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Oakwood at Madison Inc. v. Township of Madison

Decided: January 26, 1977.

OAKWOOD AT MADISON, INC., A CORPORATION OF THE STATE OF NEW JERSEY, BEREN CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, DOROTHY MAE SHEPARD, LOUVENIA ALSTON, WILLIAM BAYLIS, BRENDA SMITH, LIZZIE WALKER AND GERALDINE YORK, PLAINTIFFS-RESPONDENTS-CROSS-APPELLANTS,
v.
THE TOWNSHIP OF MADISON, DEFENDANT-APPELLANT-CROSS-RESPONDENT, AND THE STATE OF NEW JERSEY, DEFENDANT



For affirmance and remandment as modified -- Chief Justice Hughes, Justices Sullivan and Clifford and Judge Conford. Concurring in part and dissenting in part -- Justices Mountain, Pashman and Schreiber. The opinion of the court was delivered by Conford, P.J.A.D., Temporarily Assigned. Clifford, J. (concurring). Pashman, J., concurring and dissenting. Schreiber, J. (concurring in part and dissenting in part). Mountain, J., concurring and dissenting.

Conford

I Outline of Major Issues 1199

II "Fair Share" and "Region" Preliminary Considerations 1200

III Madison--Its Growth and Development 1201

IV The Zoning Ordinances 1202

V "Least Cost"versus "Low and Moderate Income" Housing etc. 1206

VI Incapacity of 1973 Ordinance to Effect Lower Income Housing 1208

VII The "Fair Share" approach of the Defendant 1213

VIII "Fair Share" and "Region"-- General Considerations 1216

IX Environmental Considerations 1223

X "Affirmative Action" for Lower Income Housing 1224

XI The Validity of the Zoning Statute 1225

XII Relief for Corporate Plaintiffs 1226

XIII Remand and remedy 1227

We today review the decision of Judge Furman invalidating the 1973 amendatory zoning ordinance of defendant Township of Madison.*fn1 128 N.J. Super. 438 (Law Div. 1974). That determination culminated an action instituted by plaintiffs in November 1970 challenging the validity of a zoning ordinance adopted by the township in September 1970 to replace a previous one in effect since 1964.*fn2 Judge Furman had invalidated the 1970 ordinance in Oakwood at Madison, Inc. v. Tp. of Madison, 117 N.J. Super. 11, 21 (Law Div. 1971), but at the same time rejected an attack by plaintiffs on the constitutionality of the enabling zoning statute, N.J.S.A. 40:55-30 et seq. Id. at 16.

Defendant obtained a stay of judgment pending its appeal to the Appellate Division, and plaintiffs filed a cross-appeal as to that part of the judgment sustaining the validity of the statute. On plaintiffs' motion, and because of the importance of the case, we certified the appeals pending unheard in the Appellate Division pursuant to R. 2:12-2. 62 N.J. 185 (1972).

Oral argument was originally heard by the court on March 5, 1973, and additional argument was requested for January 8, 1974. However, on October 1, 1973 Madison Township adopted a major amendment to the 1970 ordinance. Consequently,

on January 8, 1974, while retaining jurisdiction, we remanded the action to the trial court for a trial and ruling on the ordinance as amended, with the result stated above.

Oral argument on the present phase of the appeal has been had twice, emphasis being placed on the effect on the issues herein of our intervening decision in So. Burl. Cty. N.A.A.C.P. v. Tp. of Mt. Laurel, 67 N.J. 151, app. dism. and cert. den. 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 2028 (1975) (" Mount Laurel " hereinafter). We have received and considered supplemental briefs and materials.

Plaintiffs herein comprise two groups. Oakwood at Madison, Inc. and Beren Corporation (hereinafter "corporate plaintiffs"), both New Jersey corporations, were developers owning a tract of vacant developable land of some 400 acres, the disputed Oakwood-Beren tract. Six individuals were low income persons acknowledged by the trial judge as "representing as a class those who reside outside the township and have sought housing there unsuccessfully." Oakwood at Madison, Inc. v. Tp. of Madison, supra (117 N.J. Super. at 14). Plaintiffs alleged, inter alia, (a) that the exclusionary nature of the ordinance rendered it unconstitutional; (b) that the enabling legislation was unconstitutional in its failure to provide adequate standards for municipal exercise of the zoning power; and (c) that the restrictive effect of the ordinance as applied to corporate plaintiffs' property rendered it confiscatory.

The trial court invalidated the 1970 ordinance, primarily on the grounds that in zoning massive areas of vacant developable land for one-and two-acre single family residences, beyond the reach of 90% of the population, and in allocating only "miniscule" acreage for multi-family dwelling units, it ignored the housing needs of the township and the region, and failed "to promote reasonably a balanced community in accordance with the general welfare." 117 N.J. Super. at 20-21. The court upheld the constitutionality of the enabling legislation; it did not reach the issue of confiscation, apparently

regarding the invalidation of the entire ordinance as rendering that matter moot.

While the 1973 amendatory ordinance transferred substantial areas from large lot to smaller lot zoning, made more land available for multi-family development and provided for planned unit development (PUD) and "cluster" zones, the evidence in the case convinced the court that the municipality still was not satisfying its obligation to "provide its fair share of the housing needs of its region", particularly in relation to the low-income and moderate-income population. 128 N.J. Super. at 447. The amended ordinance was therefore again struck down in its entirety. Ibid.

The main lines of the Law Division opinion striking down the 1973 ordinance may be summarized as follows. A crisis in housing needs continues, most serious for those of low and moderate income. The region, whose housing needs must reasonably be provided for by such municipalities as Madison, is not necessarily coextensive with Middlesex County. "Rather, it is the area from which, in view of available employment and transportation, the population of the township would be drawn, absent invalidly exclusionary zoning". 128 N.J. Super. at 441. Almost all of Madison's employed residents work outside the township, 50% in the county, 15% in New York City, 10% in Essex County, and the remainder in nearby counties, including 7% in Monmouth County. After an analysis of the testimony concerning the number of housing units which could be expected, under the amended ordinance, to be produced and to be affordable by low and moderate income households, the court said:

Of the total 20,000 to 30,000 housing units which may be built in Madison Township under the 1970 zoning ordinance as amended, about 3500 [12% to 17%] at most would be within the reach of households with incomes of $10,000 a year, the upper limit of moderate incomes, and virtually none within the reach of households with incomes of $9,000 a year or less. This contrasts with the present township population, approximately 12% low income and 19% moderate income. Id. at 446.

The court assessed Madison Township's obligation to provide its fair share of regional housing needs as follows:

Without the rigidity of a mathematical formula this court holds that Madison Township's obligation to provide its fair share of the housing needs of its region is not met unless its zoning ordinance approximates in additional housing unit capacity the same proportion of low-income housing as its present low-income population, about 12%, and the same proportion of moderate-income housing as its present moderate-income population, about 19%. The amended zoning ordinance under review falls palpably short and must be struck down in its entirety. Id. at 447.

The court did not specify any absolute numerical quota of low and moderate income units the ordinance would be expected to render possible, but found that annual needs "into the 1980's were 750 to 1000 units, 500 to 600 of those low and moderate income." Id. at 442.

The court dealt with the defendants' argument that ecological and environmental factors justified the RP, R-80 (2 acre lot minimum) and R-40 (1 acre lot minimum) zones by pointing out that such problems had "no bearing" except in specified limited areas and that "ample land outside these areas is available" with which the township could meet its obligation to provide its fair share of needed housing. 128 N.J. Super. at 447.

