Our standard of review is well settled. The sole question

on appeal, whether a retrospective gap-period obligation is

authorized by the core principles of the Mount Laurel doctrine,

as codified in the FHA, and In re N.J.A.C. 5:96 II, is a legal

issue not entitled to any special deference. Manalapan Realty,

L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

IV.

Applying the plain language of the FHA, the guidelines and

principles established by In re N.J.A.C. 5:96 II, and respecting

the separation of powers doctrine,11 we conclude that the judge

11

The framers of the New Jersey Constitution articulated the

separation of powers doctrine expressing that

(continued)

30 A-3323-15T1

erroneously imposed a requirement that a municipality undertake

a new, "separate and discrete" gap-period calculation – in

addition to unmet prior round obligations, present, and

prospective needs – to establish a municipality's fair share

affordable housing obligation. We also reject the contention

that judicial estoppel precludes reversal of the February 18,

2016 order under review.

A.

We start with the plain language of the FHA. Our paramount

goal in interpreting a statute is to ascertain the Legislature's

intent, and "generally[] the best indicator of that intent is

the statutory language." DiProspero v. Penn, 183 N.J. 477, 492

(2005) (citation omitted). When interpreting a statute, we give

words "their ordinary meaning and significance." Tumpson v.

Farina, 218 N.J. 450, 467 (2014) (quoting DiProspero, supra, 183

N.J. at 492). Only when the statutory language is ambiguous and

yields more than one plausible interpretation do we turn to

(continued)

[t]he powers of the government shall be

divided among three distinct branches, the

legislative, executive, and judicial. No

person or persons belonging to or

constituting one branch shall exercise any

of the powers properly belonging to either

of the others, except as expressly provided

in this Constitution.

[N.J. Const., art. III, ¶ 1.]

31 A-3323-15T1

extrinsic sources, such as legislative history. DiProspero,

supra, 183 N.J. at 492-93. Here, there is no ambiguity.

The plain language of the FHA refers to present and

prospective need. Responding to the significantly high fair

share obligations in the aftermath of AMG Realty, the

Legislature enacted the FHA, finding that one of the "essential

ingredients" to its response was "the establishment of

reasonable fair share housing guidelines and standards."

N.J.S.A. 52:27D-302(d). Consequently, the Legislature focused

on present and prospective need, N.J.S.A. 52:27D-307(b), and

charged COAH to adopt guidelines for "[m]unicipal determination

of its present and prospective fair share of the housing need in

a given region which shall be computed for a 10-year period,"

N.J.S.A. 52:27D-307(c)(1) (emphasis added).

The FHA defines prospective need not by looking backwards,

but rather as a "projection of housing needs based on

development and growth which is reasonably likely to occur in a

region or a municipality." N.J.S.A. 52:27D-304(j) (emphasis

added). In determining prospective need, COAH considered such

things as municipalities' "approvals of development

applications, real property transfers and economic projections

prepared by the State Planning Commission." In re N.J.A.C. 5:96

I, supra, 215 N.J. at 591 (quoting N.J.A.C. 5:92-1.3).

32 A-3323-15T1

The FHA did not define present need, but in the valid First

Round Rules, COAH defined present need as "the total number of

deficient housing units occupied by low[-] or moderate[-income]

households." Id. at 590 (quoting N.J.A.C. 5:92-1.3). COAH used

several factors to establish present need, such as

"overcrowding, age of unit, and lack of plumbing, kitchen or

heating facilities as indicators of dilapidated housing." Id.

at 590-91.

The judge noted that COAH, in each of its three

unsuccessful attempts to promulgate Third Round Rules,

referenced the gap period, albeit with different unapproved

methodologies. Although the judge acknowledged COAH's reference

to the gap period during its three iterations of the un-adopted

Third Round Rules, we note that an agency is not at liberty to

impose additional requirements onto a statute that do not exist

on its face. See In re N.J.A.C. 5:96 I, supra, 215 N.J. at 614-

15 (invalidating the growth share methodology in the Third Round

Rules and explaining that COAH may not enact regulations plainly

at odds with the FHA); see also Oberhand v. Dir., Div. of

Taxation, 193 N.J. 558, 568 (2008) (explaining "an

administrative agency's interpretation will not be followed when

the agency extends a statute 'to give it a greater effect than

its language permits'" (quoting GE Solid State v. Dir., Div. of

33 A-3323-15T1

Taxation, 132 N.J. 298, 306 (1993))); Fedders Fin. Corp. v.

