                                                     SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

 In Re Declaratory Judgment Actions Filed By Various Municipalities, County Of Ocean, Pursuant To The
              Supreme Court’s Decision In In re Adoption of N.J.A.C. 5:96, 221 N.J. 1 (2015)
                                           (A-1-16) (077565)

Argued November 30, 2016 -- Decided January 18, 2017

LaVecchia, J., writing for a unanimous Court.

        In this interlocutory appeal, the Court considers whether the pent-up housing need that arose for persons in
low- and moderate-income households formed during the sixteen-plus years since the expiration of the Council on
Affordable Housing’s (COAH) second housing cycle rules (Second Round rules) may be assessed as part of a
municipality’s third cycle housing obligation and captured under a present-need analysis.

          Through the Mount Laurel line of cases, the Court recognized that municipalities have a constitutional
obligation to use their zoning power in a manner that creates a “realistic opportunity for the construction of [their]
fair share” of the region’s low- and moderate-income housing. In 1985, the Legislature codified that constitutional
obligation, enacting the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329, and creating COAH to facilitate and
monitor compliance with the constitutional mandate through the promulgation of rules for successive housing
cycles. COAH adopted rules to govern its first and second housing cycles, but, after the Second Round rules
expired in 1999, COAH failed to adopt a set of valid regulations to govern the third housing cycle (Third Round).

          In March 2015, the Court reaffirmed the constitutional obligation, declared COAH defunct, and eliminated
the FHA’s exhaustion-of-administrative-remedies requirement. In re N.J.A.C. 5:96 & 5:97 (Mount Laurel IV), 221
N.J. 1 (2015). In its stead, the Court provided for a judicial forum to adjudicate affordable housing disputes,
creating “a substitute for [COAH’s] substantive certification process.” Id. at 24. The Court held that the
municipalities that had already obtained, or were in the process of obtaining, substantive certification from COAH
could file declaratory judgment actions to confirm that their plans comported with their Mount Laurel obligations.
Id. at 24-29. The Court emphasized that its holding did not eliminate fair share obligations from the prior rounds
and that “prior unfulfilled housing obligations should be the starting point for a determination of a municipality’s
faire share responsibility.” Id. at 30.

          Approximately 300 declaratory judgment actions were commenced throughout the state, including actions
by thirteen Ocean County municipalities. The Ocean County actions were consolidated to determine whether the
Third Round housing obligation properly included the need that arose during the so-called gap period—the period
since the expiration of the Second Round rules (i.e., 1999-2015). The municipalities, joined by the New Jersey State
League of Municipalities (League), argued that fair share obligations have only two well-defined components—
“present need” and “prospective need”—and that courts lack the authority to create a new component of need to
account for the gap period. Fair Share Housing Center (Fair Share), the New Jersey Builders Association (NJBA),
and private developers argued that the gap need must be captured as part of a town’s affordable housing obligation.

         The trial court held that inclusion of the need arising during the gap period in an assessment of the Third
Round fair share obligation was a constitutional obligation. Importantly, the court held that such need was a
“separate and discrete component” of the fair share obligation that could be calculated from the actual growth that
accumulated during that time period.

          The Appellate Division granted the Township of Barnegat’s motion for leave to appeal and reversed the
trial court’s determination to address gap need as a new, “separate and discrete” component of the Third Round
obligation. 446 N.J. Super. 259, 267 (App. Div. 2016). In rejecting the trial court’s approach to the retrospective
calculation of gap need, the panel asserted that its holding did not ignore the affordable housing need that arose from
1999 to 2015. The panel observed that, to the extent that “[low- and moderate-income] households formed during
the gap period” might be living in overcrowded or deficient housing, the need that arose during the gap would be
“partially included” in the calculation of present need. Id. at 294.

         The Court granted Fair Share’s motion for leave to appeal.

HELD: Towns are constitutionally obligated to provide a realistic opportunity for their fair share of affordable housing
for low- and moderate-income households formed during the gap period and presently existing in New Jersey. A form
of present-need analysis under the Fair Housing Act—redefined to include a component premised on a calculation of
those low- and moderate-income New Jersey households, newly formed since 1999, that presently exist and are entitled
to their opportunity of access to affordable housing—provides the appropriate approach to addressing statewide and
regional need. The modification of the previous definition of a present-need analysis is essential in order to address the
failure of COAH to perform its required mission, in connection with a constitutional obligation, for a period of time
affecting almost a generation of New Jersey citizens.

1. At bottom, the parties fundamentally disagree on whether the gap time period of need must be accounted for. There
is no fair reading of the Court’s prior decisions that supports disregarding the constitutional obligation to address pent-
up affordable housing need for low- and moderate-income households that formed during the years in which COAH
was unable to promulgate valid Third Round rules. The opportunity for immunity provided by this Court’s substitute
for substantive certification was premised on the value of the efforts of towns that received substantive certification
from COAH during that interval or that otherwise could show steps taken to address affordable housing needs. That
necessarily meant addressing the need of low- and moderate-income households that came into existence since 1999,
and that still exists today. Here, the Appellate Division as well as the trial court (plus the other trial courts that have
considered the matter) recognized, in their own ways, that there could be no hiatus in the constitutional obligation. The
Court affirms that important aspect of the Appellate Division judgment. (pp. 16-17)

2. What separated the trial court and the Appellate Division panel in this matter is how to account for need arising
during the gap period. The Court summarizes the parties’ arguments on that subject. (pp. 17-19)

3. In Mount Laurel IV, the Court provided a process by which a town might obtain the equivalent of substantive
certification. The Court gave preferred treatment to two categories of towns that voluntarily had put themselves in
the queue before COAH. In return for submission to COAH’s jurisdiction, the towns received the quid pro quo of
protection from exclusionary zoning actions. In establishing an equivalent to substantive certification, the Court
identified some parameters for the trial courts’ actions. Beyond those, the Court did not limit the courts’ work
except to attempt to cabin the time within which progress would be made toward recapturing the lost opportunity.
The Court now offers more specific guidance. (pp. 19-23)

4. The Appellate Division disagreed with the establishment of a free-standing gap-time calculation. According to
the panel, the permissible categories within which to work were: unfulfilled prior cycle obligations, prospective
need, and present need. Only present need was regarded as having the potential to capture pent-up housing need that
arose during the gap period and that continues to be an identifiable category of housing need that experts could flesh
out. The Court agrees with the appellate panel that “prospective need” is a more or less calcified term, having been
used initially by the Court in its Mount Laurel decisions and later codified in the FHA. (pp. 23-25)

5. “Present need” is not defined in the FHA. The concept was identified by the Court and implemented similarly by
COAH in prior adopted regulations. Importantly, it has not been used as an assessment based on household need for
affordable housing; rather, its focus has been on the actual number of deficient housing units occupied by low- and
moderate-income households. As the Appellate Division and the trial court concluded, the need of presently
existing low- and moderate-income households formed during the gap period must be captured and included in
setting affordable housing obligations for towns that seek to be protected from exclusionary zoning actions under the
process the Court has set up while COAH is defunct. The Court agrees with the panel that the category of present
need offers the better approach to capturing the need that must be addressed. The term is malleable and can address
the circumstances presented now in order for the constitutional obligation to be fulfilled, not skirted. (pp. 25-28)

6. In current circumstances, the present-need analysis must be expanded to include, in addition to a calculation of
overcrowded and deficient housing units, an analytic component that addresses the affordable housing need of
presently existing New Jersey low- and moderate-income households, which formed during the gap period and are
entitled to their delayed opportunity to seek affordable housing. The trial courts must take care to ensure that the


                                                           2
present need is not calculated in a way that includes persons who are deceased, who are income-ineligible or
otherwise are no longer eligible for affordable housing, or whose households may be already captured through the
historic practice of surveying for deficient housing units within the municipality. The Court acknowledges the
possibility that the executive branch agency will resurrect and operate constitutionally, and further welcomes
legislative attention to this important social and economic constitutional matter. (pp. 28-32)

        As modified by this opinion, the judgment of the Appellate Division is AFFIRMED.

      JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in
JUSTICE LaVECCHIA’s opinion. CHIEF JUSTICE RABNER did not participate.




                                                        3
                                     SUPREME COURT OF NEW JERSEY
                                        A-1 September Term 2016
                                                077565

IN RE DECLARATORY JUDGMENT
ACTIONS FILED BY VARIOUS
MUNICIPALITIES, COUNTY OF
OCEAN, PURSUANT TO THE
SUPREME COURT'S DECISION IN
In re Adoption of N.J.A.C.
5:96, 221 N.J. 1 (2015).




         Argued November 30, 2016 – Decided January 18, 2017

         On appeal from the Superior Court, Appellate
         Division, whose opinion is reported at 446
         N.J. Super. 259 (App. Div. 2016).

         Kevin D. Walsh argued the cause for
         appellant Fair Share Housing Center (Mr.
         Walsh, attorney; Mr. Walsh, Adam M. Gordon,
         and Joshua D. Bauers, on the briefs).

         Thomas F. Carroll, III, argued the cause for
         respondent New Jersey Builders Association
         (Hill Wallack, attorneys; Mr. Carroll and
         Stephen M. Eisdorfer, on the briefs).

         Jeffrey R. Surenian argued the cause for
         respondent Township of Barnegat (Jeffrey R.
         Surenian and Associates, attorneys; Mr.
         Surenian, Michael A. Jedziniak, Erik C.
         Nolan, and Michael J. Edwards, on the
         briefs).

         Edward J. Buzak argued the cause for
         respondent New Jersey State League of
         Municipalities (The Buzak Law Group,
         attorneys).

         Jonathan E. Drill argued the cause for
         amicus curiae The Municipal Group (Stickel,
         Koenig, Sullivan & Drill, attorneys).

                               1
Richard J. Hoff, Jr., submitted a brief on
behalf of respondent Highview Homes, LLC
(Bisgaier Hoff, attorneys; Mr. Hoff and
Robert A. Kasuba, on the brief).

Edward J. Boccher submitted a letter brief
on behalf of respondent Township of Brick
(DeCotiis, FitzPatrick & Cole, attorneys).

Steven A. Kunzman submitted a letter brief
on behalf of respondent Township of Toms
River (DiFrancesco, Bateman, Kunzman, Davis,
Lehrer & Flaum, attorneys).

Iraisa C. Orihuela-Reilly submitted a letter
brief on behalf of amici curiae Disability
Rights New Jersey, Supportive Housing
Association of New Jersey, Collaborative
Support Programs of New Jersey, Alliance for
the Betterment of Citizens with
Disabilities, New Jersey Association of
Community Providers, The Arc of New Jersey,
New Jersey Association of Mental Health and
Addiction Agencies, Inc., Coalition of
Mental Health Consumer Organizations, System
of Care Association, New Jersey Psychiatric
Rehabilitation Association, Mental Health
Association in New Jersey, Advancing
Opportunities, Inc., Community Access
Unlimited, Community Health Law Project, and
Autism New Jersey.

Catherine Weiss submitted a letter brief on
behalf of amici curiae American Planning
Association-New Jersey Chapter, New Jersey
Future, and The Housing & Community
Development Network of New Jersey
(Lowenstein Sandler, attorneys).

Lawrence S. Lustberg and James D. Pollock
submitted a brief on behalf of amici curiae
New Jersey State Conference of the National
Association for the Advancement of Colored
People and Latino Action Network (Gibbons,
attorneys).


                      2
          Donald J. Sears submitted a brief on behalf
          of amicus curiae Township of South
          Brunswick.

          Ronald L. Israel submitted a brief on behalf
          of amicus curiae Township of Colts Neck
          (Chiesa Shahinian & Giantomasi, attorneys).

          Valentina M. DiPippo and Patrick Jhoo,
          Deputy Attorneys General, submitted a brief
          on behalf of amicus curiae Attorney General
          of New Jersey (Christopher S. Porrino,
          Attorney General of New Jersey, attorney;
          Melissa Dutton Schaffer, Assistant Attorney
          General, of counsel).