It should be stated at the outset that the basic rationale embraced by Judge Furman in both of his opinions in the case is substantially that adopted by this court in Mount Laurel, with the qualification that our determination there rested on the state constitutional ground that due process and equal protection are denied if "substantial segments of the population" are improperly precluded from residing within the municipality because of local zoning regulations. 67 N.J. at 175. The "substantial" segments thus identified were those low and moderate income people of the region economically unable to afford suitable housing in developing municipalities of the region because of their highly cost-generating zoning restrictions.

General guidelines toward eliminating undue cost-generating restrictions were stated in Mount Laurel (67 N.J. at 187):

By way of summary, what we have said comes down to this. As a developing municipality, Mount Laurel must, by its land use regulations, make realistically possible the opportunity for an appropriate variety and choice of housing for all categories of people who may desire to live there, of course including those of low and moderate income. It must permit multi-family housing, without bedroom or similar restrictions, as well as small dwellings on very small lots, low cost housing of other types and, in general, high density zoning, without artificial and unjustifiable minimum requirements as to lot size, building size and the like, to meet the full panoply of these needs.

In the absence of legislation providing for regional zoning authorities, while municipalities are empowered to zone individually, they must nevertheless (if of the "developing" category described in Mount Laurel, 67 N.J. at 160), by their zoning regulations serve and not impede the general welfare represented by satisfaction of the housing needs of lower income people throughout the region. 67 N.J. at 188-190;*fn3 id. at 194 (Pashman, J., concurring).

After the last argument in this matter the Legislature revised the zoning statutes of this State by enactment of the "Municipal Land Use Law", L. 1975, c. 291, which by its terms became operative August 1, 1976. We invited and have received from counsel supplemental comment as to any effect of the new law on the issues herein, particularly as to the continued viability of Mount Laurel. We find nothing in the statute inconsistent with the doctrine there laid down. (The decision would control, in any event, in view of its constitutional underpinning.) Without here indulging in any comprehensive evaluation of the new law, certain of the purposes stated in Section 2 seem particularly pertinent.

d. To ensure that the development of individual municipalities does not conflict with the development and general welfare of neighboring municipalities, the county and the State as a whole;

e. To promote the establishment of appropriate population densities and concentrations that will contribute to the well-being of persons, neighborhoods, communities and regions and preservation of the environment;

g. To provide sufficient space in appropriate locations for a variety of agricultural, residential, recreational, commercial and industrial uses and open spaces, both public and private, according to their respective environmental requirements in order to meet the needs of all New Jersey citizens.

At the same time, the new law reminds us, as we emphasized in Mount Laurel, that out of a proper concern for adequate housing there should not and need not be over-intensive and too sudden development, future suburban sprawl and slums, or sacrifice of open space and local beauty. 67 N.J. at 191. Thus, the newly articulated purposes of Section 2 of the statute include:

c. To provide adequate light, air and open space.

j. To promote the conservation of open space and valuable natural resources and to prevent urban sprawl and degradation of the environment through improper use of land.

I

Outline of Major Issues

The judgment of the trial court, the intervention of our decision in Mount Laurel and the nature of the record and briefs before us combine to cast the issues for determination as follows:

1. Is the Madison 1973 zoning ordinance exclusionary, i.e., whether or not so intended, does it operate in fact to preclude the opportunity to supply any substantial amounts of new housing for low and moderate income households now and prospectively needed in the municipality and in the appropriate region of which it forms a part?

2. If, as we have concluded, the affirmative response to the foregoing question by the trial court should be sustained, is it incumbent upon the courts, pursuant to Mount Laurel, to demarcate a pertinent region and to fix a specific number of lower-cost housing units as the "fair share" of the regional need therefor to be made possible by the Madison ordinance?

3. If, as we have concluded, the foregoing question should be answered in the negative, what kind of an order should be made to assure Madison's compliance, as a developing municipality, with Mount Laurel's mandate that its zoning ordinance "afford the opportunity" for at least "the municipality's

fair share of the present and prospective regional need" for "decent and adequate low and moderate income housing"? 67 N.J. at 188.

II

"Fair Share" and "Region" -- Preliminary Considerations

As noted above, the prime question before us, in Mount Laurel terms, is whether the trial court has correctly found that Madison's zoning ordinance does not provide the opportunity to meet a fair share of the regional burden for low and moderate income housing needs. We have seen that the trial court did not specify the precise boundaries of the applicable region nor fix an absolute number of appropriate housing units to be provided. It merely described the pertinent region as the area from which the population of the township would be drawn, absent exclusionary zoning.

A substantial body of evidence was adduced by the defendant below purporting to specify Madison's fair share of Middlesex County's unmet need for low and moderate income housing as of 1975. Moreover, the record before us, the briefs and the literature in the field supply abundant data concerning methods and techniques for estimating a municipality's fair share of a regional housing need. We propose to comment on these matters hereinafter, for three purposes: (a) to explain our conclusion that the evidence concerning fair share adduced by defendant does not refute the trial court determination that the Madison ordinance is deficient in the respects noted; (b) to elucidate the considerations relating to the appropriate "region" whose housing needs are relevant to this action; and (c) to furnish guidance to courts, counsel and expert witnesses in this area in applying the principles of Mount Laurel to litigated controversies generally.

However, we deem it well to establish at the outset that we do not regard it as mandatory for developing municipalities whose ordinances are challenged as exclusionary to devise specific formulae for estimating their precise fair share of the lower income*fn4 housing needs of a specifically

demarcated region. Nor do we conceive it as necessary for a trial court to make findings of that nature in a contested case. Firstly, numerical housing goals are not realistically translatable into specific substantive changes in a zoning ordinance by any technique revealed to us by our study of the data before us. There are too many imponderables between a zone change and the actual production of housing on sites as zoned, not to mention the production of a specific number of lower cost units in a given period of time. Municipalities do not themselves have the duty to build or subsidize housing. Secondly, the breadth of approach by the experts to the factor of the appropriate region and to the criteria for allocation of regional housing goals to municipal "subregions" is so great and the pertinent economic and sociological considerations so diverse as to preclude judicial dictation or acceptance of any one solution as authoritative. For the same reasons, we would not mandate the formula approach as obligatory on any municipality seeking to correct a fair share deficiency.

We are convinced from the record and data before us that attention by those concerned, whether courts or local governing bodies, to the substance of a zoning ordinance under challenge and to bona fide efforts toward the elimination or minimization of undue cost-generating requirements in respect of reasonable areas of a developing municipality represents the best promise for adequate productiveness without resort to formulaic estimates of specific unit "fair shares" of lower cost housing by any of the complex and controversial allocation "models" now coming into vogue.*fn5

It is desirable that administrative agencies acting under legislative authorization assume the regulation of the housing distribution problem. Until then, in the current post- Mount Laurel period judicial emphasis on approaches such as those just outlined, and exemplified in the remedial section

of this opinion, will, it is hoped, suffice to move the State toward the objective of "available housing in the developing municipalities for a goodly number of the various categories of people of low and moderate income who desire to live therein and now cannot." Mount Laurel, 67 N.J., at 188, n. 21.

III

Madison -- Its Growth and Development

Madison Township consists of approximately 42 square miles, or 25,000 acres, in the southeast corner of Middlesex County, of which almost 40% is vacant developable land. Its location within the gap between the metropolitan centers of New York and Philadelphia is a strategic one: this "Atlantic urban region" gap is expected to be bridged within the next 25 years, with a concomitant population increase of 75%. The Tri-State Regional Planning Association (covering counties in New York, New Jersey and Connecticut and including Middlesex) predicts that Middlesex will be one of four counties to experience the greatest rates of growth in the tri-state area from 1970 to 2000.

Parts of the township lie within 20 miles of the highly urbanized areas of Elizabeth and Newark. Easy access to and from the municipality is provided by several major highways which traverse it. The Garden State Parkway and State Highways 34 and 35 cut across the eastern portion of the township, connecting Madison to both the south Jersey shore area and the Newark-New York metropolitan area. State Highway 18 and U.S. Route 9 run through the center of the township, and there are three major county roads, 527, 516 and 520. The New York-Long Branch Railroad runs through the eastern portion of the municipality, and although there are no commuter stations in the township itself there are in nearby communities. The accessibility of the township is readily illustrated by the status of the community

as a commutershed. Only 1% of Madison's employed residents work within the township. As found by the trial court, 50% of the work force are employed in Middlesex County, 15% in New York City, 10% in Essex County, 9-12% in Union County and 7% in Monmouth County.

Madison is an archetypal "developing" municipality within the contemplation of the Mount Laurel specifications. 67 N.J. at 173, 187. During the past 25 years, it has experienced explosive growth. Its population increased over two decades by 561%, from 7,366 in 1950 to 48,715 in 1970. This boom has continued, with the population climbing to 50,000 by the time of the first trial and 55,000 by the second in 1974. With the growth and concomitant municipal problems came a steady rise in tax rates.

Even in light of this period of great expansion, Madison still has large potential for further growth.*fn6 Among the twenty-five municipalities in Middlesex County, Madison in 1970 ranked 20th lowest both in population density and housing density. Vacant acreage is plentiful; of the township's 25,000 acres, between 8,143 and 11,000 are vacant and developable. The township is a sprawling municipality marked by little continuity and spotty development. The area is laced by a network of streams and rivers eventually feeding into South River to the north. Cheesequake State Park occupies a sizeable portion of land in the eastern part of the town.

The older residential development is concentrated to some extent in the Old Bridge and Browntown areas and on the Raritan Bay, which forms the eastern boundary of the municipality. Lawrence Harbor and Cliffwood Beach, the two major developments located on the Raritan Bay, consist mainly of bungalows on 50-foot lots originally built in the

1920's as summer cottages and since converted into year-round residences. Newer single family developments and apartment complexes are peppered over the township, except for the southwestern third of the township which is largely undeveloped. Most single family homes are on lots less than an acre. It does not appear that prior to the first trial any one-or two-acre housing developments had been constructed except for some two-acre homes built in the 1920's. Commercial land uses are scattered, generally following some of the major highway routes. Industrial usage is slight.

Construction within the township fell off from 1970 to 1973. Comparing Madison with four nearby municipalities of generally similar characteristics (with large undeveloped areas) for the said three year period, Madison issued an average of only 53 dwelling unit building permits per year as against 368 in East Brunswick, 309 in Monroe, 89 in Sayreville and 212 in South Brunswick. Although Madison contains 20% of the county's vacant residentially zoned land, and from 1960 to 1970 issued 15% of all the building permits, from 1970 to 1972 its percentage of county building starts fell to 6%.

From 1950 to 1970 the housing growth in the township was characterized by construction of single family homes built on lots of 15,000 square feet or less and of a number of multi-family garden apartment developments. Virtually all the apartment units in the township, however, were constructed after 1963, and by April 1969 they comprised 3,700 or 27.4% of the total of 13,499 housing units in the township. In 1970, 56% of the single family dwellings in the township were valued at $25,000 or less. Figures from the 1970 census show that, in terms of statewide quintiles (20%) of income category, 12% of the township's households had incomes below $6,627, 19% between $6,627 and $9,936, 24% between $13,088 and $19,236, and 18% above $19,236. As of 1970, existing land uses were predominantly residential: 68% of all realty taxes were paid by single family homeowners, 16% by apartments and condominiums and the rest by commercial users, farms and industry.

Thus the overall pattern of land use confronting Madison Township planners and officials in 1970 was one of substantial

but scattered residential growth, with little industrial and commercial development. The 1970 ordinance was a hurried effort to slow population growth and the accompanying rise in the tax rate and largely to confine new population to designated areas. See 117 N.J. Super. at 14.

IV

The Zoning Ordinances

A. The 1970 Ordinance

For present purposes the salient provisions of the 1970 ordinance are adequately summarized in the first opinion of the trial court. 117 N.J. Super. 16-17. The patent intent and effect of the ordinance was to prevent construction of a substantial number of homes or apartments, particularly at low cost. Most of the land area was zoned for one- or two-acre single family homes -- uses not only beyond the reach of 90% of the general population but also responsive to little if any existing market. Ibid. It goes without saying that the ordinance was clearly violative of the principles later enunciated in Mount Laurel. Judge Furman properly condemned it as pure "fiscal zoning", not taking into consideration "[h]ousing needs of the region" and failing to promote "reasonably a balanced and well ordered plan for the entire municipality." 117 N.J. Super. at 18.

B. The 1973 Ordinance

The 1973 ordinance extensively revised the land use restrictions of the prior ordinance. The amount of land zoned nonresidential (commercial, office and industrial) was decreased by 760 acres from 19.80% to 16.70% of the total. A new "open space" zone -- RP or Recreation-Preservation -- was created. This encompassed the areas deemed environmentally sensitive by the township: Cheesequake State Park, the Old Bridge sands area, Burnt Fly Bog, the meadowlands adjacent to Deep Run (the latter three containing underground water resources areas), and the Raritan beachfront. The RP and the RR zone (also an open space area devoted to substantial preservation in a natural condition) were permitted to be developed as R-80 on two-acre lots until acquired by the municipality.

Although the fact was not stressed at trial, Madison has placed more than 4,000 acres in zones restricted to industrial and office uses despite the fact that only some 600 acres have ever been devoted to that use. By comparison, we criticized Mount Laurel for zoning 4,100 acres industrial although only 100 acres had ever been so used. 67 N.J. at 162-163, 184.

The 1973 ordinance considerably increased the facial housing potential of the prior ordinance. It enlarged the total acreage available therefor by 800 acres and the potential housing capacity, inclusive of existing housing, by 16,000 units or 46,000 persons. These figures, supplied by the Madison Township Housing Study, may be misleading, as they assume all acreage zoned residential is or will be developed to its maximum permissible density whereas some of it is already developed, either nonresidential or below permissible density, or is undevelopable.

Under the 1973 ordinance, there are five single-family zones, accounting for 72% of the total vacant residential area.*fn7 The most restrictive zone, the R-80, with a minimum lot size of two acres, was reduced from 9,134 to 3,040 acres. The R-40 zone (one acre minimum lot size) was increased from 5,557 to 7,511 acres. Together, however, these two zones account for 42% of the total acreage within the township, 58% of its vacant developable acreage, 70% of the total acreage zoned single-family, and 80% of vacant developable single family acreage.*fn8 The R-20 zone, 1,977 total

or 1,285 vacant developable acres, requires a 20,000 square foot minimum lot size.

