NJ town withdraws legal challenge to state's affordable housing requirements

One potential obstacle in New Jersey’s plan to create tens of thousands more affordable homes vanished this week, when officials in Bethlehem Township withdrew their legal challenge to the state’s affordable housing law.

The small, rural town of about 3,700 people in Hunterdon County had filed a complaint in late September with an obscure state panel, claiming the law unfairly forces local municipalities to cover all the costs of fulfilling their affordable housing duties without the state chipping in to help. The law mandates that most towns contribute their fair share of low-priced homes.

Bethlehem’s complaint was one of two legal challenges to New Jersey’s ambitious plan to increase affordable housing in the state. Now, one lawsuit that could upend the affordable housing law remains. Twenty-three New Jersey towns are currently suing in state court to invalidate the law, which the Legislature passed this year. In their legal filings, the towns have indicated that they see challenging the law as an “unfunded mandate” as a way to potentially get it overturned.

Judge John Sweeney, who chairs the New Jersey Council on Local Mandates, told Gothamist he received a letter from Bethlehem’s attorneys that stated they were withdrawing the complaint. Sweeney had ordered the state’s attorney general to file a response to the town, but he said that is no longer necessary.

“The letter was very simple … in so many words saying we desire at this time to withdraw the complaint," Sweeney said. "No details. No reasons why."

The little-known panel where Bethlehem made the complaint has the power to overturn laws if it decides they represent an unfunded mandate. In 2009, the Council heard a similar challenge to an affordable housing law, from Medford Township, which it then shot down. But before Bethlehem’s case reached the point where the Council could rule, the town pulled their case without any explanation.

The 23 municipalities behind the remaining lawsuit are asking a Mercer County Superior Court judge to declare the terms of the law passed this year unconstitutional.

“If the court makes such a determination, it would allow the municipalities to go before the [Council on Local Mandates] and seek invalidation of the law,” the towns’ attorney Michael Collins said.

Bethlehem Mayor Paul Muir and township attorney Michael P. O’Grodnick confirmed that the Bethlehem complaint was withdrawn.

In the complaint, Bethlehem Township had claimed the new law imposed the expenditure of funds “without appropriations” from the state in order to fulfill the obligations under the state plan, which is known as the Mount Laurel Doctrine. The doctrine is a 40-year-old state Supreme Court ruling that most towns in New Jersey must develop a certain amount of additional affordable housing.

The township claimed it could be required to spend more than $100,000 in taxpayer money on planning, legal and administrative costs alone to comply with its affordable housing obligations. Bethlehem cited specific tasks that would impose costs, such as revising its municipal affordable housing plan and potentially defending it in court.

In the complaint, the township stated it was seeking an injunction from the Council to prevent enforcement of the affordable housing law, claiming Bethlehem would suffer “irreparable harm” and “financial detriment” if it were forced to comply.

Muir and O’Grodnick did not respond to requests to provide more details on why the complaint was withdrawn.

Montvale Mayor Mike Ghassali, who is leading the coalition of 23 towns suing to invalidate the law, said it is “100% an unfunded mandate that is costing us money.”

Ghassali said Montvale had to add a second water tower, hire three new police officers and pass a $30 million referendum to add more school space in order to cover the cost of new housing built over the last three "rounds" of Mount Laurel obligations. “That's our tax dollars,” he said.

New Jersey state officials from the Department of Community Affairs last week released the target numbers for the next 10-year round of affordable housing development in the state. According to the numbers, New Jersey is seeking to develop more than 84,000 affordable homes in its suburbs over the next decade.

On average, municipalities are being asked to create 150 new homes priced for low- and middle-income people by 2035. Bethlehem Township was assigned 51 units, while Montvale received a higher-than-average target of 348.

New Jersey housing planner Beth McManus said the lack of state funding to help with the costs associated with providing affordable housing is a common concern among the municipalities she works with. She said these concerns most often center around taxpayer costs to educate children who move into the community and to improve roads to prevent traffic from getting out of control.

Still, she said it will be tough for New Jersey municipalities to get the new law struck down, noting that Medford had “gone down this road” already and was unsuccessful.

Richard Reading, a New Jersey economic analyst who has been involved with affordable housing issues dating back to 1975, said any town attempting to get the law overturned is working against long-standing legal precedent.

“I think there are some difficulties that [towns] will face," he said. "You’re challenging a law that has, in effect, been in place for over 40 years."