Re: In the Matter of Fair Share Housing Center, Inc. et al. v. Cherry Hill Township, et al. Docket No. CAM-L

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1 Clarke Caton Hintz Architecture Planning Landscape Architecture Hon. Nan S. Famular, P.J.Ch. Superior Court of NJ Camden County 101 South 5th St. 6th Fl., Chambers 340 Camden, NJ June 5, Barrack Street Trenton NJ clarkecatonhintz.com Tel: Fax: Re: In the Matter of Fair Share Housing Center, Inc. et al. v. Cherry Hill Township, et al. Docket No. CAM-L Dear Judge Famular, Enclosed please find my Final Master s Report on the Fair Share Plan of the Township of Cherry Hill. This report is being submitted pursuant to Your Honor s Case Management Order of February 9, In the Final Report I have identified various issues which I believe warrant discussion at the Case Management Conference on Tuesday, June 9, 2015 at 3:00 pm. If counsel have additional items to suggest for the agenda I would appreciate those being circulated to all parties in advance. As always, I would be pleased to respond to any questions on my report from Your Honor or counsel prior to the upcoming conference. John Clarke, FAIA Philip Caton, FAICP Carl Hintz, AICP, ASLA John Hatch, FAIA George Hibbs, AIA Brian Slaugh, AICP Michael Sullivan, AICP Sincerely, Philip B. Caton, PP, FAICP c. Carl Bisgaier, Esq. Kevin Walsh, Esq. Richard J. Hoff, Jr. Esq. Robert Wright, Esq. Ronald Morgan, Esq. Allen S. Zeller, Esq. Peter O Connor, Esq. Tracy A. Siebold, Esq. Jeffrey R. Surenian, Esq. Andrew Ullrich, Esq. Art Bernard, PP David N. Kinsey, FAICP, PP Creigh Rahenkamp, PP, AICP Paul Stridick, AIA Page 1 of 1

2 MASTER S FINAL REPORT ON THE FAIR SHARE PLAN OF THE TOWNSHIP OF CHERRY HILL CAMDEN COUNTY, N EW JERSEY In the Matter of Fair Share Housing Center, Inc. et al. v. Cherry Hill Township, et al. Docket No. CAM-L June 5, 2015 Prepared For: Honorable Nan S. Famular, P.J. Ch. Superior Court of New Jersey Camden County Hall of Justice 101 South Fifth Street Camden, NJ Prepared By: Philip B. Caton, PP, FAICP New Jersey Professional Planning License No CLARKE CATON HINTZ A Professional Corporation 100 Barrack Street Trenton, N ew Jersey 08608

3 TABLE OF CONTENTS PAGE INTRODUCTION 1 OVERVIEW OF CHERRY HILL TOWNSHIP S HOUSING ELEMENT AND FAIR SHARE PLAN The Rehabilitation Share 9 The Prior Round Obligation 12 OBJECTIONS TO CHERRY HILL TOWNSHIP S COMPLIANCE PLAN Objections Concerning the Township s Fair Share Obligation 17 Objections Concerning the Township s Compliance Plan 49 GENERAL COMPLIANCE PLAN COMMENTS 69 CONCLUSION 74

4 List of Exhibits Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Letter of December 13, 1999 from Shirley M. Bishop, P.P. to Mayor Susan Bass Levin Letter of October 30, 2008 from Lucy Vandenberg to all New Jersey Mayors Aerial Map of the Woodcrest Country Club site prepared By Clarke Caton Hintz, dated April 24, 2014 Memorandum of April 21, 2014 from Lorissa Luciani, PP, AICP to Allen Zeller, Esq. and Philip Caton, FAICP Resolution of the Cherry Hill Township Council of Intent to Commit for Expenditure Affordable Housing Trust Funds and to Bond in the Event of a Shortfall, dated July 9, 2012 Letter of February 25, 2014 from Leonard J. Wood, Esq. to Robert Wright, Esq. Letter of April 8, 2014 from John R. Brown, Esq. to Allen S. Zeller Esq. Letter of February 10, 2014 from Addison G. Bradley, MPA, ASLA to Robert Wright, Esq. Exhibit G Municipal Low & Moderate Income Housing Need, October 11, 1993, N.J.A.C. 5:93 Exhibit H Exhibit I Exhibit J Exhibit K Letter of June 4, 2014 from Richard Hoff, Esq. to Philip Caton, PP, FAICP Stipulation of Partial Settlement, Docket No. L PW, January 11, 2002 Article X: Affordable Housing Procedural & Eligibility Requirements of Cherry Hill Zoning Ordinance, p X-1 through 3 Letter of June 9, 2014 from Kevin Walsh, Esq. to Philip Caton, PP, FAICP

5 List of Exhibits Exhibit L Exhibit M Exhibit N Exhibit O Exhibit P Exhibit Q Exhibit R Exhibit S Letter of April 25, 2014 from Richard Hoff, Esq. to Erin Gill, Esq. Letter of October 17, 2013 from Erin Gill, Esq. to Richard Hoff, Esq. Judge Gibson s December 5, 1988 Order Public Notice of Compliance Hearing Judge Famular s May 8, 2015 Order Table: Cherry Hill Township Affordable Housing Calculations Letter of April 9, 2015 from John Verlaque, Esq. to Philip Caton, PP, FAICP Letter of May 15, 2015 from Philip Caton, PP, FAICP to John Verlaque, Esq.

6 INTRODUCTION This Final Master s Report on the Fair Share Plan of Cherry Hill Township is submitted pursuant to the February 9, 2015 Case Management Order of the Hon. Nan S. Famular, P.J. Ch. That Order directed me to submit a Preliminary Report, which I did on April 15, 2015 and provided the parties the opportunity to submit responses/comments on it by May 15, 2015 (I extended that deadline to May 18, 2015 upon request by a party). I received the following responses to my 2015 Preliminary Report: Letter to me from Jeffrey Surenian and Michael Jedziniak dated May 18, 2015 on behalf of Cherry Hill Township and Planning Board (collectively the Township ), accompanied by a planner s report by Art Bernard via letter to me dated May 14, 2015; Letter to Your Honor from Kevin Walsh dated May 18, 2015 on behalf of Fair Share Housing Center ( FSHC ) accompanied by a planner s report by David Kinsey via letter to Mr. Walsh dated May 18, 2015 (this planner s report has been superseded by a May 27, 2015 version which corrected a numerical typo); Supplemental letter to me from Mr. Walsh dated May 29, 2015; and Letter to me from Richard Hoff dated May 15, 2015 on behalf of Cherry Hill Land Associates, LLC ( CHLA ). In view of the ongoing settlement discussions between the Township and CHLA Mr. Hoff does not comment on my Preliminary Report. He does, however, reserve the right to do so in the event the settlement agreement is not consummated in advance of the Compliance Hearing scheduled to commence on June 24, This Final Report builds upon three prior Master s reports on Cherry Hill Township s Fair Share Plan. Two of these preceding reports were prepared in 2014 for the Hon. Lee A. Solomon, A.J.S.C. (prior to Justice Solomon s appointment to the N.J. Supreme Court). The first report, dated April 25, 2014, was preliminary in nature and subject to comment by the parties. The second report, termed Master s Final Report, was dated June 12, 2014 (hereinafter the 2014 Master s Report ) and incorporated my consideration of the comments by the parties. The third report was the 2015 Preliminary Master s Report prepared last April for Your Honor. Since each of this series of reports builds upon the preceding iterations I have continued in this document the pattern of inserting updates into the 2015 Preliminary Master s Report so the changes can be tracked and for ease of reference. The most recent comments will be in green type and, except for this Introductory Statement will typically follow the section of the 2015 Preliminary Master s Page 1 of 74

7 Report to which they pertain. The commentary in red typeface represents my 2015 Preliminary Report; the bold black italics represents the changes I made to the 2014 Preliminary Master s Report, which appears in a conventional black typeface. To summarize, the comments in green typeface supersede those in red, which supersede the italicized bold black typeface, which supersede those in the conventional black typeface. By virtue of Judge Solomon s Order of May 27, 2014 the schedule referenced below has been further revised to the effect that my Final Report (this document) is due on June 13, In order to maintain the body of the Preliminary Report and for ease of reference, rather than preparing a separate document I am inserting in italics throughout the Preliminary Report the revisions which constitute the Final Report. Except for this introductory statement the italicized comments will typically follow the section of the Preliminary Report to which they pertain. This Preliminary Report on the Housing Element and Fair Share Plan of Cherry Hill Township (hereinafter the Township ) has been prepared pursuant to the February 26, 2014 Order of the Hon. Lee A. Solomon, A.J.S.C. The Township s approach to meeting its affordable housing obligations is expressed through the 2011 Housing Element and Fair Share Plan (hereinafter the 2011 Housing Plan ) and the 2014 Amendment to the 2011 Housing Element and Fair Share Plan (hereinafter the 2014 Amendment ). The 2011 Plan and the 2014 Amendment may also be referred to collectively as the Compliance Plan in this report. The February 26, 2014 Order establishes a framework for the Planning Board and Township Council to adopt and endorse the Compliance Plan and for the parties to comment on these documents. Pursuant to the Order, the Township has supplied the Court and the parties with copies of a Resolution of the Planning Board, dated February 18, 2014 which adopts the 2014 Amendment and Resolution of the Township Council, dated February 24, 2014, which endorses the 2014 Amendment. The Order also requires the Township to provide all of the documents upon which it relied in assessing the Realistic Development Potential (hereinafter RDP ) of the Woodcrest Country Club property. Both the Fair Share Housing Center, Inc. (hereinafter FSHC ) and Cherry Hill Land Associates, LLC (hereinafter CHLA ) which owns the Woodcrest Country Club, have commented on and filed expert reports concerning the Township s Compliance Plan. Pursuant to its April 4, 2014 Amended Order the Court adjusted the schedule set forth in its February 26, 2014 Order at my Page 2 of 74

8 request to set the deadline for this report on April 25, Thereafter the parties will have the opportunity to comment on this preliminary report until May 13, 2014 and I will submit a Final Report to the Court and the parties on May 27, The Court will conduct a scheduling conference on May 30, 2014 to schedule a compliance hearing. Pursuant to the Order, the purpose of the compliance hearing is to determine: whether the Township s 2011 HEFSP, as amended by the 2014 Amendment referred to above, satisfies the rehabilitation and prior cycle components of its fair share housing obligations, as well as any third round obligation and the Township s right to prepare a plan amendment to meet the third round obligation, if any, and Plaintiff s request that the trial court remove control over the Township s 2011 HEFSP, as amended by the 2014 Amendment, from the Township (April 4, 2014 Order, p.2) It should be noted that my commentary in this Preliminary Report regarding the Township s third round obligation will, in all likelihood, be impacted by the release on or before May 1, 2014 of proposed third round rules by the NJ Council on Affordable Housing (hereinafter COAH ). These proposed rules will presumably include an allocation of municipal fair share obligations for the third round or a methodology for calculating third round allocations. This proposed rule-making was ordered by the New Jersey Supreme Court on March 14, 2014, which Order extended COAH s deadline for proposing third round rules from February 26, 2014 to May 1, 2014 based upon a request from COAH supported by a certification from COAH s chairperson that the Council would be able to complete its rule proposal by that date. In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, 215 N.J. 578 (2013). The Order sets forth a schedule for public comment and COAH adoption of third round rules by November 17, COAH did, in fact, meet on April 30, 2014 and voted to release new drafts of both the Procedural Rules N.J.A.C. 5:98 and Substantive Rules N.J.A.C. 5:99. In accordance with the schedule set by the NJ Supreme Court, COAH formally proposed both subchapters by publication in the June 2, 2014 NJ Register. The proposed rules are slightly different than the drafts released in April; however, the differences are not significant for the purposes of this report on Cherry Hill Township s compliance. The proposed rules will be the subject of a public hearing on July 2, 2014 and a 60 day public comment period which ends on August 1, COAH s intention is to adopt rules in October in time to publish them Page 3 of 74

9 in the November 17, 2014 NJ Register. The proposed rules require municipalities to prepare and adopt new Housing Elements and Fair Share Plans within 6 months, or by May 15, Since the proposed rules have neither been adopted nor successfully defended in litigation (which appears inevitable) they have no official status in the Cherry Hill proceedings. However, just as the fair share numbers generated by COAH s 2004 and 2008 growth share methodologies became a benchmark for municipalities even after they were invalidated by the Court, COAH s proposed numbers have captured lots of attention despite their unofficial status. Accordingly, I will give a brief overview of the proposed rules- first, from the statewide perspective then from Cherry Hill Township s perspective so that the comments from the parties which are reflective of the proposed rules may be understood in context. COAH presents statewide need in three categories. First, Present Need (Rehabilitation Share) is calculated at 62,859 units based on the 2010 census brought forward to July 1, Present Need had been 51,891 units in the 2008 COAH regulations based on the 2000 census. Second is a calculation of Prior Obligation which now encompasses need from 1987 to Two figures comprise Prior Obligation: need from 1987 to 1999 which is 77,500 units (this component had been 85,964 units in the 2008 regulations) and need from 1999 to 2014 which is 41,280 units (this component had been 103,908 units for almost the same time period of 1999 to 2018). This total Prior Obligation of 118,780 units for 1987 to 2014 was then reduced by 63,907 units for completed affordable housing units, by 27,744 units for other publicly-subsidized affordable units and finally by 4,958 units for lost units from towns with a vacant land adjustment. After subtracting these sources of 'supply', the 22,171 unit balance is called the Unanswered Prior Obligation. Only half of this component of need or 11,086 units must be addressed in the period of 2014 to The remaining half does not have to be addressed until 2024 to The third component of need was calculated to be 30,788 units and is the new fair share obligation called Prospective Need for the period 2014 to COAH's proposed rules substantially reduce statewide new construction affordable housing need from prior estimates even with the extension of the third round beyond 2018, now out to To address these new fair share obligations, COAH will require towns to adhere to its second round rules at N.J.A.C. 5:93 to satisfy any Unanswered Prior Obligation and will require the new rules at N.J.A.C. 5:99 to be used to address Prospective Need (2014 to 2024). Inclusionary zoning has a reduced presumptive affordable housing setaside standard of 10% (as opposed to the historical setaside standard of 20%) and a Page 4 of 74

10 requirement that an Economic Feasibility Study be submitted by the municipality to defend the assigned density and setaside for each site as being realistic. Other key points in the proposed rules include: - Vacant Land Adjustments are still permitted. - No future rental bonuses. Also, it s not clear whether COAH will honor previously granted prior round rental bonuses or will permit new prior round rental bonuses. - The senior cap of 25% can be exceeded if the municipality demonstrates a higher regional need for affordable senior housing. - No minimum family housing requirement. - No minimum rental requirement. - Sewer/water service must be imminently available for inclusionary development sites to be realistic. - Extensions of controls has been eliminated as an eligible compliance mechanism. - No minimum density standards for inclusionary development. - Substantial compliance bonuses are available to municipalities who have completed most of the units in their plans. Specific to Cherry Hill, COAH calculated the Township's Rehabilitation Share at 372 units, more than double the 2008 figure COAH had assigned of 145 units. However, COAH dramatically reduced the Township's Prior Obligation for the period 1987 to 1999 from 1,829 in the 2008 regulations to 940 in the proposed regulations and also reduced the 1999 to 2014 portion of the Prior Obligation from 676 in the 2008 regulations (1999 to 2018) to 101 in the proposed regulations. After COAH subtracted 452 credits for completed affordable units and subsidized units, the Township's remaining Unanswered Prior Obligation is 589 units of which half or 295 units must be addressed in the 2014 to 2024 period. Finally, COAH assigned the Township a Prospective Need (2014 to 2024) of 78 units. Thus, instead of an RDP (new construction component) of 1,647, Cherry Hill's fair share obligation could be reduced to 373 total units from 1987 to Interestingly, although the proposed rules at N.J.A.C. 5:99 also institute a new concept called 'buildable limit', based on Rutgers' analysis of vacant, developable land COAH calculated Cherry Hill's buildable limit at 1,705 total residential units. Notably, the February 26, 2014 deadline was initially established by a September 26, 2013 decision of the N.J. Supreme Court which invalidated COAH s third round rules in their entirety. This decision stands until COAH adopts third round rules which pass constitutional muster. Consequently, in this report I rely on COAH s second round substantive rules (N.J.A.C. 5:93), which have been readopted Page 5 of 74

11 by COAH and remain in effect. Although we may be on the threshold of having rules to guide municipal compliance in the third round, as of this writing COAH s second round rules are the appropriate basis for assessing the Township s prior round ( ) compliance. However, as will be discussed below, given the length of time which has transpired since the end of the second round, even in the absence of a specific fair share allocation the Township should not be relieved from planning for its ongoing affordable housing obligations. The next section of this report presents an overview of the Township s Compliance Plan, followed by a discussion of each of the objections/comments on the Plan by FSHC and CHLA and then final comments on various aspects of the Plan. As is well known to the Court and the parties in this matter, COAH met on October 20, 2014 but was unable to muster a majority to adopt the proposed rules which are summarized above. FSHC filed a Motion in Aid of Litigant s Rights on October 31, The NJ Supreme Court heard oral argument on January 6, 2015 and issued a unanimous ruling on March 10, In re Adoption of N.J.A.C. 5:96 and 5:97, N.J. (2015). I will not attempt in this report to summarize the entirety of the Supreme Court s decision. However, there are certain aspects of the decision which bear on the comments submitted by Cherry Hill Township via letter to me of March 30, 2015 from Jeffrey Surenian which warrant repeating. Faced with a State agency which is unable or unwilling to adopt regulations to continue to implement the NJ Fair Housing Act N.J.S.A. 52:27D 301 et seq., the Supreme Court essentially directed the Trial Courts to fill the void created by COAH. Starting June 8, 2015 municipalities which had been under COAH s jurisdiction may file Declaratory Judgment ( DJ ) actions in the Law Division requesting that the Trial Court establish the municipal fair share obligation for the third round of compliance and determine whether the municipality s Fair Share Plan is approvable. Although not explicitly addressed in the decision, it seems only reasonable that municipalities whose Fair Share Plans are already before the Court (as opposed to COAH) would be entitled to follow the same or a similar process as the municipalities which had been participating in COAH s administrative process. If a Fair Share Plan does not satisfy the fair share allocation which the Court determines should apply through the third round it appears that municipalities will typically be given 5 months to supplement their Fair Share Plans to bring them into compliance. Page 6 of 74

12 The Trial Courts will have broad discretion to convey immunity from builder remedy lawsuits to municipalities while they are supplementing their Fair Share Plans; however, the Supreme Court directed Trial Courts to monitor municipal progress carefully so as to ascertain that the municipality s compliance efforts continue to warrant immunity. In order to provide for an orderly transition the Supreme Court stayed the implementation of the system outlined above for 90 days, or until June 8, Thereafter municipalities will have 30 days, or until July 8, 2015 within which to file their DJ actions before being exposed to lawsuits. While I believe the aspects of the Supreme Court decision which are summarized above are commonly held amongst the attorneys and planners who specialize in Mount Laurel practice, there are many procedural and substantive issues which are not clearly described in the decision and will only begin to take shape after the Trial Courts have begun to actively manage these cases. The Compliance Hearing, which is scheduled for June 24 and 25 and July 1, 2015 occurs within the 30 day window (June 8 to July 8, 2015) created by the Supreme Court for municipalities to file DJ actions. One of the initial issues the Trial Courts will address will be determining the methodology for the computation of the regional housing need and its allocation to the constituent municipalities in each region. So as not to run at cross purposes with the anticipated surge of applications from municipalities seeking third round compliance plan approval, the scope of the hearing in this matter has been limited to the issue of whether the Township of Cherry Hill has satisfied its Rehabilitation and Prior Round affordable housing obligations as previously defined by COAH. Public Notice of Compliance, p. 1 (see Exhibit O). That said, Mr. Walsh has indicated there may be Third Round implications to components of the Township s Prior Round Plan which the Court needs to consider in the course of the hearing. This should be discussed at the June 9, 2015 case management conference so counsel can approach the Compliance Hearing with a common understanding of the latitude the Court will permit to entertain Third Round issues. Page 7 of 74

