A group of Jersey Shore municipalities will be able to scale down their affordable housing obligations under a ruling Monday by a state appeals court, reversing the decision of a lower court in February that was expected to have a broad impact across New Jersey.

The opinion, issued by a three-judge panel, said the calculation of those requirements should not reflect a period of legal chaos known as the gap years in the state’s affordable housing policy. The period spans 1999 to 2015, during which the much-maligned Council on Affordable Housing failed to produce guidelines that weren’t challenged in court.

The Appellate Division on Monday said that, if those years were to be counted, it should not be up to the judicial branch. Citing the Fair Housing Act of 1985, the judges said a municipality’s affordable housing obligation should only include unmet need prior to 1999, present need and prospective need.

“We emphasize that under our tripartite system of government, the imposition of a new retrospective calculation, designed to establish affordable housing need during the gap period … is best left for consideration by the legislative and executive branches of government, where public policy issues associated with such an additional ‘separate and discrete’ obligation can be fairly and fully debated in the public forum,” the judges wrote. “The Legislature may craft new legislation addressing any gap period between housing cycles if that is the course it wishes to take.”

It is the latest development in the tortured, 40-year legal history of policy aiming to prevent exclusionary zoning in New Jersey. And it comes as Superior Court judges across the state work to bring local governments, housing advocates and developers to a resolution on how many low- and moderate-income housing units must be built, following the judiciary’s decision last year to take control of the process from the executive branch.

The Cherry Hill-based Fair Share Housing Center criticized the opinion as another delay, while the New Jersey State League of Municipalities cheered the decision.

“The league supports the provision of affordable housing in a reasonable and rational manner and we applaud Barnegat Township for appealing the lower court’s ruling,” league Executive Director Michael J. Darcy said in a prepared statement. “The appellate division’s common-sense ruling upholds the legislative intent of the Fair Housing Act and will facilitate municipal compliance. Further, it creates a rational path forward that we anticipate will end costly litigation and allow municipalities to move forward in meeting their community’s affordable housing needs.”

The appellate judges also emphasized that "our holding today does not ignore housing needs that arose in the gap period or a municipality's obligation to otherwise satisfy its constitutional fair share obligations." The opinion noted that low- and moderate-income households formed during the gap period may no longer represent an affordable housing need because of reasons such as death, changes in income or changes in household size, but said those factors should be balanced by accounting for overcrowding or deficient housing units in new calculations.

Fair Share Housing, one of the parties that has argued for counting the gap years, highlighted the court's acknowledgement of housing needs that arose during that period. The group also pointed to the fact that the judges said that "identified low and moderate-income households formed during the gap period in need of affordable housing can be captured in a municipality's calculation of present need."

"Yet the court today deviated from the course New Jersey has set for decades on how this need should be measured, raising the problem of continued delays for thousands of families who have waited years for homes in safe communities with access to good schools and employment opportunities,” Fair Share Housing Center Executive Director Kevin Walsh said. “This plays into the hands of wealthy towns that are seeking to delay and exclude because it requires further studies at a time when the needs of New Jersey working families, seniors and people with disabilities are so great.

“The court erred today in coming up with a new way for municipalities to account for the housing needs of families that occurred during a 15-year gap period when New Jerseyans were buffeted by the impacts of the Great Recession, a wave of casino closures and the state's ongoing foreclosure crisis, rather than relying on existing law."

Monday’s decision reverses a February ruling by Superior Court Judge Mark Troncone, sitting in Toms River, who ordered that the 13 towns in Ocean County “must provide for satisfaction of the gap year need, as well as their prior round need, the present need and their prospective need.” Led by Barnegat, those local governments were seeking to reduce their obligations from that period by about 60 percent because the requirements were never clearly established.

Fair Share and other intervenors in the case argued the gap years should be included in the calculation of “prospective need,” meaning that portion of the requirement would encompass 27 years, from 1999 to 10 years from the present. The appeals court, however, disagreed and sided with the Ocean County towns and several municipalities from elsewhere that joined in the case.

“We conclude such an interpretation is clearly at odds with the FHA's unambiguous definition of prospective need,” Appellate Division Judge Douglas M. Fasciale wrote in the 53-page opinion. “As it is defined in the FHA, prospective need refers to a ‘projection’ of growth in the future, namely a ‘projection of housing needs based on development and growth which is reasonably likely to occur in a region or a municipality.’ By its nature, it does not involve retrospectively including a gap-period calculation.

“In sum, to impose a gap-period requirement would inevitably add a new requirement not previously recognized under the FHA.”

Asked if Fair Share would appeal to the Supreme Court, Welsh said his group was still analyzing the decision.

Guidelines for how many affordable units each town should accommodate under the state’s fair housing laws had long rested with state Council on Affordable Housing. But after years of controversy and litigation over the agency’s rules, the state Supreme Court stripped the agency of those duties last year and turned them over to the lower courts.

In recent months, stakeholders on both sides have said the shift in oversight has not added much certainty to the process or helped speed it along to any significant degree.

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