Dir., Div. of Taxation, 96 N.J. 376, 392 (1984) (stating "[i]t

is well established that [an agency's] regulatory authority

cannot go beyond the Legislature's intent as expressed in the

statute"); Serv. Armament Co. v. Hyland, 70 N.J. 550, 563 (1976)

(explaining "an administrative interpretation which attempts to

add to a statute something which is not there can furnish no

sustenance to the enactment"). To the extent COAH interpreted

the FHA to include a requirement beyond present and prospective

need and fulfilling prior round obligations, we conclude such an

interpretation is "at odds with the plain meaning of the [FHA]."

Oberhand, supra, 193 N.J. at 568. The same proscription applies

to the courts.

Importantly, during the sixteen-year gap period, the

Legislature amended the FHA twelve times. It did not amend the

FHA, however, to require a retrospective determination of gap-

period obligations. Failure to so amend the FHA does not amount

to Legislative authorization to retroactively adopt a new

methodology for calculating affordable housing gap-period needs,

even if COAH's un-adopted Third Round Rules sought to

encapsulate the gap period. See GE Solid State, supra, 132 N.J.

at 312-13 (rejecting that the Legislature's failure to interfere

with an administrative interpretation is proof that the agency's

34 A-3323-15T1

interpretation conforms with legislative intent or establishes

legislative acquiescence); see also Airwork Serv. Div., Div. of

Pac. Airmotive Corp. v. Dir., Div. of Taxation, 97 N.J. 290, 296

(1984) (explaining that administrative acquiescence is only

relevant when "the Legislature's intent cannot otherwise be

determined by a critical examination of the purposes, policies,

and language of the enactment" (emphasis added)).

Fair Share, supported by Dr. Kinsey, interprets

"prospective need" to mean that a town is required to look at

affordable housing needs prospectively starting from 1999, in

addition to a separate ten-year prospective need calculation

from the present. In other words, Fair Share argues a town's

"prospective need" would cover a period of twenty-seven years,

from 1999 to ten years from now. We conclude such an

interpretation is clearly at odds with the FHA's unambiguous

definition of prospective need. As it is defined in the FHA,

prospective need refers to a "projection" of growth in the

future, namely a "projection of housing needs based on

development and growth which is reasonably likely to occur in a

region or a municipality." By its nature, it does not involve

retrospectively including a gap-period calculation.

In sum, to impose a gap-period requirement would inevitably

add a new requirement not previously recognized under the FHA.

35 A-3323-15T1

The Supreme Court has cautioned courts not to become a

replacement agency for COAH in promulgating substantive rules.

Rather, based on COAH's inaction, courts must work within the

provisions of the FHA and should employ the first and second

round methodologies to determine a municipality's compliance

with its Mount Laurel obligations. Until COAH adopts Third

Round Rules, or until the Legislature acts, the courts may not

act as a legislature by imposing new, substantive obligations

not recognized under the FHA.

B.

Next, the judge did not follow the guidelines established

by the Court in In re N.J.A.C. 5:96 II. We will address the

relief requested in In re N.J.A.C. 5:96 II, the Court's

response, and then our application of the guidelines to the

judge's ruling.

(i)

In In re N.J.A.C. 5:96 II, Fair Share, the NJBA, the NJLM,

and various towns expressed their respective positions as to the

guidance they believed the Court should provide to the

designated Mount Laurel judges. We briefly summarize these

competing positions to emphasize the Court's unwillingness to

decide "unresolved policy details of replacement Third Round

Rules" or to become a "replacement agency for COAH" by

36 A-3323-15T1

essentially endorsing a new methodology for separately and

discretely calculating affordable housing needs during the gap

period.

[Fair Share] ask[ed] that the second-round

methodology, with limited modifications, be

directed for use in such [remand]

proceedings and that newly authorized

judicial actions proceed expeditiously and

on a notice-and-opportunity-to-be-heard

basis.

. . . .

