After decades of slow progress in building up New Jersey's inventory of affordable housing following the landmark 1975 Mount Laurel decision, a year-old law designed to speed the process along is leading to lawsuits from both towns and builders.

The law, signed by Gov. Phil Murphy last March, aims to help towns more easily determine what is needed to fulfill their Mount Laurel requirements so progress can be made on fulfilling the quota for each town.

“It means that the affordable housing obligations of towns up and down our state will be determined much more quickly than in decades past,” Murphy said.

Developers' construction proposals must guarantee that a given percentage of the housing they build are affordable units — usually 15% of rentals and 20% of sales. The rest are market-rate units.

The law signed by Murphy last March was welcomed by legislators and groups dedicated to addressing what they say is a crisis-level need for more affordable housing in New Jersey. They point to New Jersey's homeless crisis, which saw a 24% increase in the number of people living without shelter in 2024.

“We face a somewhat perfect storm of low housing inventory and escalating pricing, which leaves thousands of working families all across our state with no viable options,” said Sen. Troy Singleton, D-Burlington, who sponsored the legislation. “Without securing the most basic human needs — a place to live — the other policies we pass cannot be as effective.”

Still, more than two dozen towns have joined a lawsuit seeking a pause to the housing quotas. Local officials say the challenge is born from concerns voiced by their homeowners.

Residents, for years, have expressed concerns about strains on infrastructure, traffic and schools that could come from the increased construction and population, as some towns still must catch up on their "present need" quotas from the previous round of enforcement.

For example, residents in Parsippany, where 2,300 new residential units are under construction, continue to blame their elected leaders for permitting what they see as rampant overdevelopment.

And the courts aren't the only place where the quotas are being challenged. About a quarter of the state's other municipalities are trying to lower their affordable housing quotas by submitting their own calculations to the state Department of Community Affairs.

On the other side of the equation, the New Jersey Builders Association, or NJBA, has decided to push back against those municipalities, also through the courts.

And the courts aren't the only place where the quotas are being challenged. About a quarter of the state's other municipalities are trying to lower their affordable housing quotas by submitting their own calculations to the state Department of Community Affairs.

On the other side of the equation, the New Jersey Builders Association, or NJBA, has decided to push back against those municipalities, also through the courts.

Mayors, councils and planning boards that refuse to make good-faith accommodations for developers willing to build affordable housing, however, risk exposure to what are known as "builder's remedy" lawsuits and a court order that could permit the developer to build even larger projects than town zoning laws currently permit.

"This doctrine was commandeered by developers and special-interest groups," East Hanover Mayor Joe Pannullo said. "They only care about more development and more profit. And housing advocates are unrealistic, single-minded and care little about the real ramifications that come about by overdeveloping an area."

How do NJ's affordable housing laws work?

The controversy and the process remain complex. Each project proposal is unique and subject to negotiation between the developer and municipal officials. Some projects currently under construction took a decade or more to break ground.

Here are the steps that are usually involved leading to construction of affordable housing. In most cases, that construction includes a majority of units rented or sold at market rate, or a "mixed-use" development often featuring retail shops or restaurants on the street level of a multi-story complex.

MUNICIPAL PERSPECTIVE:

• In March, the Department of Community Affairs released town-by-town "prospective" and "present" need totals for towns to catch up on their previous obligations, and additional "fourth-round" totals over the next decade.
• Municipalities had a deadline of Jan. 31 to accept the Department of Community Affairs' numbers — providing them with immunity from builder's remedy lawsuits — or submit their own housing obligation calculations to the state.
• Of the 440 towns opting into the fourth-round planning process, 372 — or 85% of the participating towns — did not challenge the department's calculations, the Fair Share Housing Center said.
• Any individual or group, including developers, was permitted to file a law-based challenge to a given town's obligation submission by Feb. 28. The New Jersey Builders Association, for example, filed a challenge against all 159 towns that submitted their own calculations, including 35 in Bergen County, 20 in Morris County, five in Passaic County and five in Sussex County.
• Those challenges will be considered under a new court-supervised dispute resolution program, with all cases supposed to be resolved by the end of March.
• The towns then face a June 30 deadline to adopt specific plans for how to address their respective obligations. 
• A coalition of 26 towns also filed a legal challenge to pause the mandate, but a state Superior Court judge in Mercer County has rejected their challenges twice.
• Towns can also reduce their numbers by gaining credits through certain actions such as homes for individuals or groups with special needs, building in transit zones within a half-mile of public transit, and adding affordability controls to units that would otherwise sell at market rate.
• Towns can also gain credits by building on their own or working with developers to construct new projects with 100% affordable housing. Partly funded with a federal grant, Madison is building 44 all-affordable units featuring zero-energy building designs, electric-vehicle charging stations and a 165-watt solar panel array.
• Some towns are finding a silver lining in the process by declaring increasingly vacant office properties as areas in need of condemnation or development so they can be demolished and replaced with residential properties that generate tax revenue while reducing their affordable housing obligation.
• Towns also can, and often do, incentivize development deals by offering tax breaks to some developers. These PILOT programs, or "payment in lieu of taxes," are used in negotiations to gain concessions from developers such as a lower housing density or adding recreational facilities, open space or infrastructure improvements.

DEVELOPER PERSPECTIVE

• Under the Mount Laurel mandate and the new law signed by Murphy in 2024, developers seeking to build new residential projects can expect good-faith efforts from a given town to approve their plan as long as they commit to reserving a percentage of their inventory, usually 15% for rentals and 20% for sold units, as qualified affordable housing.
• Those good-faith efforts may include zoning changes or easements or declaring certain properties as areas in need of condemnation or redevelopment.
• Developers, who typically favor the Department of Community Affairs calculations, can challenge the alternative submissions by any town that challenges their numbers, possibly gaining what is known as "intervenor status." In those cases, the court appoints a special master to mediate a settlement among the intervenor, the town and the Fair Share Housing Center.
• Towns with affordable housing obligations that do not make good-faith efforts to accommodate developers willing to commit inventory to affordable housing are vulnerable to what is known as a "builder's remedy" lawsuit, in which the court could approve the construction of housing at higher densities than a municipality otherwise would allow.
• Developers and towns can also negotiate their own deal parameters to make them more palatable to the community, such as adding a mixed-use component with retail shops and restaurants.
• Projects including affordable housing must still obtain final approvals from planning and zoning boards.

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