Affordable housing trust injunction denied, but munis can contest transfer of funds

An appellate court judge has ruled that an injunction blocking the transfer of affordable housing trust funds from municipalities to the state is not warranted, but will allow local governments to contest the transfer before it occurs.

Judge Mary Catherine Cuff ruled that the injunction was not warranted because municipalities have known for four years that the July 17, 2012 deadline was in place.

“In light of the record presented, we are satisfied that a global preliminary injunction restraining COAH from transferrring funds held in trust by municipalities to meet their affordable housing obligations is not warranted,” Cuff wrote.  

The panel, however, ruled that before any money is transferred to the Council on Affordable Housing, the state must provide a written notice of the amount it is transferring.  The municipality will then have the right to contest the transfer by demonstrating that the funds have already been committed to a project.

The case was brought by the Fair Share Housing Center, which was joined by the state League of Municipalities in an effort to block the transfer of more than $160 million to the state’s coffers.  The deadline was created in 2008, but townships have argued that no mechanism or guidelines are in place to commit the funds they have in trust.  Cuff dismissed the argument, saying that townships have been seeking approval for various affordable housing projects for the past four years, despite the claimed lack of guidelines.

Opponents of the deadline took the ruling as a victory.

“This decision means that the Christie Administration cannot seize any municipal trust funds without a full and fair hearing for every municipality before COAH,” Fair Share Housing Center attorney Adam Gordon said. “The Court rightly has brought to a halt the Christie Administration’s planned July 17 raid on municipal trust funds.”

The League of Municipalties also declared victory, calling the ruling a good first step.

“This decision is a good first step for municipalities and for our taxpayers,” said league Executive Director Bill Dressel. “The Court today made it clear that the seizing of these dollars is not automatically done by statute, but that COAH must provide adequate notice and the opportunity to contest the forfeiture before the agency.  With this process in place, it is less likely that taxpayers will be unfairly asked to make up the loss of these dollars.” 

Opponents brought the case after legislative efforts to stop the transfer failed. Last week, the governor removed language from the budget that would have beefed up the guidelines and vetoed legislation that would have granted an extension to spend the money.

“The governor’s recent rejection of legislative efforts to provide a more concrete definition of ‘commit’ does not transform a four-year-old deadline into an unforeseen event warranting immediate judicial intervention,” Cuff wrote.

The money is included as part of the state’s general fund, so success in court would have required the state to find the money elsewhere.

Affordable housing trust injunction denied, but munis can contest transfer of funds