I have posited as a basic economic principle “that as a general rule people will tend to act in what they perceive to be their (economic, political, social) best interest.”
What is true at the individual level remains true in the aggregate; case in point: municipal governments and housing. New Jersey has over 500 municipalities, each largely funded by the local property tax and dedicated to the concept of home rule and the political survival of incumbent office holders. The greatest and most basic gripe of the local voter is that property taxes are too high, and a major component of that tax burden is the school tax which is directly related to the number of children attending the locally supported public schools.
It is not surprising, therefore, that municipalities will encourage development that generates tax revenue without increasing the need to provide local services, especially as represented by school children. This motive is often, but not always, openly acknowledged; sometimes it will be camouflaged by citing planning concepts such as preservation of the environment or the character of the area and the prevention of suburban sprawl, some of which the advocates may actually believe (in addition to the core goal of making sure unwanted development happens elsewhere, that “someone else” will bear the cost).
To limit school children, these municipalities seek to limit the residential development that will generate school children, at least in numbers that will exceed the new housing’s proportionate contribution to the local property tax base. Techniques to do this include limiting housing to single-family homes of a certain minimum size on large lots (ironically causing the very suburban sprawl used to justify the regulation in the first place).
Home builders are in business to make a profit. Faced with these regulations they will build the expensive, luxury housing that the local government will at least tolerate. But if the regulations were otherwise, they might build significantly more homes on the same land that might be within the reach of the less wealthy.
In the 1970s New Jersey’s Supreme Court issued its decision in cases challenging this misuse of the local zoning power. In what has become known as the Mount Laurel Doctrine, the Court held as a matter of state constitutional law that developing municipalities must use their zoning power to provide a realistic opportunity for the construction of their fair share of housing affordable to low and moderate income households. The initial decision generated litigation, not housing, so in 1983 the Court created the “builders remedy,” an incentive for profit-seeking enterprises to propose the construction of housing in significantly greater density than would otherwise be permitted so long as a substantial percentage was “affordable.”
Fast forward 40 years. The Legislature responded by enacting the Fair Housing Act which created the Council on Affordable Housing (COAH) to create specific regulations to determine each town’s obligation and what housing would qualify as a credit against the obligation and grant “substantive certification” to protect compliant towns from the dreaded builder’s remedy. Municipalities that did not participate in the COAH process took the risk that they might be sued. Still, the whole idea that someone else could tell a municipality what to do, especially in a way that was inconsistent with its own parochial interests, continued to rankle. COAH was never able to adopt rules for the third housing round that passed judicial muster and ultimately the Supreme Court removed the requirement that potential Mount Laurel plaintiffs exhaust (plainly unavailable) administrative remedies before initiating exclusionary zoning litigation.
Instead of state-wide standards for determining the municipal obligation and compliance techniques, there was the potential for considerable variation depending upon where the case was tried. Most municipalities sought to settle these claims, but the parties were limited in their ability to justify the numbers offered and demanded. A few towns took the risk of litigation, resulting in trials that were battles of the planning experts and generally were not as advantageous to the municipal positions as they had hoped.
In 2024 the Legislature passed a statute eliminating COAH and providing a substitute administrative process. When the resulting municipal obligations were published, there as widespread complaint that they were too high. A coalition of towns sued to overturn that act and sought preliminary relief pausing not only its process, but the entire Mount Laurel obligation until their suit was resolved.
Last week the trial court judge denied that relief.1 There are lots of issues discussed in the decision (it’s long, but not unnecessarily so, and largely accessible even without a law degree), but many keep coming back to the point that the law which the coalition was challenging is not in reality the source of the grievance. Municipalities that are not willing to accept the numbers determined in accordance with that statue do not have to participate in the process; just as before the statute was passed they may bring their own declaratory judgment actions seeking to establish their preferred numbers or do nothing and take the risk of an exclusionary zoning lawsuit. The statute does not limit these choices.
The coalition’s real beef is with the Mount Laurel Doctrine itself. But people have to live somewhere. At its core the Mount Laurel Doctrine is not about charity housing but that municipalities may not use their governmental power to make themselves enclaves for the wealthy. If certain types of development impose what a town considers to be an unfair burden (relative to its neighbors) to pay for education, I suggest that responsibility for that public service be transferred from the local to the state level.
Jay Bohn
January 6, 2025
Copyright 2025 by Jay Bohn.