13 OVERVIEW OF CHERRY HILL TOWNSHIP S HOUSING ELEMENT AND FAIR SHARE PLAN Under the Municipal Land Use Law (N.J.S.A. 40:55D 62.a.) the Housing Element of the Master Plan along with the Goals and Objectives and the Land Use Element provide the foundation for municipal zoning. The NJ Fair Housing Act (N.J.S.A. 52:27D-310) requires that the Housing Element be designed to provide access to affordable housing, particularly for households of low and moderate income. The Fair Housing Act spells out the standards which Housing Elements must meet, including an analysis of the demographics of the municipal populace, an analysis of existing and probable future employment characteristics and an inventory of the municipal housing stock. The Cherry Hill 2011 Plan provides an adequate description of the background criteria required by the statute. The Fair Housing Act also requires that the Housing Element set forth the municipality s fair share obligation, which is comprised of the rehabilitation share, the prior round obligation and the as-yet unspecified third round obligation. The Appendices to COAH s substantive rules, N.J.A.C. 5:97 et seq. provide each municipality s affordable housing obligation. As described above, COAH s proposed Substantive rules set forth fair share obligations comprised of Present Need (Rehabilitation Share), the Unanswered Prior Round obligation and the Prospective Need. Each municipality s obligation for each of these fair share components is provided in the appendices to COAH s proposed rules, as follows: Appendix B Rehabilitation Share Methodology, Appendix C Fair Share [of the Prospective Need] Methodology and Appendix D Unanswered Prior Obligation. Since COAH failed to adopt the proposed rules which were described in my 2014 Master s Report, the fair share components set forth in its third round rules (the Rehabilitation Share, the Unanswered Prior Round obligation and the Prospective Need) are not in effect. FSHC submitted alternative calculations of third round municipal obligations with its Motion in Aid of Litigant s Rights. These calculations, which were principally prepared by Dr. David Kinsey, PP, AICP resulted in a 1,524 unit fair share allocation for Cherry Hill Township for The NJ Supreme Court, in its March 10, 2015 decision reiterated its prior instructions that previous methodologies employed in the First and Second Round Rules should be used to establish present and prospective statewide and regional affordable housing need. In re Adoption of N.J.A.C. 5:96 and 5:97, N.J. (2015). It will be the Trial Courts responsibility to determine whether the Page 8 of 74

14 methodology in COAH s proposed rules or that advanced by FSHC or another alternative entirely will prevail. However, based on Cherry Hill Township s example (179 units per COAH vs. 1,524 units per FSHC for the period 1999 to 2024) the new construction allocations can differ substantially. However, as indicated above, the upcoming Compliance Hearing in this matter will not include the determination of Cherry Hill Township s Third Round fair share obligation. Rather, the hearing will be limited to assessing whether the Township has satisfied its Rehabilitation and Prior Round affordable housing obligations. The Rehabilitation Share Cherry Hill Township s rehabilitation share is listed as 145 units. The rehabilitation share is COAH s estimate, based on surrogate data from the 2000 Census, of the number of physically substandard housing units occupied by low or moderate income households. The municipal Rehabilitation Share in COAH s proposed substantive rules is based on surrogate data from the 2010 U.S. Census brought forward to July 1, 2014 using the annual American Community Surveys. Cherry Hill Township s Rehabilitation Share under the proposed rules is 372 units, clearly a significant increase over the prior Rehabilitation Share of 145 units. Only rehabilitation projects completed after July 1, 2014 will be eligible for credit against the new Rehabilitation Share. As is the case with the vast majority of certified municipalities, Cherry Hill is addressing its rehabilitation share through a home improvement program targeted to low and moderate income households. The Township Department of Community Development has administered a housing rehabilitation program since Based upon a review by my office, the program design, including the program manual is consistent with applicable COAH rules and Uniform Housing Affordability Controls (hereinafter UHAC ). The 2011 Housing Plan indicates that 38 housing units have been rehabilitated through the Township program since My office has reviewed the Township s monitoring data and can only verify 37 qualified rehabilitated housing units. Also, the Township must supply final inspection dates for 6 of the units. On July 2, 2012 the Township entered into a Shared Services Agreement with Camden County which transferred the administration of the housing rehabilitation program in Cherry Hill to the County s Page 9 of 74

15 Home Improvement Program. The County s program also conforms to COAH s rules and UHAC. This Shared Services Agreement was executed shortly after the Hon. Robert G. Millenky, P.J.Cv. entered a Consent Order on June 14, 2012 approving the allocation of $3,425,000 of the Township s Affordable Housing Trust Fund revenues to the rehabilitation program. At a program maximum of $25,000 per housing unit the Trust Fund allocation is more than sufficient to cover the Township s outstanding rehabilitation share. The 2014 Amendment indicates that 5 housing units have undergone qualified rehabilitation since the County assumed responsibility. We understand from the Township staff that the County project number has since increased to 7 units. If that is the case, 101 units ( = 101) remain to be addressed of the Township s rehabilitation share. I have not yet seen the monitoring forms for these 7 units and have asked that the Township forward them to me for review. I hope to be able to finalize these rehabilitation numbers in my Final Report. Finally, COAH s rules require that municipalities which elect to address their rehabilitation share through a rehabilitation program offer assistance to both for sale and rental units. While the County s Home Improvement Program does not currently include rental properties, the Shared Services Agreement with Cherry Hill contemplates such a program expansion. In anticipation of this change, the Township has provided a draft Rehab Operating Manual which has been revised to include not only for-sale but also rental units. We have reviewed the draft manual and have only minor details to clarify with Township staff. We have confirmed with the director of the County Home Improvement Program his interest in expanding it to serve rental units. I recommend that the implementation of the rental component of the County rehabilitation program be a condition of any Order of Compliance and Repose which the Court might consider. The Township documents provided additional and updated information on its and Camden County s rehabilitation programs via the Certification by Lorissa Luciani, PP, AICP, dated May 19, 2014 and the related Exhibits. This revised information documents that since April 2, 2000, 45 units have been rehabilitated through the Township program and an additional six (6) units have been rehabilitated through the County program(an increase from 38 and 5, respectively, in my Preliminary Report). The Township has supplied the final inspection dates of all rehabilitated units. Of the 45 Township-completed units, the affordability controls on 10 units expired prior to 10 years of affordability controls. As such, the Township is eligible for 35 rehabilitation credits from the Township program and six (6) rehabilitation credits from the County s program. Page 10 of 74

16 My Preliminary Report recommended that implementation of a rental component in the County s rehabilitation program to be a condition of any Order of Compliance and Repose. In response to this recommendation, the Township obtained a letter from the Camden County Improvement Authority stating it is willing to accept applications for rental units and that rehabilitation of those units would comply with the applicable COAH and UHAC rules. Inclusion of the rental program will require an amendment to the Township-County Shared Services Agreement. As noted above, COAH s proposed Substantive rules revise the approach to rehabilitation by eliminating the requirement that rehabilitation assistance programs be offered to landlords of rental properties. Nonetheless, I recommend that the Township and County follow through with their plan for rental housing assistance since it is required under current rules. While the number of units which constitutes the Township s current Rehabilitation Component is still unresolved, the programmatic approach which it is taking to address the target housing stock is satisfactory. As described above, the Township has contracted with the Camden County Improvement Authority to administer a housing rehabilitation program within Cherry Hill. An executed Subrecipient Agreement between the Authority and the Township for these services has been provided as Exhibit B to Michael Jedziniak s Certification of March 30, The Authority has been utilizing HUD Community Development Block Grant funds for the home ownership rehabilitation program, so as to minimize use of the Township s Affordable Housing Trust Funds, which can be used for the rental rehabilitation program. This makes good sense. Through recent contact with Lorissa Luciani, Deputy Director of Community Development for Cherry Hill Township, I have ascertained that the Township has not yet received any applications for financial assistance for the rental rehabilitation program in the past year. This is not surprising based on my experience with similar rental rehabilitation programs in other municipalities. However, Ms. Luciani expects to be marketing both the rental and the home owner programs later this month. The home owner program is in operation, with 16 units rehabilitated during the past 2 years at a cost of $250,000 and 11 applications being processed. On July 9, 2012 the Cherry Hill Township Council adopted Resolution , entitled Resolution of Intent to Commit for Expenditure Affordable Housing Trust Funds and to Bond in the Event of a Shortfall (see Exhibit E). The Resolution acknowledges that the housing rehabilitation program is included in the Township s 2012 Spending Plan and commits the Township Council to fund any shortfall in its affordable housing program. The Spending Plan was approved by the Hon. Page 11 of 74

17 Robert G. Millenky, P.J.Cv. through a Consent Order Amending Cherry Hill Township s May 29, 2012 Spending Plan and Granting Other Relief on June 14, 2012 and was approved by COAH on January 8, Since COAH failed to adopt the proposed Third Round rules last November, the rental rehabilitation program is still a requirement. Fortunately, the Township has created a partnership with the County which gives it access both to administrative expertise and HUD funding. So, although the precise rehabilitation obligation has yet to be calculated for Cherry Hill as long as the Township continues to administer and fund these two programs it will likely satisfy whatever rehabilitation component the Trial Court assigns it. The Prior Round Obligation Cherry Hill s prior round obligation is listed as 1,829 units. However, this obligation was reduced to 1,669 units by operation of the 1,000 unit cap. This reduction is the focus of an objection which will be addressed in the next section of this report; however, for purposes of the overview the Township s Compliance Plan uses 1,669 units as the prior round fair share obligation. The applicability of the 1,000 unit cap has been contested again by FSHC and CHLA. Their supplemental arguments will be addressed below under Objections Concerning the Township s Fair Share Obligations. Notwithstanding the reduction to 1,669 units, Cherry Hill has insufficient vacant, developable land to meet its fair share obligation. The Fair Housing Act and COAH s rules provide adjustments for situations in which municipalities have inadequate land, sewer or water service to provide a realistic opportunity to meet their obligation. Municipal adjustments do not apply to the rehabilitation share since those units already exist. Both FSHC and CHLA contend that Cherry Hill Township should not qualify for a vacant land adjustment. Their supplemental arguments will be addressed below under the Objections section. Cherry Hill s affordable housing plans have relied on a vacant land adjustment for over 20 years. In 1993 the Township and FSHC entered into a Stipulation of Settlement Establishing Cherry Hill s Fair Share and Other Issues in Dispute. This settlement reduced the Township s first round fair Page 12 of 74

18 share allocation as a result of the lack of vacant, developable land. It also provided the foundation for an Order Establishing Cherry Hill s Fair Share Number, which was entered on March 30, 1993 by the Hon. L. Anthony Gibson, A.J.S.C. (ret). Judge Gibson found that Cherry Hill s realistic development potential (hereinafter RDP ) for affordable housing was 758 units, comprised of 706 units of new construction and 52 units of a rehabilitation share. This RDP was a substantial reduction from the 2,295 units COAH had allocated to Cherry Hill. COAH s second round rules carried forward the concept of Municipal Adjustments in N.J.A.C. 5:93-4. Under the second round rules a municipality which qualifies for a vacant land adjustment, like Cherry Hill, may address its RDP through any activity approved by the Council [COAH], pursuant to N.J.A.C. 5:93-5. The municipality need not incorporate into its housing element and fair share plan all sites used to calculate the RDP if the municipality can devise an acceptable means of addressing its RDP. N.J.A.C. 5:93-4.2(g) and N.J.S.A. 52:27D Notwithstanding the adjustment in the 1993 Order, in preparation for its 2009 Housing Plan Cherry Hill reexamined its development capacity and determined that its RDP should increase by 437 units, rising from 706 to 1,143 units. Meanwhile, COAH had allocated municipal fair share obligations for the cumulative first and second cycles (collectively termed the prior round ) and, as indicated above, adjusted Cherry Hill s prior round obligation from 1,829 to 1,669 units due to the 1,000 unit cap rule. The difference between the allocation (1,669 units) and the RDP (1,143 units) was 526 units. This differential is termed the unmet need. Municipalities with fair share adjustments are not excused from addressing unmet need; however, COAH s rules are less demanding for meeting unmet need than for the RDP. The Township has continued to recalculate its RDP as previously developed sites have redeveloped with inclusionary housing or, in the case of the Woodcrest CC, become available for residential development. According to the Township s Compliance Plan since 2011 these changes have increased the RDP by 197 units to a total of 1,340 units, thereby reducing the prior round unmet need to 329 units ( = 329). The Township s 2014 Amendment presents two versions of the fair share plan. Both versions are summarized in tables entitled Cherry Hill Township Affordable Housing Calculations. The first such table, which follows page 8 in the Amendment, reflects a more literal reading of COAH s rules under which the Township asserts a right to 1,487 units/credits toward its prior round obligation. Page 13 of 74

19 This Plan exceeds the Township s RDP of 1,340 units by 147 units/credits (1, = 147) and results in a shortfall of 182 units/credits (1,669 1,487 = 182). The second table, which follows page 10 in the Amendment, is premised upon an interpretation of COAH s rules and permits the Township to claim a total of 1,543 units/credits toward its prior round obligation. This version of the Plan exceeds the RDP of 1,340 units by 203 units/credits (1,543 1,340 = 203) and results in a shortfall of 126 units/credits (1,669 1,543 = 126). Neither version of the Township s Plan includes the 54 unit project at Short Hills Farm known as Evans-Francis Estates. The Township s position is that it should be entitled to remove this 100% affordable family rental housing project from its Plan since it does not represent a realistic development opportunity. The Township bases this conclusion on the inability of the developer (Fair Share Housing Development, Inc. hereinafter FSHD ) to develop the project during the 20+ years it has controlled the site. This issue will be explored in greater detail below since it is the subject of an objection. Also, while the Township has increased the RDP by 155 units to reflect the availability of the Woodcrest CC for inclusionary development it has not included that site in its Compliance Plan, citing principally concerns with the impact the additional traffic from development would have on the surrounding single family neighborhoods. The Woodcrest CC property is also the subject of an objection and will be addressed in more detail below. Depending on the interpretation of COAH rules which the Court endorses, the Township s Plan as presented includes a shortfall of either 126 or 182 units/credits. Cherry Hill is addressing that portion of the unmet need through the collection and expenditure of development fees and the adoption of overlay zoning on 6 developed sites covering 146 acres. The overlay zoning permits inclusionary development at a variety of densities either alone or as part of a mixed-use development. The draft overlay zoning ordinances, which are exhibits to the 2014 Amendment, permit the prior (typically retail) uses to proceed as permitted uses. Consequently, the sites will only be redeveloped and produce affordable housing if the overlay zoning presents a more profitable return than the existing zoning. The 2014 Amendment calculates a theoretical yield of 349 affordable units if all 6 sites were redeveloped at the maximum densities permitted under the proposed overlay zoning. The adequacy of this overlay zoning to address the remaining unmet need and, by extension, a portion of the Township s third round obligation will be explored further below. The Township has revised its RDP calculation in response to my 2015 Preliminary Report. As set forth in Mr. Surenian s May 18, 2015 letter, the Township has increased the RDP attributed to the Page 14 of 74

20 Woodcrest CC property by 61 units to reflect the difference between the Township s initial RDP assessment of 155 units and my recommendations of 216 units ( = 61). Also, the Township has revised its RDP to reflect the 64 affordable unit development capacity of Parcel B of the Croft Farm Property as recommended in my 2015 Preliminary Report. The Township has declined to increase its RDP to account for the Evans Francis Estates property at Short Hills Farm as I had recommended. Mr. Surenian points out correctly that the Township s 2009 Housing Element and Fair Share Plan carries a 115 unit assessment for Tocco Farms (a.k.a. Evans Francis Estates), so the RDP for that property has already been included. Based on the two revisions cited above, the Township now calculates its RDP as 1,465 units. This represents the base of 1,340 units plus 61 units for Woodcrest CC and 64 units for Croft Farm (Parcel B) (1, = 1,465). Based on an adjusted Prior Round fair share allocation of 1,669 units the Township s revised RDP of 1,465 units yields an Unmet Need of 204 units (1,669 1,465 = 204). FSHC s continuing objection to the Township s RDP calculation will be addressed below. OBJECTIONS TO CHERRY HILL TOWNSHIP S COMPLIANCE PLAN Objections to the Township s Compliance Plan have been filed by Kevin Walsh on behalf of FSHC and Richard Hoff on behalf of CHLA. Mr. Walsh has presented his objections through a letter to me of December 31, 2011, a still-pending September 12, 2011 motion to require Cherry Hill to incorporate overlay zoning in its Fair Share Plan, and a letter to Judge Solomon of February 19, In addition, Mr. Walsh s December 31, 2011 letter enclosed a planner s report by David Kinsey, FAICP, PP which sets forth additional objections on behalf of the Plaintiffs. Dr. Kinsey s original report was dated December 29, 2011; he has updated that report to February 19, 2014 (hereinafter either the Kinsey Report ). Each of the parties took the opportunity to submit responses to my April 25, 2014 Preliminary Report. Kevin Walsh, Staff Attorney for the Fair Share Housing Center submitted a letter to the Court dated May 19, 2014 which included a supplemental expert report by David Kinsey, planning consultant to FSHC. Mr. Walsh submitted a supplemental letter to me dated June 9, 2014 concerning the proposed 76 unit age-restricted affordable housing project planned for the Garden State Park property. Page 15 of 74

21 Mr. Hoff has presented objections and advocated for the incorporation of the Woodcrest CC property in the Township s Compliance Plan principally through a letter with certification to Judge Solomon of February 19, 2014, a Site Suitability Analysis and Objection report prepared by Creigh Rahenkamp, PP, AICP (hereinafter the Rahenkamp Report ), a Traffic Review of the January 21, 2014 Amendment to the 2011 Housing Element and Fair Share Plan, Cherry Hill Township via a letter to Mr. Hoff from David R. Shropshire, PE, PP of Shropshire Associates, LLC of February 19, 2014 (hereinafter the Shropshire Report ), a February 18, 2014 certification of Michael Haydinger, managing member of CHLA and through a complaint for intervention on behalf of CHLA filed by Mr. Hoff on February 28, Richard Hoff, counsel to Cherry Hill Land Associates submitted a letter to the Court dated May 19, 2014 which included a supplemental expert report by Creigh Rahenkamp, planning consultant to CHLA, a supplemental traffic circulation report by Nathan Mosley of Shropshire Associates, LLC and two alternative Overall Site Plans for the Woodcrest CC property by Jason Sciullo of Marathon Engineering & Environmental Services, Inc. Mr. Hoff submitted a supplemental letter to me dated June 4, 2014 concerning environmental constraints which have been mapped by Marathon Engineering for the Woodcrest CC property and reviewed by the NJ Department of Environmental Protection. Pursuant to the Court s February 26, 2014 Order Cherry Hill Township was entitled to respond to the objections expressed by FSHC and CHLA. It did so principally through a letter report of March 8, 2014 by the Township s consulting planner, Art Bernard, PP (hereinafter the March 2014 Bernard Report )to distinguish it from a Response to FSHC Objections of December 2011 prepared by Mr. Bernard and dated February, 2014 (hereinafter the February 2014 Bernard Report, a Traffic Study prepared by the Township s consulting engineer, Stacey Arcari, PE, PP, PTOE, CME of Environmental Resolutions, Inc. and dated April 3, 2014 and a letter to me of March 10, 2014 from Mr. Surenian. Jeff Surenian, affordable housing counsel to the Township submitted a letter to me dated May 19, 2014 which included a supplemental expert report by Art Bernard, the Township s planning consultant and a certification by Lorissa Luciani, Deputy Director of Community Development for the Township. While I have attempted to cite above the principal sources of objections and responses filed by the parties, there were also various letters from counsel to either the Court or to me which pertain to the Township s Compliance Plan. Also, as is customary in preparing a master s report I reached out to Page 16 of 74