. . . [NJBA] contend[ed] that the

administrative stalemate ha[d] permitted

municipalities to "shelter themselves" from

suit under COAH's jurisdiction without

providing any additional affordable housing

in years. They urge[d] the Court to fashion

relief that [would] require courts to

examine what towns have done to date in

attempting to satisfy their constitutional

obligations.

. . . .

[Various towns] contend[ed] that trial

courts would be tasked with determining

whether a municipality's fair share

allocation will be "cumulative" or

applicable only to one compliance period.

The[y] also contend[ed] that adjudicating

such Mount Laurel matters would require

courts to confront the myriad differences

between the methodologies utilized in the

prior rounds and those contained in the

various iterations of COAH's Third Round

Rules.

. . . .

[NJLM] argue[d] that the 314

municipalities [which had submitted to

37 A-3323-15T1

COAH's substantive certification under the

earlier Third Round Rules] should not

forfeit their protection from suit.

According to NJLM, exclusionary zoning

litigation would punish the municipalities,

which [were] not responsible for COAH's most

recent failure to adopt compliant Third

Round Rules.

Notably, NJLM propose[d] an alternate

solution, arguing that COAH ha[d] expended

significant resources in developing the most

recent proposed regulations, which efforts

should not be wasted. NJLM suggest[ed] that

the Court appoint "a former high-ranking

policy-making official" to recruit three

"professional planners" to assist in

reviewing COAH's proposed Third Round Rules,

the 3000 public comments, and any responses

prepared by COAH's staff. NJLM propose[d]

that this Court authorize those planners to

revise the proposed Third Round Rules for

review by the Court-selected "policy-making

official." If the policy maker is

satisfied, NJLM further propose[d] that he

or she would present the revised regulations

to this Court for approval, and for entry of

an order directing COAH to adopt the Third

Round Rules in that form.

[In re N.J.A.C. 5:96 II, supra, 221 N.J. at

12-16 (emphasis added).]

The Court responded to Fair Share's plea for guidance and, in

light of the various stages of municipal preparation that had

existed "as a result of the long period of uncertainty

attributable to COAH's failure to promulgate Third Round Rules,"

the Court devised a transitional process before allowing

exclusionary zoning actions to proceed. Id. at 20. In

articulating the transitional process, and by expressing the

38 A-3323-15T1

concomitant "guidelines . . . gleaned from the past [that] can

provide assistance to the designated Mount Laurel judges," id.

at 29-30, the Supreme Court did not include a new methodology

for calculating additional housing obligations during the gap

period. In our view, consideration of imposing such a new

policy — that essentially addresses "unresolved policy details

of replacement Third Round Rules" — is best left to the other

two branches, where important public policy considerations can

be fairly, fully, and openly debated.

(ii)

We now address the actual guidelines and principles listed

by the Court for use by designated Mount Laurel judges handling

declaratory judgment applications on constitutional-compliance

applications. In enumerating these guidelines, the Court

reiterated it did not intend to punish the towns that were "in a

position of unfortunate uncertainty due to COAH's failure to

maintain the viability of the administrative remedy." Id. at

23. Instead, the Court explained:

Our goal is to establish an avenue by which

towns can demonstrate their constitutional

compliance [i.e., present and prospective

obligations] to the courts through

submission of a housing plan and use of

processes, where appropriate, that are

similar to those which would have been

available through COAH for the achievement

of substantive certification. Those

processes include conciliation, mediation,

39 A-3323-15T1

and the use, when necessary, of special

masters. The end result of the processes

employed by the courts is to achieve

adoption of a municipal housing element and

implementing ordinances deemed to be

presumptively valid if thereafter subjected

to challenge by third parties.

[Id. at 23-24 (emphasis added).]

The Court then identified specific procedures, guidelines, and

principles.

In In re N.J.A.C. 5:96 II, the Court reasserted that

"previous methodologies employed in the First and Second Round

Rules should be used to establish present and prospective

statewide and regional affordable housing need." Id. at 30

(emphasis added). As a result, municipalities were required to

demonstrate to the court computations of housing need and

municipal obligations "based on those methodologies." Ibid.