          Kira S. Dabby submitted a letter in lieu of
          brief on behalf of amicus curiae Township of
          Middletown (Archer & Greiner, attorneys).

          Michael B. Steib submitted a letter brief on
          behalf of amicus curiae Township of
          Millstone.

     JUSTICE LaVECCHIA delivered the opinion of the Court.

     For the last sixteen years, while the Council on Affordable

Housing (COAH) failed to promulgate viable rules creating a

realistic opportunity for the construction of low- and moderate-

income housing in municipalities, the Mount Laurel

constitutional affordable housing obligation1 did not go away.

Municipal responsibility for a fair share of the affordable

housing need of low- and moderate-income households formed

during that period was not suspended.   We now must address


1  See S. Burlington Cty. NAACP v. Township of Mount Laurel, 92
N.J. 158 (1983); S. Burlington Cty. NAACP v. Township of Mount
Laurel, 67 N.J. 151, appeal dismissed and cert. denied, 423 U.S.
808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975).
                                3
arguments over constitutional compliance, specifically as it

concerns municipal responsibility to address the housing need

that arose during the past sixteen-plus years, to the extent

that it still exists today.

    In this interlocutory appeal, we consider whether the

Appellate Division was correct in determining that the pent-up

need that arose for persons in low- and moderate-income

households formed during the years since expiration of COAH’s

second housing cycle rules (Second Round rules) may be assessed

as part of a municipality’s third cycle housing obligation and

captured under a present-need analysis.   The trial court in this

matter concluded that the pent-up need should be captured using

a new and distinct category of need.   We now hold that a form of

present-need analysis under the Fair Housing Act, N.J.S.A.

52:27D-301 to -329 (FHA) -- redefined to include a component

premised on a calculation of those low- and moderate-income New

Jersey households, newly formed since 1999, that presently exist

and are entitled to their opportunity of access to affordable

housing -- provides the appropriate approach to addressing

statewide and regional need.

    Our modification of the previous definition of a present-

need analysis is essential in order to address the failure of

COAH to perform its required mission, in connection with a

constitutional obligation, for a period of time affecting almost

                                4
a generation of New Jersey citizens.     The prior understanding of

present need was limited.    It was premised exclusively on a

delineated standard for essentially substandard and overcrowded

existing housing units; it did not focus on households eligible

for affordable housing.     That previous definition would fail to

ensure compliance with the Mount Laurel doctrine under the

present circumstances.

    As modified, we affirm the Appellate Division judgment.        We

hold that, under the current circumstances, the present-need

analysis must be expanded to guarantee municipal compliance with

the Mount Laurel doctrine.     We authorize contested matters of

municipal obligation to be resolved using a modified approach to

present need in order to result in a fair judicial allocation of

municipal obligation and assessment of municipal compliance,

which can lead to the grant of immunity from exclusionary zoning

actions under the process established by this Court.     See In re

N.J.A.C. 5:96 & 5:97 (Mount Laurel IV), 221 N.J. 1, 19–20

(2015).

                                 I.

    The history of this matter has been recited recently enough

and need not be extensively repeated.     Through the Mount Laurel

line of cases, this Court recognized that municipalities have a

constitutional obligation to use their zoning power in a manner

that creates a “realistic opportunity for the construction of

                                   5
[their] fair share” of the region’s low- and moderate-income

housing.   Mount Laurel IV, supra, 221 N.J. at 7 (alteration in

original) (quoting S. Burlington Cty. NAACP v. Township of Mount

Laurel (Mount Laurel II), 92 N.J. 158, 205 (1983), and citing S.

Burlington Cty. NAACP v. Township of Mount Laurel (Mount Laurel

I), 67 N.J. 151, 179, appeal dismissed and cert. denied, 423

U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975)).

    In 1985, the Legislature codified that constitutional

obligation, enacting the Fair Housing Act and creating COAH to

facilitate and monitor compliance with the constitutional

mandate.   In COAH, the Legislature vested responsibility for

determining and assigning municipal affordable housing

obligations, which would be accomplished through promulgation of

procedural and substantive rules for successive housing cycles.

N.J.S.A. 52:27D-307, -308.

    COAH adopted rules to govern its first and second housing

cycles, but when the Second Round rules expired in 1999, COAH

had not proposed new regulations for the third housing cycle.

In the sixteen-plus years that followed, COAH failed to adopt a

set of valid regulations to govern the third housing cycle

(Third Round).   Although COAH twice adopted Third Round rules,




                                 6
reviewing courts found several key aspects of the regulations to

be invalid and violative of the Mount Laurel doctrine.2

     In March 2015, this Court responded to years of delay and

uncertainty with Mount Laurel IV, reaffirming the constitutional

obligation to create a realistic opportunity for the provision

of affordable housing.   Mount Laurel IV, supra, 221 N.J. at 3–4.

Because COAH had failed to comply with the Court’s prior Order

directing that the agency take specific administrative steps

culminating in the adoption of Third Round rules, we declared

COAH defunct and eliminated the FHA’s exhaustion-of-

administrative-remedies requirement.    Id. at 5–6, 16–17.

     In its stead, we provided for a judicial forum to

adjudicate affordable housing disputes once more.    Id. at 5–6,

19–20.   In so doing, we “provide[d] a substitute for [COAH’s]

substantive certification process,” creating an avenue for

municipalities to obtain immunity from challenges to their fair

share plans.   Id. at 24.   We held that the municipalities that

had already obtained, or were in the process of obtaining,

substantive certification from COAH could file declaratory




2  See In re Six Month Extension of N.J.A.C. 5:91-1 et seq., 372
N.J. Super. 61 (App. Div. 2004), certif. denied, 182 N.J. 630
(2005); In re Adoption of N.J.A.C. 5:94 & 5:95, 390 N.J. Super.
1 (App. Div.), certif. denied, 192 N.J. 71 (2007); In re
Adoption of N.J.A.C. 5:96 & 5:97, 416 N.J. Super. 462 (App. Div.
2010), aff’d as modified, 215 N.J. 578 (2013).
                                 7
judgment actions to confirm that their plans comported with

their Mount Laurel obligations.       Id. at 24-29.

