I. Constitutionality of the Fair Housing Act 403
A. Background: The Mount Laurel Doctrine and the Legislative
B. Delay in Enforcement of Mount Laurel Obligations under the
Administrative Procedures of the Act 409
C. Moratorium on Judicial Award of Builder's Remedies 415
F. Adjustments to and Limitations of Fair Share Obligations 426
H. Regional Contribution Agreements 430
I. Past Settlements and Repose 432
J. Absence of Authority of the Council on Affordable Housing to
Award Builder's Remedies 433
II. Exhaustion of the Administrative Remedies provided by the Act 435
A. The Meaning of "Manifest Injustice" 435
B. Morris County Fair Housing Council v. Denville; Stonehedge
Associates v. Denville; Cali v. Denville; Siegler Associates v.
Denville; Affordable Living Corp. v. Denville; Soussa v. Den-
C. Morris County Fair Housing Council v. Randolph; Randolph
Mountain Industrial Complex v. Randolph 445
D. Van Dalen v. Washington 449
E. Rivell v. Tewksbury 450
F. Essex Glen, Inc. v. Roseland 452
G. Conclusion 455 [209 NJSuper Page 401] On July 2, 1985, Governor Kean signed into law the "Fair Housing Act" ("the act"). L. 1985, c. 222; N.J.S.A. 52:27D-301 et seq. This statute acknowledges, as determined by the Supreme Court of New Jersey in Southern Burlington Cty. NAACP v. Mount Laurel, 92 N.J. 158 (1983) (" Mount Laurel II "), that "every municipality in a growth area has a constitutional obligation to provide through its land use regulations a realistic opportunity for a fair share of its region's present and prospective needs for housing for low and moderate income families." L. 1985, c. 222, § 2(a). The primary change made by the statute is the establishment of an administrative framework for determining the extent of a municipality's Mount Laurel obligation and the manner in which it will be satisfied. Primary responsibility for administration of the statute is conferred upon a newly established state administrative agency called the Council on Affordable Housing ("the council").
This court has before it motions based upon the act which have been filed by five municipal defendants in pending Mount Laurel cases. Denville, Tewksbury, Randolph and Washington seek transfer of the cases against them to the council and Roseland seeks dismissal. Some plaintiffs have responded to these motions by attacking the constitutionality of the act, contending that certain sections are facially invalid and that those sections are so central to the overall operation of the act that it must be declared invalid in its entirety.*fn1 In the alternative, all plaintiffs argue that, assuming the constitutionality of the act, this court should exercise the discretion conferred upon it by the act to deny transfer or dismissal and proceed to a judgment on the merits. All pending motions which seek transfer to the council or dismissal have been consolidated solely for the purpose of briefing and argument and the issuance of a decision as to the constitutionality of the act and, if valid, its impact upon the pending cases.
This court concludes, for the reasons set forth in part I of this opinion, that the act is constitutional on its face and that, to the extent individual sections raise constitutional problems,
those sections either are susceptible to interpretations which would preserve their constitutionality or, if unconstitutional, would be severable from the remainder of the act. This court further concludes, for the reasons set forth in part II, that it should retain jurisdiction over the cases against Denville, Randolph and Washington but that the complaints against Tewksbury and Roseland should be transferred to the council.
Constitutionality of the Fair Housing Act.
A. Background: The Mount Laurel Doctrine and the Legislative Response.
In Southern Burlington Cty. NAACP v. Mount Laurel, 67 N.J. 151 (1975) cert. den. 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975) (" Mount Laurel I "), the Court held that under Article I, paragraph 1 of the New Jersey Constitution a zoning ordinance which forecloses any opportunity of housing for lower income persons is not, absent unusual circumstances, in furtherance of the general welfare and is therefore invalid. Accordingly, the Court held that a municipality must provide an opportunity through its zoning for lower income housing, "at least to the extent of the municipality's fair share of the present and prospective regional need therefor." Id. at 174.