These three zones (R-20, R-40 and R-80) may be compared with the zones considered exclusionary in Mount Laurel. There more than half the township was zoned R-3, requiring single family homes on half acre lots; in the instant case, over 50% of the township is zoned for half acre lots or larger, and 42% for one-or two-acre lots. Considering only vacant developable acreage, the total for the three zones is over 65%, 58% comprising R-40 and R-80.*fn9

The R-15 zone*fn10 and R-10 zones, requiring 15,000 and 10,000 square foot lots respectively, account for another 5% of the land. Both are more restrictive than the R-1 zone (9,375 square foot, 75' wide lots) involved in Mount Laurel. Calling for some "very small lot" zoning in a developing municipality, 67 N.J. at 170, n. 8, 187, Justice Hall noted that minimum size lots of 9,375 to 20,000 square feet "cannot be called small lots and amounts to low density zoning." 67 N.J. at 183. Yet almost 70% of Madison Township is zoned at such or lower densities (including the RP and RR zones).

Only the R-7 zone allows residential single family development on lots smaller than those found in Mount Laurel to constitute low density zoning. It allows 7,500 square foot lots and two-family dwellings. However it accounts for only 5.8% of the total acreage and 2% of the vacant developable acreage in the township.

The AF or multi-family apartment zone was enlarged by 150 acres. The prescribed bedroom ratio of the prior ordinance (80% one bedroom, 20% two bedroom) was deleted and replaced by a floor area ratio (FAR) limiting construction to a maximum of 10,000 square feet per acre. Although the ordinance presumably allows any size units in any combination, up to the maximum FAR, the impact of the building area ratio combined with the profit incentive which motivates developers is such that, according to the proofs, only small units (efficiencies and one bedrooms) will be constructed.*fn11

Of the 676 acres zoned AF (2.7% of the total township acreage) at most only 193 acres are vacant and developable (2.3% of township total). The true figure, however, as indicated by Judge Furman, is more likely to approximate 120 acres (or 1.5% of township total).*fn12 The AF zone is limited to the development of parcels of six or more acres. The parties agreed that the AF zone could hold at least 800 housing units, but defendant maintains the maximum capacity

is 1,700. However, as against township planner Abeles's estimate of 15,600 to 20,700 total additional units of all kinds possible under the ordinance, the potential AF units constitute only 5.1% to 8.2% thereof.*fn13

Madison Township relies heavily on provisions in the 1973 ordinance for PUDs (planned unit developments) and clustering to satisfy its obligation with respect to low and moderate income housing. On the evidence, that reliance is illusory.

The PUD, an overlay zone, is a modern planning modality, introduced by the 1973 ordinance pursuant to N.J.S.A. 40:55-54 et seq. See Mount Laurel, 67 N.J. at 166; L. 1975, c. 291, Secs. 2k, 29.1b. Three areas are zoned for PUD -- two of which are on remote sites unserviced by water and sewer utilities. PUD requirements vary, depending upon the amount of land in the developer's tract.*fn14 A Class I PUD, between 150 and 300 acres, has a maximum density of 3.5 units per acre. Of all the units constructed in a Class I PUD, a minimum of 30% must be detached single-family units,*fn15 and the remainder may be medium density multi-family.*fn16 A Class II PUD, between 300 and 500 acres, has a maximum density of 4.25 units per acre; a minimum of 17.5% of the units must be single-family, a maximum of 12.5% may be

high density,*fn17 and the remainder medium density. Class III PUDs (over 500 acres) are the most favored, with an allowable density of 5.0, 12.5% minimum single-family detached and maximum 17.5% high density. The densities allowed in the PUD zones are 20% lower than those originally proposed by the municipal planners. Moreover, it is unlikely that the highest density (5.0) will ever be utilized as there are within the PUD zones no 500-acre parcels owned by a single entity, and accumulation of the necessary number of acres is, according to the credible evidence, neither "possible nor probable."*fn18

For every PUD project the developer is required to maintain at least 12.5% of the gross project area as undeveloped open space and 7.5% as developed open space; at least 5% of a Class I and 10% of a Class II or III tract must be nonresidential development; at least 3% in all the classes must be commercial and 2% of Class II special development. There is the additional requirement that the developer build a school large enough to accommodate .5 children per dwelling unit and dedicate the land to the township. Streets and utility hookups must also be provided by the developer. There is a lengthy three-stage approval process, which, according to the estimate of the township planner, may take as long as a year but plaintiffs' expert pegs at 18 months to two years.

The proofs render it patent that the PUD requirements have the potential for greatly increasing the costs of housing units in that zone. The school requirement alone adds a cost of $2.2 million (or 66% of all the central improvement costs involved in a PUD project) to the project budget of a Class II PUD.

The cluster provisions (a PUD variation, not including commercial uses) apply to any lands in the R-40 or R-80 zones not alternatively designated PUD. Under the cluster provisions, a developer is allowed to build at increased densities if he preserves a proportion of his land as open space, public purpose space or donated public purpose space. If 20% of the gross project area is devoted to open space, the allowable densities are increased from normal R-40 and R-80 densities of 1 unit and 1/2 unit per acre to 1-1/3 and 5/6 units per acre, respectively. If an additional 20% of the land is devoted to public purpose space, a further increase in density to 1-2/3 unit and 1.0 units per acre is allowed. Furthermore, if the public purpose land (in an R-40 zone) is dedicated to the township, the developer may build 20% of all his units in attached buildings of four units each. A cluster development must be a minimum of 25 and maximum of 150 acres.

The credible proofs indicate that the clustering provisions are unlikely to have a significant impact on the cost of housing as the low densities and limits on numbers of attached units make significant economies of scale unlikely, and therefore, according to plaintiffs' experts, cluster development may not occur at all. Yet even under the cluster provisions costs would be prohibitive to most lower income families. According to the township planner, an R-40 townhouse would cost a minimum of $29,000; plaintiffs' expert places the average townhouse figure at $52,000. Moreover, the single family detached units which constitute 80% of an R-40 cluster would according to plaintiffs' expert cost $64,000. The allowable densities are still too low to create significant cost savings. By comparison, Mount Laurel had a similar cluster provision allowing a density of 2.25 units per acre upon dedication of 15% of the total acreage to the municipality and reservation of 25% for public use.

The distribution of vacant and developable acreage (and total acreage) among the various zones under the ordinance shows that low density, middle and high income residential

uses are strongly favored. Only a maximum of 2.37% of the town's vacant developable residential acreage is zoned for multi-family apartments (AF), and the correct figure may be as low as 1.02% or 0.84%. An additional 2% is zoned R-7 for small lot attached double houses. Though 9.9% is zoned for PUD development, the location of two of the three PUD tracts makes their development highly unlikely. Using the township planner's estimates of the potential future building capacity under the 1973 ordinance, the R-7 and AF zones account for a maximum of 16% of all housing units. By contrast, the R-80, R-40 and open space zones account for over 71% of the vacant developable residential acreage and over 41% of the housing units. If the R-15 and R-20 zones are counted, the large-lot single-family acreage figure increases to 82% and the unit figure to almost 50%.

V

"Least Cost" versus "Low and Moderate Income" Housing

A key consideration in this particular case as well as a factor integral to the entire problem, generally, is the well-known fact, amply corroborated by this record, that private enterprise will not in the current and prospective economy without subsidization or external incentive of some kind construct new housing affordable by the low income population and by a large proportion of those of moderate income.*fn19 We recognized this fact in Mount Laurel. 67 N.J. [72 NJ Page 511] at 170, n. 8; 188, n. 21. The amount and kind of governmental subsidies available for housing has always been fragmentary, and federal sources have recently been restricted.*fn20 What can legally be required of municipalities by way of initiation of public housing programs and provision of zoning incentives for production of lower income housing will be discussed infra. But it will be apparent that sources extraneous to the unaided private building industry cannot be depended upon to produce any substantial proportion of

the housing needed and affordable by most of the lower income population.

In view of the foregoing, defendant implies that the mandate of Mount Laurel is impracticable in the current economy and that litigation to enforce it is futile. Thus defendant flatly asserts in a supplemental brief: "We do not believe that substantial low and moderate income housing can be created by zoning." However, it goes on to make an observation which appears to us to provide the clue to the only acceptable alternative recourse if in fact private enterprise cannot economically construct the housing needed for lower income families. It states:

Planned Unit Development can help by providing large amounts of additional housing some of which is in the moderate income range. The effect of new construction is also to create filtering whereby families in the moderate income group move into new housing created in the PUD zone making available existing housing for lower income families who cannot afford the new. Without subsidization, this is undoubtedly the most reasonable and certain method of creating housing opportunities for low income families.

To the extent that the builders of housing in a developing municipality like Madison cannot through publicly assisted means or appropriately legislated incentives (as to which, see infra) provide the municipality's fair share of the regional need for lower income housing, it is incumbent on the governing body to adjust its zoning regulations so as to render possible and feasible the "least cost" housing, consistent with minimum standards of health and safety, which private industry will undertake, and in amounts sufficient to satisfy the deficit in the hypothesized fair share. As the matter was put in a supplemental amicus brief of The Public Advocate:

This sentiment has also been expressed by a leading commentator who responded thus to the argument that the inability of lower income persons to afford unsubsidized housing rendered minimal the impact of exclusionary ordinances:

As a factual matter, the situation may often be otherwise; particularly where the ordinance is enacted by an undeveloped suburb attempting to stem an urban tide, the availability of low cost housing a decade hence may be very much a function of zoning requirements today.

Sager, "Tight Little Islands: Exclusionary Zoning, Equal Protection and the Indigent", 21 Stanford L.J. 767, 792 (1969).

Nothing less than zoning for least cost housing*fn21 will, in the indicated circumstances, satisfy the mandate of Mount Laurel. While compliance with that direction may not provide newly constructed housing for all in the lower income categories mentioned, it will nevertheless through the "filtering down" process referred to by defendant tend to augment the total supply of available housing in such manner

as will indirectly provide additional and better housing for the insufficiently and inadequately housed of the region's lower income population. See also Mount Laurel, 67 N.J. at 205 (Pashman, J., concurring).*fn22

It will be apparent from our survey of the facts and the discussion hereinafter that the 1973 ordinance under review not only fails to provide directly for Madison's fair share of the region's low and moderate income housing needs but also is not geared to satisfy such a share in terms of "least cost" housing in the sense just described. The failure will be seen to be both quantitative and qualitative. Insufficient areas are zoned to permit such housing, and the zoning restrictions are such as to prevent production of units at least cost consistent with health and safety requirements.

VI

Incapacity of the 1973 Ordinance to Effect Adequate Lower Income Housing

As we shall indicate hereinafter, Madison's planners have, for purposes of this litigation, formulated a study purporting

to demonstrate an unmet need in Madison for low and moderate income housing, as its share of a larger Middlesex County regional need therefor, of some 1800 housing units as of 1975.*fn23 Assuming, for present purposes, the legitimacy of that estimate -- a matter for discussion in a later section of this opinion -- the evidence is convincing that the 1973 zoning ordinance does not hold the promise of an opportunity to meet that need and at the same time satisfy the prospective continuing need in the foreseeable period following 1975. This, in effect, was the substance of Judge Furman's holding, quoted earlier herein. From his conclusions,*fn24 amply supported by the record, it appears that no new housing is feasible under the ordinance for persons in the bottom income third of the population (under $9,000); that at most 12% (3500/30,000) to 17% (3500/20,000) of all new housing units are attainable by persons earning $10,000*fn25 a year; so that 83% to 88% of the feasible future units would be zoned out of the reach of the lowest 40% of the population.

The anatomy of these failures is apparent.

In our analysis of the minimum lot single-family and multi-family zones in IVB, supra, the prima facie disproportion of land zoned for high cost residences vis-a-vis that

zoned for lower cost residences and multi-family units was fully canvassed. According to the proofs here adduced, there is little or no present market for the R-80 and R-40 zoning as such. Cf. Schere v. Township of Freehold, 119 N.J. Super. 433 (App. Div.), certif. den. 62 N.J. 69, cert. den. 410 U.S. 931, 93 S. Ct. 1374, 35 L. Ed. 2d 593 (1972). While the R-7 zone may permit a marginal amount of moderate income housing, new home ownership in that zone is precluded for the low income population. While the latter condition may be economically unavoidable (see V, supra), Madison has provided for no home ownership at all on "very small lots", as mandated by Mount Laurel. 67 N.J. at 187. Clearly no effort was made to permit "least cost" single family homes -- and certainly not in reasonable numbers.

We have further seen that the multi-family zoning regulations are not only substantially deficient in areas of developable vacant land made available therefor, but also defective in their susceptibility to entrepreneurial concentration in one-and two-bedroom configurations.

Mount Laurel requires that a municipality must allow for "an appropriate variety and choice of housing." 67 N.J. at 174. This obligation extends to all types of housing and includes moderate and large sized multi-family units. In Mount Laurel, bedroom limitations were considered "so clearly contrary to the general welfare as not to require further discussion." 67 N.J. at 183. Although the express bedroom restrictions of the 1970 Madison ordinance were excised in 1973, the maximum bulk and density regulations in the AF and PUD zones (the sole sites of multi-family units),*fn26 when combined with the economics of building, effectively dictate development on an 80% one bedroom, 20% two bedroom mix, and such a combination was within the contemplation of the township planners. This is not an

inevitable result of zoning and economics, for a municipality through the zoning power can and should affirmatively act to encourage a reasonable supply of multi-bedroom units affordable by at least some of the lower income population. Such action should include a combination of bulk and density restrictions, utilization of density bonuses,*fn27 minimum bedroom provisions and expansion of the FAR ratio in the AF zone to encourage and permit larger units.

Although the validity of a zoning provision for density bonuses in the sense stated in note 27, supra (as distinguished from unit bonuses for rental concessions -- i.e., "rent skewing"), has not been argued in this case, we see no objection to it in principle. Comparable bonuses are expressly permitted by the statute in relation to PUDs and clustering. N.J.S.A. 40:55-57(b)(2) and (3). While there is no express statutory sanction for a density bonus provision outside the PUD context, this type of regulation is directly tied to the physical use of the property and is thus within the recognized ambit of the zoning power. There was unanimity of opinion among the experts at the trial herein that such a device is a vital weapon in the armament of affirmative zoning for adequate housing of families in all income categories. Recognizing that the objectives of Mount Laurel are essential to the effectuation of the general welfare, and are within the broad legislative delegation to municipalities of both the zoning and the general police power, see Ward v. Scott, 11 N.J. 117 (1953); 16 N.J. 16 (1954), and Inganamort et al. v. Bor. of Fort Lee, et al., 62 N.J. 521 (1973), we hold that provision for density bonuses in the sense indicated is within the municipal zoning

power, and, in situations such as that here presented, is a necessary implement in the encouragement of builders to provide multi-family housing for those of lower income. Cf. Mount Laurel, 67 N.J. at 170, n. 8.

We are constrained to take a more reserved position as to the validity of zoning provisions for "rent skewing", or the allowance of greater density in either sale or rental accommodations in exchange for special concessions by the developer of rental or sale price of a limited number of units. Although this is also a widely recommended zoning technique for handling the problem of encouraging private construction of lower income housing,*fn28 we discern serious problems with the exercise of local zoning power in such a manner without express legislative authorization. See Board of Supervisors v. De Groff Enterprises Inc., 214 Va. 235,

198 S.E. 2d 600 (Sup. Ct. 1973); Annot. 62 A.L.R. 3d 880 (1975). We will not here resolve the issue in the absence of adequate argument on the matter. However, we are not to be understood as discouraging local initiative in this area; the question, moreover, deserves legislative study and attention.

It seems useful to point out, in connection with the revision of the ordinance which will be required by our judgment herein, that sound planning calls for providing for a reasonable cushion over the number of contemplated least cost units deemed necessary and believed theoretically possible under a particular revision. Plaintiff adduced testimony that a reasonable margin over any formulaic quota was necessary in order to produce any likelihood of achievement of the quota. The reasons are evident. Many owners of land zoned for least cost housing may not choose to use it for that purpose. And developers of least cost housing may not select all of the zoned land available therefor, or at least not within the anticipated period of need. Thus overzoning for the category desired tends to solve the problem.*fn29

The PUD provisions do not contribute to the desideratum of Mount Laurel. The provisions were analyzed

in IVB, supra. We assume, for present purposes, that PUD zoning is valid. It has not been attacked in this case, and the relevant legislation, N.J.S.A. 40:55-54 et seq.; L. 1975, c. 291, Secs. 2 k, 29.1 b, as in the case of all legislation, is presumptively valid. Cf. Mount Laurel, 67 N.J. at 166-167, n. 5. In any event, it is a corollary of Mount Laurel that when municipal exactions from developers reach such proportions as to exert an exclusionary influence, whether in a PUD or any other context, they offend the constitutional precept of Mount Laurel and must be remedied.

As pointed out by Heyman and Gilhool in their penetrating study of the rationale for upholding subdivision requirements: "But such exactions raise the spectre of exclusion: arguably they will add so to the cost of suburban housing as to exclude an even larger portion of lower income and nonwhite population than is presently relegated to life in the central cities by the higher suburban costs." "The Constitutionality of Imposing Community Costs of New Suburban Residents Through Subdivision Exactions", 73 Yale L.J. 1119, 1155 (1964). The authors conclude, however, that the exclusionary impact of such exactions "will be strikingly slight because legislative and judicial pressures will tend to require the establishment of reasonable ceilings." Ibid. Cf. Berger, Land Ownership and Use 786, 787 (2d ed. 1975).

Heyman and Gilhool found subdivision exactions ranging from $37.50 to $325 per lot to be reasonable. Id. at 1156. In contrast, a $2.2 million expenditure for schools in a Class II 300 acre PUD with a maximum capacity of 1,725 units yields a per unit exaction of $1275*fn30 which does

not seem to be reasonable even at the high price levels of 1974.*fn31 This requirement must be omitted in the revision of the ordinance.

The requirement for the provision by the PUD developer of roads, water and sewage facilities presents a different situation. Such statutorily authorized municipal requirements for approval of subdivision plats have generally been held to be valid exercises of the police power. Brazer v. Borough of Mountainside, 55 N.J. 456 (1970). Nevertheless, as already noted, application of the police power through zoning cannot be had in a manner contrary to the general welfare. Mount Laurel, 67 N.J. at 175.

Other limitations on this statutory power have previously been recognized. Cf. Divan Builders v. Planning Bd. Tp. of Wayne, 66 N.J. 582 (1975). There this court considered a prerequisite to subdivision approval that the developer contribute toward the cost of an off-site drainage facility without allocating any part of the cost to other properties specially benefitted by the improvement, and found it invalid. Similarly, in Longridge Builders, Inc. v. Planning Bd. of Princeton Tp., 52 N.J. 348 (1968), the court condemned a condition to subdivision approval that plaintiff pave an off-site right of way, resulting in the imposition of the entire cost upon plaintiff, when other lands would benefit from the improved road and there were inadequate standards and procedures for the allocation of costs.

In this light, the $300,000 and $600,000 costs involved in bringing roads and utilities to the removed PUD sites (a distance of up to two miles, compared to the 361-foot distance of the improvement involved in Longridge,

supra) bear examination. To the extent that these costs do not prohibit development, they nonetheless add sufficiently to final costs as to tend to have an exclusionary impact. Further considerations highlight the questionable validity of these requirements.

Only a limited area has been denoted PUD (9% of the township's vacant developable residential acreage), and 2/3 of it is in remote areas. This is not a case of a substantial category of land being reasonably zoned as a whole, with only a minor portion excessively burdened. Quite the opposite. The municipality could well have located these PUDS in more accessible areas of the town had it been motivated to render housing for lower income families more available. However, the record clearly shows that the sites were deliberately chosen in order to force the PUD developers and their customers to carry the burden of developing these remote areas. The township planner testified that the "decision was made that two PUDs would be the incentive to complete and bring around the water system * * * to provide a main system that would rationally serve 1/3 of the township." This kind of motivation is echoed in the minutes of the planning board and township council where it was noted that because of the locations chosen the developers would be required to build portions of the trans-Madison highway as well as to widen and improve Union Hill Road. Such expenditures by PUD developers would directly benefit the owners of other property advantaged by the added facilities and paved roads yet not required to contribute a proportionate amount of the cost.

The potential impact of the water and sewer line requirements is shown by the conclusion of the Middlesex County Planning Board, in reviewing the PUD ordinance, that the two remote PUD areas would probably not be developed at all within the next ten years. Under the totality of the stated circumstances, it must be concluded that a prima facie case of exclusion has been made out with respect to the road and facility requirements, and the burden shifts

to the municipality to justify those provisions of the ordinance. Cf. Mount Laurel, supra, 67 N.J. at 181. As the municipality has not met its burden, the municipality will be directed on remand to do one or more of the following in the course of revision of the ordinance (if it continues in its position that the PUD provisions partly meet its obligation to zone for least cost housing): (1) eliminate these requirements or revise them to render them not exclusionary; (2) require proportionate donation by other property holders; or (3) relocate these or other PUD tracts nearer to utility hookups.

A third potentially cost-generating requirement in the PUD provisions is the approval process, which allegedly results in high carrying charges and has the potential for delay effectively barring the project. The approval process is a three-stage procedure, which, according to the township's witness, may be completed within a year, but which plaintiffs' experts testify would take eighteen months to two years.

Admittedly, a protracted approval process will add greatly to the cost of any project and hence may tend to render development prohibitive to lower income users. The evidence as to the cost impact of the Madison PUD provisions was contradictory. As noted, they were adopted pursuant to the PUD enabling legislation, N.J.S.A. 40:55-54 to 67. The statute undertakes to replace existing multifarious procedures with "an expeditious method of processing a plan for a planned unit development * * * to avoid the delay and uncertainty" inherent in the other procedures. N.J.S.A. 40:55-59. It then proceeds to lay out a two-stage approval process which the Madison ordinance follows with one exception. The ordinance adds a third "informal preliminary application" stage which must be completed prior to the filing of an application for tentative approval. This "informal" stage adds approximately 40 days. Without it,

the entire process on its face takes 150 days.*fn32 Consequently the township's testimony that the procedure may be completed within nine months is supportable on the record. Except for the "informal preliminary application" stage, the procedure is valid. The latter, being unduly cost-generating, and not contemplated by the statute, should be eliminated.