     To guide the designated judges who would be evaluating

compliance with Mount Laurel obligations, we instructed the

courts to follow certain guidelines “gleaned from the past.”

Id. at 29-30.   Among other points, we directed that judges

ascertain affordable housing need using the methodologies set

forth in COAH’s First and Second Round rules.         Id. at 30.   We

also noted that many aspects of COAH’s Third Round rules had not

been invalidated by the appellate courts, and we authorized

judges to evaluate municipal compliance using discretion similar

to that afforded to COAH in the rulemaking process.        Ibid.   This

Court emphasized that its holding did not eliminate fair share

obligations from the prior rounds and that “prior unfulfilled

housing obligations should be the starting point for a

determination of a municipality’s fair share responsibility.”

Ibid.

     Approximately 300 declaratory judgment actions were

commenced throughout the state.   Pertinent to this appeal,

thirteen Ocean County municipalities filed declaratory judgment

actions to ascertain their fair share obligation for the Third

Round.3   On September 17, 2015, the trial court (the Honorable


3  The municipalities include the townships of Barnegat,
Berkeley, Brick, Jackson, Lacey, Little Egg Harbor, Manchester,
                                  8
Mark A. Troncone, J.S.C., and the Honorable Marlene Lynch Ford,

A.J.S.C., acting in concert -- hereinafter, the trial court)

consolidated the thirteen cases to determine whether the Third

Round housing obligation properly included the need that arose

during the so-called gap period.       As the issue unfolded before

the trial court, that period was described to span the length of

time since expiration of the Second Round rules through 2015

(i.e., 1999-2015).   The trial court used the 2015 date by which

towns had to file declaratory judgment actions to demonstrate

constitutional compliance in order to obtain immunity.       See

Mount Laurel IV, supra, 221 N.J. at 21, 35.

    The municipalities argued that fair share obligations have

only two well-defined components -- “present need” and

“prospective need” -- and that the courts lack “the authority to

create . . . a new component” of need to account for the gap

period.   The New Jersey State League of Municipalities (League)

intervened and joined the opposition to the inclusion of the gap

need in any Third Round calculation.      Fair Share Housing Center

(Fair Share), the New Jersey Builders Association (NJBA), and

private development companies also intervened, arguing that the

gap need must be captured as part of a town’s affordable housing

obligation.



Ocean, Stafford, and Toms River, and the boroughs of Beach
Haven, Pine Beach, and Point Pleasant.
                                   9
    To address the question, the parties submitted to the court

and to the court-appointed Special Master expert reports

analyzing whether the gap need could be a proper component of a

municipality’s Third Round fair share obligation.   The League’s

expert, Econsult Solutions, Inc., found no “legally defined

obligation” to address the gap need in the Third Round period --

a period which Econsult viewed as limited to the years 2015 to

2025.   See N.J.S.A. 52:27D-307(c)(1) (defining housing cycles as

ten-year periods).   Therefore, it provided no estimate for the

gap need.

    In contrast, Art Bernard and Associates, L.L.C., on behalf

of the NJBA, concluded that COAH’s regulations, as well as the

reality of affordable housing need in New Jersey, mandated that

the gap need be included in a prospective-need analysis.   Dr.

David N. Kinsey, on behalf of Fair Share, stated that COAH’s

regulations and applicable case law supported the gap need’s

inclusion, either separately or in the cycle’s prospective-need

component, in the Third Round, which encompassed all years from

1999 to 2025 (inclusive of the ten-year period following 2015).

Dr. Kinsey also advanced, essentially, two proposed formulas for

calculating the gap need.

    Based on those reports, the Special Master recommended to

the trial court that the need arising in the gap period should

be included in the Third Round fair share calculation and would

                                10
be properly calculated if a “separate and discrete” methodology

unique to the gap period were used rather than inserting gap

need into an assessment of prospective need.4

     After reviewing the reports, but prior to any cross-

examination of the experts about their opinions, on February 18,

2016, the trial court issued an opinion.   It held that the

inclusion of the need arising during the gap period in an

assessment of the Third Round fair share obligation was a

constitutional obligation.5   The trial court relied on the




4  During this phase of the litigation, the Special Master issued
three reports to the trial court: (1) an October 30, 2015
report in which he agreed with Econsult that using a 1999-2025
period for the Third Round presents dangers of “overlapping and
over counting” and “diverge[s] from the Prior Rounds,” which
limited prospective need to “future years only”; (2) a December
29, 2015 report that opined on the difficulty of accounting for
the gap need, but concluded that an estimate may be determined;
and (3) a February 17, 2016 report recommending the inclusion of
the gap need in the Third Round as a separate component of fair
share based in part on Dr. Kinsey’s January 2016 formulas for
capturing gap need.

5  As the record of material submitted to this Court reveals, at
approximately the same time that Judge Troncone issued his
opinion, two other designated Mount Laurel judges addressed the
issue of whether the gap need was a proper component of the
Third Round obligation. Both reached the same essential
conclusion as Judge Troncone. In Middlesex County, the
Honorable Douglas Wolfson, J.S.C., found it an “inevitable
conclusion” that the Third Round obligation would include a
means for addressing the gap need because “ignor[ing] th[e]
unmet need would be squarely at odds with the constitution and
the Legislature’s overarching intent to produce affordable
housing.” In Mercer County, the Honorable Mary C. Jacobson,
A.J.S.C., adopted the portion of Judge Troncone’s opinion
“requiring the municipalities to include the ‘gap period’ unmet
                                11
principle, “first enunciated . . . in Mount Laurel II,” that a

“fair share obligation is cumulative” and therefore, the gap

need must be addressed to the extent it could be “reliably

calculated by rational means.”    The court also relied on COAH’s

prior attempts at promulgating valid Third Round rules, noting

that every adopted version explicitly required “the gap need

[to] be incorporated into the towns’ [T]hird [R]ound

obligation[s].”

