On appeal from Council on Affordable Housing.
Shebell, Havey and Skillman. The opinion of the court was delivered by Skillman, J.A.D. Shebell, J.A.D., concurring in part and dissenting in part.
The Public Advocate appeals from a final decision of the Council on Affordable Housing (COAH) granting substantive certification pursuant to N.J.S.A. 52:27D-314 to the housing element and fair share plan of the Borough of Roseland (Roseland). Roseland appeals from COAH's interpretation of the occupancy preference authorized by N.J.A.C. 5:92-15.1, which Roseland was required to follow in order to receive substantive certification. Since the appeals were both taken from COAH's grant of substantive certification to Roseland, we consolidate them.
This proceeding was initiated by a property owner filing an action in the Law Division alleging that Roseland's zoning ordinances fail to provide a reasonable opportunity for the construction of housing affordable to lower income households and are therefore unconstitutional under the Mount Laurel doctrine. See Southern Burlington Cty. NAACP v. Township of Mount Laurel, 67 N.J. 151, 336 A.2d 713 (Mount Laurel I), appeal dismissed and cert. den., 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975), and 92 N.J. 158, 456 A.2d 390 (1983) (Mount Laurel II). After enactment of the Fair Housing Act of 1985 (FHA), N.J.S.A. 52:27D-301 to -329, the Law Division transferred the case to COAH pursuant to N.J.S.A. 52:27D-316.
COAH treated Roseland's motion for transfer as a petition for substantive certification, see Hills Dev. Co. v. Township of Bernards, 103 N.J. 1, 38 n. 10, 510 A.2d 621 (1986), and the Public Advocate filed objections to the petition. COAH rejected the Public Advocate's objections and granted substantive certification to Roseland's fair share plan.
COAH determined that Roseland's fair share of Mount Laurel housing is 165 units. Roseland's certified fair share plan provides for the satisfaction of this obligation through the rehabilitation of three indigenous substandard units, the construction of 96 units in three inclusionary developments in Roseland and a regional contribution agreement (RCA) with the City of Newark under which Roseland will pay $1,138,500 to Newark for the construction of 66 units of new housing. Roseland's fair share plan further provides, as permitted by COAH's regulations, that households which presently reside in the municipality or which have a member who works there shall be granted an occupancy preference with respect to the purchase or rental of new lower income housing constructed in Roseland.
In his appeal, the Public Advocate argues that Roseland's RCA with Newark and the occupancy preference violate the Mount Laurel doctrine by perpetuating exclusionary zoning and violate constitutional and statutory prohibitions against racial discrimination by perpetuating racial stratification within the region. The Public Advocate also argues that COAH's standards of affordability for Mount Laurel housing violate the Mount Laurel doctrine by not providing a realistic opportunity for the construction of housing affordable to persons earning less than 40% of the median household income in the region. We reject these arguments for the reasons expressed in In re Petition for Substantive Certification Filed by the Township of Warren, 247 N.J. Super. 146, 588 A.2d 1227 (App.Div.1991), which is also being filed today.
The Public Advocate's arguments which are not addressed in Warren are that COAH erred in granting Roseland a downward adjustment of its pre-credited need number for lack of vacant and developable land, and that any housing units deducted from Roseland's pre-credited need number should have been reallocated to other municipalities in the housing region. These arguments are addressed in section I of this opinion. In its appeal, Roseland argues that COAH improperly amended its occupancy preference regulation without following the rulemaking procedures of the Administrative Procedure Act (APA), N.J.S.A. 52:14B-4. This argument is addressed in section II.
N.J.S.A. 52:27D-307(c)(2)(f) requires COAH to adopt "criteria and guidelines" for "[m]unicipal adjustment of the present and prospective fair share . . . whenever . . . [v]acant and developable land is not available in the municipality." Pursuant to this statutory mandate, COAH has adopted comprehensive regulations describing the conditions a municipality must satisfy in order to receive an adjustment of its Mount Laurel obligation. N.J.A.C. 5:92-8.1 to 8.6. In brief, N.J.A.C. 5:92-8.2(b) provides that COAH shall determine the amount and location of vacant and developable land within a municipality, and N.J.A.C. 5:92-8.4(c) provides that COAH shall determine the municipality's ability to absorb its pre-credited need number through inclusionary developments on that vacant and developable land. If a municipality demonstrates that it does not have sufficient vacant and ...