In Mount Laurel II the Court reaffirmed the constitutional analysis on which its decision in Mount Laurel I had been based:
The constitutional basis for the Mount Laurel doctrine remains the same. The constitutional power to zone, delegated to the municipalities subject to legislation, is but one portion of the police power and, as such, must be exercised for the general welfare. When the exercise of that power by a municipality affects something as fundamental as housing, the general welfare includes more than the welfare of that municipality and its citizens: it also includes the general welfare -- in this case the housing needs -- of those residing outside of the municipality but within the region that contributes to the housing demand within the municipality. Municipal land use regulations that conflict with the general welfare thus defined abuse the police power and are unconstitutional. In particular, those regulations that do not provide the requisite opportunity for a fair share of the region's need for low and moderate income housing conflict
with the general welfare and violate the state constitutional requirements of substantive due process and equal protection. [92 N.J. at 208-209]
The Court in Mount Laurel II also concluded that eight years experience with Mount Laurel I had demonstrated a need for more effective judicial remedies to enforce the constitutional rights recognized by its earlier decision. Therefore, it established an elaborate procedural framework for the adjudication of Mount Laurel cases. It appointed three judges to hear all Mount Laurel cases, who would be able to develop expertise in the subject matter, to provide some degree of consistency in trial court decisions, and to assign appropriate priority to this important area of public litigation. Id. at 216-217, 292-293. The Court also rejected decisions after Mount Laurel I which had held that "'fair share' allocations need not be 'precise' or based on 'specific formulae' to win judicial approval," id. at 206, and held that there must be "a determination by the court of a precise region, a precise regional present and prospective need, and a precise determination of the present and prospective need that the municipality is obliged to design its ordinance to meet." Id. at 257; see also id. at 215-216. Recognizing that public interest organizations lack the resources to bring a sufficient number of cases to provide effective enforcement of Mount Laurel obligations, it sought to increase the incentive for developers to pursue Mount Laurel litigation by holding that "where a developer succeeds in Mount Laurel litigation and proposes a project providing a substantial amount of lower income housing, a builder's remedy should be granted unless the municipality establishes that because of environmental or other substantial planning concerns, the plaintiff's proposed project is clearly contrary to sound land use planning." Id. at 279-280; see also id. at 218. The Court attempted to reduce the time needed to bring municipal zoning into compliance with Mount Laurel by specifying that the remedial stage should result in the adoption (even under protest) of a compliant zoning ordinance. Id. at 218, 285-291. It also held that compliance with Mount Laurel
may require adoption of zoning which provides affirmative measures to encourage construction of housing affordable to lower income families, such as requiring a certain percentage of units to be set aside for those families. Id. at 217, 260-274. The Court made a variety of other rulings, all with the common purpose of simplifying Mount Laurel litigation and promoting more effective enforcement of this constitutional obligation. For example, it required municipalities to take all reasonable steps to assist developers in obtaining subsidies, id. at 217, 262-265, and it held that a municipality's obligation to zone for a fair share of the regional need for lower income housing turns on whether it is located partly or wholly within a "growth area" designated by the New Jersey Department of Community Affairs in its State Development Guide Plan ("SDGP"). Id. at 215, 223-248.
While issuing these rulings to improve judicial administration of the Mount Laurel doctrine, the Court expressed in emphatic terms the desirability of legislative action addressed to the problem of exclusionary zoning. It stated that "we have always preferred legislative to judicial action in this field." Id. at 212. The Court also noted that its "deference" to certain limited legislative and executive initiatives in the field could be "regarded as a clear signal of our readiness to defer further to more substantial action." Id. at 213. However, it concluded that " [i]n the absence of adequate legislative and executive help, we must give meaning to the constitutional doctrine in the cases before us through our own devices, even if they are relatively less suitable." Id. at 213-214, emphasis supplied. Consequently, certain of the rulings set forth in Mount Laurel II may be viewed not as constitutional imperatives in themselves but rather as "devices" to promote more effective judicial enforcement of the Mount Laurel doctrine until such time as the Legislature might address the problem in another manner.
The Fair Housing Act is the legislative response to the Court's encouragement of legislative initiatives to address the problems of housing for lower income families. The legislative [209 NJSuper Page 406] findings include a declaration that "[t]he interest of all citizens, including low and moderate income families in need of affordable housing, would be best served by a comprehensive planning and implementation response to this constitutional obligation." L. 1985, c. 222, § 2(c). The central role in providing this comprehensive response is assigned to the Council on Affordable Housing. The council has the responsibility to determine housing regions, to estimate the present and prospective need for low and moderate income housing and to adopt "criteria and guidelines" for a municipality's determination of its present and prospective fair share of the housing need in its region. Id. at § 7. A municipality may elect to participate in the administrative procedures established by the act by notifying the council of that intention by November 2, 1985 and filing a "housing element" and "fair share housing ordinance" within five months after the council's adoption of its criteria and guidelines. Id. at § 9. Thereafter, a municipality may petition the council for approval of its housing element and implementing ordinance, which is called "substantive certification." Id. at § 13. The council also has the responsibility to "engage in a mediation and review process" if there is an objection to a municipality's petition for substantive certification or upon the request of a party to pending Mount Laurel litigation. Id. at § 15(a). A party which has filed a Mount Laurel case within 60 days of the effective date of the act must exhaust the procedures for mediation and review. Id. at § 16(b). A party to a case filed more than 60 days before enactment of the act also may seek transfer to the council, but the court may deny such an application if "transfer would result in a manifest injustice to any party to the litigation." Id. at § 16(a). If mediation is unsuccessful, the dispute may be referred to the Office of Administrative Law for hearing as a "contested case" pursuant to the Administrative Procedures Act. N.J.S.A. 52:14B-1 et seq. The act further provides that until expiration of the statutory period for the filing of municipal housing elements, "[n]o builder's remedy shall be granted to a plaintiff
in any exclusionary zoning litigation which has been filed on or after January 20, 1983, unless a final judgment providing for a builder's remedy has already been rendered to that plaintiff." L. 1985, c. 222, § 28.
