Nearly one year ago, Hopewell Township passed a resolution to commence litigation against the State of New Jersey to retrieve $639,644.75 of unpaid funds, due to the Township, from conditions provided in the New Jersey Economic Stimulus Act of 2009. Because those fund were never made available, Hopewell Township filed a motion asking the Court to reimburse the municipality either financially, or with credits towards its fair share affordable housing obligation.
This week, Judge Mary C. Jacobson of Mercer County issued a final opinion in response to Hopewell Township’s motion.
With regard to the background of the unreimbursed funds, in 2008, the statewide Non-Residential Development Fee Act imposed a 2.5% statewide affordable housing development fee on all non-residential new construction within the state. In Hopewell Township, the non-residential project was the one constructed by Capital Health Systems (CHS) which paid the Township a non-residential development fee in the amount of $639,644.75.
The following year, the New Jersey Economic Stimulus Act entitled developers to a refund of non-residential development fees that had been previously paid to the Township. The Stimulus Act further provided that, if a municipality had to refund these fees, then the municipality would be reimbursed for those funds from the New Jersey Affordable Housing Trust Fund, for which there was 15 million dollars allotted. Hopewell Township reimbursed the $639,644.75 to CHS but never received a reimbursement from the Affordable Housing Trust Fund or COAH (Council on Affordable Housing). In March of 2010, the Township received a statement from COAH saying that they were still determining whether there was any money available to pay the reimbursement.
Discussions at the Committee meeting last February involved the estimated attorneys fees for the lawsuit to pursue the roughly $600K and the likelihood of success in the case. Steve Goodell, Township Attorney estimated the counsel fees to be $20,000.
“I think it is a good investment,” said then-Mayor Harvey Lester. “I don’t want taxpayers to be out the $600K+ without trying to get the money back. This is the first step in being successful and, without it, there is no chance of succeeding.”
When then-committee member (now mayor) Kevin Kuchinski inquired about the number of cases of this type that have been successful, Goodell informed the committee that there have been no other cases of this type and, if the Township could not get the money back, they would be requesting a reduction in affordable housing obligation numbers. The resolution passed unanimously.
Want to catch up on the background of affordable housing obligations and COAH in New Jersey? Check out MercerMe’s article COAH in 90 seconds: Making housing accessible, or Affordabullsh*t?
In court this week, Hopewell Township argued that since there were no funds to reimburse, that it was entitled to 155 affordable housing credits and that, not only had it lost the non-residential reimbursement funds, but it also lost funds that would have provided an opportunity further act in accordance with its affordable housing obligation.
Judge Jacobson noted the parallel of this issue with the pension case, over which the Judge also presided, in which the legislature laid out payments to be made upon which employees relied however the money was not available. Within that case, Judge Jacobson found a number of instances, cited within that case, in which municipalities sought to acquire certain funds from the State on the basis of statutory provisions. In those cases, if it is not part of the annual appropriation process, the municipalities (or in the pension case, the state employees) were out of luck.
Judge Jacobson explained the Court’s challenge in interpreting statutes: to try to understand what the legislature meant, how the statute works, and how the passage of time affects one’s understanding of the statute. But, she explained, that the key for her was the plain language of the statute and it now reads “the portion if any… attributable shall be reduced or eliminated…” She further explained that the legislature even amended the statute to include the words “if any,” suggesting that the legislature still viewed the statute as viable, at the time of amendment, and also that the legislature intended it strictly.
Furthermore, the rules at the time the non-residential reimbursements, were adopted when the growth share methodology (looking at what developments were actually being built, how many jobs are connected with non residential development and the housing generated as a result of that development) had been deemed, in a series of Appellate and Supreme Court cases, as non-enforceable and inconsistent with the Fair Housing Act. COAH was therefore not able to rely on a growth share methodology and there has been no legislative change since the Courts’ decisions. One of the ways that Hopewell based its request for the reimbursement was relying on the growth share methodology to request the 155 credits.
“How can I enforce it when the whole underlying basis of it does not exist?” said Judge Jacobson.
In her final decision, Judge Jacobson ruled that Hopewell Township would be denied the 155 credits as a substitution for the not reimbursed non-residential development fee of $639,644.75.
“We are obviously disappointed by the Court’s recent decision on Affordable Housing credits, but at the same time, I have been increasingly concerned as to how much money we are spending in legal fees on what appears to be a fruitless path forward,” said Hopewell Township Mayor Kevin Kuchinski, this week. “Looking ahead, Hopewell Township will continue to vigorously defend itself in the pending Affordable Housing case, and work to reduce the outrageous number of Affordable units some entities wish us to build. As we do this, however, we must work to spend taxpayers’ money more frugally and reduce unnecessary legal expenses, particularly those that have little potential for a reasonable return.”