    Importantly, for present purposes, in holding that

municipalities are constitutionally required to recognize need

that arose during the gap period, the trial court held that such

need was not a part of prospective need, but rather constituted

a “separate and discrete component” of the fair share

obligation.    Without providing an express formula by which the

gap need would be calculated, the trial court reasoned that the

need arising from 1999 to 2015 could be calculated not by using

projections into the future, as is typical of prospective need,

but by relying on the actual growth that accumulated during that

time period.

    Accordingly, the trial court held that the Third Round

obligation consisted of four components:    (1) prior (First and

Second) round unmet obligations; (2) the need arising during the



affordable housing needs when calculating their Third Round
obligations.”
                                 12
gap period; (3) a traditional present-need analysis; and (4)

calculation of prospective need for the 2015-2025 period.   To

ease the burden on municipalities, the court emphasized that,

except for prior unmet obligations, all of the components of

need are subject to the FHA’s 1000-unit cap, see N.J.S.A.

52:27D-307(e), and that the municipalities may elect “to defer

up to 50 percent of [their] ‘gap’ obligation to the [F]ourth

[R]ound.”

     The Township of Barnegat filed a motion for leave to appeal

the trial court’s legal conclusion that there must be a “gap

need” component to the Third Round housing need.   The Appellate

Division granted the motion,6 prompting Fair Share to file an

emergent application for direct certification of the appeal;

this Court denied the application, but expedited the appellate

proceedings.

     On July 11, 2016, the Appellate Division issued its

decision.   In re Declaratory Judgment Actions filed by Various

Muns., Cty. of Ocean, Pursuant to the Supreme Court’s Decision

in In re Adoption of N.J.A.C. 5:96, 221 N.J. 1 (2015), 446 N.J.


6  The Appellate Division also granted amicus status to the
townships of Millstone, Middletown, South Brunswick, and Colts
Neck, as well as The Municipal Group (a consortium of
municipalities interested in fair share methodology issues
ensuing after issuance of Mount Laurel IV), the New Jersey
Chapter of the American Planning Association, New Jersey Future,
Disability Rights New Jersey, and The Housing and Community
Development Network of New Jersey.
                                13
Super. 259 (App. Div. 2016).   The Appellate Division focused on

the trial court’s determination to address gap need as a new,

“separate and discrete” component of the Third Round obligation,

which was derived from principles taken from previous

assessments of prospective-need calculations for households.     In

reversing the trial court’s determination on the issue framed in

that manner, the appellate panel stated that “the FHA does not

require a municipality to retroactively calculate a new

‘separate and discrete’ affordable housing obligation arising

during the gap period.”    Id. at 267.   The panel pointed to

language of the FHA that prevents a retroactive calculation of

“prospective need,” which, the panel explained, is statutorily

defined to be a forward-looking projection of household growth.

Further, the panel rejected the trial court’s creation of a

“separate and discrete” gap need component, which it regarded as

policymaking, in seeming contravention of cautionary language in

Mount Laurel IV.

    In rejecting the trial court’s approach to the

retrospective calculation of gap need, the panel asserted that

its holding did not ignore the affordable housing need that

arose from 1999 to 2015.   The panel observed that, to the extent

that “[low- and moderate-income] households formed during the

gap period” might be living in overcrowded or deficient housing,

the need that arose during the gap would be “partially included”

                                 14
in the calculation of present need -- a term defined not in the

FHA but in case law and in COAH’s implementing regulations.     Id.

at 294 (alteration in original).

    Fair Share filed with the Appellate Division an application

seeking permission to file an emergent motion for a stay, which

the Appellate Division denied on July 18, 2016.    Fair Share then

applied to this Court, and we remanded Fair Share’s stay motion

to the Appellate Division for consideration in accordance with

the Court Rules.   After an appellate panel denied a stay, Fair

Share filed an application for a stay with this Court and sought

leave to appeal.

    On September 8, 2016, we granted leave to appeal and

imposed a stay of the Appellate Division’s judgment, pending

expedited review by this Court.    We also denied a later emergent

application by municipalities for a “temporary stay of all

trials on the fair share issues pending the Court’s rulings” on

this appeal.   We are informed that, in the wake of that action,

twelve of the thirteen declaratory judgment actions have been

settled.   In those cases, the parties have resolved the

municipalities’ fair share obligations for the time period

running from 1999 through 2025.    We are also informed that,

statewide, there have been seventy-one settlements reached as of

the time of argument in this matter.



                                  15
    Barnegat, the only remaining municipality in this appeal,

has settled all issues in this matter except for the obligation

to account for any need arising during the gap period.

Accordingly, the present appeal involves only one contested

municipality, although resolution of the legal issue will impact

other unresolved declaratory judgment actions brought by

municipalities seeking to take advantage of the prospect of

immunity offered by the process created in this Court’s 2015

decision.

                               II.

    At bottom, the parties fundamentally disagree on whether

the gap time period of need must be accounted for.   Secondarily

the arguments have raised the question of:   if so, then how?

    As to the fundamental disagreement -- whether the gap

period must be addressed -- we waste no time in settling that

issue.   There is no fair reading of this Court’s prior decisions

that supports disregarding the constitutional obligation to

address pent-up affordable housing need for low- and moderate-

income households that formed during the years in which COAH was

unable to promulgate valid Third Round rules.   The opportunity

for immunity provided by this Court’s substitute for substantive

certification was premised on the value of the efforts of towns

that received substantive certification from COAH during that

interval or that otherwise could show steps taken to address

                                16
affordable housing needs.     Mount Laurel IV, supra, 221 N.J. at

21, 24–29.    That necessarily meant addressing the need of low-

and moderate-income households that came into existence since

1999, and that still exists today.

    The Appellate Division as well as the trial court (plus the

other trial courts that have considered the matter)

incorporated, in their own ways, the recognition that the need

that arose during the gap period was a responsibility of the

municipalities.     Indeed, both decisions below inherently

recognized that there could be no hiatus in the constitutional

obligation.    We agree and, therefore, affirm that important

aspect to the Appellate Division judgment.