The constitutional challenges to the act are premised solely upon the Mount Laurel doctrine. No party contends that the act offends any provision of the United States Constitution or any provision of the New Jersey Constitution other than the part of Article I, paragraph 1 on which the Mount Laurel doctrine rests.*fn2 Rather, plaintiffs argue that individual sections of the act, considered either independently or in combination, so fundamentally undermine the Mount Laurel doctrine that the act must be declared unconstitutional in its entirety.
The general principles which govern judicial consideration of any attack upon the constitutionality of legislation were described as follows in New Jersey Sports & Exposition Auth. v. McCrane, 61 N.J. 1 (1972):
One of the most delicate tasks a court has to perform is to adjudicate the constitutionality of a statute. In our tripartite form of government that high prerogative has always been exercised with extreme self restraint, and with a deep awareness that the challenged enactment represents the considered action of a body composed of popularly elected representatives. As a result, judicial decisions from the time of Chief Justice Marshall reveal an unswerving acceptance of the principle that every possible presumption favors the validity of an act of the Legislature. As we noted in Roe v. Kervick, 42 N.J. 191, 229 [199 A.2d 834] (1964), all the relevant New Jersey cases display faithful judicial deference to the will of the lawmakers whenever reasonable men might differ as to whether the means devised by the Legislature to serve a public purpose conform to the Constitution. And these cases project into the forefront of any judicial study of an attack upon a duly enacted statute both the strong presumption of validity and our solemn duty to resolve reasonably conflicting doubts in favor of conformity to our organic charter. Moreover, the conclusions reached in such cases demonstrate that in effectuating this salutary
policy, judges will read the questioned statute as implying matters requisite to its constitutional viability if it contains terms which do not exclude such requirements. [at 8]
There are a number of corollaries to the presumption of validity of legislative enactments which are pertinent to this case. One is that "a challenged statute will be construed to avoid constitutional defects if the statute is 'reasonably susceptible' of such construction." New Jersey Board of Higher Ed. v. Shelton College, 90 N.J. 470, 478 (1982); Schulman v. Kelly, 54 N.J. 364, 370 (1969). Therefore, "where a statute is capable of two constructions, one of which would render it unconstitutional and the other valid, that which will uphold its validity must be adopted." Ahto v. Weaver, 39 N.J. 418, 428 (1963). Another is that a court may engage in "judicial surgery" or narrow the construction of a statute to preserve its constitutionality. Town Tobacconist v. Kimmelman, 94 N.J. 85, 104 (1983); New Jersey Chamber of Commerce v. New Jersey Election Law Enforcement Comm'n, 82 N.J. 57, 75 (1980). A further principle of judicial restraint is that challenges to the constitutionality of legislation "will not be resolved unless absolutely imperative in the disposition of the litigation." Ahto v. Weaver, supra, 39 N.J. at 428.
The case applying these principles which is most analogous to the present case is Robinson v. Cahill, 69 N.J. 449 (1976). In both Robinson v. Cahill and Mount Laurel the Court had determined that a long-established part of the system of local government violated the New Jersey Constitution. In Robinson v. Cahill the Court had held that statutes which governed the financing of local schools violate the guarantee of a "thorough and efficient" system of public education. In Mount Laurel the court had held that municipal zoning ordinances which failed to provide a realistic opportunity for the construction of lower income housing violate equal protection and due process guarantees. In each case the Court had urged the Legislature to respond to the deficiencies it found in existing laws. In each case, the Legislature, after prolonged debate,
enacted comprehensive legislation providing for enforcement by a state administrative agency of the constitutional rights involved -- by the Commissioner of Education in Robinson v. Cahill and by the Council on Affordable Housing in this case. In Robinson v. Cahill, as in this case, plaintiffs pointed to a host of problems with the interpretation and implementation of the new law. See Robinson v. Cahill, supra (Hughes, C.J., concurring at 468-475; Conford, P.J.A.D., concurring at 476-511; Pashman, J., dissenting at 512-562. Nonetheless, a majority of the Court concluded that faithfulness to the presumption of validity of legislative enactments required it to sustain the validity of the law on its face and to afford the commissioner an opportunity to administer its provisions in a manner which would fulfill the constitutional guarantee of a "thorough and efficient" system of public schools. See also Abbott v. Burke, 100 N.J. 269 (1985). This court is convinced that a similar approach should be followed in reviewing the constitutionality of the Fair Housing Act.
There are two primary categories of challenges to the act. First, plaintiffs claim that requiring parties with pending Mount Laurel claims to utilize the administrative procedures of the act will result in unconstitutional delay in enforcement of Mount Laurel obligations. Second, plaintiffs claim that the provisions for the determination of regions, regional need for lower income housing, fair share allocations and credits fail to satisfy the requirements of Mount Laurel. Plaintiffs' claims that the act will unconstitutionally delay enforcement of Mount Laurel obligations are considered in parts IB and IC and their substantive challenges in parts ID through IK.
B. Delay in Enforcement of Mount Laurel Obligations Under the Administrative Procedures of the Act.
A central theme of the Mount Laurel II opinion is that vindication of the constitutional right recognized in Mount Laurel I had been thwarted by unjustifiable delays in the litigation process. The Court stated that:
The obligation is to provide a realistic opportunity for housing, not litigation. We have learned from experience, however, that unless a strong judicial hand is used, Mount Laurel will not result in housing, but in paper, process, witnesses, trials and appeals. [92 N.J. at 199]
At another point it observed that:
Confusion, expense and delay have been the primary enemies of constitutional compliance in this area. [ Id. at 292]
The Court conceived that the various procedural rulings set forth in its Mount Laurel II opinion would simplify and thereby reduce the time required to litigate Mount Laurel claims:
The remedies authorized today are intended to achieve compliance with the Constitution and the Mount Laurel obligations without interminable trials and appeals. Municipalities will not be able to appeal a trial court's determination that its ordinance is invalid, wait several years for adjudication of that appeal, and then, if unsuccessful, adopt another inadequate ordinance followed by more litigation and subsequent appeals. We intend by our remedy to conclude in one proceeding, with a single appeal, all questions involved. [ Id. at 290]
Plaintiffs argue that exhaustion of the administrative procedures established by the act will take so long to complete and will produce such uncertain results that the delay and confusion condemned by the Court in Mount Laurel II will be reestablished -- this time in the administrative rather than the judicial process. This argument is made most forcefully by plaintiffs with pending cases now close to completion.
The initial step in the administrative process is the council's determination of housing regions and present and prospective need for lower income housing, and the adoption of "criteria and guidelines" for individual municipalities to determine their fair shares. L. 1985, c. 222, § 7. The council has seven months after either January 1, 1986 or the confirmation of its last member, whichever date is earlier, to discharge this responsibility. Ibid. Once the council acts, any municipality which has elected to participate in the administrative process has five additional months within which to file a housing element and an implementing fair share housing ordinance. Id. at § 9(a). The next step in a case transferred from the courts to the council is [209 NJSuper Page 411] "review and mediation." Id. at § 15(a)(2).*fn3 It is unclear whether this process may occur simultaneously with municipal consideration of its housing element or only after submission of the housing element.*fn4 In any event, it would appear that mediation cannot be completed until the housing element is filed, since that is when a municipality will determine the contents of its Mount Laurel compliance plan. If mediation is unsuccessful, the next step in the administrative process is transfer of the matter to the Office of Administrative Law. Id. at § 15(c).*fn5 [209 NJSuper Page 412] The administrative law judge must issue an "initial decision" within 90 days. Ibid. The council has an additional 45 days within which to accept, reject or modify this initial decision. N.J.S.A. 52:14B-10(c). If the council denies or conditionally approves a municipality's fair share plan, the municipality has another 60 days within which to refile its plan with changes satisfactory to the council. L. 1985, c. 222, § 14(b). The municipality then has another 45 days within which to adopt the fair share housing ordinance approved by the council. Ibid. If the maximum period permitted by statute were taken at each of these steps, exhaustion of the entire administrative process would take more than two years from enactment of the act, that is, until September 1, 1987.*fn6