22 counsel as need arose for clarification or documentation of their positions to help inform my recommendations to the Court. Where those contacts resulted in additional documents being prepared or supplied they have been provided to all counsel. In terms of the objections I will first address those which deal with the Township s fair share obligation (including RDP issues) and then issues of crediting concerning the various compliance techniques set forth in Township s Fair Share Plan. Objections Concerning the Township s Fair Share Obligations 1. The Township s Prior Round fair share obligation should not be adjusted from 1,829 to 1,669 units. The Fair Housing Act (N.J.S.A. 5.2:27D-307e) and COAH s second round rules (N.J.A.C. 5:93-14) comprise the basis for 1,000 unit cap relief. By letter of December 13, 1999 Shirley Bishop, then Executive Director of COAH wrote to then Mayor Susan Bass Levin and explained how COAH would interpret the 1,000 unit cap rule in relation to Cherry Hill s published fair share of 1,829 units (see Exhibit A). Director Bishop enclosed a generic explanation from Dr. Robert Burchell, the Rutgers professor who prepared the methodology for allocating fair share numbers to municipalities in the first and second rounds. Director Bishop advised Mayor Levin that the application of the 1,ooo unit cap rule would reduce Cherry Hill s Pre-Credited Need number to 1,669. Director Bishop further indicated that the 1,000 unit cap applies during the six year delivery period for affordable housing subsequent to certification, not to the calculation period. (emphasis in original) It should be noted that the Fair Housing Act has been subsequently amended to revise the six year delivery period to a ten year delivery period reflecting a similar FHA amendment concerning the length of substantive certification. FSHC and CHLA contend that Cherry Hill s entitlement to the lower obligation has expired and that it should not be rewarded with the adjustment after having delayed in the preparation of its Fair Share Plan for 12 years. The Rahenkamp report contends that had Cherry Hill been zoned in a more inclusionary manner the resulting increase in residential housing development would have rendered Page 17 of 74

23 the Township ineligible for the 1,000 unit cap relief. However, this is speculation and no basis on which the application of the statute could reasonably be denied. The Township s response is two-fold. Mr. Surenian points out that the 1993 Stipulation of Settlement included the following provision: However, the Township s total obligation through 1999, exclusive of indigenous need, cannot exceed 1,000 units, including any allocation for Croft Farm, or any other property. The 1993 settlement terms cited above do not square particularly well with either the COAH application of the 1,000 unit cap rule or the Appellate Court decision In re Application of the Township of Jackson, 350 N.J. Super. 369 (App. Div. 2002) in which the Court upheld COAH s interpretation of the 1,000 unit cap rule as applying to calculated need, not pre-credited need. However, as Mr. Bernard points out, there is no reference in either the Fair Housing Act, the COAH rules or even Director Bishop s letter to the effect that the adjustment available under the 1,000 unit cap expires (March 2014 Bernard Report, p.5). Moreover, while FSHC has every right to voice this objection, it challenges a provision which has been included, without compliant by FSHC, in both the Township s 2009 and 2011 Housing Plans. In a letter to me of October 16, 2009 setting forth objections to the Township s 2009 Housing Plan Mr. Walsh asserted that Cherry Hill s Prior Round obligation is 1,669 units. In 2012 when Mr. Walsh expressed his objections to the Township s 2011 Housing Plan, he objected to any effort by the Township (which it was then considering) to demonstrate that the prior round fair share should be any less than 1,669 units. He did not contend that the number should be higher. Furthermore, my experience is consistent with that of Mr. Bernard; I have no knowledge of a matter before either COAH or the Superior Court in which the application of the 1,000 unit cap was deemed to have expired. In light of all of the above I recommend that Cherry Hill Township s Prior Round adjusted obligation be set at 1,669 units. Mr. Walsh contends that Cherry Hill Township does not qualify for fair share relief if the 1,000 unit cap rule is properly applied to Calculated Need as opposed to Pre-Credited Need as required by COAH rules and the Jackson Township decision cited above. He reasons that the 1,778 units of credits and reductions which Page 18 of 74

24 the Township claims must be deducted from the allocation of 1,829 yielding 651 a number less than 1,000 and thereby not warranting an adjustment. However, we have reviewed the application of the 1,000 unit cap rule consistent with both COAH s instructions to the Township and with Dr. Burchell s explanation and have confirmed the Township does qualify. COAH s December 13, 1999 letter to Cherry Hill (see Exhibit A)describes a two-step process whereby first it was determined that the Township s prior-cycle prospective need (987) was greater than 1,000 minus present need (1, = 806). Since 987 is greater than 806, Cherry Hill Township s prior-cycle prospective need was reduced to 806. As shown on Exhibit G ( Municipal Low and Moderate Housing Need from COAH s prior round rules N.J.A.C. 5:93), Cherry Hill s precredited need was reduced from 1,851 to 1,669 (due to rounding). The actual change to the second round new construction obligation was from 1829 to 1,647 a difference of 182 units. The second round rehabilitation number stayed the same at 22 units. The second step in the 1,000-unit cap process described in the December 13, 1999 letter was to determine whether the 1,669 obligation would be further reduced to 1,000 after all eligible credits and reductions were applied. COAH didn t complete the second step to determine eligible credits and reductions since the Township was under the Court s jurisdiction. Since Judge Gibson had found Cherry Hill eligible for 706 credits and reductions in the 1993 Order, the Township s second round precredited need of 1,669 was not capped at 1,000 units because subtracting 706 credits and reductions from 1,669 resulted in a calculated need of 963, less than 1,000 units. Cherry Hill s second round precredited need remained at 1,669. The central finding in the Appellate Court s Jackson Township decision was that COAH s policy of subtracting credits and reductions from a municipality s second round precredited need before applying the second step in the 1,000 unit cap process was affirmed. Parenthetically, in the Jackson Township matter, COAH found that there was no first step reduction because Jackson Township s prior-cycle prospective need of 344 was already less than 1000-present need (1, =843). Also, in COAH s second step, Jackson did not have its second round precredited need of 1,323 reduced to 1,ooo units because after subtracting eligible credits and reductions, Jackson s calculated need was below 1,000. Page 19 of 74

25 We are aware of two other second round 1,000-unit cap matters similar to the Cherry Hill case. Both Middletown Township and Dover Township (subsequently renamed Toms River Township) had second round prior-cycle prospective need obligations greater than 1,000 minus present need, so reductions were achieved in the first step. Again, like Cherry Hill, both Middletown and Dover Townships had calculated needs below 1,000 so their second round precredited need obligations were not reduced to 1,000 but remained at 1,655 for Middletown and 1,735 for Dover. Mr. Rahenkamp reminds us that the 182 unit adjustment in the Township s new construction obligation is a deferral, not a credit or a permanent reduction. I agree; however, this raises the question of when the 182 units are to be re-assigned to Cherry Hill. That reassignment can be accomplished through the third round methodology and it appears that COAH s proposed rules carry forward the 1,851 unit allocation rather than the 1,669 unit allocation. Alternatively a reinstatement of the 182 unit deferral could be attributed toward the Township s good faith effort at meeting its as yet unspecified third round obligation. In his letter to me of March 30, 2015 Mr. Surenian weighs in on this objection in two respects. First, he claims that FSHC should be barred from objecting to the adjustment in the Township s prior round fair share by virtue of the operation of COAH s 1,000 unit cap rule. The effect of the cap rule is to adjust the Township s obligation from 1,851 units to 1,669 units (or from 1,829 units to 1,647 units of new construction). Mr. Surenian s basis for the bar the equitable principles of waiver, estoppel and laches are legal arguments on which I will defer to the Court. In any event, I have set forth my reasoning for supporting the adjustment in my 2014 Master s Report (p ) and have not been persuaded to change my opinion. Mr. Surenian s second point refers to a comment in my 2014 Master s Report concerning the possible reinstatement of the 182 unit new construction adjustment referenced above. Mr. Surenian argues that COAH never reallocated the differential in applying the 1,000 unit cap in the Round 2 rules (which are still in effect) and urges the Court not to do so in this case. That point is well taken; I do not know of any town which was subject to the 1,000 unit cap which had its differential deferred and reassigned. However, it is worthwhile to distinguish between deferrals of the impact of significant fair share obligations within a given delivery period and outright reductions. As a practical matter, so long as Cherry Hill retains its vacant land adjustment the issue of reinstatement is largely moot since any deferred units would simply become part of the unmet need and the Township has indicated its willingness to capture low and moderate income housing from Page 20 of 74

26 redevelopment projects when such opportunities arise. I would appreciate any further thoughts counsel may have on this issue before finalizing this report. None of the attorneys addressed the issue of the 1,000 unit cap and its operation on Cherry Hill Township s Prior Round obligation. However, in his letter of May 27, 2015 Dr. Kinsey objected to the approach set forth in my 2015 Preliminary Report. Dr. Kinsey starts by reminding us that the explanation of the operation of the 1,000 unit cap rule upon which the Township and I have relied has not been validated by a Court it is only a staff interpretation. This is correct; however, the staff person who interpreted Cherry Hill Township s right to an adjustment based on N.J.S.A. 52:27D 307e and N.J.A.C. 5:93 14 was Shirley Bishop who was serving as Executive Director of COAH in 1999 when she wrote to then - Mayor Levin. Moreover, Director Bishop relied on an explanation of the 1,000 unit cap which was provided by Dr. Robert Burchell, the Rutgers University consultant who had prepared the fair share methodology for COAH in the first and second rounds. While the Court must ultimately decide the issue, it is customary for planners and special masters to seek advice from COAH on interpreting its rules and to rely upon letters such as Director Bishop s letter which is appended as Exhibit A to this report. Dr. Kinsey s principal point is that the Township s progress in creating affordable housing opportunities since 1999 renders it ineligible for the 1,000 unit cap. In fact, the Township s entitlement to the cap in the first step (as described on page 19 above) is not affected by its affordable housing production. The Township s increase in affordable housing credits since 1999 only affects its right to a cap in the second step and, as is indicated above, the Township never qualified for the second step cap by virtue of the 706 credits and reductions recognized by Judge Gibson in the 1993 Order. Dr. Kinsey agrees with my characterization of the 182 unit adjustment as a deferral and not a reduction in the Township s Prior Round obligation but contends that no mechanism exists in the Prior Round methodology to reassign those units to the Township. Whether the Supreme Court s March 15, 2015 decision provides such latitude may be worth exploring during the upcoming hearing. In any event, it appears that any such re-assignment would simply add to the Township s Unmet Need for the Third Round. Page 21 of 74

27 2. The Township s Fair Share Plan fails to identify and address its third round (post 1999) obligation. Both FSHC and CHLA contend that the Township s Compliance Plan is inadequate in that it focuses on the prior round obligation (RDP and unmet need) but does not identify nor address the third round obligation the housing need which has been accumulating since the end of the prior round in Mr. Surenian s response is that the Township s 2011 Housing Plan was prepared in accordance with my instructions which were to limit its scope to the Township s rehabilitation share and the prior round obligation. Those were in fact my instructions. In January of 2011 I had reviewed the Township s 2009 Housing Plan for Judge Millenky and presented my findings in a Pre-Mediation Report dated January 26, Although the Township s 2009 Housing Plan addressed the third round rules which had been in effect at the time of its adoption, I limited my review to the 145 unit rehabilitation share and the 1,669 unit prior round obligation. Since the growth share methodology on which the third round municipal fair share obligations were based had been invalidated by the Appellate Division on October 8, 2010 in IMO the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing I saw no reason to evaluate the Township s third round compliance. Compounding the uncertainty surrounding the third round at that time was the N.J. Legislature which, on January 10, 2011 had passed S-1, a bill which would have significantly revised the Fair Housing Act. As it happened, the Governor conditionally vetoed the bill and no comprehensive legislation has gotten traction since. In any event, as the title Pre-Mediation Report conveys, the report was designed to provide the Township and interested parties with a preliminary assessment of the Plan and to guide discussions as the Township and objectors move forward in mediating their disputes (Pre-Mediation Report, p.1). My hope was that if the parties could limit their debate to the rehabilitation and prior round plans they might find common ground and then confront the third round issues when the rules or law had crystallized. Unfortunately, that common ground eluded the parties which brings us to the current adversarial posture of the case. Page 22 of 74

28 Notwithstanding my instructions to the Township in 2011, the rationale for limiting the Compliance Plan to only the rehabilitation share and the prior round obligation no longer pertains. Consequently, the Township should incorporate a response to the third round obligation into its Compliance Plan. Since the Appellate decision in 2010 I have recommended to the Court in other cases that municipalities seeking prior round compliance and repose be required to make a good faith effort at addressing their third round obligation. Since the magnitude of that obligation has not been known I have recommended that municipalities implement plans for the third round housing need which do not impose an unreasonable financial or administrative burden nor commit the municipality unalterably to an excessively high third round obligation. As a practical matter, many municipalities had adopted third round Fair Share Plans before the rules were invalidated and were able to select components of their previous plans to implement. This was admittedly a different approach than that taken by COAH as articulated in the Resolution Granting Motions for Stays adopted on December 8, 2010 (see Exhibit B, p.2). However, COAH s Resolution went further than I thought warranted by the Appellate decision in relieving municipalities from even applying to COAH for a stay from proceedings concerning third round growth share obligation (see Exhibit, p.3). Cherry Hill s 2014 Amendment postulates an RDP of 1,340 and alternative unit/credit totals of 1,487 and 1,543. These calculations all exclude the 54 units and potential 115 units/credits from Evans- Francis Estates and the Croft farm RDP. The Township proposes overlay zoning which could theoretically generate as many as 349 affordable units as its principal unmet need mechanism. The likelihood of redevelopment occurring pursuant to the overlay zoning is addressed in a later section of this report. The third round rules proposal may provide guidance on whether the Township will be able to allocate any units/credits which exceed its prior round RDP toward its third round obligation. As indicated above, COAH apparently intends to propose third round rules starting May 1, Rule publication may simply lead to their adoption or it may incite the Legislature to action. In any event, we appear to be entering a new chapter in the evolving Mount Laurel doctrine. At the very least, we should have a new benchmark for the third round which will inform municipal planning even before formal adoption. Since counsel in this matter are scheduled to comment on this Preliminary Report by May 13, 2014, I will be particularly interested in their views as to the effect of the proposed third round rules on Cherry Hill s Compliance Plan. Page 23 of 74

29 Not surprisingly, the parties have very different reactions to COAH s proposed third round rules. Mr. Bernard observes that if the rules are adopted in their current form Cherry Hill will have exceeded its housing obligations by over 400 low and moderate income units. (Bernard Report of May 15, 2014, p.2). He then raises questions about the accuracy of COAH s methodology in assigning Cherry Hill a prior obligation (101 units) and a post-adjusted projected need of 78 units, concluding that the Township s surplus will be even greater if he is correct in identifying these errors in COAH s fair share allocations. Apart from these observations Mr. Bernard does not explicitly address how the Township should deal with its third round housing obligation in the present matter. Mr. Rahenkamp and Dr. Kinsey are sharply critical of COAH s proposed rules. Mr. Rahenkamp identifies five deficiencies in the methodology. These deficiencies include a characterization that it is not the same or even similar to the Round II methodology that the Supreme Court ordered them [COAH] to use and that the methodology understates-through various means the need for affordable housing. Dr. Kinsey also opines that COAH s proposed rules are not in compliance with the remedy ordered by the Appellate Division in 2010 and affirmed by the NJ Supreme Court in 2013, namely to adopt new third round rules that use a methodology for determining prospective need similar to the methodologies used in the first and second rounds. (Kinsey Report of May 19, 2014, p.2). Dr. Kinsey points out numerous differences in the rules. He also points out four changes in the methodology which Dr. Burchell utilized to calculate and allocate fair share numbers which Dr. Kinsey contends significantly dilute the affordable housing obligations across the state. In view of these deficiencies Dr. Kinsey urges that I maintain the approach I recommended in my Preliminary Report, which is to require Cherry Hill to make a good faith effort to address its third round obligation in its prior round plan. I have recommended such an approach in other post-2010 matters in which I serve as special master and am still inclined to do so in this case. However, apart from the 182 units which were deferred by operation of the 1,000 unit cap (as detailed above), the basis for calculating a number of units which would represent a good faith effort by the Township has been complicated by COAH s rule proposal. Ultimately this calculation should not be undertaken in isolation, but may depend on the Court s determinations on the 1,000 unit cap, the Township s RDP, the viability of the Township s unmet need mechanisms and other related contested issues. This is a matter which I would appreciate counsel and their respective planning experts addressing at the compliance hearing, if not before. Page 24 of 74

30 In my prior reports I indicated that the rationale (of inducing a partial settlement) for having the Township limit its Compliance Plan to its Rehabilitation Component and Prior Round obligation was, unfortunately, no longer germane. Consequently, I recommended that Cherry Hill should incorporate a response to the third round obligation into its Compliance Plan notwithstanding the lack of specificity of the Township s obligation (2014 Master s Report, p. 16). As recounted above, municipal obligations for the Third Round continue to be elusive. However, the NJ Supreme Court decision on March 10, 2015 has provided a process through which those obligations will be established by the Trial Courts in the foreseeable future. Mr. Surenian asserts in his March 30, 2015 letter to me that in light of this new avenue through which municipal Third Round obligations will be established, the Trial Court should limit the upcoming compliance hearing to Cherry Hill Township s satisfaction of its Prior Round obligation. Since the Mount Laurel III decision the NJ Supreme Court has directed Trial Courts to follow COAH s rules in interpreting the Mount Laurel doctrine to the greatest extent possible The Hills Development Co. v. Town of Bernards, 103 N.J. 1 (1986) at 63. After COAH s 2008 rules were invalidated municipalities no longer knew their Third Round obligations. Nonetheless, it still made sense to require municipalities seeking a Final Judgment of Compliance and Repose to make a good faith effort toward their unspecified Third Round obligation. However, now that the Trial Courts have been assigned the responsibility for determining these fair share allocations I tend to concur with Mr. Surenian that the Courts focus with the Township s 2014 Fair Share Plan should be limited to the Prior Round obligation. This inclination is premised upon the Township either filing a DJ action by July 8, 2015 or filing a motion in the instant matter for the Court to set a Third Round obligation and establish a schedule for the preparation and review of the Township s Third Round Compliance Plan. As indicated above, Your Honor has decided to limit the scope of the Compliance Hearing to the issue of whether the Township of Cherry Hill has satisfied its Rehabilitation and Prior Round affordable housing obligations as previously defined by COAH (see Order of May 8, 2015, paragraph 2, Exhibit P). Page 25 of 74