(emphasis added). The Court reminded the designated Mount

Laurel judges they had the same discretion that COAH enjoyed

when "assessing a town's plan, if persuaded that the techniques

proposed by a town will promote for that municipality and region

the constitutional goal of creating the realistic opportunity

for producing its fair share of the present and prospective need

for low- and moderate-income housing." Ibid. (emphasis added).

Importantly, the Court did not eradicate the prior round

obligations. Ibid. Instead, the Court stated "municipalities

40 A-3323-15T1

are expected to fulfill those obligations. As such, prior

unfulfilled housing obligations should be the starting point for

a determination of a municipality's fair share responsibility."

Ibid. In reaching this conclusion, the Court cited Judge Cuff's

recognition that "municipalities are responsible for fulfilling

their prior round obligation," In re N.J.A.C. 5:94, supra, 390

N.J. Super. at 28, and Judge Skillman's approval, as a starting

point, for the imposition of "the same prior round obligations

[COAH] had established as the second round obligations in 1993,"

In re N.J.A.C. 5:96, supra, 416 N.J. Super. at 498-500.

Fulfilling prior round obligations, as described by the

Court and in our 2007 and 2010 remand opinions, is decidedly

different than imposing a new, retrospective, "separate and

discrete" methodology for establishing affordable housing

obligations during the gap period. A court-imposed "separate

and discrete" retrospective gap-period calculation, on top of a

town's existing and present and prospective fair share

affordable housing obligations, would amount to the Court acting

as a replacement agency for COAH, and would contravene the

Court's unwillingness to decide unresolved policy issues

relating to replacement Third Round Rules.

In addition to this assistance, the Court identified other

principles that Mount Laurel designated judges should follow,

41 A-3323-15T1

such as: our prior treatment of reallocation of present need 12;

bonus credits; cost-burdened poor; and the reduction of fewer

surrogate indicators. In re N.J.A.C. 5:96 II, supra, 221 N.J.

at 30-33. The Court emphasized that the courts should "employ

flexibility in assessing a town's compliance and should exercise

caution to avoid sanctioning any expressly disapproved practices

from COAH's invalidated Third Round Rules." Id. at 33.

Finally, the Court reiterated its "hope that an administrative

remedy will again become an option for those proactive

municipalities that wish to use such means to obtain a

determination of their housing obligations and the manner in

which those obligations can be satisfied." Id. at 34 (emphasis

added).

(iii)

Here, the judge's ruling respectfully did not comport with

In re N.J.A.C. 5:96 II. The Court repeated its instructions

that "previous methodologies employed in the First and Second

Round Rules should be used to establish present and prospective

statewide and regional affordable housing need." Id. at 30.

Further, it stated that "[t]he parties should demonstrate to the

12

"The [S]econd [R]ound [R]ules define[d] reallocated present

need as 'the share of excess deterioration in a region

transferred to all communities of the region with the exception

of Urban Aid Cities.'" In re N.J.A.C. 5:96 II, supra, 221 N.J.

at 30 n.4 (alterations in original) (citations omitted).

42 A-3323-15T1

court computations of housing need and municipal obligations

based on those methodologies." Ibid. The Court stated that the

starting point for a determination of a municipality's fair

share responsibility is the prior round unfulfilled obligations.

Ibid. Requiring municipalities to undertake a retrospective

"separate and discrete" additional calculation for affordable

housing need does not follow the First or Second Round Rules.

It mandates an entirely new obligation unauthorized by the FHA.

The judge concluded that "New Jersey's affordable housing

need is cumulative and there can be no gaps in time left

unaddressed." He based this conclusion on his interpretation of

Mount Laurel II, stating the Court "found the obligation to meet

the prospective lower income housing need of the region is, by

definition, one that is met year after year in the future,

throughout the years of the particular projection used in

calculating prospective need." However, the Court's statement

was aimed at the practical effects of establishing prospective

need, stating:

