New Jersey Supreme Court Decisions Affirm Mount Laurel Doctrine, Separate Decision Protects Supportive Housing

On September 26, 2013 the New Jersey Supreme Court issued two important decisions affecting affordable housing. One court decision upholds New Jersey’s Mount Laurel doctrine, which requires every town in New Jersey to provide its “fair share” of the regional need for low- and moderate-income housing. The second decision protects tax exemption for nonprofit supportive housing.Mount LaurelA group of eleven municipalities in 2012, with the support of Governor Chris Christie’s Administration, appealed an appellate court decision that upheld the Mount Laurel doctrine. The appellate court rejected the state’s 2008 regulations allowing municipalities to establish their own affordable housing obligations, which could discourage affordable housing through zoning and other land use powers. For example, municipalities that wanted to exclude lower income households could do so by discouraging housing development while encouraging commercial growth. Consequently, housing prices in some municipalities were unaffordable for lower income households.The state’s Supreme Court found the 2008 version of the regulations, the “growth share” rules, violated New Jersey’s Fair Housing Act. Under the growth share rule, the municipal obligation to provide realistic opportunities for affordable homes was linked to actual residential and nonresidential growth, allowing municipalities to avoid the obligation by controlling their growth rates. This was a sharp change from previous rules in place from 1987 through 1999; those rules projected the future need for affordable homes on a regional basis and allocated to each municipality in a region its fair share of the responsibility for making the development of affordable housing possible. The state Supreme Court decision directed the state to adopt new rules within five months that comply with the Mount Laurel doctrine.Kevin Walsh, the attorney for Fair Share Housing Center who argued the case, stated: “The Supreme Court’s decision stops Gov. Christie and his administration from allowing wealthier municipalities to exclude working families and people with special needs. The Christie Administration has done everything it can to delay and block Mount Laurel from promoting development of affordable housing in New Jersey. We now have a final decision and look forward to more homes in communities throughout the state.”“We’re very pleased with the court’s ruling,” said Staci Berger, executive director of the Housing and Community Development Network of New Jersey. “After a decade of dithering, the state will finally have to provide certainty to communities and residents using a proven method that helped to create more than 65,000 affordable homes. As a result of this decision, more of our hardworking residents, seniors, and people with disabilities will have the opportunity to live in homes they can afford in communities of their choice.” Tax Exemption for Nonprofit Supportive HousingAlso on September 26, the New Jersey Supreme Court upheld the tax exemption of Advance Housing, a nonprofit provider of supportive housing and services for people who have mental disabilities in Bergen County, NJ. Between 1999 and 2003, Advance Housing purchased several one and two bedroom condos in larger multifamily complexes in order to provide more integrated supportive housing opportunities. Between 2002 and 2004, nine Bergen County municipalities denied tax-exempt status for 14 residential properties purchased by Advance Housing and operated as supportive housing, claiming they were not used for charitable purposes.  A New Jersey Tax Court agreed with the municipalities, concluding that the housing component was not integrated with the counseling and supportive services, in part because residents were not required to participate in services. Both the federal Section 811 program and the state program which enabled the purchase of the condos forbid requiring residents to participate in services. Approximately $1 million in taxes were at stake.Advance Housing appealed to the Appellate Division, which unanimously reversed the Tax Court decision and granted the tax exemption; the New Jersey Supreme Court upheld the Appellate Division decision. Although the text of the Supreme Court decision is limited to technical details about what constitutes charitable purpose, advocates interpret the decision as one legitimizing support for permanent supportive housing and helping the county to transition away from group homes and institutions.View the September 26, 2013 Mount Laurel decision at: View the September 26, 2013 Advance Housing decision at: For more information about the Mount Laurel Doctrine, visit the Fair Share Housing Center’s website at: For more from the Housing and Community Development Network of New Jersey, visit: