This is a suit by a developer (Van Dalen) attacking the validity of the zoning ordinance of Washington Township (Washington) in Morris County. The primary ground of attack is that Washington's zoning fails to afford a realistic opportunity for the construction of low and moderate income housing, as required by the Mount Laurel doctrine. See Southern Burlington Cty. N.A.A.C.P. v. Mount Laurel Tp., 92 N.J. 158 (1983) (Mount Laurel II).
It has been determined by oral opinion dated February 9, 1984 that a corridor of Washington adjacent to Hackettstown lies in an area designated "growth" in the State Development Guide Plan (SDGP) and that this designation is valid. Under Mount Laurel II, such a designation means that Washington has a responsibility to provide a realistic opportunity through its zoning for the construction of housing for its own inadequately housed lower income residents and also for its fair share of the regional need for lower income housing.
Before discussing the magnitude of Washington's Mount Laurel obligation, it is appropriate to note that another of the judges specially appointed to hear Mount Laurel cases, Judge Eugene D. Serpentelli, has issued a comprehensive opinion in AMG Realty Co. v. Warren Tp., N.J. Super. (Law.Div.1984), dealing with the calculation of a municipality's Mount Laurel obligation. That opinion adopts a methodology which evolved out of discussions among a group of planners relating to settlement of Urban League of Greater New Brunswick v. Borough of Carteret, Docket No. C-4122-73, and is generally referred to as the Urban League methodology. In deciding the present case, this court has followed the Urban League methodology in some respects and departed from it in others. To avoid
undue length, this opinion refers to parts of the discussion of the Urban League methodology contained in AMG Realty.
As noted before, there are two components of Washington's Mount Laurel housing obligation; first, the needs of its own residents who are inadequately housed, and second, its fair share of the regional need for lower income housing. The calculation of Washington's indigenous need for lower income housing is set forth in section I of this opinion and its regional fair share obligation in section II. The steps purportedly taken by Washington to satisfy its Mount Laurel obligation are considered in section III.
Van Dalen's expert, Geoffrey Wiener, utilized the Urban League methodology to determine the number of lower income residents of Washington who currently occupy deficient housing.*fn1 This methodology relies upon housing data generated by the 1980 census. Specifically, it obtains from published census data an unduplicated count of housing units which lack complete plumbing (i.e., where residents of the unit do not have a toilet, sink and bathing facilities for their exclusive use), are overcrowded (i.e., have 1.01 or more occupants per room) or lack central heating (i.e., have no heating or are heated by fireplace, stove or room heaters with no flue). AMG Realty at .*fn2
Wiener observed that the census does not directly report housing dilapidation. Therefore, except for overcrowded units, which are an independent category of inadequate housing, the negative housing characteristics reflected by the census and utilized by the Urban League methodology are referred as "indicators" or "surrogates" of physically dilapidated housing. In other words, a housing unit may lack central heating or complete plumbing for the exclusive use of its residents and yet be structurally sound and possess the other qualities of satisfactory housing. Conversely, a housing unit may not exhibit any of the negative characteristics revealed by census data and yet have broken windows and doors, a failed roof and collapsing exterior structure, and hence be "dilapidated." Nonetheless, Wiener expressed the opinion that there is a sufficient degree of correlation between lack of complete plumbing or central heating and actual physical dilapidation to justify the use of these surrogates to measure the extent of present need for lower income housing.
The final step in calculating indigenous need under the Urban League methodology is to determine the percentage of deficient units occupied by lower income persons. AMG Realty at . The source used for this information is a 1978 report published by the Tri-State Regional Planning Commission, entitled People, Dwellings and Neighborhoods (Tri-State Report), which states that 82% of all inadequate housing units are occupied by lower income households.
Applying this methodology, Wiener concluded that Washington contains 151 deficient housing units. This total is comprised of 17 units that lack complete plumbing, 35 that are overcrowded, and 99 that lack central heating. Using the 82%
figure derived from the Tri-State Report, Washington's indigenous need for lower income housing is 124 units (82% X 151).
Washington's expert, P. David Zimmerman, took issue with the Urban League methodology for calculating indigenous need in three respects. First, he contended that overcrowding should not be a component of indigenous need. In his view, overcrowding is reflective not of housing condition but rather of the occupants' economic and social condition. Hence, it is a problem which should be addressed through means other than zoning for construction of new units. Second, while agreeing generally with the use of lack of complete plumbing or central heating to determine the extent of dilapidated housing, Zimmerman contended that the use of these surrogates in Washington produces inflated results. To support this conclusion, he relied upon a study by the municipal tax assessor which purported to disclose that the extent of dilapidated housing in Washington is far less than the 116 units which the census reported to lack complete plumbing or central heating. Zimmerman also expressed the opinion that it is common in rural areas for housing units which are in satisfactory condition to be heated by wood stoves, and therefore that the lack of central heating surrogate should exclude such units. This exclusion would reduce the total number of dilapidated units to 72. Third, Zimmerman contended that the assumption that 82% of deficient housing units are occupied by lower income persons is erroneous as applied to Washington and that a lower percentage should be used.