31 Given that Order, in his May 18, 2015 letter Mr. Surenian characterizes the preceding discussion concerning the degree to which the Township has identified and met its Third Round obligation to be moot. Mr. Walsh, on the other hand, in his May 18, 2015 letter maintains Plaintiff s objection to the Court s bifurcation of the Prior Round and Third Round proceedings and asserts that the Township should still be required to meet part of its Third Round obligation through the upcoming Compliance Hearing. He also claims that the Township should be required to plan for 1,400 units of affordable housing for the next 10 years (presumably the Third Round) in view of its conduct to date. While I agree with Mr. Walsh that there will likely be issues involving Prior Round compliance which will reverberate into the Third Round, my understanding of the May 8, 2015 Bifurcation Order is that the Court will not be attempting to determine the Township s Third Round obligation at 1,400 units or any other number. That determination will occur as part of a separate proceeding. I continue to recommend that the Court impose the same July 8, 2015 deadline for the Township to file a DJ action as applies to municipalities previously before COAH. By doing so the Township will transition quickly from Prior Round to Third Round proceedings. Mr. Walsh has identified some of the issues, such as the continuation of scarce resource restraints, amendments to the Township s Spending Plan and overlay zoning which have implications to both the Township s Prior Round and Third Round plans. However, it is difficult to provide a path forward for the Third Round as Mr. Walsh urges since the disposition of many of these issues will depend on the Court s determinations regarding the primary thrust of the Compliance Hearing whether the Township has satisfied its Rehabilitation and Prior Round obligations. 3. The Woodcrest CC parcel should be rezoned for inclusionary development. FSHC and CHLA object to the treatment of the Woodcrest CC property in the 2014 Amendment and contend that the site should be rezoned for inclusionary development. As indicated above, the Woodcrest CC site has been the subject of planning commentary and traffic analysis by experts for FSHC, CHLA and the Township. There are differences of opinion among the planners as to the area of the Woodcrest CC and as to the portion of the property which is constrained from development due to environmental features. Page 26 of 74

32 According to the Rahenkamp report, the site comprises a total of 179 acres, of which only 109 are free of wetlands, flood plain and other environmental features. The Township s 2014 Amendment has the property sized at acres, of which 130 acres are free of development constraints. For the purpose of this report I will assume the property owner s figures are the more reliable, but I recommend that both CHLA and the Township check their calculations. The Woodcrest CC is located on the southern boundary of Cherry Hill and is bordered by Evesham Road on the south and Haddonfield-Berlin Road on the west. The property is generally surrounded by single-family detached houses both in Cherry Hill, where the neighborhood actually abuts the property on the north and in Voorhees, where the neighborhood is on the other side of Evesham Road. Some of the frontage lots on the bordering arterials have been converted or developed with commercial or retail use (see Exhibit C, Map of Woodcrest CC site). All of the planning experts involved in this matter including myself agree that the Woodcrest CC is a suitable site for inclusionary residential development. The differences are in the appropriate density to apply and what significance that finding of suitability carries. Mr. Bernard undertakes an RDP analysis of the Woodcrest CC site. COAH rules provide that it should consider the character of the area surrounding each site and the need to provide housing for low and moderate income households in establishing densities and set-asides for each site Furthermore, the minimum presumptive density shall be six units per acre and the maximum presumptive set-aside shall be 20 percent. N.J.A.C. 5:93-4:2(f) Given the context of this rule the reference to density is to net density, i.e., units per developable acre. Mr. Bernard then cites two key factors which shaped the density which has been incorporated into the 2014 Amendment: the density of the adjacent Cherry Hill neighborhoods and the traffic congestion on the adjacent road system. The density of the neighborhoods to the north of the property is 2.7 units per acre (R-1 zoning: 13,000 sf minimum lot size) and 3.8 units per acre (R-2 zoning: 9,200 sf minimum lot size). The character of residential development in Voorhees Township south of Woodcrest CC is generally comparable to that of Cherry Hill; however, the subdivision directly across Evesham Road from the golf course is characterized by larger lots of approximately 1 acre in size. Page 27 of 74

33 Mr. Bernard then cites traffic congestion as a factor which should be considered in setting the density. This concern was the subject of a separate traffic analysis (the Arcari report) which described low and failing levels of service and long queues for signalized intersections in the immediate area. The 2014 Amendment prefaces the discussion of traffic by stating Although traffic is not normally a major factor in determining the RDP of a site (2014 Amendment, p.4). This has certainly been my experience as well. In fact, the COAH rules require only that inclusionary development sites have access to appropriate streets as a component of suitability (N.J.A.C. 5:93-1 and 5:3(b)). It is rare that traffic concerns have any pivotal role in the designation of density for an RDP evaluation or, for that matter, for a builder remedy determination. This does not mean traffic congestion is irrelevant to a density designation, only that it should not be the determining factor. Rather, the presumption should be that the public sector has a responsibility to maintain an adequate circulation system and a private developer is responsible for funding improvements which are proportionate to the increase in traffic generated by the new development. The details of specific traffic improvements are worked out during the application process and implemented pursuant to a developer agreement typically long after the zoning has been established. The 2014 Amendment finds that the RDP for the Woodcrest CC property should be 155 affordable units. This is derived from applying COAH s minimum presumptive density of 6 units per acre to the 130 developable acres computed by Mr. Bernard and applying a 20% set-aside (6 x 130 = 780 x.20 = 156). The 2014 Amendment points out that 6 units per acre is approximately twice the density of the adjacent neighborhoods in Cherry Hill. However, at 780 units, the gross density for the property would be 4.4 units per acre (780/179 = 4.4) or 4.7 units per acre using the 166 acre parcel size presented by the Township. These densities are only 50% over those of the adjacent neighborhood and do not sufficiently consider the need to provide housing for low and moderate income households as required by N.J.A.C. 5: (f). Mr. Rahenkamp provides a Density Table to illustrate the implications of various densities applied to the Woodcrest CC site. He points out that the stream corridor which runs the length of the site s northern boundary will provide a 480 foot setback and natural buffer from development which would occur to the south of that corridor. This would greatly mitigate the impact of development on the abutting single family residences. Mr. Rahenkamp s alternatives, some of which preserve either a 9 hole or even an 18 hole golf course, are interesting but for purposes of the RDP analysis alone it appears to me that the 6 unit per acre Page 28 of 74

34 gross density (9.9 unit per acre net density) best balances the character of the surrounding neighborhood with the needs of low and moderate income households. This is also a density which Mr. Rahenkamp points out could allow the introduction of greater diversity in housing product than at higher densities and would thereby create greater diversity in households served. This diversity would enhance absorption of market rate units and thereby accelerate the delivery of affordable units. At this density the RDP of the property would be either 215 units using the parcel size of 179 acres (6 x 179 = 1,074 x.20 = 215) or 199 units using the Township s 166 acre size (6 x 166 = 996 x.20 = 199). These RDP calculations are 60 and 44 units, respectively, above the 155 unit RDP attributed to the property in the Township s 2014 Amendment. Mr. Kinsey recommends a net density range of units per acre which would translate to a development of 1,950 2,600 units and an RDP of affordable units. These densities are above even those proposed by Mr. Rahenkamp and I believe would be excessive for this site. The implications of this suitability analysis have been thoroughly briefed by counsel. The 1993 Settlement identified six parcels which were suitable but which were not available for development at that time. Consequently, their development capacity was not included in the 706 unit new construction RDP set forth in the settlement. However, the parties recognized that, over time, one or more of the parcels might become available and, when that occurred it would be necessary for the Township s RDP to be re-evaluated and for its Fair Share Plan to be amended to address the additional housing need. The settlement included language that this adjustment mechanism would be operative during the next six (6) years, reflecting the expectation that the Township s Fair Share Plan would be revised in 6 years. However, as a practical matter, the parties have continued to honor the 1993 settlement notwithstanding the 6 year reference. Under the 1993 Settlement there is no presumption as to how the Township would address the fair share obligation which might arise from the re-evaluation of any of the six properties. COAH rules permit a municipality to meet its RDP through any activity approved by the Council, pursuant to N.J.A.C. 5:93-5. The municipality need not incorporate into its housing element and fair share plan all sites used to calculate the RDP if the municipality can devise an acceptable means of addressing its RDP. (N.J.A.C. 5: (g)). Page 29 of 74

35 If the intent of the parties had been that the six sites would be automatically zoned for inclusionary development upon becoming available as has been suggested by FSHC and CHLA the settlement agreement would have so stated. Such a provision would not have been difficult to draft. Rather, the intent of the settlement agreement was to capture any affordable housing opportunities which might be presented by the availability of these sites while permitting the Township the discretion afforded to all municipalities with vacant land adjustments under COAH rules to determine how those opportunities would be addressed. Consequently, absent any legal challenge which may factor into this issue I believe the Township s responsibility is to meet the RDP generated by the Woodcrest CC and other suitable sites by any means permitted under COAH rules. As attractive a site as Woodcrest CC may be for inclusionary development so long as the Township otherwise meets its fair share obligations under COAH rules it need not include Woodcrest CC in its Fair Share Plan. At the time of my Preliminary Report, the size of the Woodcrest CC property and the area which was unavailable for development due to environmental constraints was the subject of conjecture. Those questions have since been put to rest. The gross tract size (not including the land within the rights-of-way of the perimeter county roads) is acres (see Marathon Engineering Overall Site Plan for Village at Woodcrest, dated May 16, 2014). While the Marathon Engineering plans indicate a total of acres of uplands (developable land), Mr. Hoff has provided an update of that figure to acres based upon a May 30, 2014 Wetlands Letter of Interpretation from the NJ Department of Environmental Protection (see Exhibit H, Mr. Hoff s letter to me of June 4, 2014). This developable area is significantly more than the 109 acres offered by CHLA for consideration as of the date of my Preliminary Report. Mr. Hoff responded to my Preliminary Report by contending that CHLA is entitled to a builder s remedy since it filed suit before the Township had modified its Fair Share Plan to include an increased RDP representative of the development capacity of the Woodcrest CC property. Mr. Surenian has disputed that right. Since the builder s remedy question has not yet been reached by the Court I will not address it here. Mr. Rahenkamp asserts that the RDP mechanism has expired and that it creates an unrealistic static approach to what is, in actuality, a dynamic real estate market in which properties are continuosly developed or redeveloped in response to market pressures and opportunities. While noting that COAH s proposed rules have deleted the terms Realistic Development Potential and Unmet Need the Township s prior round Page 30 of 74

36 obligation and Housing Plan are being evaluated according to N.J.A.C. 5:93, in which the RDP and unmet need concepts are very much present. In fact, rather than relying on a fixed number and plan for a 10-year delivery period Cherry Hill has modified its Housing Plan over the years in response to changing circumstances, adding affordable housing at the Garden State Park, Dwell, and Buckingham Partners among other sites. Mr. Walsh contends that the Woodcrest CC property should be rezoned in part because the Township can meet its prior round new construction fair share allocation of 1,829 and therefore does not qualify for a vacant land adjustment. However, Mr. Walsh s argument relies on the Court finding that the Township s fair share obligation should be increased by as many as 426 units to reflect the affordable housing capacity of 5 separate sites. This RDP issue is addressed elsewhere in this report but, in any event, it would be premature to speculate at this stage the consequences of such a ruling by the Court. Mr. Walsh also argues that the Township needs to rezone the Woodcrest CC property in order to meet its (unadjusted) 1,829 new construction fair share obligation as well as even a small part of its Third Round obligation. Again, once the Court rules on the RDP issue and the magnitude of the Third Round fair share which the Township should address as part of its prior round Housing Plan the Township s capacity for meeting its obligation will be clarified. As for the RDP, Mr. Surenian and Mr. Bernard acknowledged my recommendation of 255 units without substantive comment (neither acceptance nor dispute). Mr. Rahenkamp introduces the two yield studies which Marathon Engineering prepared for the Woodcrest CC site: one for 1,080 units (a gross density of 6 units per acre in line with the recommendation in my Preliminary Report) and another for 1,696 units (a gross density of 9.5 units per acre). He points out the enormous separation between any housing to be built on the Woodcrest Site and the adjoining development (Rahenkamp Report dated May 19, 2014, p. 13 & 14) and argues that the property should warrant a higher density than I recommended. However, only the 1,080 unit Site Plan features the separation to which Mr. Rahenkamp refers. The 1,696 unit site plan shows 3 story apartment buildings located throughout the ravine approximately feet from the property lines of the single family houses along the northern boundary of the Woodcrest CC. In my view this proximity does not represent a reasonable balancing of the interests of the neighbors with those of the protected class. Page 31 of 74

37 Dr. Kinsey notes out that developments such as Dwell and Buckingham Partners have been approved by the Township Zoning Board of Adjustment at densities approaching 2o units per acre. This is correct; however, those sites are more commercial/mixed use in character than the Woodcrest CC, which is surrounded by a predominantly single family detached housing community. Development of the Woodcrest CC site would also have to contend with extensive wetlands and stream corridors which reduce the attainable density unlike the other two development sites cited by Dr. Kinsey. My recommendation of 1,080 units (a gross density of 6 units per acre) is approximately twice the prevailing density of the surrounding neighborhood. I believe this is sufficient for the purposes of an RDP assessment. However, I acknowledge that the increase in developable land area (from 109 to 140 acres) enhances the design flexibility on the Woodcrest CC site and may support an increase in development capacity. If the Court determines that the Woodcrest CC site deserves to be rezoned for inclusionary housing the issue of density could be revisited along with further input from civil and traffic engineers to examine the impacts of higher density. I have received a copy of a letter of April 2, 2015 to Your Honor from Richard Hoff, who represents Cherry Hill Land Associates, LLC ( CHLA ). Mr. Hoff indicates that the negotiations between the Township and his client which triggered the postponement of the scheduling of this matter are ongoing and productive and that the parties continue to work toward finalizing a settlement agreement. He declined to submit any information for me to consider for this Preliminary Report and took no position with regard to the Township s submission as it relates to any issues other than the Woodcrest Country Club. Mr. Hoff referred to the comment period the parties have (until May 5, 2015) to provide additional information to the Court on the settlement negotiations. While Mr. Surenian shared Mr. Hoff s optimism concerning the prospects for the negotiations to succeed, he indicated it may take until June for an agreement to be consummated. Since the hearing is scheduled to begin on June 24, 2015 I trust that the Township and CHLA are treating the negotiations as a high priority. In the absence of any additional input from the parties on the Woodcrest CC property, I have nothing to add to my commentary on it in my 2014 Master s Report. Page 32 of 74

38 Messrs. Hoff and Surenian continue to be optimistic about the prospects of a settlement between CHLA and the Township. While I do not know the details, components of the proposed agreement have been the subject of public hearings so to that extent progress toward a resolution is evident. Mr. Walsh urges me to recommend that the Woodcrest CC be zoned for inclusionary housing development since the parties have yet to settle. I have already opined that the property is suitable for inclusionary housing and have assigned it a RDP based on a development yield of 1,080 units (216 affordable units). Overlay zoning is clearly an option which the Court may order if the settlement is not consummated and the Township s Fair Share Plan is found to be noncompliant. The status of the pending agreement and the manner in which it will be addressed at trial should be an agenda item for the June 9, 2015 case management conference. 4. The RDP should be increased to account for sites that developed without affordable housing or were purchased by the Township in violation of a scarce resource restraining order. In his letter to me of December 31, 2011, Mr. Walsh contends that at least three substantial residential developments, namely Bishops View, the Highlands, and a 32 unit single family development on a 17.5 acre tract on the application of Quaker N.J. Construction, Inc. received approvals in the late 1990s or 2000 without any affordable housing being included despite the fact that a scarce resource restraint order was in effect. He also objects to the Township s acquisition of open space and approval of permits for non-residential development during this time frame. If Mr. Walsh s allegations of violations of scarce resource restraining orders are true, his suggestion that the properties be retroactively assigned an RDP may be the appropriate remedy. After all, under the restraints any property owner/ developer who is seeking development approvals first must have the site evaluated for its suitability for inclusionary development. If it is suitable the Township s RDP is increased correspondingly. In some cases the Township and the property owner/developer have collaborated on ways to meet the affordable housing obligation either on or off site. The difficulty with this objection is documentation. Mr. Surenian contends that no restraints were in effect between October 10, 1991 and March of 2003 when the projects cited by Mr. Walsh were approved. To my knowledge neither party has assembled the trail of scarce resource restraining orders and the various land use approvals/ purchases to determine conclusively whether the alleged violations occurred. I recommend that Mr. Walsh compile the orders and Mr. Surenian assemble the Page 33 of 74

39 various permits/approvals so this objection can be resolved. It would also be useful to know if the various developers paid affordable housing developer fees and if so, in what amounts. Mr. Walsh has expanded the list of three projects (Bishop s View, the Highlands and Springdale Crossing, the Quaker Group subdivision) which he claims were approved in violation of scarce resource restraint orders to five projects, adding the development of the Hillview Shopping Center and Loews Theaters at Chapel Avenue and Route 38 and the Township s acquisition and preservation of the Springhouse Farm tract on Springdale Road. He calculates the imputed RDP for all of these properties at 426 units. The Township has assembled the various scarce resource restraint orders and claims that no such order was in effect between October of 1991 and October of No party has produced an order which was in effect during the 12 year period cited above. The Township has documented that the approvals for Bishop s View were granted in 1999, for the Highlands in 2001 and for Springdale Crossing in I am not certain what the applicable dates are for the purchase of the Springhouse Farm tract and the approval of the Hillview Shopping Center/Loews Theaters, but I ask that the Township provide those dates. Mr. Walsh points out language in Judge Gibson s March 30, 1993 Order that upon a finding of compliance, the Court shall enter a Judgment of Repose and vacate the scarce resources moratorium imposed by Court Order of December 5, 1988 He argues that this language demonstrates that the restraints must have been in place as of March 30, 1993 and until repose was granted (presumably upon entry of Judge Davis Order on the application of Cherry Hill Township for a judgment of repose dated March 20, 2002). Judge Davis made the Township s 6 year period of repose retroactive (from March 24, 1994 to March 24, 2000) to match the time frame he believed would have resulted from an application by the Township on or about July 26, 1993 as anticipated in Judge Gibson s 1993 order. This apparent contradiction in the application of scarce resource restraints will need to be sorted out in court. In addition, the parties should address the point raised by Mr. Rahenkamp as follows: While others may care if an order was violated, the issue is that a municipality that pled a lack of land resources and had continuing unmet need failed to take action to meet that need when opportunities presented themselves. (Rahenkamp Supplemental Report, p.9) Page 34 of 74

40 The issue of the Township s acquisition of the Springhouse Farm tract appears distinguishable from the development approvals for the other four projects since its acquisition was specifically acknowledged in a Stipulation of Partial Settlement entered into by FSHC, the Township and the Planning Board on January 11, 2002 (see Exhibit I, Stipulation of Partial Settlement, paragraph F). The Township has assembled and submitted via a certification of March 30, 2015 by Mr. Jedziniak the various scarce resource restraints orders which have been entered in this matter, starting with an Order of March 17, 1989 by the Hon. L. Anthony Gibson, J.S.C. and culminating with an Order of December 2, 2008 by the Hon. Mary Eva Colalillo, P.J. Ch. (which is still in effect). He did not include Judge Gibson s December 5, 1988 Order, which is included as Exhibit N to this report. I have reviewed the scarce resource restraints orders provided by the Township and agree with Mr. Surenian s finding that no restraints appear to have been in effect between October 10, 1991 and March 28, This is the 9 year period during which Mr. Walsh alleges Township land use approvals occurred in violation of the restraints. However, my conclusion does not square well with the text in the 1993 Stipulation of Settlement that upon a finding of compliance, the Court shall enter a Judgment of Repose and vacate the scarce resources moratorium imposed by Court Order of December 5, 1988 (see Jedziniak certification, Exhibit J) (emphasis supplied). Mr. Walsh relies on this language as evidence that restraints must have been in place. I suspect that they may have lapsed but that the parties and the Court overlooked that fact when drafting the Stipulation. Notwithstanding the Stipulation, Mr. Surenian asserts that the Judgment of Compliance and Repose which was entered on March 20, 2002 by the Hon. Theodore Z. Davis, P.J. Ch. but with an effective date of March 24, 1994 retroactively vacated any scarce resources moratorium which may have been in place. Consequently, he concludes that no restraints were in effect from March 24, 1994 until the next scarce resource restraints Order was entered by Judge Davis on March 28, Ironically, in 2002 the Township was urging Judge Davis to grant repose prospectively, from 1999 to FSHC contended that the Court should enter the judgment of repose as Judge Gibson would have done so that the Township s immunity would commence in 1993 and expire in Judge Davis essentially agreed with FSHC, although he adjusted the starting date to March 24, 1994 to allow for the time he thought the Township would have required after the Stipulation of Settlement on March 30, 1993 to adopt the ordinances to implement the Fair Share Plan. Page 35 of 74

41 Mr. Surenian points out that municipalities with vacant land adjustments under COAH s first round rules were not obligated to address unmet need. He also cites Art Bernard s letter to me of March 30, 2015 in which Mr. Bernard asserts that first round substantive certifications from COAH and Final Judgments from Trial Courts that extended beyond 1994 (into the Second Round) were not altered by COAH s adoption of the Second Round rules. It was not until the NJ Supreme Court s decision in Fair Share Housing Center v. Cherry Hill, 173 N.J. 393 (2002) regarding the Garden State Park that municipalities with vacant land adjustments had to capture affordable housing from redevelopment on parcels not included in the calculation of Realistic Development Potential. This has also been my experience. Mr. Surenian argues that the purpose of any scarce resource restraint being imposed in 1993 would have been to ensure the Township s implementation of its Fair Share Plan. He cites Judge Davis in 2002 as having determined that the Township had completed all requirements that the trial court had imposed in the 1993 Order 173 N.J. 393, 401 n 8. Therefore he claims that the Township fulfilled its Fair Share Plan obligations notwithstanding the land use approvals to which Mr. Walsh objects. The resolution of this objection may turn more on legal rather than planning considerations. However, since it is of significant moment to the Township s plan I am inclined to give Mr. Walsh and any other interested party a final opportunity to comment on Mr. Surenian s latest arguments before finalizing my recommendation to the Court. In his May 18, 2015 letter Mr. Walsh continues to maintain that scarce resource restraints were in place during the period in which land use approvals were granted to the respective developments. His most compelling argument is Judge Gibson s 1993 Stipulation of Settlement (see red text underscored above) which refers to the scarce resources moratorium as if it were in effect. However, notwithstanding that reference, the absence of an order which explicitly extends the restraints past their termination date of October 10, 1991 which is based on Judge Gibson s June 4, 1991 Order (Exhibit G to Mr. Jedziniak s Certification) is troubling. Essentially, we are presented with two Orders filed by Judge Gibson which have opposing implications as to the existence of the restraints. In addition, Mr. Walsh contends that if the Township did violate the restraints the retroactive repose provided by Judge Davis 2002 Order should not forgive any transgressions which occurred. That is essentially a legal question for the Court to decide if it finds a violation(s) did occur. Page 36 of 74

42 The Township points out that prior to the Supreme Court decision in 2002 municipalities were not required to capture affordable housing from parcels which became available for development after the RDP had been calculated. That responds to Mr. Rahenkamp s point raised in 2014 and excerpted above from his Supplemental Report, but it does not bear on the issue of whether the restraints were violated. 5. The Short Hills Farm site, on which FSHD has proposed 54 family affordable rental units in a 100% affordable housing development known as Evans-Francis Estates, should be reinstated in the Township s Compliance Plan. The Township s 2014 Amendment claims no credit for Evans-Francis Estates; rather, it states that the project is neither economically viable nor realistic and that it should be dropped from the Township s Plan. Alternatively, if the Court will not sanction the deletion of the project the Township claims it deserves the 115 units/credits which were awarded to the Township immediately upon execution of the November 2, 2005 Consent Order by the Hon. M. Allan Vogelson, P.J.Ch. (ret). Furthermore, the Township claims it has taken all steps necessary and appropriate under that Order to facilitate the development of Evans-Francis Estates and should not be obligated to provide the project with further financial support even if the project remains in the Township s Plan. In fact, Mr. Surenian s response to the FSHC objection ends with an acknowledgement that the Township s Spending Plan (recently approved by COAH) includes a $1.5 million allocation of Township Affordable Housing Trust Funds to facilitate the relocation of the Evans-Francis Estates development from the Short Hills Farm site to the Garden State Park. Since it has become evident that the relocation of Evans-Francis Estates is not feasible Mr. Surenian wants to redirect the Township s Trust Funds to other projects. However, if the Court rules that Evans-Francis Estates must remain in the Township s Compliance Plan the Township is willing to execute a PILOT agreement for the project and to endorse applications for funding which FSHD may submit to other agencies. To state the obvious, the 17 year saga of Evans-Francis Estates has been frustrating for all involved. However, notwithstanding the opportunities lost and the obstacles which have had to be surmounted over the years the current status is promising. FSHD owns the site (which is cleared and uncontaminated) and, as a result of a series of meetings with Township staff over recent months has Page 37 of 74

43 perfected its site plan approval (see Exhibit D, Conformance Letter of April 21, 2014 from Lorissa Luciani, PP, AICP). Consequently, for a 100% affordable housing development Evans-Francis Estates is well positioned to compete for public financial assistance. In a September 10, 2013 letter to Judge Millenky, I said, given the enormous time and resources which the Court and the parties have devoted to the Evans-Francis Estates development over the years I recommend that the Court give this project the highest priority. By virtue of Judge Millenky s November 1, 2013 Order which vacated the site plan denial and remanded the project back to the Planning Board for a conformance review the project has made significant progress in recent months. Furthermore, notwithstanding various missteps over the years which the Township has exhaustively chronicled in its pleadings, FSHD has twice assembled funding to develop Evans- Francis Estates; there is no reason to believe it cannot do so again. Consequently, I recommend that Evans-Francis Estates be reinstated in the Township s Fair Share Plan. The two key issues are whether the Township can still claim credit for the project (the 115 credits granted by Judge Vogelson as cited above) and whether the Township s necessary and appropriate assistance to the project can be as limited as it proposes. As for the first issue, 100% affordable projects typically receive credit in municipal plans through the promise of funding conveyed by a municipal Resolution of Intent to Bond. However, due to the exorbitant expense municipalities only very rarely actually fund the construction of rental affordable housing projects themselves. Typically the funding comes from the State s allocation of federal low income housing tax credits, which are competitively awarded and can take repeated attempts over a number of years to secure. Moreover, the Appellate Division ruling in In re Adoption of N.J.A.C. 5:96 and 5:97 By New Jersey Council on Affordable Housing, 416 N.J. Super 462, (App. Div. 2010), affirmed, 215 N.J. 578 (2013) disallowed rental bonus credits for units not yet constructed, reasoning that the incentive that the bonus credit was to induce when the rule was first adopted had long since dissipated by In this respect the question may be an essentially legal one whether the 2005 Order granting the Township immediate credits for a project clearly not yet built can be reconciled with the 2010 Appellate decision which followed. It may be that FSHD s long standing perseverance on the project, starting more than a decade prior to the Appellate decision can justify retaining the project in Cherry Hill s Compliance Plan with the bonus credits. Although I am troubled by the fact that the number Page 38 of 74

44 of rental bonus credits awarded to the project (61) exceeds the number of units (54), if retaining the 115 units/credits for the project is integral to maintaining it as part of the Compliance Plan then I support it. As for the Township s obligation to do what is necessary and appropriate to facilitate the development of Evans-Francis Estates, the Township has been an essential party to FSHD s acquisition of the land and securing nearly $1 million in additional funding for the project. The tax credit competition rewards applications which include municipal funding and I have asked Peter O Connor whether the Township s role to date will enable FSHD to maximize the competitiveness of its future funding applications. His response will influence my recommendation to the Court on the limits which the Township seeks to place on its participation. Mr. O Connor should also indicate whether the Evans-Francis Estates project needs to be included in the Township s Compliance Plan in order to qualify or be competitive for funding. Finally, I would appreciate hearing from counsel how they think the Evans-Francis Estates site and project should affect the Township RDP and unit/credit count in the event the Court determines that the project should be reinstated in the Compliance Plan. Mr. Surenian indicates that the Township is amenable to including [Evans-Francis Estates] in its plan provided that it secures the benefit of the December 23, 1996 and August 17, 2005 orders, as amended by the November 2, 2005 order, all of which confer 115 credits for this project on the Township (Surenian letter of May 19, 2014, p.8) He also details various actions taken by the Township some financial, some procedural- which, he contends, satisfy the Township s obligation under the 2005 Consent Order to do what is necessary and appropriate to facilitate development of the project. Mr. Walsh sets forth a series of affirmative measures involving the Township s participation and which he characterizes as essential to support the project as a realistic affordable housing opportunity (Walsh letter of May 19, 2014, p.6). These affirmative measures run the gamut from reinstating Evans-Francis Estates in the Township s Housing Plan and various aspects of administrative cooperation (review of construction documents, timing of escrow payments, type of performance guarantee, etc.) to revising the $1.5 million commitment of the Township s affordable housing trust funds so that it is applicable to the project at Short Hills Farm rather than at Garden State Park as had been contemplated. Mr. Walsh also requests at least $1.5 million of trust funds in affordability assistance to render 12 of the 54 rental units planned for Evans- Francis Estates affordable to very low income households. Mr. Walsh provides an administrative code Page 39 of 74

45 citation to demonstrate that the municipal trust funds are necessary for an application for tax credit financing for the project to be competitive. He makes a similar case for the Township agreeing to a minimal Payment in Lieu of Taxes agreement. Since some of Mr. Walsh s affirmative measures are new requests the Township should have an opportunity to respond and I ask that it prepare a written response by the June 26, 2014 case management conference. Also, I would ask Mr. Walsh to indicate how the contributions which the Township has made thus far which have financial dimensions such as participating in the agreement through which FSHD acquired the site for Evans Francis Estates and the agreements through which FSHD or Evans-Francis Estates received cash contributions for the development from third parties figure in the municipal contribution calculation in the tax credit application process. The Township has responded via Mr. Surenian s letter to me of March 30, 2015 to the list of affirmative measures which Kevin Walsh requested on behalf of FSHD in his letter of May 19, 2014 (p.6). Mr. Surenian devotes the majority of his response to adamantly opposing Mr. Walsh s request for financial subsidies for the Evans-Francis Estates project from the Township s Affordable Housing Trust Fund ( AHTF ). These subsidies ($1.5 million for land acquisition, predevelopment costs and construction expenses and an additional estimated $1.5 million to write down the cost of 12 of the 54 units at Evans-Francis Estates from low to very low income affordability) were incorporated into the Township s approved Spending Plan but for a site at the Garden State Park, not at the current property at Short Hills Farm. The relocation of the Evans-Francis Estates project relied on the cooperation of M&M, the Garden State Park developer, which was not forthcoming. Parenthetically, it appears that the disposition of these trust funds has just been vested in the Trial Courts by virtue of the recent N.J. Supreme Court decision. See In re Failure of the Council on Affordable Housing to Adopt Trust Fund Commitment Regulations, ---N.J. Super--- (App. Div. 2015) ( In re Council on Affordable Housing ) Mr. Walsh has provided a citation to the rules of the NJ Housing and Mortgage Finance Agency which link municipal financial support for a tax credit development to the points needed to render the application competitive. However, he did not respond to my request for insight as to how the various contributions made to FSHD to date may satisfy the necessity for municipal support. As Mr. Surenian points out, these contributions include clear title to a property assessed at $1,798,040 (per the 2011 Tax Court decision at Exhibit L of Mr. Jedzininak s certification), $80,000 Page 40 of 74

46 in 2004 and $581,549 in These contributions were made with municipal knowledge and acquiescence if not directly from the Township s Affordable Housing Trust Fund. I still support the reinstatement of Evans-Francis Estates into the Township s Fair Share Plan. As a cleared, developable parcel with site plan approval it has the prospect to compete well for tax credit financing particularly if the contributions to date can be counted as municipal support for the project. This is not to say that the Township should necessarily be relieved of any further financial support for the project but rather to first exhaust the possibility that the contributions to date will be sufficient. I acknowledge that Mr. Walsh has requested a variety of other concessions as part of the Township s affirmative measures to support the development. However, these are relatively minor procedural concessions which I expect the parties could work out once the funding and crediting issues are resolved. I should also acknowledge that the parties dispute the legitimacy of a portion of the charges to the Evans-Francis Estates escrow account which were charged by the Township and its consultants in the process of administratively perfecting the site plan approval as ordered by Judge Millinky. However, I am hopeful this dispute will be settled in the near future. Mr. Surenian has clarified the Township s position on this project. The Township is willing to reinstate the Evans-Francis Estates project at Short Hills Farm in its Fair Share Plan and enter into a PILOT agreement at a reasonable rate. For its part the Township wants to receive the 115 credits for the project consistent with Court orders of December 23, 1996, August 17, 2005 and November 2, In addition, it is opposed to providing any further financial assistance to the project. Mr. Walsh has clarified Fair Share Housing Development s ( FSHD ) position. First, he has confirmed that the financial support of $1,036,549 which was provided to the project with the Township s support is sufficient under the NJ HMFA s current tax credit Qualified Assistance Plan to attain the maximum points for the municipal support component of competitive scoring. This is welcome news and improves the project s prospects for tax credit funding. Second, he indicates that a PILOT agreement with lower than the standard 6.28% of gross annual revenues rate may be necessary to permit project feasibility and recoup past expenses (Walsh letter of May 18, 2015, p-7). Setting the rate will require a balancing of the Township s obligation to do what is necessary and appropriate to facilitate development of Evans Francis Estates and determining the rate which is reasonably required to promote the project s financial feasibility. In my experience Page 41 of 74

47 it is unusual for the rate to dip below the NJ HMFA standard of 6.28%; project feasibility (as opposed to recouping past expenses ) would be the only justifiable cause to do so and would have to be demonstrated by FSHD. Third, Mr. Walsh contends that the tax credit rules necessitate the designation of the Short Hills Farm site as a Redevelopment Area pursuant to N.J.S.A. 40A:12A (the Local Housing and Redevelopment Act) in order to receive the 5 points in this scoring category. This designation is a reasonable affirmative measure for a municipality to take in support of a 100% affordable housing development. However, the parties first have to ascertain that the Evans-Francis Estates site can meet the statutory criteria to be designated a Redevelopment Area under the Act. My understanding is that the Township is reviewing this issue at this time. Fourth, FSHD retains two objections to what it claims are excessive Planning Board fees. The first, which are the fees related to plan conformance review by the Township and its staff, have recently been settled. The second objection is over the $66, in Township application and escrow fees which were required of FSHD in its re-application for site plan approval for the project. These fees are the subject of a complaint filed by Evans Francis Estates against the Township in While the parties have discussed settlement of this claim, no resolution has yet been achieved. One final factor warrants mention: FSHD now plans to develop Evans-Francis Estates through a partnership with the Walters Group. This partner is an experienced developer with solid experience in competing successfully for tax credit funding and building and managing affordable housing in New Jersey. The addition of the Walter Group enhances the development team significantly and improves the likelihood that the project will be completed. In conclusion, the conditions which the Township and FSHD have articulated for the advancement of Evans Francis Estates appear to be achievable on both sides, with the possible exception of the Redevelopment Area designation (which is pending further review). If the Court wants a specific recommendation on the re-application fee complaint I will be pleased to review it and provide one. 6. The 108 unit contingent allocation for the Croft Farm should be added to the Township s RDP. FSHC objects to the continuing absence of the Croft Farm from the Township s vacant land inventory and RDP. Dr. Kinsey accurately recounts the history of the Croft Farm litigation in his Page 42 of 74

48 report (Kinsey Report, p. 9 & 10). Litigation between Plaintiffs and Cherry Hill Township was filed in 1985 and was a subject of the 1993 Stipulation of Settlement. With regard to the Croft Farm, the parties stipulated the following: 1. The legal issue before the Court is limited to whether Croft Farm should be included in the Township s vacant land inventory for the purposes of determining the Township s right to a vacant land adjustment. The parties hereto do not waive their right to appeal the Court s determination on this issue and this issue alone. 2. If the site is deemed included in the vacant land inventory, the parties stipulate that the Fair Share allocation for the entire tract (parcels A and B) is 108 units. The stipulation included an explanation that the development capacity calculation for the Croft Farm was premised upon the availability of 54 developable acres with presumably a density of 10 units per acre and a 20% set-aside (54 ac x 10 units/ac = 540 units x.20 = 108 units). The Stipulation also referred to a wetlands delineation of the Croft Farm which was undertaken by Dresdner Robin, a consultant whom I retained. That delineation resulted in a determination that the Croft Farm (both parcels A and B) comprised acres of which acres were developable. Since the developable acreage exceeded 40 acres the 108 unit affordable housing assignment was validated. Mr. Surenian chronicles the Township s efforts to research the historic value of the Croft Farm and qualify it for listing on the State and National Registers of Historic Places. These efforts apparently began in 1980 and reached fruition in 2000 when the Croft Farm was placed on the National Register. Indeed, since the research process which Mr. Surenian describes had begun a decade before, the Township and FSHC were well aware of the historic value of the Croft Farm when the 1993 Settlement was being negotiated. My recollection is that the settlement on 108 units was premised on land which the parties agreed could be developed without encroaching on the historic features of the property. If the historic value of the farm would preclude any development on the property then the Township s agreement to a 108 unit allocation in the event it was included in the vacant land inventory is certainly puzzling. Page 43 of 74

49 Mr. Surenian discounts as incomprehensible the reference by Judge Davis in his June 6, 2003 letter opinion as to whether the Croft Farm should be assigned an RDP. Mr. Surenian points out that the Judge was well aware that the Township required a vacant land adjustment for the first round since he had entered an Order on March 20, 2002 retroactively awarding Cherry Hill a Judgment of Repose for the period March 24, 1994 through March 24, I agree. However, the Township s plans for the second and third round were not before Judge Davis so his speculation may not have been misplaced. After all, based on the 708 unit RDP in the 1993 Settlement it would have been hard to imagine that the Township would be claiming 1,543 units/credits in its 2014 Fair Share Plan. The Township should clarify its position with regard to the Croft Farm. If it contends that the historic designation warrants excluding the entire property from the vacant land inventory then it should support that contention with mapping and relevant buffering standards/precedents. As Dr. Kinsey points out, COAH rules do not preclude historic sites from being included on a vacant land inventory for RDP purposes if the historic designation occurred after the municipal petition for substantive certification. N.J.A.C. 5:93-4.2(c)3; N.J.S.A. 52:D Mr. Surenian and Township staff have provided the information requested (along with some unanticipated insights from Dr. Kinsey). The Croft Farm is divided by Brace Road into two parcels: Parcel A (which contains the historic farmhouse and outbuildings on 45 acres) and Parcel B (which contains active and passive recreation facilities on 31.7 acres). The structures and 40.1 acres of Parcel A are on the State and National Register of Historic Places. The National Register designation occurred in 2000, prior to the Township s application to the Court for repose in 2oo1, so under COAH rules the 40.1 acre portion of Parcel A can be excluded from contributing to the Township s RDP. N.J.A.C. 5:93-4.2(c) 3; N.J.S.A. 52: D Both parcels are listed on the Township s Recreation and Open Space Inventory ( ROSI ). Any determination concerning the Croft Farm should be reached after the Court decides whether an RDP should be attributed to the market rate developments which were allegedly approved during the gap in the Township s coverage by scarce resource restraints. If the Court decides such an allocation is appropriate, the Township s RDP will likely surpass its prior round fair share number and the entire vacant land adjustment will be unnecessary. However, if the Township s RDP remains below its prior round obligation the most practical approach to the Croft Farm may involve setting aside the 108 unit stipulation in favor of an RDP on Parcel B alone. My recommendation on the Croft Farm RDP follows in the commentary to point 7 below. Page 44 of 74