    What separated the trial court and Appellate Division panel

in this matter is how to account for need arising during the gap

period.   On that, we summarize in Section III the respective

positions of the parties and amici, combining arguments that

have commonality.

                                 III.

    While the specifics of the arguments advanced by the

parties and amici have evolved during the filing of successive

briefs at the various stages of this litigation and in

connection with arguments advanced by amici, appellant and

respondents’ chief positions nonetheless remain essentially

unchanged from those advanced before the Appellate Division.

                                  17
    Fair Share, the NJBA, and amici in support of their

position argue that the need that arose during the gap period

must be included in an assessment of the Third Round housing

obligation because it would contravene the Mount Laurel doctrine

to simply ignore for sixteen years a municipality’s

constitutional obligation to provide a fair share of regional

affordable housing need.    For support, they point to, among

other things, the FHA.     Fair Share and its supporters regard the

FHA as containing provisions indicative of a legislative intent

that affordable housing need be calculated cumulatively, without

a break in time that would ignore household needs arising during

the gap period.   Fair Share, the NJBA, and amici assert that the

intricacies of calculating each municipality’s fair share

obligation should be left to the trial courts and their

consideration of expert analyses.      Indeed, the NJBA contends

that whether the need that arose during the gap period should

factor into a municipality’s present-need calculation is

something for trial courts to resolve on a case-by-case basis,

because this Court never restricted “present need” to

“physically substandard housing units occupied by low and

moderate income households.”

    On the other hand, Barnegat, the League, and their

respective amici argue, emphasizing the plain language of the

FHA, that the Third Round obligation is limited to prior unmet

                                  18
obligations, present need, and prospective need; a separate gap

need is not included in the statute.   According to Barnegat, the

League, and their amici supporters, the Third Round obligation

does not include the need that arose during the gap period

because such need no longer exists today.   Finally, Barnegat and

the League contend that the Appellate Division decision cannot

be read to incorporate the gap need into present need because

“present need,” under its current definition, is measured in

housing units and as of “a fixed point in time” and therefore

cannot have a retrospective component.   Amicus, The Municipal

Group, acknowledged during oral argument that the definition of

present need could be expanded to include pent-up, but still-

existing, need that arose during the gap period in a

municipality’s calculation of its constitutional obligations

under Mount Laurel.

                              IV.

                               A.

    In Mount Laurel IV, supra, confronted by COAH’s prolonged

and ultimately unfruitful efforts to promulgate rules for

assessing and identifying municipal compliance with housing

obligations, this Court (1) recognized COAH to be a

nonfunctioning agency; (2) eliminated the FHA’s exhaustion-of-

administrative-remedies requirement and reopened the courts to

Mount Laurel litigants; and (3) provided a process by which a

                               19
town might obtain the equivalent of substantive certification

for its fair share housing plan and avoid exclusionary zoning

actions, after a court assessed the town’s fair share

responsibility.   221 N.J. at 5-6, 19-20.

    Because the Court gave favorable treatment to (1) towns

with plans in progress that received substantive certification

from COAH under earlier iterations of Third Round rules, id. at

24–27, or, to a lesser degree, (2) towns that had signed on as

participants before COAH as the regulatory process was playing

out but whose active compliance was as yet unknown, id. at 27–

29, those towns were expected to meaningfully satisfy their

obligations owed to low- and moderate-income households being

formed during the gap period.   That expectation certainly

animated the Court’s different, and better, treatment of towns

that had already started taking meaningful steps toward

compliance during that period, in some form.   See id. at 26

(mentioning “generous” treatment toward towns that had achieved

substantive certification); id. at 27 (suggesting more favorable

treatment for towns that took action toward implementing housing

plans addressing then-quantified fair share obligations versus

towns that merely filed for participation status but took no

further steps to address need at that time).

    That prospect of preferred treatment for those two

categories of towns came from a background of events that had

                                20
taken place leading up to our 2015 Opinion and Order.      First,

there was COAH’s consistent work toward adopting regulations

that invariably sought to encompass the time period of housing

need since the Second Round rules expired in 1999.   See N.J.A.C.

5:94-1.4 (2004); 36 N.J.R. 3691(a), 3704, 3753 (2004); 40 N.J.R.

2690(a), 2719 (2008).   Second, there was the compelling

inference to be drawn that the towns, which voluntarily put

themselves in the queue before COAH, willingly accepted

responsibility for the need arising while COAH worked to adopt

controlling rules for that very time period and going forward.

See Mount Laurel IV, supra, 221 N.J. at 21–23.   In return for

their submission to COAH’s jurisdiction, the towns received the

quid pro quo of protection from exclusionary zoning actions.

See In re Six Month Extension, supra, 372 N.J. Super. at 78–80.

In setting forth an equivalent to substantive certification, we

aimed to establish a judicial analogue to further that process.

See Mount Laurel IV, supra, 221 N.J. at 29 (describing judicial

remedy provided as “one that seeks to track the processes

provided for in the FHA”).

    Although we gave the trial courts considerable flexibility

in assessing need, allocating it by region and municipality, and

in evaluating municipal plans for compliance, we did identify

some parameters for the courts’ actions.   Id. at 29–33.



                                21
    Growth share analysis for prospective need was precluded on

the ground that it was contrary to the FHA.     Id. at 25 (citing

In re Adoption of N.J.A.C. 5:96 & 5:97, 215 N.J. 578, 605

(2013)); see also id. at 33.    We sought to streamline

proceedings and directed courts to use familiar methodologies

from the past.   Id. at 30.    The prior methodologies that the

Court identified included reference to the First and Second

Round methodologies, ibid., which avoided an assessment of

prospective need based on growth-share.     See In re Adoption of

N.J.A.C. 5:96 & 5:97, supra, 215 N.J. at 600.