The Mount Laurel obligation to meet the

prospective [looking forward not

retrospectively] lower income housing need

of the region is, by definition, one that is

met year after year in the future,

throughout the years of the particular

projection used in calculating prospective

need. In this sense the affirmative

obligation to provide a realistic

opportunity to construct a fair share of

43 A-3323-15T1

lower income housing is met by a "phase-in"

over those years; it need not be provided

immediately. Nevertheless, there may be

circumstances in which the obligation

requires zoning that will provide an

immediate opportunity -- for instance,

zoning to meet the region's present lower

income housing need. In some cases, the

provision of such a realistic opportunity

might result in the immediate construction

of lower income housing in such quantity as

would radically transform the municipality

overnight. Trial courts shall have the

discretion, under those circumstances, to

moderate the impact of such housing by

allowing even the present need to be phased

in over a period of years. Such power,

however, should be exercised sparingly. The

same power may be exercised in the

satisfaction of prospective need, equally

sparingly, and with special care to assure

that such further postponement will not

significantly dilute the Mount Laurel

obligation.

[Mount Laurel II, supra, 92 N.J. at 218-19

(emphasis added).]

The language quoted by the judge pertained to the Court's

recognition that phasing in was an option for municipalities in

calculating present and prospective need. Therefore, the

judge's reliance on Mount Laurel II for the proposition that

there can be no gap periods is respectfully misplaced.

Furthermore, the FHA, enacted after Mount Laurel II, and the

Court's opinion in In re N.J.A.C. 5:96 II do not support such a

conclusion.

44 A-3323-15T1

C.

Whether to establish a new methodology that imposes

retrospective calculations for determining affordable housing

needs during the gap period, which would be in addition to

satisfying prior round unmet present and prospective

obligations, is best left for consideration by the Legislative

and Executive branches. As the Court explained in 2013, when it

invalidated COAH's Third Round Rules:

The Legislature may determine to

authorize new avenues for addressing

regional need and the promotion of

affordable housing. And, it may do so in

ways that we do not attempt to circumscribe

in this opinion because we do not know the

breadth of considerations that may be

brought forth through informational

legislative hearings on the subject.

Nevertheless, it is the Legislature that

must devise the parameters to such an

approach. It must craft new legislation if

that is the course it wishes to take. Our

courts can and should exercise caution and

defer to such solutions when appropriately

drafted by the Legislature. See N.J. Ass'n

on [Corr.] v. Lan, 80 N.J. 199, 220 (1979)

(acknowledging importance of deference to

legislative enactments addressing general

welfare (citation omitted)); Roe v. Kervick,

42 N.J. 191, 230 (1964) (recognizing value

of deference when reasonable minds could

differ and issue to be remedied "involves a

concept which varies with the needs of the

times").

Although the Legislature may consider

enacting an alternative form of remedy for

the promotion of affordable housing in the

housing regions of this state, see Hills

45 A-3323-15T1

[Dev. Co. v. Twp. of Bernards, 103 N.J. 1,]

65 [(1986)] ("No one should assume that our

exercise of comity today signals a weakening

of our resolve to enforce the constitutional

rights of New Jersey's lower income

citizens. The constitutional obligation has

not changed; the judiciary's ultimate duty

to enforce it has not changed; our

determination to perform that duty has not

changed."), enforcement of the

constitutional obligation is still a matter

that may be brought to the courts.

[In re N.J.A.C. 5:96 I, supra, 215 N.J. at

616-17.]

Deferring to the Legislature on such policy considerations

is especially important here because COAH is a "legislatively

created, unique device for securing satisfaction of Mount Laurel

obligations." In re N.J.A.C. 5:96 II, supra, 221 N.J. at 29.

As the Court stated, it is not our role to become a replacement

agency for COAH by creating "an alternate form of statewide

administrative decision maker for unresolved policy details of

replacement Third Round Rules." Ibid. We discern no

constitutional basis for the judiciary, much less this court, to

intrude into the policy-making arena, an area traditionally

reserved in our tripartite system of governance to the

legislative13 and executive branches.

13

Although not dispositive on the legal question presented on

appeal, there are two identical pending bills in the Assembly

and Senate directly on point. The Legislative statement

accompanying those bills states in pertinent part:

(continued)

46 A-3323-15T1

D.

We reject the contention that the doctrine of judicial

estoppel bars the challenge to the court's holding as to the

gap-period issue. We review a trial court's decision to invoke

judicial estoppel using an abuse of discretion standard. State,

Div. of Motor Vehicles v. Caruso, 291 N.J. Super. 430, 438 (App.