50 My commentary on the Croft Farm RDP has been updated following Point 7 below. 7. The RDP calculation on which the Township s 2011 Plan as amended by the 2014 Amendment is based is understated because the Township did not include in its inventory of sites two classes of sites required by COAH rules: sites with relatively low-density development N.J.A.C. 5:97 5.2(c) 4 and areas in the municipality that may develop or redevelop including a private club owned by its members and properties that may be subdivided and support additional development. N.J.A.C. 5:97-5-2(c)6. As indicated above, the 1993 Stipulation of Settlement incorporated an adjustment of Cherry Hill s fair share from 2,295 to 708 units. COAH s second round rules would have permitted the Township to retain its Court sanctioned adjustment provided that it continued to implement the terms of its previous substantive certification ( i.e., repose) N.J.A.C. 5: (f). Nonetheless, in 2004 the Township planner undertook a much more detailed examination of the municipality s vacant land resources than had occurred in 1993 and determined that the RDP should be increased by 437 units to 1,143 units (the 2 unit discrepancy is due to an apparent misreading of the 1993 adjustment). This RDP re-evaluation is presented as Appendix A to the 2009 Housing Plan. The 2009 Plan also makes reference to COAH s third round modifications to the RDP process. These third round rules have been invalidated by the September 26, 2013 decision of the NJ Supreme Court. Dr. Kinsey recognizes this rule change in his updated report (Kinsey Report, p.8). He refers instead to N.J.A.C. 5:93-4.2(h) as the basis for expanding the universe of properties which would comprise Cherry Hill s RDP. However, I agree with Mr. Bernard that the rule Dr. Kinsey cites refers to municipal approaches to addressing unmet need, not to the calculation of RDP. COAH rules do allow the Council the discretion to look beyond vacant development sites for sources of the RDP, as indicated in this excerpt: (d) The Council shall review the existing land use map and inventory to determine which sites are most likely to develop for low and moderate income housing. All vacant sites shall initially be presumed to fall into this category. In addition, the Council may determine that Page 45 of 74

51 other sites, that are devoted to a specific use which involves relatively low density development would create an opportunity for affordable housing if inclusionary zoning was in place. Such sites include, but are not limited to: golf courses not owned by its members; farms in SDRP planning areas one, two and three; driving ranges; nurseries; and nonconforming uses. The Council may request a letter from the owner of sites that are not vacant indicating the site s availability for inclusionary development. N.J.A.C. 5:93-4.2(d) However, the four most prominent tracts with the characteristics described in the rule cited above are the Woodcrest CC, Merchantville GC, Springdale Farm and the Apostolic Church and the 1993 Settlement already provides a mechanism for capturing the RDP from these properties. In my Pre- Mediation Report of January 26, 2011 I referred to the Township s revised vacant land analysis and the resulting increase in the RDP to 1,143 units and reported that it reasonably represents the Township s RDP pursuant to applicable COAH rules. (Pre-Mediation Report, p. 3). That remains my view. The Township has continued to modify its RDP as properties become available for development or redevelopment. Accordingly, the 2014 Amendment includes RDP allocations for the Woodcrest CC site (155 units), Buckingham Partners (the former Pro-Build property (304 units), St. Thomas Seniors (7.4 units) and The Grand (4 units) which amount to an additional 197 units and a total RDP of 1,340 units (1, = 1,340). Naturally, this total may change as a result of the Compliance Hearing, but I believe the Township is abiding by the COAH rules in the way it has handled the RDP. Dr. Kinsey acknowledges that Cherry Hill Township has modified its RDP over the years either on its own initiative (as in 2004) or in response to development or redevelopment proposals. He observes that it is the long, multi-year gestation period that provided time for those opportunities to arise. (Kinsey letter of May 19, 2014, p. 6). He then expresses concern that once the Court approves the Township s Housing Plan that dynamic process will freeze and the Plan will be static for 10 years. To counter that he suggests the Township include in its RDP calculus properties with low-density development and areas that may become available for redevelopment. I concur with Dr. Kinsey that the Township Housing Plan should continue to evolve, but rather than conduct a potentially expensive examination of the capacity of developed properties for redevelopment, such as the property Dr. Kinsey proposed in his letter, I recommend as an alternative that the Court require as a Page 46 of 74

52 condition of any Judgment of Repose that the Township continue to supplement its inclusionary sites over the course of its period of Repose until it meets the full prior round allocation. The Township s 2014 Plan Amendment to the 2011 Housing Element and Fair Share Plan (the 2014 Fair Share Plan ) presents a 1,340 unit RDP. This is derived from the 1,143 unit analysis performed by the then Township Planner, David Benedetti, PP, AICP in preparing for the 2011 Housing Plan, plus the following specific sites: Woodcrest CC: Buckingham Partners: St. Thomas Seniors: The Grand: 155 units 30.4 units 7.2 units 4 units 197 units (rounded) The resulting RDP was 1,340 units (1,143 & 197 = 1,340). It should be noted that the 74 unit agerestricted affordable units constructed at St. Mary s Benedicts Place do not affect the RDP since the land on which that housing development is located had already been assigned an RDP of 110 units. There are three additions to be made to this RDP. The first is to account for the differential between the Township s RDP proposal on the Woodcrest CC site (155 units) and my recommendation (216 units, or 20% of 1,080 units per my 2014 Master s Report, p ). Although I acknowledge that the Court will establish the RDP my recommendation is 61 units greater than the Township s and if accepted by the Court, would increase the Township s 1,340 unit RDP to 1,401 units (1, = 1,401). The second RDP alteration concerns the 4.2 acre parcel at 460 Evesham Road which is owned by an affiliate of FSHD and is the intended site for the 54 unit family rental development to be known as Evans-Francis Estates. If the Court finds that this development should be restored to the Township s Fair Share Plan I recommend that the RDP assessment for this property be 54 units since the parcel is deed-restricted to affordable housing use and has site plan approval for 54 units. Further justification for this assessment is that it represents the affordable housing allocation from the Short Hills Farm mixed-use development. Had an RDP analysis been performed when the Short Hills Farm property was vacant (which is within the timeframe of this case) the RDP would likely have exceeded 54 units. When added to the 1,401 unit RDP tallied above the 54 units from Evans Francis Estates bring the RDP to 1,455 units (1, = 1,455). Page 47 of 74

53 The third and final adjustment to the RDP is to account for the Croft Farm property. The history of the Croft Farm and its division by Brace Road into Parcels A and B is described above. In light of the National Register of Historic Places designation for Parcel A which preceded the Township s application for repose I recommend that Parcel A be exempt from an RDP assignment. Parcel B is suitable for residential development and was stipulated by the parties for RDP purposes in the 1993 Stipulation of Settlement at a gross density of 10 units per acre. Applying that density to the acres of Parcel B yields a total development capacity of 317 units and, assuming a 20% affordable housing set-aside, yields an RDP of 64 units (31.7 ac x 10 du/ac x.20 = 63.4 units, rounded up to 64 units). When added to the 1,455 unit RDP subtotal above this brings the Township s RDP total to 1,519 units (1, = 1,519). Given the adjusted prior round new construction fair share of 1,647 units which I have recommended, the Township s Unmet Need is 128 units (1,647 1,519 = 128). The Township should describe how its Fair Share Plan addresses the 1,519 unit RDP and 128 unit Unmet Need for the Prior Round. To that end, I have asked the Township to update the tables entitled Cherry Hill Township Affordable Housing Calculations after pages 8 and 10 in the 2014 Fair Share Plan. These tables, which focus on the RDP should be supplemented with a description of how the Township plans to address the Unmet Need and how that response squares with COAH s Second Round rules. As mentioned above, in his May 18, 2015 letter to me Mr. Surenian indicates that the Township has agreed to my recommendation to add 64 units to its RDP which represents the development capacity of Parcel B of the Croft Farm. Mr. Walsh counters that the issue of whether development must occur at Croft Farm is res judicata and not open to modification. He also claims that the Township is estopped from asserting that the use of the Croft Farm is not necessary and cites a March 13, 2003 Township brief as evidence that Cherry Hill agreed to use the site. I do not share his interpretation of the citation. However, I acknowledge that my recommendation to depart from the 108 unit RDP if the site is included in the vacant land inventory as stipulated by the parties in the 1993 Stipulation of Settlement raises a legal question as to whether the Court can entertain such an alternative. Nonetheless, if the all or nothing language of the Stipulation (see pages 36 & 37 of this report for Page 48 of 74

54 the excerpt) can be bypassed I believe the 64 unit RDP for Parcel B of the Croft Farm is the appropriate approach for the reasons set forth above. Finally, per my request Mr. Bernard has modified the table entitled Cherry Hill Township Affordable Housing Calculations from the versions which were published in the 2014 Amendment to the Township s Fair Share Plan (see Exhibit Q to this report). The revisions to this table will be discussed in the following section regarding the Township Compliance Plan. Objections Concerning the Township s Compliance Plan 8. Plaintiff s have objected to the Township s Compliance Plan as not providing for a sufficient number of units affordable to very low income households (30% of regional median income or less). P.L. 2008, c.46 (a.k.a. the Roberts Bill ) amended the Fair Housing Act to create a requirement that a minimum of 13% of affordable housing units be reserved for occupancy by very low income households. On October 30, 2008 Lucy Vandenberg, then COAH Executive Director, sent out a form letter to Mayors of all NJ municipalities entitled: Re: Affordable Housing Reform Statute, P.L. 2008, c. 46 Guidance Document. That document provides the following guidance: Third Round Housing Elements and Fair Share Plans must address the 13% very low-income requirement of the growth share obligation. Consequently, Cherry Hill Township s prior round plan does not have to meet the 13% very low income housing standard. Furthermore, to the extent that municipalities have adopted Compliance Plans in recent years which do incorporate very low income housing it has typically been circumstantial since the growth share obligation on which it was predicated has been invalidated by the Appellate Division (October 8, 2010) and the NJ Supreme Court (September 26, 2013). Some municipalities have been able to secure very low income housing credits through State sponsored Low Income Housing Tax Credit rental developments or through group homes which serve the very low income population. However, without knowing the third round obligation to which the 13% requirement will be applied it has been impossible for municipalities to plan for compliance with any degree of precision. It should be noted that Cherry Hill has included a 13% very Page 49 of 74

55 low income requirement in the draft overlay zoning ordinances through which it proposes to address unmet need. Dr. Kinsey asked that I reconsider my recommendation that COAH s interpretation as expressed in Executive Director Vandenberg s letter referenced above is binding on the Court. He points out that COAH s guidance to municipalities as expressed in that letter to Mayors was not subject to rulemaking in accordance with the Administrative Procedures Act. I did not intend to imply that COAH s interpretation was binding on the Court. However, I did want to convey to the Court how the statutory amendment to the Fair Housing Act which requires 13% of affordable housing units to be affordable to very low income households was generally being implemented. I know of no prior round Fair Share Plan which meets that standard, presumably because most of the affordable units in prior round plans were already cast as either low or moderate by 2008 when the statute was amended. In any event, Article X: Affordable Housing Procedures & Eligibility Requirements of the Township s zoning ordinance, which requires 13% of newly constructed affordable rental units to be priced for very low income households is an appropriate response. (see Exhibit J, Section 1006 A2). Mr. Walsh has reiterated his claim that the Township is out of compliance with the 2008 amendment to the Fair Housing Act which requires that at least 13 percent of the housing units made available for occupancy by low income and moderate income households [will] be reserved for occupancy by very low income households N.J.S.A. 52:27D Pursuant to the statutory amendment COAH was charged with reviewing municipal housing elements and housing activities at least once every three years to monitor compliance. COAH has not conducted this monitoring. Although Mr. Walsh characterizes the language of the 2008 amendment as plain, the amendment does not indicate whether the 13 percent standard is to apply to all of the units in the municipal fair share plan, or all units made available after the effective date of the amendment (July 17, 2008) or, as interpreted by COAH s then Executive Director Vandenberg, all the units made available in Third Round plans. This potential for differing interpretations is presumably what motivated Director Vandenberg to issue the policy guidance to municipalities on October 30, Director Vandenberg s guidance has been heeded - I know of no municipality under either COAH s or the Court s jurisdiction which has been monitored for compliance with the 13 percent very low income housing requirement. Page 50 of 74

56 In my 2015 Preliminary Report I noted with approval that the Township s land use code was in the process of being amended to require 13 percent of newly-constructed affordable rental units to be priced for very low income households. Units constructed with tax credit financing are exempt from this code provision due to NJ HMFA requirements. This amendment to Article X: Affordable Housing Procedural & Eligibility Requirements was adopted by the Township Council and became effective on May 20, This is a welcome step forward. Finally, although in my view it does not relate to Prior Round compliance it would be worthwhile to know how many units in Cherry Hill are actually priced to be affordable to very low income households and I recommend that the Township provide this information. It will be needed shortly in any event if the Township moves directly into planning for the Third Round after the Prior Round Compliance Hearing. 9. The Township has not adopted a Resolution of Intent to Bond. Since most municipal Compliance Plans contain components which may require financial assistance from the municipality in order to be implemented, COAH and the Courts typically require the governing body to adopt a Resolution of Intent to Bond. These resolutions pledge the municipality s support to the programs and projects set forth in their Compliance Plan, thus rendering them realistic opportunities for the affordable housing they are intended to provide. Mr. Walsh lodged the objection cited above on December 31, The Cherry Hill Township Council adopted a Resolution of Intent to Bond on July 9, 2012 (see Exhibit E). The Resolution follows the COAH model and corresponds to the Affordable Housing Trust Fund Spending Plan which the Township adopted on May 29, By resolution of January 8, 2014 Sean Thompson, COAH Acting Executive Director approved the Township s Spending Plan. While the Plaintiff s objection should be satisfied by the adopted municipal Resolution described above there is an outstanding issue related to the Spending Plan which Mr. Surenian covers at the end of his March 10, 2014 letter (see p. 31 Loose Ends ). The Township had allocated $1.5 million in its 2012 Spending Plan to support the relocation of the Evans-Francis Estates development from the Short Hills farm site to the Garden State Park. Since that relocation was not able to be consummated the Township wants to revise the Spending Plan to reallocate the Evans-Francis Estates funding to Page 51 of 74

57 other approvable components of its Compliance Plan. The issue of financial support for Evans- Francis Estates has previously been addressed. Mr. Surenian reiterated that the Township has previously adopted a Resolution of Intent to Bond and will adopt a revised version once the final form of the Housing Plan has been established through this compliance process. He indicated the Township s intention to redirect the $1.5 million allocated in the Township s Spending Plan to Evans-Francis Estates to other programs since the relocation of the housing development to the Garden State Park has not been accomplished. This intention is clearly at odds with the affirmative measures set forth by Mr. Walsh and addressed in a prior section. As noted above, in his May 18, 2015 letter Mr. Walsh covered four points for FSHD related to the Township s affirmative actions in support of the development of Evan-Francis Estates. The Township has not agreed to each of FSHD s demands (one of which was conveyed for the first time in that letter and the Township is just now considering it). However, Mr. Walsh did not reiterate his demand that the Township redirect the $1.5 million in affordable housing trust funds from the proposed Garden State Park location to the current Short Hills Farm site. At the case management conference Mr. Walsh should clarify whether FSHD has indeed abandoned that demand. 10. The Township should be required to demonstrate that its process for certifying and recertifying lower-income households is adequate. Mr. Walsh asked that the Township provide evidence that it has been and continues to properly administer the certification process for low and moderate income households who apply for affordable housing in Cherry Hill. In response to this objection my office reviewed the Township s written administrative procedures, which were satisfactory. I also asked that the Plaintiff s counsel meet with the staff of the Township Community Development Department to review the affirmative marketing, income qualification and related procedures. Although I was not involved in that review I understand that it took place. I have not heard any subsequent complaints so I will assume that Plaintiffs were satisfied with the Township s administrative procedures unless Mr. Walsh indicates otherwise. Mr. Walsh reiterated his concern that the Township has not abided by COAH s affirmative marketing rules in the administration of the affordable housing units in Cherry Hill and notes that he intends to pursue the issue further at trial. Mr. Surenian has offered to meet with Mr. Walsh and the Township staff responsible Page 52 of 74

58 for administration of affordable housing units to discuss the Township s past procedures and respond to questions. I urge Mr. Walsh to do so and am willing to convene such a meeting if my participation would be helpful. A meeting may prove to be a much more efficient way for Mr. Walsh to understand the extent of any administrative problems which may have existed than to search for them at trial. Mr. Surenian has reiterated his invitation for Mr. Walsh to meet with Township staff to review the affirmative marketing, income qualification and related procedures for any alleged deficiencies. I encourage that meeting and review as well so that any procedural problems which may exist can be identified and corrected as soon as possible. It would be counterproductive to address any such deficiencies in Court if they can be remedied without imposing on the Court s time. In his May 18, 2015 letter Mr. Walsh reiterates his demand that the Township demonstrate compliance with the panoply of COAH s administrative rules, including those relating to price limitations, income qualification procedures for prospective buyers/renters, affirmative marketing, and deed restrictions, among others. Mr. Walsh reinforced the need for this review in a letter to me of May 29, 2015 which raises questions as to whether a local residency preference policy was utilized in the tenant selection process for a 152 unit age-restricted affordable rental development at the St. Mary s property. The Township is looking into the St. Mary s tenant selection process and should report on it in advance of the Compliance Hearing. The Township s progress on its inquiry and analysis should be on the agenda for the June 9, 2015 case management conference. In the past I have volunteered to monitor these administrative procedures if the Court so directs. However, in view of the unexpected residency preference references in the St.-Mary s documents I recommend that this review of the Township s records be conducted. 11. The Township s Compliance Plan does not create the requisite realistic opportunity for capturing affordable housing opportunities through inclusionary zoning at its six identified redevelopment sites. The Township s 2011 Housing Plan, as revised by the 2014 Amendment claims affordable housing units and credits totaling 1,543 toward a prior round fair share allocation of 1,669. This yields a shortfall of 126 units (1,669 1,543 = 126). The Compliance Plan also presents a more conservative Page 53 of 74

59 approach to crediting which results in a total of 1,487 units/credits toward the 1,669 unit allocation. This yields a shortfall of 182 units (1,669 1,487 = 182). As a result of the upcoming Compliance Hearing the shortfall and perhaps the unmet need may well change again and by that time COAH will presumably have released the third round fair share obligations. It is conceivable that the Township could present a Compliance Plan which meets its prior round obligation and eliminate the unmet need and thereby any requirement to address it. However, I believe the greater likelihood is that the final plan will continue to result in unmet need. COAH s prior round rules which guide municipal compliance concerning unmet need are set forth in N.J.A.C. 5:93-4.2(h) and read as follows: If the RDP described in (f) above is less than the precredited need minus the rehabilitation component, the Council shall review the existing municipal land use map for areas that may develop or redevelop. Examples of such areas include, but are not limited to: a private club owned by its members; publicly owned land; downtown mixed use areas; high density residential areas surrounding the downtown; areas with a large aging housing stock appropriate for accessory apartments; and properties that may be subdivided and support additional development. After such an analysis, the Council may require at least any combination of the following in an effort to address the housing obligation: 1. Zoning amendments that permit apartments or accessory apartments; 2. Overlay zoning requiring inclusionary development or the imposition of a development fee consistent with N.J.A.C. 5:93-8; In approving an overlay zone, the Council may allow the existing use to continue and expand as a conforming use, but provide that where the prior use on the site is changed, the site shall produce low and moderate income housing or a development fee; or 3. Zoning amendments that impose a development fee consistent with N.J.A.C. 5:93-8. Cherry Hill s Compliance Plan addresses unmet need through two initiatives: it proposes to enact overlay zones in six locations comprising a total of 146 acres and it has adopted a developer fee ordinance and established an Affordable Housing Trust Fund and Spending Plan. Page 54 of 74

60 The overlay zoning proposal in Cherry Hill s Compliance Plan has evolved over recent years. In the 2009 Housing Plan 4 sites were proposed for rezoning or for a redevelopment area designation, as follows: 1. Golden Triangle (Transit Oriented Development Overlay) 2. Kimco-Brace Road (Affordable Housing Overlay) 3. Kimco-Clover Shopping Center (Affordable Housing Overlay) 4. Woodcrest Shopping Center (Affordable Housing Overlay) These four shopping centers were all planned for a mixture of inclusionary residential and commercial development. Kimco, the owner of two of the shopping centers, objected to being included in the Township s Compliance Plan, claiming that it had no interest in mixed-use development and that the terms of the leases at its two centers would prohibit their redevelopment for the foreseeable future. I agreed with this assessment and called into question the availability of these sites for affordable housing production in my October 5, 2009 report for the Court. Kimco s objection was overcome when the Township reconsidered the rezoning approach and decided instead to designate overlay zones on the properties which would permit the pre-existing 100% commercial uses to continue as permitted uses but would enable the properties to be redeveloped for mixed use as an additional permitted use. Plaintiff s objected to the limited redevelopment prospects presented by the 4 shopping center properties and at my invitation provided a list of other properties for the Township to consider as redevelopment candidates to address unmet need. On December 14, 2009 representatives of FSHC, the Township and I toured the sites suggested by Plaintiffs and evaluated them for redevelopment potential. The parties agreed that two properties from FSHC s inventory warranted inclusion as unmet need prospects: the PATCO Woodcrest Station and the former Howard Johnson (now America s Best Value Inn) site (hereinafter the Hotel site). Judge Colalillo entered an Order on June 3, 2010 directing that these two sites be added to the Township s Compliance Plan to address unmet need. In his December 29, 2011 report, Dr. Kinsey objected to the manner in which the Township s 2011 Housing Plan addressed the then-calculated 478 unit unmet need on the expanded list of 6 properties. Dr. Kinsey s objections focused on the residential densities permitted by the proposed zoning overlays (generally too low), the lack of an incentive for rental housing, the lack of a demonstration that the incentive provided by the proposed overlay zoning would be sufficient to Page 55 of 74

61 trigger redevelopment of the sites and the inadequacy of redevelopment of the 6 sites even if it were to occur - to satisfy the total unmet need. In his February 19, 2014 Updated Report, Dr. Kinsey acknowledges that the Township s 2014 Amendment responds to his prior critique in various respects, including increasing permitted densities in the zoning overlays and creating an incentive for rental housing by reducing the set-aside to the customary 15%. He maintains that higher gross densities are still appropriate. Finally he questions the availability of the two Kimco properties for the reasons cited above. The 2014 Amendment incorporates the proposed overlay ordinances and summarizes the potential affordable residential development capacity of the six proposed sites as 349 units (2014 Amendment, p.13). By comparison, this potential housing yield far exceeds the unit shortfall of unmet need which the 2014 Amendment presents. However, as a practical matter development on any of the six sites in the near future is not likely. The two Kimco centers have already been discussed; the prospects for redevelopment of the Woodcrest shopping center are unlikely for similar reasons. The Pavilion Shopping Center which anchors the Golden Triangle site was struggling during the recession and the Township commissioned an independent planning firm to examine the viability of designating it a redevelopment area pursuant to the Local Housing and Redevelopment Law. N.J.S.A. 40A:12A-1 et seq. The Redevelopment Plan was never adopted, but the Center now appears fully tenanted and the redevelopment prospects for housing development on site appear unlikely. I reviewed the Golden Triangle overlay zone along with the ordinance amendments for the PATCO Woodcrest Station and the Hotel site in a letter report to Judge Millenky dated January 26, That report referenced a 2006 report commissioned by the Delaware River Port Authority (hereinafter the DRPA ). The DRPA report examined the viability of redevelopment at the Woodcrest Station assuming that a developer would pay for structured parking to liberate areas of the existing surface parking for office buildings. The consultants concluded that such a redevelopment scenario was not economically feasible. Nonetheless, I support the Township s overlay zoning of the Woodcrest Station as a signal to the DRPA that it is supportive of transit oriented development at that location. The project scale (of 504 units) and net density of 28 units per acre with buildings of 4 stories is reasonably dense, although I Page 56 of 74

62 agree with Dr. Kinsey that the gross density should be increased, probably to 18 units per acre if the proposed 4 story maximum building height is maintained. Finally, the Hotel site is proposed for a density of 16 units per acre. Unlike the other mixed use overlays, this site is proposed for residential-only re-use. This 4 acre tract is bounded by Route 70 and Park Boulevard along the Cooper River Park and is an attractive residential location. Whether the site is redeveloped or not is a function of the viability of the hotel, which is not in the Township s control and the attractiveness of the proposed residential zoning, which is. The Bishop s View development next to the Hotel site was approved as a use variance at 22.5 units per acre with a 3 story maximum building height. The Township proposes 4 stories for the overlay, but at a density of only 16 units per acre. I recommend that the overlay density be increased to 22 units per acre, which will provide a greater zoning inducement for redevelopment. Both Mr. Surenian and Mr. Bernard make one other critical point in their responses to the Township s approach to unmet need. That point is that COAH does not hold municipalities to the same standard in creating a realistic opportunity that affordable housing will be constructed to address unmet need as it does to address the RDP. They cite cases of municipalities receiving substantive certification from COAH without adopting any plan to address unmet need or by simply adopting a developer fee ordinance. However, I do not recommend that the Court follow COAH s practice in this instance; rather I recommend that it follow COAH s rule, as excerpted above. Cherry Hill is proposing both overlay zoning and a developer fee ordinance. Those two techniques meet the standard which COAH may require as set forth in N.J.A.C. 5:93-4.2(h); namely, a combination of the three enumerated zoning amendments. I also recommend that the Court attempt to maintain some general proportionality between the extent of the unmet need and the zoning response. Presumably that was the Township s motivation in presenting the theoretical yield of 349 affordable units which could be generated by the overlay zoning on the 6 sites. As indicated above, I find the likelihood of many of these units being developed very low. However, it is clear from COAH s rules that the precision with which units are documented as against the RDP is not intended for the municipal response to the unmet need. Once the Court rules on the extent of the Township s unmet need it can then determine if the Township s response is adequate. Page 57 of 74

63 The Township through Mr. Surenian s letter of May 19, 2014, Mr. Bernard s letter of May 15, 2014 and Ms. Luciani s Certification of May 19, 2014, has agreed with my recommendation to increase the proposed density at the PATCO Woodcrest station site from 14 to 18 units per acre. If developed at 18 units per acre the 35 acre PATCO site could yield 126 affordable units (35.19 ac x 18 units/ac x.20 =126) Also, the Township has agreed to increase the proposed density at the Hotel site from 16 to 22 units per acre. In addition, the Township proposes to expand the 4 acre Hotel site by rezoning adjacent lots to create a total area of 9.12 acres. If assembled and developed at the maximum permitted density the Hotel site could yield 40 affordable units (9.12 ac x 22 units/ac x.20 = 40). While I still do not consider development on the four shopping center sites to be likely, the overlay zoning on the Woodcrest station and the Hotel sites is worthwhile as it creates an opportunity for a total of 166 affordable units. In addition, as referenced previously, the Township has adopted Article X: Affordable Housing Procedural & Eligibility Requirements of the land use code (see Exhibit J). Section 1005: Inclusionary Zoning imposes a 15% (for rental) or 20% (for sale) setaside for every multi-family development in the Township, including but not limited to development in the R7, R10 and R20 zones and the Affordable Housing Overlay Zone Section 1006: New Construction of the ordinance sets forth affordable housing requirements for all newly constructed developments that contain low-and moderate-income units, including any currently anticipated future developments that will provide low-and moderate-income housing units. The Township staff has represented to me that Article X was the basis for the Zoning Board of Adjustment requiring that Buckingham Partners include a 20% set-aside of affordable units. Although I think the ordinance could be clearer, requiring an affordable housing set-aside for multi-family projects approved by the Zoning Board of Adjustment could be a valuable approach to addressing unmet need and I recommend that the Township clarify the ordinance accordingly. Had such a provision been in effect when Bishop s View and the Highlands were approved as d variances they would have included an affordable housing set-aside. Finally, the Township has indicated its agreement with my recommendations that its obligation to address unmet need be proportional to the magnitude of the unmet need. Consequently, the mechanisms and sites Page 58 of 74

64 offered by the Township should be re-evaluated for adequacy after the Court has determined the unmet need number. Consistent with my recommendation following Point 7 I ask that the Township describe how the 2014 Fair Share Plan addresses an Unmet Need of 128 units. The Township s claim of 152 Prior Cycle units at St. Mary s changes the order of magnitude of Unmet Need dramatically. To be sure, there are still unanswered questions about residency preference policies at St. Mary s and the Jewish Federation and Gesher House and clarifications on the unit counts at Centura and Brunetti/Burrough s Mill which may impact the creditworthiness of affordable units at these developments. However, there is now a reasonable prospect that the Township s Fair Share Plan will not only meet its 1,465 unit RDP but will exceed its cap-adjusted Prior Round obligation of 1,669. Notwithstanding that prospect, it is also possible that the Township may retain an Unmet Need as a result of adverse Court rulings on the 1,000 unit cap and on the various challenges by FSHC to units such as those cited above. Consequently, I recommend that the Court address the issue of the 1,000 unit cap first, then the Township s RDP, and then the creditworthiness of the 1,734 units/credits which the Township claims. After those determinations the size of the Unmet Need for the Prior Round, if any, can be calculated and the Court can determine if the Township s mechanisms to address the Unmet Need are adequate. Although I do not recommend that the Court require the Township to address the Unmet Need with the kind of precision with which municipalities must address their RDP, I do think there should be a proportionality between the size of the Unmet Need and the municipal response. Cherry Hill s response to its Unmet Need has included overlay zoning at six developed properties (only 2 of which I believe are viable redevelopment candidates within the foreseeable future), amendments to Article X: Affordable Housing Procedural & Eligibility Requirements of the land use code which should capture affordable housing as Page 59 of 74

65 redevelopment occurs and a development fee ordinance (which has generated significant funding for affordable housing over previous years). These mechanisms to address Unmet Need compare favorably to those of the Fair Share Plans of other vacant land adjusted municipalities within COAH s jurisdiction as profiled by Mr. Bernard in his May 14, 2015 letter. However, the more critical yardstick is whether they are proportional to the size of the Unmet Need they are intended to address. At this point it appears likely that they will be sufficient. If not, then alternative sites including the Barclay Farms shopping center and McNaughton s Nursery and Garden Center as suggested by Mr. Walsh and others can be evaluated for overlay zoning. The former Syms property is in a different category since I have already exempted it from the scarce resource restraints and both Mr. Walsh and John Stapleton, attorney for Syms, have corresponded directly with the Court concerning its status. 12. The Township s Compliance Plan fails to provide the required documentation for the sites proposed to be redeveloped under the Local Housing and Redevelopment Law. The 2009 and 2011 Housing Plans were drafted to conform to the now-invalidated third round rules (N.J.A.C. 5:97). Those rules permitted municipalities to receive credit for affordable housing both for RDP purposes and to address unmet need through use of the Local Housing and Redevelopment Law (N.J.A.C. 5:97-5.3(b) 4 and N.J.A.C. 5:97-6.6). As indicated above, the Township had undertaken an Area in Need study of the Golden Triangle site to determine whether it would qualify as an Area in Need of Redevelopment. The Township decided not to proceed with the adoption of a Redevelopment Plan under the statute, instead opting to apply a zoning overlay for mixed use (including affordable housing) to the area. Consequently, the Township s Compliance Plan no longer contemplates use of the redevelopment statute. In his Report Dr. Kinsey claims that if the Township does not intend to utilize the redevelopment statute it must otherwise demonstrate that the overlay zoning of the six unmet need sites provides sufficient incentives for property owners to pursue redevelopment. This, he asserts, is necessary for Page 60 of 74

66 the Township to create the realistic opportunity to the extent that economic conditions allow 1 for the development of affordable housing. As described in the previous section and as reflected in the second round rules, COAH does not require the kind of economic analysis for unmet need which Dr. Kinsey advocates. Moreover, in a redevelopment situation making a judgment about a realistic opportunity can be a complicated matter. It could require a financial analysis of an existing business, the cost of relocation and demolition as well as the potential profitability of housing development. Much of this information may be proprietary and unavailable to the municipal planner. So, as attractive as it is to increase the predictability of the housing opportunities presented in Fair Share Plans, I do not think COAH rules require the municipality to demonstrate the economic feasibility of overlay zoning for redevelopment addressing unmet need. While this objection generated little response to my Preliminary Report I want to acknowledge that one of the new features in COAH s proposed rules is the requirement for economic feasibility studies to serve as the foundation for determining whether proposed inclusionary zoning creates a realistic opportunity for development. These studies are to be provided by municipalities as part of the Fair Share Plan and are intended to consider densities and set-asides that are sufficient to address total prospective need. N.J.A.C. 5:99-7.2(b) 1. It appears that economic feasibility studies are to be required for prior round but undeveloped sites as well as sites to meet the 2014 to 2024 Prospective Need. 13. The Township s Compliance Plan does not create the requisite realistic opportunity for creating affordable housing if the six sites identified in the 1993 Stipulation of Settlement become available. This objection is the subject of a separate motion filed by FSHC on September 12, 2011 and still pending. It concerns the treatment of (originally) 6 large sites in the Township which, at the time of the 1993 Stipulation of Settlement were thought to be unlikely candidates for development. Notwithstanding their lack of availability the parties did not want to miss any opportunity for affordable housing which might arise if one or more of the parcels became available for development. 1 Mount Laurel II, 92 N.J. 222 (1983) Page 61 of 74

67 Consequently, after acknowledging that the Township had an insufficient supply of vacant, developable land to meet its fair share allocation of 2,295 units the 1993 Stipulation adjusts the Township s realistic development potential to 787. It then reads as follows: D. In the event during the next six (6) years the Merchantville Country Club (Block 114, Lot 3; Block 193, Lot 18; Block 193, Lot 12), Woodcrest Country Club (Block 528, Lot 10 B), Springdale (Ebert) Farm (Block 438, Lots 2,8); Barclay Farm (Block 513, Lot 7), Springhouse Farm Trust (Block 513, Lot 7B), or Apostolic Church (Block 513, Lots 2, 6) parcels become available for development, the Township s fair share allocation as to these properties shall be re-evaluated. Stipulation of Settlement, p.4 It should be noted at the outset that the Township has since clarified a misconception in the 1993 Stipulation: the Barclay Farm and the Springhouse Farm Trust are actually the same property. Moreover, the Township claims that it acquired the property in 2003 for agricultural use so it is no longer available for development. Dr. Kinsey points out in his Report that the property does not appear on the Township s Recreation and Open Space Inventory ( ROSI ) on the NJ Department of Environmental Protection website. I have found the NJ DEP website to have incomplete information on other occasions. However, given the prior confusion regarding this property I agree with Dr. Kinsey s suggestion that the Township clarify the status of the property. Assuming that the Township s assertion concerning the Barclay Farm and Springhouse Farm Trust is validated, only 4 parcels remain from the 1993 Stipulation. In my 2011 Pre-Mediation Report I acknowledged the potential availability of the Woodcrest CC property, and asked the Township to provide a status report on the remaining sites identified in the 1993 Court Order, including an update on the development plans, if any, of the owners of the sites and an assessment as to whether overlay zoning would render inclusionary development more likely. (Pre-Mediation Report, p.9.) I also spoke with Township counsel about reaching out to the owners of the properties to gauge their interest in developing. The availability of the Woodcrest CC property has become clearer in the succeeding years and that property has been addressed in the Fair Share section of this report. The three parcels which remain from the 1993 Stipulation, with size and current zoning characteristics are indicated below: Page 62 of 74

68 Property Area Zone District (s) Merchantville CC ac Institutional Apostolic Church ac Residential 1; Institutional Springdale Farm ac Residential 1 As has been noted by FSHC in its brief, the Township did not respond to my request at the time. However, the Township did evidently contact the owners of the three remaining sites. Mr. Surenian has recently produced letters from attorneys for the Merchantville CC and the Apostolic Church and from a Landscape Architect/Professional Planner on behalf of Springdale Farm (see Exhibit F). All of the letters are dated within the past two months and they all indicate an awareness of the fact that the Township is seeking approval of its Housing Element and Fair Share Plan from the Court. They all profess no interest in making their respective properties available for development nor in changing the use from that which has prevailed for many years. Taking these letters at face value it appears that no affordable housing opportunities have been lost by virtue of the manner in which these three properties have been addressed over the past 20 years under the 1993 Stipulation. Notwithstanding the apparent lack of interest in developing at this time Dr. Kinsey cautions that the 2010 time of application amendment to the Municipal Land Use Law would permit an application to be filed and locked in for non-inclusionary development on the properties. While largely theoretical at this time, ultimately this is an important question for these properties since, along with the Woodcrest CC they constitute the only significant area of vacant suitable privately-owned land in the Township. Mr. Surenian has proposed a scarce resource restraint prohibiting non-inclusionary development without the Township s approval as an antidote. While such restraints have previously been imposed in Cherry Hill and other municipalities with scarce resources, the application of this restraint to just three properties is a distinction which would warrant legal analysis. While I do not agree that COAH s rules or the N.J. Constitution require overlay zoning of these properties COAH and therefore the Court clearly has the discretion to require it (N.J.A.C. 5:93-4.2(h)2). Whether that step is warranted in Cherry Hill at this time depends upon a number of factors, some of which are essentially legal in nature, including the following: Page 63 of 74

69 1. Whether the Stipulation of Settlement is still in full force and effect or expired in 1999 (6 years after its entry). 2. Even if the Stipulation has legally expired, whether overlay zoning is necessary or is the system established by the Stipulation (perhaps augmented by a scarce resource restraint) sufficient. This approach maintains maximum flexibility over fair share planning with the Township. 3. Whether the overlay zoning proposed by the Township for the six redevelopment sites is sufficient to address the unmet need for the prior round and, if so, whether it is also sufficient to address a reasonable portion of the unspecified third round obligation. This will depend, in part, on the Court s view of the likelihood of redevelopment occurring via the overlay zoning amendments. 4. Whether the RDP of each of the three parcels should be determined now so that the Township can plan for the eventuality of one or more of the sites becoming available and the owners of the respective sites would be informed as to their development capacity if the Township were to elect to zone the site(s) for inclusionary development at some future time. This is an area of inquiry which may be affected significantly by the third round rule proposal, particularly if the Township s shortfall for the prior round diminishes as I have recommended. I would appreciate counsel s views on the third round rule implications for meeting unmet need. I would also be interested to hear from Messrs. Walsh and Hoff as to what flaws they perceive in continuing the current system if a legal means of preventing non-inclusionary development can be fashioned. Mr. Walsh takes issue with the letters from representatives of the owners of the three remaining named sites in the 1993 Stipulation of Settlement: Merchantville Country Club, Springdale Farm and the Apostolic Church. He considers the Township s actions to be an unconstitutional taking that requires the consent of the owners and requests that the Township provide evidence from the lot owners that they are aware of the infringement being perpetuated on their rights. Mr. Surenian indicated in his letter of May 19, 2014 that a workable solution to address the three sites is to ask the Court to impose a scarce resource-type restraint which would permit the sites to be utilized either for their as-of-right zoned use or for inclusionary residential development. He asserts that such restraints would Page 64 of 74