    The Court also referenced aspects or portions of the failed

Third Round rules that had not been invalidated by the courts in

prior reviews.   Mount Laurel IV, supra, 221 N.J. at 30–33.

Examples were listed for illumination but without limitation to

the discretion being afforded to the trial courts.

    Beyond that, we did not limit the work of the trial courts

except to attempt to cabin the time within which progress would

be made toward recapturing the lost opportunity to advance

municipal compliance with affordable housing obligations.     Id.

at 33 (granting courts “flexibility in assessing a town’s

compliance” and encouraging courts to “endeavor to secure,

whenever possible, prompt voluntary compliance from

municipalities in view of the lengthy delay in achieving

satisfaction of towns’ Third Round obligations”).     Plainly, we

                                  22
need now to be more specific.    It is two years since our 2015

decision.

                                 B.

       The Appellate Division disagreed with the trial court’s

choice to establish a free-standing gap-time calculation.

According to the Appellate Division, the permissible categories

within which to work, when considering how to accommodate need

arising during the sixteen-plus gap-time years, were:

unfulfilled prior cycle obligations, prospective need, and

present need.   In re Declaratory Judgment Actions Filed by

Various Muns., supra, 446 N.J. Super. at 293.    As the Appellate

Division analysis distilled, the first category -- unfulfilled

prior cycle obligations -- was expressly directed by this Court.

See id. at 267 (citing Mount Laurel IV, supra, 221 N.J. at 30).

It appears that the panel regarded that category as limited

exclusively to previously identified obligations from earlier

cycles, which ended in 1999.    Id. at 278, 280 (relying on trial

court and experts’ treatment of prior round obligations as those

carried over from First and Second Rounds).     Prospective need

was declared an inapt fit for the gap need arising between 1999

and 2015 because the FHA definition rendered the term forward-

looking, and therefore not conducive to a retrospective

calculation of need arising during the gap period.    Id. at 282,

284.    Only present need was regarded as having the potential to

                                 23
capture pent-up housing need that arose during the sixteen-plus

years of the gap period and that continues to be an identifiable

category of housing need that experts could flesh out.       Id. at

294, 295.

    We agree with the Appellate Division that “prospective

need” is a more or less calcified term at this point.       It was a

concept used initially by this Court in its Mount Laurel

decisions.   See Mount Laurel II, supra, 92 N.J. at 256–58

(explaining approaches to calculating prospective need).       The

term was later codified in the FHA.    In setting parameters for

COAH, the FHA defined prospective need as “a projection of

housing needs based on development and growth which is

reasonably likely to occur in a region or a municipality” within

the next housing cycle.   N.J.S.A. 52:27D-304(j).   By that

definition, prospective need is forward looking.    It is

predictive -- a projection of future need.   The statutory

language was not designed to account for past periods of time

when performing a calculation of anticipated housing need for

low- and moderate-income households.    COAH has followed suit in

its rules, implementing the FHA’s codified definition.       See

N.J.A.C. 5:92-1.3 (defining prospective need in First Round

rules as “a projection of low and moderate housing needs based

on development and growth which is reasonably likely to occur in

a region or a municipality”).   Such need would be calculated by

                                24
estimating “the share of future households that are low and

moderate income and as such require affordable housing.”

N.J.A.C. 5:92-5.6.

       “Present need,” on the other hand, is not defined in the

FHA.    The concept was identified initially by this Court, Mount

Laurel II, supra, 92 N.J. at 243, and implemented similarly by

COAH in prior adopted regulations.    Importantly, it has not been

used as an assessment based on household need for affordable

housing.

       COAH’s First Round rules defined “present need” as “the

total number of deficient housing units occupied by low or

moderate income households as of July 1, 1987.”    N.J.A.C. 5:92-

1.3 (emphasis added).    The First Round rules detailed that the

present-need calculation would equate to the sum of a region’s

“indigenous need” (or the “actual or capped deficient housing

occupied by low and moderate income households,” N.J.A.C. 5:92-

5.2) and “reallocated present need” (or “the share of excess

deficient housing which must be distributed to municipalities

designated in whole or in part as growth area,” N.J.A.C. 5:92-

5.4).   N.J.A.C. 5:92-5.5.   The focus of “present need” has been

on “the actual number of deficient housing units occupied by

low- and moderate-income households.”    In re Twp. of Warren, 132

N.J. 1, 14 (1993) (emphasis added).    Estimating existing



                                 25
deficient units is a snapshot of current need within a

municipality.

     The Second Round rules, when adopted in 1994, retained the

First Round’s definitions of present and prospective need,

N.J.A.C. 5:93-1.3; the various adopted Third Round rules

continued to regard their prospective- and present-need

analogues as forward-looking calculations and snapshots of

deficient units within a municipality, respectively, see

N.J.A.C. 5:94-1.4 (2004).   Notably, however, the Second Round

housing obligation calculations were adjusted to incorporate

some retroactivity in analytic application.7   Those actions by

COAH, as separately described in footnote seven, were never

challenged by municipalities at the time, presumably because the

retroactive adjustments worked to the municipalities’ advantage.

However, the validity of those adjustments is not conceded by




7  Rather than incorporating a purely forward-looking approach in
1994 when promulgated, the Second Round rules were adopted to
procedurally govern the six-year period spanning from 1993-1999
(rather than 1994-2000). See N.J.A.C. 5:93-2.7. In so doing,
COAH utilized a continuous calculation of present and
prospective need that included and covered the one-year gap
between the First and Second Round regulations. See 26 N.J.R.
2300(a), 2347 (1994).
     The Second Round Rules also added a new component to a
municipality’s fair share obligation called “prior cycle
prospective need,” N.J.A.C. 5:93-1.3, by which COAH recalculated
the First Round’s prospective need to comport with actual
household growth during the First Round using the 1990 Census
data, resulting in truer and lower assessments of need, N.J.A.C.
5:93-2.8(a).
                                26
the municipalities in this action to be a sound basis for

utilizing a similar retroactivity analysis in respect of the gap

period.   We acknowledge the past practice of COAH as a matter of

historical record.   Further, we acknowledge that the trial court

considered such techniques previously employed by COAH in

fashioning its approach to retroactive capturing of gap period

obligations for low- and moderate-income households.