Plaintiffs further note that various uncertainties in the administrative process could result in an even longer period of time elapsing. For example, the time for issuance of an initial decision by an administrative law judge may be extended by the Director of Administrative Law "for good cause shown." Id. at § 15(c). Plaintiffs express skepticism whether a decision can be rendered within 90 days in a matter as complex as a Mount Laurel case, and consequently they fear that the power to extend the time for issuance of an initial decision will be liberally exercised. The act also fails to specify what consequences would flow from a failure to meet one of the statutory deadlines.*fn7
If every party with a pending Mount Laurel case, including one close to conclusion, were required to exhaust the rather lengthy administrative procedures established by the act, its constitutionality would be difficult to defend. However, the Legislature has not imposed such a requirement. Rather, it has demonstrated an awareness of the danger of undue delay by requiring trial courts to determine, on a case by case basis, whether cases filed more than 60 days prior to the effective date of the act should be transferred to the council. In determining whether to transfer, the trial courts are directed to
"consider whether or not the transfer would result in manifest injustice to any party to the litigation." Id. at § 16(a). The legislative intent in including this provision in the act is discussed in detail in part II of this opinion. However, consistent with the principle that a statute should be construed so as to preserve its constitutionality, Ahto v. Weaver, supra, this exception to the requirement of exhaustion of administrative remedies should be read as broadly as is needed to avoid a declaration that the statute unconstitutionally delays adjudication of pending Mount Laurel cases.
The Legislature provided for retention of jurisdiction by the courts only in cases filed more than 60 days before the effective date of the act. L. 1985, c. 222, § 16. Therefore, it is necessary to consider separately whether the administrative procedures of the act will cause unconstitutional delay in connection with Mount Laurel cases filed after that cut-off date. The danger of unconstitutional delay in such cases may be easily avoided by invoking R. 4:69-5, which provides that administrative remedies need not be exhausted "where it is manifest that the interest of justice requires otherwise." Whatever may have been the intent of the Legislature, this court rule could be found applicable to cases filed within 60 days of enactment of the act if that were necessary to preserve its constitutionality.
Furthermore, the use of the procedures established by the act should not cause undue delay in cases filed within 60 days of enactment. Experience has demonstrated that Mount Laurel litigation, even under the simplified procedures set down in Mount Laurel II, is extremely time consuming. Detailed expert reports still must be prepared and lengthy discovery conducted before a case is ready for trial. The trials, which often have been bifurcated to simplify consideration of issues, have taken from a few weeks to a month. Moreover, the process of rezoning in conformity with Mount Laurel generally has taken
much longer than the 90 days envisioned in Mount Laurel II.*fn8 Therefore, if mediation under the act is successful, cases may be brought to a conclusion by the council sooner than if they were fully litigated before the courts. In addition, while some delay in bringing cases to trial will occur if mediation is unsuccessful, that delay should not be unduly lengthy because much of the review and analysis in the administrative process is the same as normal pretrial preparation.
In any event, the mere fact that the act may cause some delay in final disposition of some Mount Laurel claims does not render the Act unconstitutional on its face. As former Chief Justice Hughes observed in his concurring opinion in Robinson v. Cahill:
In the area of judicial restraint and moderation there is room for accommodation to the exigencies of government, as pointed out by Judge Conford, in the consideration of practical possibilities of accomplishment. Brown v. Board of Educ. of Topeka, 349 U.S. 294, 300-01, 75 S. Ct. 753, 756, 99 L. Ed. 1083, 1106 (1955). This Court has exercised this restraint in the timing of required accomplishment of a constitutional goal, without abandoning its eventual enforcement. [69 N.J. at 474-475]
C. Moratorium on Judicial Award of Builder's Remedies.
Section 28 provides in relevant part:
No builder's remedy shall be granted to a plaintiff in any exclusionary zoning litigation which has been filed on or after January 20, 1983, unless a final judgment providing for a builder's remedy has already been rendered to that plaintiff. This provision shall terminate upon expiration of the period set forth in subsection a. of section 9 of this act for the filing with the council of the municipality's housing element.
This moratorium could remain in effect until January 1, 1987.*fn9
There are two exceptions to the moratorium. First, it is inapplicable to cases filed before January 20, 1983. Second, the definition of "builder's remedy" limits its operation to "a court imposed remedy for a litigant who is an individual or a profit-making entity." Ibid. Therefore, the moratorium is ...