This court is satisfied that, except for its use of 82% to determine the percentage of deficient housing units occupied by lower income persons, the Urban League methodology represents a reasonably reliable means for determining indigenous need.
With respect to Zimmerman's first objection to the Urban League methodology, this court concludes that Mount Laurel II mandates the inclusion of overcrowded units as a
component of present need and that Zimmerman's contrary opinion must therefore be rejected. Although the Mount Laurel II opinion states at one point that the present need obligation relates to "resident poor who now occupy dilapidated housing," 92 N.J. at 214, it describes this need at another point as generated by "present dilapidated or overcrowded lower income units." Id. at 243; emphasis supplied. It is unlikely that the Court's reference, in the disjunctive, to "dilapidated or overcrowded" units was inadvertent. Therefore, the Court appears to have concluded that present indigenous need includes not only housing units which are dilapidated but also units which are physically adequate but overcrowded.
Second, the surrogates of lack of complete plumbing and central heating provide a reasonably accurate indication of the extent of physically dilapidated housing, and the survey conducted by the municipal assessor failed to impugn the accuracy of the numbers generated by these surrogates. Although a properly conducted physical survey of all housing in a municipality undoubtedly would provide a more reliable count than census data, Washington's survey was flawed in so many respects that no meaningful conclusion may be drawn from it. The survey ostensibly involved the review of property record cards to determine which specific housing units lack plumbing for exclusive use or central heating, and then physical observation to determine the quality of those units. However, the evidence failed to establish that the property record cards accurately reflect the existence of lack of complete plumbing or central heating. The assessor testified that where entry into a house could not be gained, the revaluation official would simply "estimate" the house or use information gathered a decade earlier. Furthermore, the results of the assessor's inspections of certain houses strongly suggested that the notations placed on the record cards were simply erroneous. The magnitude of this erroneous reporting is indicated by the fact that whereas the census data indicated the existence of at least 116 units which lack complete plumbing or central heating and are occupied
year-round, the property record cards revealed only 70 such units.*fn3 In addition, there were interior observations made of only 20 of the 119 units included in the survey and questionnaires received from the owners of only 41 properties. Assessments of the quality of the remaining units were based solely on exterior observations, which can fail to reveal serious interior deficiencies. Most important, even if the data were reliable, the survey is based on the false premise that the only dilapidated housing in Washington is that which lacks complete plumbing or central heating. However, as explained previously, these negative housing characteristics are simply surrogates for dilapidation. There are some units exhibiting one or the other of these characteristics which are not dilapidated, but by the same token there are some dilapidated units which do not exhibit either of these characteristics. Therefore, a properly conceived physical survey of housing to determine the extent of dilapidation would not be restricted to units which lack complete plumbing or central heating.
The only respect in which this court agrees with Zimmerman that the Urban League methodology fails to provide a sufficiently reliable indication of the extent of Washington's indigenous need is in its reliance upon the 82% figure derived from the Tri-State report for determining the percentage of deficient housing occupied by lower income persons. The "82%" is contained in a single sentence in the Tri-State Report, which reads as follows: "3. Low and Moderate Incomes. This includes one-third of all households, and it also includes almost all 82 percent of the households experiencing inadequate
housing conditions." Tri-State Report at 15. The report contains no indication of how the "82%" figure was established. Furthermore, since the Tri-State Commission has been dissolved, it has not been possible to locate any person or background document which might reveal the source of this statistic.
While the specific source of the "82%" figure has not been determined, an overall review of the Tri-State Report indicates that there are a number of problems in using the data contained therein to determine the percentage of New Jersey households occupying deficient housing who are lower income. First, the study encompassed the entire New York metropolitan area, including the Connecticut and New York suburbs and New York City. Consequently, the size of New York City's population causes its housing characteristics to dominate the statistics. Second, the primary source of data appears to have been the 1970 census, which is now 14 years old. Third, the term "inadequate" housing may have included not only physically deficient and overcrowded units but also units occupied by persons who pay a disproportionate percentage of income for housing or who commute an excessive distance to work. See Tri-State Report at 8. Since the Urban League methodology does not include these latter two characteristics as part of present need, this is yet another reason to conclude that the "82%" figure is unreliable.
Furthermore, evidence was presented of an alternative method of determining the percentage of deficient housing units occupied by lower income persons, which has none of the weaknesses of the Tri-State Report statistic. The Rutgers Report, mentioned earlier in this opinion (at 312, n. 3), calculates the extent of deficient housing in New Jersey, based upon negative housing characteristics reported in the census of 1980 rather than 1970. That report also calculates the percentage of deficient units actually occupied by lower income persons on a regional basis within New Jersey. Consequently, the Rutgers Report has the decided advantage, compared with the Tri-State
Report, of providing data which is based on the 1980 rather than the 1970 census and which relates solely to northwestern New Jersey rather than the entire New York metropolitan area.*fn4
The Rutgers Report indicates that 67.5% of the deficient housing units in northwestern New Jersey are occupied by lower income persons. Applying this percentage to the 151 deficient units calculated by the Urban League methodology, Washington's total indigenous need is 102 units.
The regional Mount Laurel obligation of a municipality located in a "growth" area is to provide a realistic opportunity for the construction of its "fair share" of the regional need for lower income housing. 92 N.J. at 238-239. There are two components of regional need. The first is the region's present need, which is the current need for adequate housing in excess of the average need in the region. See 92 N.J. at 214-215. The second component is prospective need, which is the projected future need for lower income housing caused by growth in regional population and employment. See 92 N.J. at 256.
A three-step process is required to establish a municipality's fair share of regional present and prospective need. First, the relevant region must be identified. Second, regional need must be determined. Third, that need must be allocated among the municipalities in the region. See 92 N.J. at 248.
Both parties employed the Urban League methodology as their basic framework for determining Washington's regional Mount Laurel obligation. Therefore, it is appropriate to describe
briefly the Urban League methodology*fn5 and then to identify the respects in which the experts for each party departed from that methodology.
The Urban League methodology establishes two different regions, one for present and the other for prospective need. See AMG Realty, N.J. Super. at - . The present need regions are "fixed line" regions; the one in which Washington is located consists of 11 counties in northern New Jersey. The prospective need regions are "commutershed" regions which are determined separately for each municipality. Specifically, a determination is made of how far a person can travel in 30 minutes from the center of a municipality, and this establishes its commutershed. The whole of every county penetrated by this 30-minute commutershed is the prospective need region of that municipality. Washington's prospective need region, using this methodology, consists of Hunterdon, Morris, Somerset, Sussex and Warren counties.
To determine regional present need, the percentage of housing units in the present need region which are deficient and occupied by lower income persons is calculated first. The percentage of such units in each municipality is then determined and to the extent any individual municipality's percentage exceeds the regional percentage, the excess is added to the excesses from other municipalities with high present need to arrive at the regional present need. AMG Realty at , - . The total regional present need for the 11-county region in which Washington is located is 35,014 units. However, under the Urban League methodology, this overall need is to be met in three six-year stages, so that only one third of the total, or 11,671 units, must be satisfied between 1984 and 1990.
To determine regional prospective need, it is necessary to project the number of new lower income households that will be established between 1980, the year in which present need is determined, and 1990. AMG Realty at - , - . The Urban League methodology does this by averaging two different sets of county population projections prepared by the Office of Demographic and Economic Analysis in the New Jersey Department of Labor. One set is based upon a method known as the Economic Model and the other on a method known as the Demographic Model, both of which project growth by age group. To translate population data into household data, the methodology relies upon the Rutgers Report, which uses census data to predict the extent of new household formation for each age group. To project the percentage of new households which will be lower income, it relies upon the statewide figure of 39.4% referred to in Mount Laurel II, 92 N.J. at 221 n. 8. Thus, applying the Urban League methodology, the prospective regional need for the five-county region in which Washington is located is 37,049 housing units.
The allocation of fair share of regional need among municipalities in the present and prospective need regions is made in accordance with two mathematical formulas, one for present and the other for prospective need. AMG Realty at -
With respect to present need, the formula involves two factors, the percentage of growth area in the region contained in each municipality and the percentage of regional employment in the municipality. These two percentages are averaged, and the average is modified by taking into consideration the median income in the municipality compared to that in the region.*fn6 The total present need of the region then is multiplied by the resulting percentage to arrive at the municipality's fair share of
the regional present need. AMG Realty at - . There are then two further adjustments. First, each municipality's fair share is increased by 20% to reflect the fact that some municipalities in any region have insufficient vacant land or other circumstances preventing them from accommodating their fair shares. Second, it is increased by another 3% to provide for a vacancy rate which will facilitate mobility in housing choice. AMG Realty at - . Applying this ...