Div. 1996).

The law as to the doctrine of judicial estoppel is well

settled. To protect the integrity of the court system, "[w]hen

(continued)

Although the [FHA] clearly states that

the State Constitution's affordable housing

obligation is comprised of "present and

prospective need" for affordable housing

only, some courts have misunderstood the

intent of the Legislature behind the [FHA],

and imposed a retroactive obligation for the

so-called gap period. The purpose of this

bill is to eliminate any possible

misconception with respect to the

Legislature's intent to ensure that

determination of a municipality's fair share

of affordable housing will be based upon the

present and prospective need for affordable

housing, as clearly set forth in the [FHA],

and that a fair share obligation will not

include a retrospective need that may have

arisen during any "gap period" between

housing cycles.

[Statement to Assemb. No. 3821, and

Statement to S.B. No. 2254 at 7 (May 23,

2016) (emphasis added).]

47 A-3323-15T1

a party successfully asserts a position in a prior legal

proceeding, that party cannot assert a contrary position in

subsequent litigation arising out of the same events." Kress v.

La Villa, 335 N.J. Super. 400, 412 (App. Div. 2000) (emphasis

added), certif. denied, 168 N.J. 289 (2001). It has been

summarized as follows: "The principle is that if you prevail in

Suit # 1 by representing that A is true, you are stuck with A in

all later litigation growing out of the same events." Kimball

Int'l, Inc. v Northfield Metal Prods., 334 N.J. Super. 596, 607

(App. Div. 2000) (citation omitted), certif. denied, 167 N.J. 88

(2001).

Judicial estoppel is not a favored remedy because of its

draconian consequences. It is to be invoked only in limited

circumstances:

It is . . . generally recognized that

judicial estoppel is an "extraordinary

remedy," which should be invoked only "when

a party's inconsistent behavior will

otherwise result in a miscarriage of

justice." Ryan Operations G.P. v. Santiam-

Midwest Lumber Co., 81 F.3d 355, 365 (3d

Cir. 1996) (quoting Oneida Motor Freight,

Inc. v. United Jersey Bank, 848 F.2d 414,

424 (3d Cir.) (Stapleton, J., dissenting),

cert. denied, 488 U.S. 967, 109 S. Ct. 495,

102 L. Ed. 2d 532 (1988)); see also

[Teledyne Indus., Inc., v. NLRB, 911 F.2d

1214,] 1218 [(6th Cir. 1990)] ("Judicial

estoppel is applied with caution to avoid

impinging on the truth-seeking function of

the court because the doctrine precludes a

contradictory position without examining the

48 A-3323-15T1

truth of either statement."). Thus, as with

other claim and issue preclusion doctrines,

judicial estoppel should be invoked only in

those circumstances required to serve its

stated purpose, which is to protect the

integrity of the judicial process.

[Id. at 608 (footnote omitted).]

In Ali v. Rutgers, 166 N.J. 280, 288 (2000), our Supreme Court

confirmed that judicial estoppel is an "extraordinary remedy."

The facts presented on this appeal do not warrant application of

this remedy.

In invoking the doctrine of judicial estoppel and imposing

a "separate and discrete" gap-period obligation, the judge

relied on our opinion in In re Six Month. We conclude that the

court's reliance is misplaced. We reach that conclusion

primarily because the parties and issues in In re Six Month were

substantially different than here, and since issuing our opinion

in In re Six Month, the Court provided Mount Laurel judges with

further guidelines and principles in In re N.J.A.C. 5:96 II.

As to the dissimilarity of issues, our focus in In re Six

Month was on COAH's interim procedural rules designed to address

a six-year period between 1999 and 2004. Supra, 372 N.J. Super.

at 68. In In re Six Month, we identified the sole issue:

These [seven] appeals concern only N.J.A.C.

5:91-14.3, which provides a mechanism for

municipalities previously certified in the

second round to receive an extension of

their substantive certification status and,

49 A-3323-15T1

therefore, further protection from civil

action remedies, for up to one year

following the adoption of the third-round

rules, well beyond the previously scheduled

1999 expiration of second-round standards

and methodology.

[Ibid.]