We need add no more to the discussion above in IV B of the inadequacy for fair share purposes of the cluster provisions of the ordinance.

In summation of this point, the 1973 Ordinance is shown not to provide the opportunity for a substantial amount of new housing which could be available to the lower income segments of the population. This failure arises from both (a) the inadequacy or non-existence of areas zoned for homes on very small lots or for multi-family housing; and (b) the undue cost-generating features inherent in the ordinance which raise the expense of purchasing or renting new housing units above the reach of the great majority of the lower income population.

VII

The "Fair Share" Approach of the Defendant

We made the preliminary observation in II, supra, that although we would neither make nor require a finding of

fact as to a given number of lower income housing units to be made possible by the Madison Zoning Ordinance, we would, for the purposes there enunciated, nevertheless discuss the evidence herein concerning Madison's fair share of a regional need for such housing. By way of further preliminary, we adhere to the broad principle of Mount Laurel that each developing municipality must by its zoning ordinance provide the opportunity for a fair share of the lower income housing needs of its region. We intend that our judgment herein shall subserve that principle notwithstanding that we do not propose to, nor require that the trial court shall demarcate specific boundaries for a pertinent region or fix a specific unit goal as defendants' fair share of such housing needs.

Defendant undertook at the trial to establish what would constitute a fair share of the regional need for low and moderate income housing for Madison's zoning ordinance to render possible. It relied upon two allocation studies, one made in 1972 on behalf of the Middlesex County Planning Board by a planner named Kim ("Kim study"); the other made on behalf of the Madison Township Planning Board in 1974, during the litigation below, by its planning adviser Abeles and his firm ("Abeles study"). The Abeles study, in turn, partly relied on an estimate of Madison's unmet lower income housing needs as of 1975, made in 1970, by the Middlesex County Planning Board ("County study"), updated by Abeles in 1974. Both the Kim and the Abeles studies took Middlesex County as the relevant region, making allocations of "fair shares" of lower income housing for each of the 25 municipalities in the county. The allocations of the two studies for Madison were relatively close, the Kim study arriving at about 1600 lower income units, and the Abeles study, about 1800 units, both as of 1975. Neither, however, ventured a prognostication as to Madison's continuing fair share of the region's needs on an annual or

other periodic basis for the foreseeable future beyond 1975.*fn33 In the latter regard, however, Abeles foretold that Madison's housing unit growth (total) until 1975 would be at the annual rate of 600-800 units and from 1975 to 1980 at 800-1000. This was not broken down between lower income and other categories.

By comparison with the foregoing, Davidoff, plaintiffs' planning expert, estimated an unmet need in Madison as of 1975 of 3,000 lower income units, and a continuing need thereafter into the 1980's of 1000-1200 units annually (total) of which 500-600 should be lower income.*fn34

The county study indicated an unmet county need for lower income housing units as of 1975 of 23,600 units. Significantly, the study stated:

"To meet this deficit, increases in public and private resources will be required. For the county and its municipalities these resources would include the freeing up of more land for residential development of a particular density and location commensurate with socio-economic function of units required * * *" (emphasis added).

The plan of the Kim study was to estimate what the demand (need) for low and moderate income housing in the county would be by 1975 and to compare it with the prospective supply of such units by that date. The pertinent lower income category used was those households with less than $12,000 annual income as of 1970. Kim estimated a 1975 county population of 766,946 (583,000 in 1970) and

the number of persons employed as 290,700 (241,000 in 1970). The estimates were based on expected movements of people and jobs from large urban centers to the suburbs. In general there would be an "expansion" from the New York metropolitan region to the outer boundaries of Middlesex County and to the south and west thereof.

Kim estimated a demand for lower income housing in 1975 of 126,374 households or units (111,301 in 1970) to which he added a factor of 6.5% for normal vacancy rate, or a total 1975 demand of 134,589.

The Kim approach to the estimate of anticipated housing deficiency was to balance prospective employment in the county with housing, following the approach of the Tri-State Regional Planning Commission. His study disclosed a 1975 housing supply of 115,791 lower income units, which, subtracted from demand, left a 1975 deficit of 18,798 lower income units.

The Kim allocation (fair share) of the deficit among the 25 municipalities of the county was based on a complex mathematical formula reflecting the following factors: (a) housing location in relation to work place; (b) housing location in relation to housing construction costs, i.e., land costs per unit; (c) other "constraints", e.g., the subregion's capacity to absorb more housing. The application of the formula to Madison was to allocate to it a "fair share" of 8.4%, or about 1600 units.

The Abeles study avowed as a goal "increasing the housing supply for all income groups." The new housing "should be provided in a mixture of housing types and costs at various locations in the township." The job dispersion outside Middlesex County of Madison's resident work force as compared with the work force resident in the county as a whole is indicated by the percentages of 50% for the township and 36% for the county. Correlatively, Madison has 8% of the population of the county but only 0.8% of the jobs.

The Abeles study averred that important to a fair share-regional plan is the consideration of the relevant "housing market area". This is defined as "the geographic area in which housing units are in competition for the people who are seeking housing". The study conceded that "Madison Township is a relatively small part of a market area which could encompass virtually all of Central New Jersey," but stated that its purposes would be met by assuming a housing market area confined to Middlesex County.*fn35

The Abeles study projected a growth of 12,000 households in Middlesex County from 1970-1975 and another 15,000 between 1970 and 1980. This growth will take place primarily in municipalities with an ample supply of vacant land. The existing supply of housing in the county is very limited, as indicated by the abnormally low vacancy rates (1% in the county in 1970; 1.5% in Madison). Sixty minutes is a "commonly acceptable limit for commutation." The highway network allows for considerable mobility and creates substantial housing demand in Madison.

Unlike the Kim study, the Abeles study did not approach the concept of housing needs from a demand and supply relationship, but rather from that of the number of obsolete housing units in existence. Obsolescence was defined as (a) undesirable physical conditions; (b) overcrowding of occupants of unit; and (c) excessive share of income being paid as rent. The total thus determined was found to concur generally with a 1974 revision of the 1970 estimate by the county study of an unmet need as of 1975 for lower income housing in the county. The revision increased the original estimate of 23,600 to 29,251 units.

The county need was allocated as "fair shares" to municipalities in accordance with a formula generally resembling that devised by the Metropolitan Washington Council of Governments (COG). This involves housing need factors and housing supply factors. To those the Abeles study added certain modifiers. The need factors were generally those aforementioned related to obsolescence. The supply factors comprise vacant residential land as zoned and vacant housing units. The modifiers were (1) per capita financing resources; (2) the existing ratio of low and moderate income housing; (3) a multi-family housing index based on growth in multi-family units from 1960-1970; and (4) a housing density index, i.e., the ratio of housing to total land area.

Application of the resulting formula to the 29,251 county units needed ascribed to Madison a "fair share" of 6.1%, or about 1800 lower income units. As already noted, the Abeles study made no prognostication as to a fair share of the continuing housing need subsequent to 1975.