    None of the expert reports addressing the gap need have, as

yet, been tested through cross-examination, and the unexamined

reports have not yet resulted in any court-ordered assessment of

need at the time this appeal began its ascent through the

appellate process.   It is not for us, as an appellate court, to

reconcile untested expert reports.   That is a job for the trial

courts.   But, we can refine the guidance provided to the courts

in approaching the quantification of municipal fair share

obligations under competing analyses of experts to be subjected

to examination, as necessary.

                                C.

    We conclude, as did the Appellate Division panel and the

trial court, that the need of presently existing low- and

moderate-income households formed during the gap period must be

captured and included in setting affordable housing obligations

for towns that seek to be protected from exclusionary zoning

actions under the process this Court has set up while COAH is

                                27
defunct.   See Mount Laurel IV, supra, 221 N.J. at 24–29.

Attending to that need is part of the shared responsibility of

municipalities.   We hold that towns are constitutionally

obligated to provide a realistic opportunity for their fair

share of affordable housing for low- and moderate-income

households formed during the gap period and presently existing

in New Jersey.

    That said, we agree with the Appellate Division that the

category of present need offers the better approach to capturing

the need that must be addressed.      In re Declaratory Judgment

Actions Filed by Various Muns., supra, 446 N.J. Super. at 295.

We originally defined present need in Mount Laurel II, supra,

based on the circumstances faced at the time.     92 N.J. at 243.

The term is malleable and can address the circumstances

presented now in order for the constitutional obligation to be

fulfilled, not skirted.   Present need does not have to be

limited to a survey approach to housing units.     “Need” for

prospective-need analytical purposes devolves into an assessment

for households meant to be benefitted by the constitutional

obligation.   See N.J.S.A. 52:27D-304(j).    Present need can and

should be similarly applied, when, as here, we must be concerned

about existing households, formed during the gap period, that

need affordable housing today.     A present-need analysis

therefore must be expanded in current circumstances.      It must

                                 28
include, in addition to a calculation of overcrowded and

deficient housing units, an analytic component that addresses

the affordable housing need of low- and moderate-income

households created since 1999, provided that the households

remain income-eligible and situated in New Jersey, and are not

calculated in a way that includes persons now deceased or whose

households may be already captured through the historic practice

of assessing deficient housing units within the municipality.

    The panel emphasized that flexibility in its holding,

similarly suggesting a permissible expansion in the analysis of

identifiable need submitted to a trial court through expert

presentations.   The panel stated that its holding “does not

ignore housing needs that arose in the gap period or a

municipality’s obligation to otherwise satisfy its

constitutional fair share obligations.”   In re Declaratory

Judgment Actions Filed by Various Muns., supra, 446 N.J. Super.

at 293–94.   The panel cited the trial court’s Special Master’s

comments, when reviewing the competing experts’ reports,

acknowledging that “[low- and moderate-income] households formed

during the gap period may no longer represent an affordable

housing need due to a variety of reasons including death,

changes in income, increase or decrease in household size,

retirement and/or relocation outside of New Jersey.”     Id. at 294

(alteration in original).   However, as the panel noted, the

                                29
Special Master observed that gap period housing need would only

be “partially included by those living in over[]crowded or

deficient housing units that are encompassed in the new

calculation of [p]resent [n]eed.”    Ibid. (alterations in

original) (internal quotation marks omitted).   Thus, the panel

intimated that, when reviewing for present need through

examination of expert reports and testimony, the trial court’s

scope might be elastic enough to consider capturing still-

existing “identifiable housing need characteristics.”8    Ibid.

     Although each used different “need” categories, the Special

Master was recommending to the trial court, and the Appellate

Division was embracing, a common intent to capture the

households formed during the gap period and to avoid double-

counting in the process.   There was much commonality to the

bottom line result sought by each, subject of course, to review

of details presented through expert reports and cross-

examination on the opinions rendered.   That detailed review

awaits on remand.




8  In quoting this language from the Appellate Division’s
decision, this Court is not adopting any particular party’s
expert’s opinion on such characteristics, which are a matter of
dispute. Rather, we find the phrase useful only to describe the
practice in which the experts will have to engage to convince
the trial courts as to what characteristics should be included
when providing a fair estimate of the need that arose during the
gap period and remains unmet today.
                                30
    We now modify the Appellate Division judgment to make

express what is necessary in order to properly assess fully the

pent-up affordable housing need of low- and moderate-income New

Jersey households created during the gap period.   We hold that,

in determining municipal fair share obligations for the Third

Round, the trial courts must employ an expanded definition of

present need.   The present-need analysis must include, in

addition to a calculation of overcrowded and deficient housing

units, an analytic component that addresses the affordable

housing need of presently existing New Jersey low- and moderate-

income households, which formed during the gap period and are

entitled to their delayed opportunity to seek affordable

housing.   The trial courts must take care to ensure that the

present need is not calculated in a way that includes persons

who are deceased, who are income-ineligible or otherwise are no

longer eligible for affordable housing, or whose households may

be already captured through the historic practice of surveying

for deficient housing units within the municipality.

    In providing clarification for the trial courts’ handling

of the remaining declaratory judgment actions, we do not

discount the possibility that the executive branch agency will

resurrect and operate constitutionally.   Additionally, we

recognize, as we have before, that the Legislature is not

foreclosed from considering alternative methods for calculating

                                31
and assigning a municipal fair share of affordable housing, and

to that end, we welcome legislative attention to this important

social and economic constitutional matter.   See Mount Laurel IV,

supra, 221 N.J. at 34; In re Adoption of N.J.A.C. 5:96 & 5:97,

supra, 215 N.J. at 620.

                               V.

    As modified by this opinion, the judgment of the Appellate

Division is affirmed.


     JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and
TIMPONE join in JUSTICE LaVECCHIA’s opinion. CHIEF JUSTICE RABNER
did not participate.




                               32
