“A Historically High Level of Compliance:” New Jersey Towns Are Making Progress in Meeting Their Affordable Housing Targets

June 30th, 2025 by Tim Evans

New Jersey’s high housing costs make life difficult for everyone, especially individuals and households at the lower end of the income spectrum. New Jersey’s Mount Laurel doctrine addresses the need for housing for lower-income households. The process by which towns satisfy their affordable housing obligations was recently updated with the passage of new legislation (now colloquially referred to as A4/S50), which established a formal methodology for determining municipal obligations and laid out a timeline of compliance for municipalities to follow.

Panelists in the session “Update on 4th Round Compliance” at the 2025 NJ Planning and Redevelopment Conference, hosted by New Jersey Future and APA New Jersey, provided an update on how that process is going, based on the municipal obligation numbers that were calculated by the Department of Community Affairs (DCA). Panelists included David Kinsey of Kinsey & Hand; Josh Bauers, Director of Exclusionary Zoning Litigation for the Fair Share Housing Center (FSHC); Rick Hoff, Partner at Bisgaier Hoff; and Beth McManus, Partner at Kyle + McManus Associates. Creigh Rahenkamp, Principal of Creigh Rahenkamp & Associates, served as moderator.

Kinsey provided background on the effectiveness of the Mount Laurel process in creating housing options for lower-income households. He noted that about 10% of the 1 million residential certificates of occupancy (COs) issued in New Jersey since 1980 have been for income-restricted units, and about 70% of these (or 70,000 of the 100,000 total) are directly attributable to the Mount Laurel process, with the other 30% happening in “qualified urban aid municipalities”¹ (QUAMs) that are exempt from new-production requirements due to lower-income housing already being disproportionately concentrated there. Because many municipalities choose to satisfy their affordable housing obligations through multi-family projects, Kinsey said, “multi-family housing has become the norm.” Indeed, since 2017, multi-family units have accounted for the majority of housing production overall, much of which is attributable to zoning changes and to the resulting increased production of market-rate multi-family housing as part of inclusionary developments prompted by Mount Laurel compliance, as noted in Fair Share Housing Center’s 2023 report, Dismantling Exclusionary Zoning: New Jersey’s Blueprint for Overcoming Segregation.

Bauers and Hoff provided an overview of how many municipalities are meeting the deadlines laid out in the law and where adjustments have been made to their obligation numbers. A4/S50 established the statewide need for lower-income housing at 84,000 units, which the DCA formula apportioned among the non-QUAM municipalities. Most (448) of these municipalities complied with the requirement to file their calculations of fair share obligations by January 31, 2025. Hoff described this as “a historically high level of compliance” compared to earlier rounds of Mount Laurel oversight.

Among the 448 responding municipalities, 283 accepted the calculation prepared by DCA; their numbers were set by default on February 1, 2025. Among the remaining 165 that did not accept their initial DCA numbers, 159 mediations were completed within 30 days, prompting Hoff to remark that “The adage that ‘deadlines spur action’ proved accurate here” —most municipalities got the job done. The other six are still appealing. Almost all mediations have ended in settlements, some of which involved FSHC accepting the lower numbers suggested by the municipality. (The New Jersey Builders Association (NJBA) decided not to object to any municipalities that settled with FSHC, even where FSHC and NJBA initially disagreed on what the target number should be.)

Hoff and Bauers both noted that any negotiated reductions in individual municipalities’ obligations were not reallocated to other municipalities and were essentially “lost units,” resulting in a net decrease in the original statewide need calculation of 84,000. Future rounds of compliance will need to address this gap in the process.

Only a handful of municipalities have not reached a settlement and do not have final numbers. Bauers noted that all of the 29 towns that are challenging A4/S50 in the “Montvale” lawsuit are still participating in the Affordable Housing Dispute Resolution Program and have had conditional numbers either established by default or by the Program. The chart below summarizes how many municipalities are how far along in the process.²

The next step in the process is for municipalities to prepare and file “fair share” plans for the numbers established for them, indicating where and how they plan to allow for the creation of the required income-restricted units. This process is nearing its deadline of June 30, with more than 100 municipalities having filed as of the 19th; Bauers says he ultimately expects that most of the 448 towns that responded to their initial numbers will also file their plans by the deadline, with a small handful of towns granted extensions.

The next milestone is August 31, the deadline for interested parties to challenge municipalities’ submitted plans. In July and August, potential challengers like FSHC and NJBA will evaluate individual plans and look for shortcomings. From September through the end of the year, the program will reactivate its mediation function to resolve these challenges. Bauers indicated that FSHC’s priorities, in terms of things it will be looking for in municipalities’ plans, include more family units (units with multiple bedrooms) and more projects slated to occur in redevelopment areas. FSHC will also ensure that towns are doing their required assessments of any unfulfilled 3rd-Round obligations, especially those that asked for vacant land adjustments.

Redevelopment is the new Normal

Looking ahead in the process, what should municipalities be mindful of? All the panelists touched on one aspect of the new law: its focus on redevelopment. Redevelopment has become the dominant mode of growth in New Jersey over the last decade and a half, to the degree that two-thirds of all residential COs issued since 2015 have been issued in municipalities that were at least 90% “built-out,” meaning that at least 90% of all developable land (land not either permanently preserved or undevelopable due to environmental regulations) has already been developed.

In light of this trend, some earlier drafts of the bill had dispensed entirely with vacant land as one of the components in determining municipal obligations, relying on the assumption that residential development would happen via redevelopment in towns with little to no vacant land remaining. The legislature ultimately decided to retain vacant land in the calculation, since it was part of a formula that emerged from litigation during the 3rd Round and was incorporated into the new bill. Still, the law nonetheless includes specific language about redevelopment:

“Any municipality that receives an adjustment of its prospective need obligations for the fourth round or subsequent rounds based on a lack of vacant land shall as part of the process of adopting and implementing its housing element and fair share plan identify sufficient parcels likely to redevelop during the current round of obligations to address at least 25 percent of the prospective need obligation that has been adjusted, and adopt realistic zoning that allows for such adjusted obligation, or demonstrate why the municipality is unable to do so.”

McManus said she has been urging her client municipalities to take this directive seriously. She expects Fair Share Housing Center, the NJ Builders Association, and other interested parties to challenge “fair share” plans that do not adequately demonstrate that redevelopment opportunities are being considered.

She has also been advising municipalities to take advantage of whichever of the law’s bonus credits apply to them. The credit for rental units from earlier rounds has gone away, but there are several new ones – see the “Bonus Credit Incentives and Limitations” section of the guide Developing Effective Housing Plans In The Fourth Round, prepared jointly by FSHC and the Housing and Community Development Network of NJ (HCDNNJ).

¹ There are 62 “qualified urban aid municipalities” that are not assigned a “Prospective Need” (new construction) number. Their involvement in the affordable housing process is only through rehabilitation of existing units.

² These numbers represent a rough tally of the status of compliance as of the day of the conference but may have changed slightly as the process progresses.