The post-litem motivation of the Abeles study is apparent. It was approved by the township planning board April 23, 1974, two days before the end of the second trial and over 18 months after adoption of the 1973 ordinance. The analysis of "need" is largely weighted in favor of indigenous need, i.e., of those persons already in the township, as compared with potential aspirants for housing from

outside the municipality. Of the 1784 units which the Abeles study attributes as Madison's fair share, 1394 units will represent the indigenous need and only 390 the need of the region (Middlesex).*fn36

In several respects, over and above the apparent limitation of the region to the county, the formula presented by the Abeles study appears to be a self-serving one. First, the original COG formula contained an accessibility factor as one of the modifiers which Abeles omitted, ostensibly on the ground that a substantial proportion of all employment opportunity in Middlesex County lies within 45 minutes commuting time from any municipality therein. However, this unwarrantably favors Madison. As it is nearer to heavy employment centers such as Perth Amboy and Woodbridge than are places like Monroe and Cranbury, relatively more people would be likely to want to live in Madison, and correspondingly Madison's comparative fair share would be larger if accessibility were taken into account.

The inclusion of a multi-family index and a housing density index are two additional self-serving features of the Abeles study. These factors did not appear in the COG formula, and their use results in a substantial credit in Madison's favor. While the housing concentration factor defensibly affords some recognition to those subregions which "have already contributed to the supply of rental housing for low and moderate income families," Abeles nevertheless takes duplicative credits for both Madison's increase over the past ten years in multi-family units and for its existing housing density. As a result of the interplay of these factors, Madison, with 11,142 vacant and developable acres, ends up with a 6.1% allocation compared to towns of similar amounts of vacant residential acres, Monroe (12,067 acres), and

South Brunswick (10,778 acres), which, under the Abeles formula, receive fair share allocations of 16.1% and 12.6% respectively. Towns with closely corresponding fair share allocations, East Brunswick (7.5%), North Brunswick (6.0%), and Woodbridge (5.0%), have vacant residential acres of 4,722, 986, and 230 respectively.

VIII

"Fair Share" and "Region"

-- General Considerations

The probative value of the Kim and Abeles fair share studies should be appraised against the background of the substantial body of experience that has been developed by governmental planning bodies in recent years in devising fair share plans for voluntary housing planning purposes as distinguished from litigation. All of them involve realistic housing market areas larger and functionally more appropriate, in Mount Laurel terms, than the small Middlesex County region. Before discussing those specific plans, some preliminary observations as to the concepts of "fair share" and "region" seem appropriate by way of background.

Of primary significance is the difference between the situation of an administrative planning agency functioning under authorizing legislation and that of a court dealing with an attack by litigation on the adequacy of the zoning ordinance of an isolated municipality. The former is dealing with a comprehensive, predetermined region and can render or delegate the making of allocations with relative fairness to all of the constituent municipalities or other subregions within its jurisdiction.*fn37 Moreover, it presumably has expertise

suited to the task. The correlative disadvantages of a court adjudicating an individual dispute are obvious.*fn38

The formulation of a plan for the fixing of the fair share of the regional need for lower income housing attributable to a particular developing municipality, although clearly envisaged in Mount Laurel, 67 N.J. at 162, 189-190, involves highly controversial economic, sociological and policy questions of innate difficulty and complexity. Where predictive responses are called for they are apt to be speculative or conjectural.*fn39 These observations are supported not only by the published literature*fn40 but by the proofs and comprehensive briefs supplied us by the parties and amici. [72 NJ Page 534] Some of the problems catalogued above were touched upon in Mount Laurel, e.g., "region", 67 N.J. at 162, 189-190; incidence of subsidized construction in contemplation, id. at 170, n. 8, 188, n. 21; sources of reliance for "fair share" guidance, id. at 190; quantity of needed housing reasonably expectable under proper zoning, id. at 188, n. 21. We take this occasion to make explicit what we adumbrated in Mount Laurel and have intimated above -- that the governmental-sociological-economic enterprise of seeing to the provision and allocation throughout appropriate regions of adequate and suitable housing for all categories of the population is much more appropriately a legislative and administrative function rather than a judicial function to be exercised in the disposition of isolated cases.*fn41 Cf. 67 N.J. at 189, n. 22, 190. [72 NJ Page 535] Fortunately, the other branches of government are giving the matter their attention.*fn42 But unless and until other appropriate

governmental machinery is effectively brought to bear the courts have no choice, when an ordinance is challenged on Mount Laurel grounds, but to deal with this vital public welfare matter as effectively as is consistent with the limitations of the judicial process.

We address the question, implicated by defendant's evidential studies, of the appropriate concept of a "region" in the context of a litigation challenging the housing adequacy of a particular zoning ordinance. Defendant purports to justify its fair share allocation on the basis of a single county as a region. However, both the Kim and the Abeles studies, in estimating anticipatorily the need for and supply of housing as of 1975 in Middlesex County, apparently recognized the influence of growth of population and jobs emanating from the broader region of northeastern New Jersey and the New York metropolitan region. Thus, while it is questionable whether the functionally relevant regional housing need was adequately realized in the Kim and Abeles studies, it does appear that in effect they envisaged a need emanating beyond the county boundaries.

The technical details of the basis for fair-share allocations of regional goals among municipalities, pertaining as they do to an area of considerable complexity and theoretical diversity, are not as important to a reviewing court concerned with effectuating Mount Laurel objectives as the consideration that the gross regional goal shared by the constituent municipalities be large enough fairly to reflect the full needs of the housing market area of which the subject municipality forms a part.

In broad principle, we believe Judge Furman was correct in conceiving the appropriate region for Madison Township as "the area from which, in view of available employment and transportation, the population of the township would be drawn, absent invalidly exclusionary zoning". 128 N.J. Super. at 441. This is essentially like the housing market area concept espoused in the Abeles report as sound in principle, although not directly employed in the Abeles fair share study.

The concept of a county per se as the appropriate region was thought not to be "realistic" by Justice Hall in writing Mount Laurel. He there said (67 N.J. at 189-190):

The composition of the applicable "region" will necessarily vary from situation to situation and probably no hard and fast rule will serve to furnish the answer in every case. Confinement to or within a certain county appears not to be realistic, but restriction within the boundaries of the state seems practical and advisable. (This is not to say that a developing municipality can ignore a demand for housing within its boundaries on the part of people who commute to work in another state.)

Justice Hall defined the region applicable there as "the outer ring of the South Jersey metropolitan area, which area we define as those portions of Camden, Burlington and Gloucester Counties within a semicircle having a radius of 20 miles or so from the heart of Camden city." 67 N.J. at 162, 190. What was material to that determination was the proximity of Mount Laurel to the highly urbanized Camden area, its residential development due to the influx of new residents from nearby central cities, existing and projected employment patterns, the "highway network" linking Mount Laurel with all parts of the Camden area and the contrast of its vacant acreage (65%) with the land supply situation in those nearby central cities. See 67 N.J. at 161-162.

For purposes of our present problem, we distinguish the situation with which we would be confronted if the municipality whose ordinance was under attack had been the subject of an official fair share housing study of a group of

counties or municipalities conducted under such auspices as the DVPRC or the planning boards of a county or group of counties functioning under Executive Order No. 35 (see note 42, supra). We conceivably might regard a "region" so constructed, and the dependent fair share allocations thereby arrived at, as meriting prima facie judicial acceptance. The Kim and Abeles "studies" before us do not have that authority or ...


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