Here, the issue is whether a retrospective "separate and

discrete" gap-period obligation is authorized by (1) the core

principles of the Mount Laurel doctrine, as codified in the FHA;

and (2) In re N.J.A.C. 5:96 II. There, we were not asked to

address, and we did not sanction, a gap-period affordable

housing obligation, on top of prior unfulfilled obligations and

present and prospective needs. Rather, we temporarily suspended

substantive certifications granted by COAH pursuant to N.J.A.C.

5:91-14.3, subject to rule modifications. Id. at 105. As to

the dissimilarity of parties, none of the Ocean County

municipality entities participated in In re Six Month.

V.

In sum, we conclude that the core principles of the Mount

Laurel doctrine, as codified in the FHA, and the guidelines and

principles established by the New Jersey Supreme Court in In re

N.J.A.C. 5:96 II, do not authorize a retrospective new "separate

and discrete" affordable housing gap-period obligation.

Following In re N.J.A.C. 5:96 II, a town should start with its

unfulfilled prior round obligations and then establish its

50 A-3323-15T1

present and prospective need in establishing a municipality's

fair share Mount Laurel obligation.

Finally, we emphasize that our holding today does not

ignore housing needs that arose in the gap period or a

municipality's obligation to otherwise satisfy its

constitutional fair share obligations. As Mr. Reading candidly

acknowledged, "[low- and moderate-income] households formed

during the gap period may no longer represent an affordable

housing need due to a variety of reasons including death,

changes in income, increase or decrease in household size,

retirement and/or relocation outside of New Jersey." However,

he also stated that housing need from the gap period would be

"partially included" by those living in "over[]crowded or

deficient housing units that are encompassed in the new

calculation of [p]resent [n]eed." Therefore, the scope of

present need should be dictated by identifiable housing need

characteristics as found by the reviewing Mount Laurel judge

when examining the evidence presented.14 In this context, the

focus remains – as it has for the last forty years - on the

constitutional obligation of realistically affording

14

The Municipal Group asserted in its amicus brief that

"municipalities presented facts to show that developers

constructed roughly 90,000 rental units affordable to low[-] or

moderate-income households during the gap period."

51 A-3323-15T1

opportunities for construction of a municipality's fair share of

present and prospective need for low- and moderate-income

housing.

We reach our conclusion emphasizing: (1) the core of the

Mount Laurel doctrine is a municipality "would satisfy [its]

constitutional obligation by affirmatively affording a realistic

opportunity for the construction of its fair share of the

present and prospective regional need for low[-] and moderate[-

income] income housing," Mount Laurel II, supra, 92 N.J. at 205

(emphasis added); (2) a realistic opportunity depends on

"whether there is in fact a likelihood -- to the extent economic

conditions allow -- that the lower income housing will actually

be constructed," id. at 222; (3) the FHA codified the core

constitutional holding undergirding the Mount Laurel obligation,

In re N.J.A.C. 5:96 I, supra, 215 N.J. at 584, and specifically

defined "prospective need" as a forward projection of housing

needs "based on development and growth . . . [which is]

reasonably likely to occur in a region or a municipality,"

N.J.A.C. 5:92-1.3; (4) the FHA charged COAH with determining

"State and regional present and prospective need for low[-] and

moderate[-income] housing," In re N.J.A.C. 5:96 I, supra, 215

N.J. at 589 (emphasis added); (5) although the Legislature

amended the FHA twelve times during the gap period, it did not

52 A-3323-15T1

impose a retrospective "separate and discrete" gap-period

obligation; (6) although the Appellate Division and the Supreme

Court likewise had opportunities during the gap period to

require a "separate and discrete" gap-period obligation, such an

obligation was not imposed, and instead remained steadfast to

the FHA's focus on State and regional present and prospective

need for low- and moderate-income housing; (7) identified low-

and moderate-income households formed during the gap period in

need of affordable housing can be captured in a municipality's

calculation of present need; and (8) under our tripartite system

of jurisprudence, imposing a "separate and discrete" gap-period

obligation is best left for consideration by the Legislative and

Executive branches of government where the issues can be fairly

and fully debated in the public forum.

Reversed and remanded for further proceedings consistent

with this opinion. We do not retain jurisdiction.

53 A-3323-15T1