70 not support a takings claim since the restraints would not preclude development and offered to provide a legal memorandum on the subject if the Court so desires. Mr. Surenian also indicated that the Township is not averse to having the Court establish RDP numbers for all three sites as part of this compliance proceeding so as to minimize the time which the Township would require to decide on how to revise its Fair Share Plan if one or more of the properties became available for residential development in the future. I would be pleased to provide the Court with recommendations on the development capacity of those sites if the Court so directs. Mr. Surenian has provided the legal underpinning for his workable solution to the time of application concern raised by FSHC with regard to the Apostolic Church, Springdale Farms and Merchantville Country Club sites. While this is legal and not a planning issue I would appreciate Mr. Surenian providing a clarification to his explanation of the mechanics of the process the Township proposes. Under this proposal, would the property owner have the right to elect to undertake inclusionary development or would their access to inclusionary development only occur if the Court found that the Township did not have a viable alternative approach to addressing the RDP which the property generates? If the latter process applies and if the Court is satisfied that no taking would occur, I would recommend the RDP be established for each of the 3 sites as part of these proceedings so as to expedite the case before the Court if one of the owners wants to develop. The basis for a taking would appear to relate to the time a property owner would be denied the ability to develop, so minimizing the time involved for judicial review would be critical. If time is still a concern, it might be worthwhile for the ordinance to include a sunset provision which would require the property to be available for inclusionary housing development at the density utilized for the RDP calculation if no final decision on the adequacy of the Township s alternative plan is rendered within a specific time period. In his May 18, 2015 letter Mr. Surenian has confirmed that in the Township s proposal the owners of the three properties would not automatically have the right to inclusionary zoning if they chose to develop their property. Instead, the inclusionary zoning rights would only apply if the Township failed to find an appropriate way to address the RDP generated by the availability of the site (emphasis in original). Mr. Surenian concludes by stating that the Township s satisfaction of its Prior Round obligation has rendered this issue moot. Page 65 of 74

71 On the other hand, in his May 18, 2015 letter Mr. Walsh challenges the Township to produce the authors of the three letters the Township solicited and submitted at trial to testify as to their understanding of the perpetual injunction he alleges the Township is proposing to impose upon the properties. From a planning standpoint, if the Court finds that the Township s Plan has satisfied its Prior Round obligation (not just its RDP but its allocated fair share number) then I agree with Mr. Surenian that the disposition of these three properties is no longer an issue for the Prior Round. It will, in all likelihood, presently become an issue for the Township s Third Round plan and the Court may ultimately need to decide whether the properties will continue to be treated as the Township proposes as opposed to assigning them each an RDP which the Township must address. However, that is likely to be a Third Round issue and not a subject for the upcoming Prior Round Compliance Hearing. 14. The issues surrounding the 76 unit, age-restricted 100% affordable rental housing development at the Garden State Park (hereinafter GSP ) should be resolved. The Order which determined the affordable housing obligation of the developers of the mixed-use project at the former site of the Garden State Park racetrack was entered by the Hon. M. Allan Vogelson, P.J.Ch. on March 3, The Order included a 76 unit, age-restricted, 100% low and moderate income rental housing development to be located on the GSP site. The pertinent section of the Order is from a transcript of a hearing before Judge Vogelson on January 16, 2004 and reads as follows: Number 3. Turnberry [Realen Turnberry, the original redevelopers of the GSP] and Plaintiffs [FSHC] or their designees shall enter into a joint venture agreement to build and manage the 76 affordable age-restricted units in the interior portion of the site. This joint venture arrangement shall be separate and apart from this Agreement with the exception that the Township of Cherry Hill shall have a voting representative on the Board of Trustees of the nonprofit housing sponsor which operates the senior housing complex. The existence of the joint venture in no way diminishes Turnberry s financial obligation to produce 76 affordable, age - restricted rental units in accordance with COAH rules in conjunction with market rate housing at the GSP. Plaintiffs and Turnberry, or their designees, agree to prepare Page 66 of 74

72 the joint venture agreement within three weeks and agree to submit any disagreements to the Special Master for conclusive determination. Transcript, p.9 & 10 Over the ensuing decade since the Order was entered I have convened a number of meetings to advance this project. Unfortunately little progress has been made. To the contrary, the housing site, about which FSHD expressed reservations from the start has been reduced in size as a consequence of other changes M&M (the successor redeveloper to Turnberry) has made to the General Development Plan. The site is now more objectionable to FSHD and it is not clear that sufficient parking can be accommodated on site. Apart from the location and size of the project site, other issues to be negotiated include the following: 1. The extent of M&M s financial obligation to the project; 2. The respective roles of M&M and FSHD in the development; 3. When the project must be constructed in order to conform to the phasing requirements governing the pace of market rate and affordable housing unit construction at Garden State Park; and 4. Whether the project will be increased in size to incorporate the 29 affordable housing units programmed for the former D.R. Horton age-restricted rental development at the northern end of the GSP site. Mr. Surenian presents what appears to be a comprehensive inventory of the dates of public hearings of the Planning Board from 2002 to the present at which applications for development at the Garden State Park were considered. He takes note of my characterization of FSHD s dissatisfaction with the location and size of the parcel being provided for the senior citizen housing project but asks for proof that the site has decreased in size as a result of plan changes by M&M over the years. Mr. Walsh s letters to me of May 19, 2014 and June 9, 2014 (see Exhibit K to this report, without attachments) respond to Mr. Surenian s request and confirms the concerns harbored by FSHD about the site and the joint venture contemplated for the project under Judge Vogelson s 2004 Order. Mr. Walsh asks that the project site be relocated to the civic lots of the Garden State Park, be financed entirely by M&M, be developed immediately (in advance of the normal phasing for the Garden State Park), be developed and managed exclusively by FSHD rather than through a joint venture between FSHD and M&M, and incorporate, if agreeable to D.R. Horton or its successor in interest, the 29 affordable, age-restricted units planned for the partially-constructed D.R. Horton project. Page 67 of 74

73 Mr. Walsh asks that I make conclusive determinations on the issues identified above within 45 days (or by July 24, 2014) and asserts that I have this authority under Judge Vogelson s June 17, 2003 and February 5, 2003 Orders. Mr. Walsh appropriately copied Ronald Morgan and Andrew Ulrich, respectively outside and inside counsel to M&M on his June 9, 2014 letter. By copy of this report to them I ask they respond in writing to Mr. Walsh s proposal by June 26, Since the Township and the Planning Board were also signatories to Judge Vogelson s Consent Order I ask them to respond as well within the same time frame. I will also seek guidance from the Court as to the extent of my authority under Judge Vogelson s Orders. Mr. Surenian addresses my concern with the lack of resolution of the 76 unit senior citizen affordable development at Garden State Park in his March 30, 2015 letter. While acknowledging that no meaningful progress has been made on the project, Mr. Surenian asserts that M&M will be motivated by the profit on the market rate housing components of the Garden State Park project to deal with FSHD (its joint venture partner) and build the 76 unit development when the phasing standards for the entire GSP development require it. In this regard, M&M is obligated by Judge Famular s Order of March 23, 2015 to provide a phasing schedule to the Court and the parties. This phasing schedule was submitted yesterday and I am in the process of reviewing it. The schedule should inform this discussion as well as the Court s consideration of FSHD s request that I make conclusive determinations on a variety of issues related to the 76 unit development. Peter O Connor recently committed FSHD to pay half of my services to undertake these determinations. I have forwarded that correspondence to John Verlaque, in-house counsel to M&M and asked for M&M s response. Mr. Verlaque responded to me by letter of April 9, His letter (Exhibit R to this report) addresses both the phasing inquiry and M&M s posture toward collaborating with FSHD on the 76 unit senior citizen development. As to phasing, Mr. Verlaque reports on the status of construction of affordable units as well as in lieu contributions to the Township s Affordable Housing Trust Fund in relation to the construction of market rate units at Garden State Park. I responded to Mr. Verlaque in a letter of May 15, 2015 (Exhibit S to this report) and indicated that I find M&M to be in compliance with the COAH phasing schedule although I credit them with only 12.3 affordable units via in lieu contributions, not the 21.8 affordable units they calculate. I await a written response from Mr. Verlaque on this discrepancy. Page 68 of 74

74 As to the age-restricted housing, Mr. Verlaque did not consent to mediation with FSHD and instead announced that M&M was in discussions with other affordable housing developers to construct the project. I expect that FSHD will challenge any effort by M&M to substitute another developer for FSHD on this project; however, no complaint has been filed as yet by either side. Given the size of the Garden State Park project and the pace of construction, it may be years before M&M is obligated to build the age-restricted housing in order to keep pace with the phasing requirements for market rate units. GENERAL COMPLIANCE PLAN COMMENTS The Township s Compliance Plan warrants a few more comments even though they regard matters which have not been the target of objections by the parties. First, I have reviewed the documentation on the 8 group homes which provide the basis for the Township s claim for 35 special needs units in the 2014 Plan Amendment. Documentation on affirmative marketing, funding sources, license dates and CO dates is still outstanding. The Township is aware of the information we need to corroborate that these units are creditworthy. As with the rehabilitation program, I will report the tally of eligible special needs units in my Final Report. The Township provided additional information on the proposed special needs units via the Certification by Lorissa Luciani, PP, AICP, dated May 19, 2014 and the related Exhibits. The additional information provided includes the missing licenses and certificate of occupancy dates for all group homes. Additionally, the Certification indicated that the seven Bancroft group homes utilize the New Jersey DDD waiting list and thus comply with COAH s affirmative marketing regulations. Evidence of affordability controls for the remaining group home, Durand Academy, has been requested, but not yet received by the Township. I have reviewed the copy of the Purchase Money Mortgage for the Durand Academy, Inc. and do not find adequate evidence of affordability controls. I recommend that the Township simply ask the Academy to complete COAH s form for alternative living facilities. Page 69 of 74

75 In his letter to me of May 18, 2015, Mr. Surenian provided additional documentation on the Durand Academy. COAH s Supportive and Special Needs Housing Survey has been submitted and it appears that the facility is credit-worthy for 5 units. However, the Certificate of Occupancy date is blank and should be supplied. Second, the Township has claimed 15 credits for 15 Medicaid eligible beds at the 150 bed Spring Hills Assisted Living Facility. Since 2001 the N.J. Department of Health and Senior Services has required assisted living facilities to provide 10 percent of their units for Medicaid-eligible residents. COAH rules set the standards by which housing for these residents can qualify for low and moderate income credit. N.J.A.C. 5: I have asked the Township for documentation on these beds and will provide a recommendation on their eligibility for credit in my Final Report. The Township provided me with correspondence from Spring Hills which documents the size of the facility at 150 beds. We then confirmed by talking with Andrew Benesch of the NJ Department of Health that Spring Hills maintains compliance with the 10% Medicaid requirement. Consequently the 15 beds are valid credits as indicated in the Township s Housing Plan. Third, my Pre-Mediation Report of January 26, 2011 acknowledged the Township s program to convert up to 116 least cost housing units to credit worthy affordable housing (Pre-Mediation Report, p. 10). These units were previously deed-restricted to households earning 120% of the median income or less; consequently, they do not currently qualify for credit under COAH s rules. However, the Township s intent is to subsidize the cost of the units upon sale so they are affordable to households of low and moderate income. My report suggested that the Township apply for a waiver if necessary to justify spending less per unit to subsidize the conversion process than COAH rules require for a market to affordable program. The Township applied for a waiver in its 2011 Housing Plan. It recognizes that the conversion from affordable at 120% of median income to low and moderate income may not cost the $25,000 to $30,000 required by COAH rules for moderate and low income units respectively. The waiver request makes a compelling argument that the waiver would foster the production of affordable housing and the intent, if not the letter of COAH s rules. (2011 Housing Plan, p ). Even though the waiver request was oriented to COAH s third round rules the arguments are equally applicable to COAH s second round waiver rules (N.J.A.C. 5:93-15) and I recommend the waiver be granted by the Court. Page 70 of 74

76 Fourth, FSHC has a motion pending of January 15, 2014 to compel Cherry Hill Township to repay interest to the Township s Affordable Housing Trust Fund. The amount of the outstanding interest was last calculated at $1,069,328.76; however, it will have increased marginally to reflect additional interest foregone since that amount was determined. I do not believe that the Township contests that the interest is owed nor do the parties dispute the amount. The parties had been negotiating an approach by which the Township would contribute land for affordable housing at the GSP which would carry a value comparable to the interest owed. Since that approach has been abandoned the parties need to negotiate the terms of the cash repayment. Mr. Surenian indicates the Township intends to budget for the repayment of the $1,069, plus interest earned in its 2015 budget. I note that Mr. Surenian has provided a Statement of Account from a TD Bank Housing Impact Fee Account for January of 2015 which indicates a deposit being made of $1,124, (see Exhibit P of Mr. Jedziniak s certification). Mr. Surenian represents that this deposit is the Township s repayment of the funds owed, including interest earned, to its Affordable Housing Trust Fund. Fifth, the Township s 2014 Amendment presents two charts entitled Cherry Hill Township Affordable Housing Calculations. Both charts show the Township Fair Share Plan exceeding the RDP. However, the second chart is premised on an interpretation of COAH s rules (N.J.A.C. 5:93-4.1) which allows both the age-restricted cap and the rental bonus cap to be determined by the number of creditworthy units in the Township s Plan instead of the RDP. This interpretation rewards municipalities for increasing affordable housing production and is more equitable with the manner in which these caps are calculated for municipalities which are not affected by scarce resources. Consequently, I am inclined to recommend it to the Court. Dr. Kinsey notes that he agrees with my recommendation that the Court utilize the second chart presented by Mr. Bernard in the Township s 2014 Amendment to the 2011 Housing Plan. In his May 14, 2015 letter to me Mr. Bernard compares Cherry Hill s proposed plan for addressing Unmet Need with those of other municipalities under COAH s jurisdiction which qualified for vacant land adjustments and were granted substantive certification. Cherry Hill s plan is clearly more substantial than the municipalities profiled by Mr. Bernard. Page 71 of 74

77 Based on the most recent tabulation of affordable housing credits (Mr. Bernard s Cherry Hill Township Affordable Housing Calculations - Exhibit Q to this report) it appears that the Unmet Need may be within the Township s reach. Mr. Bernard has updated Exhibit Q at my request from two tables which were presented in the 2014 Amendment to the Township s Fair Share Plan (after pages 8 and 10 of that Plan). The Township s current tabulation of units and credits totals 1,734. This tally is premised on an interpretation of COAH s rules N.J.A.C. 5: as reflected in the chart following page 10 of the 2014 Amendment. Mr. Bernard proposed this approach to encourage municipalities with vacant land adjustments to exceed their RDP and I endorsed it in my April 25, 2014 Preliminary Master s Report (see page 60 of this document). The essence of the interpretation is that it would permit an RDP municipality which is implementing a Fair Share Plan which exceeds the RDP to utilize the unit/credit count in the Plan rather than the RDP to calculate the cap on rental bonus credits and the cap on age-restricted units. This should serve as an incentive to induce municipalities to exceed their RDP. In order to distinguish between plans for the Prior Round and Third Round I recommend that the municipal Prior Round fair share allocation be the maximum fair share for purposes of these calculations. In this case I have recommended 1,669 units as the Township s adjusted fair share. The conventional approach for these calculations would limit the rental bonus credits to 25 percent of the RDP, or 366 units (1,465 x.25 = 366). Instead, under the proposed interpretation Mr. Bernard s Exhibit Q employs 404 rental bonus credits, which is 38 credits more than the 366. It should be noted that the 115 units/credits from Evans Francis Estates are not included in Exhibit Q. If they were included the 54 units plus an estimated 13 additional rental bonus credits would increase the total credit count from 1,734 to 1,801 (1, = 1,801). These totals are approaching the Township s uncapped new construction component of 1,829. The proposed interpretation presented here would likely not have any impact on the number of agerestricted units in Cherry Hill since the conventional formula allows 25 percent of the combination of the municipal rehabilitation component (net of completed projects) and the RDP. In this case 25 percent of the RDP alone equals 366 units (1,465 x.25 = 366) and there are only 379 age-restricted units in the Township s Plan. The net rehabilitation component for the Prior Round is estimated at Page 72 of 74

78 80 units, which would add 20 units to the age-restricted cap more than enough to accommodate the 13 additional age-restricted units in the Plan. Dr. Kinsey argues against this approach in his May 18, 2015 letter and points out that in 2007 the Appellate Division invalidated a change in COAH s rules to increase the age-restricted housing cap from 25 to 50 percent. However, recent calculations of Third Round housing need by Dr. Kinsey and others show a majority of the need to be households of 55 years and older. Consequently, I recommend this approach to the Court, particularly as applied to this case when it is likely to have no numerical impact whatsoever on the age-restricted housing cap. Mr. Rahenkamp raises an issue of a possible discrepancy in the Township s accounting for the 96 affordable housing units and credits for the Brunetti/Burrough s Mill Site. He contends that the 96 units and credits represent a 24 unit over-counting for 36 rental units which were actually constructed at the development. The Township should respond to this issue in writing by June 26, Mr. Rahenkamp also raises the issue of an affordable housing unit discrepancy at the Centura project, which is set forth in greater detail in a letter of April 25, 2014 to Erin Gill, Esq. of the Township Solicitor s office from Richard Hoff, special counsel to Planland, the current developer of Centura (see Exhibit L, without attachment). While the history of this development, which dates to the 1970s, is complicated, the essence of Mr. Hoff s request is that since the developer is planning on building fewer market rate units than originally contemplated, the Township permit Planland to provide proportionately fewer affordable units (26 v 32 units). The Township s prior position as articulated in a letter of October 17, 2013 from Ms. Grill to Mr. Hoff (see Exhibit M, without attachment) was that Centura is bound by Judge Gibson s 1993 Order to provide the 32 units listed in the Stipulation of Settlement and only the Superior Court (not the Township Planning Board) can provide relief from that Order. The Township should indicate in writing by June 26, 2014 if it has changed its position as a result of Mr. Hoff s April 25, 2014 letter. I still need a response to my request that the Township address the two possible discrepancies in affordable housing crediting noted by Creigh Rahenkamp and described above. I still await a response from the Township on these possible discrepancies. Page 73 of 74

79 CONCLUSION This Preliminary Report has addressed a variety of fair share and compliance issues related to Cherry Hill Township s 2011 Housing Element and Fair Share Plan as revised/updated by the 2014 Plan Amendment. Whether the Township s Compliance Plan is satisfactory as currently conceived or, as I have recommended, should be revised will, of course, be determined by the Court. Since this is my Preliminary Report I look forward to comments from counsel on any aspects I have covered but particularly on the implications of COAH s proposed third round rules (should they be released on May 1, 2o14) and the issues on which I specifically invited input. As we all anticipated, COAH S proposed rules have complicated the consideration of Cherry Hill s Prior Round Plan, if only from the standpoint of changing the context. However, I recommend that we resist the urge to use the excuse of impending change to start creating our own rules rather than adhering to the rules that should govern prior round plans until they are officially superseded. Coloring within the lines will still allow for plenty of opportunities for legitimate differences of opinion. The limitation of the upcoming Compliance Hearing to the issue of whether the Township has satisfied its Rehabilitation and Prior Round affordable housing obligations has made the compliance issues in this complex litigation more manageable. In this Final Report I have endeavored to outline a sequential approach for the Court to take in the Compliance Hearing, beginning with the Township s fair share allocation and the applicability of the 1,000 unit cap, then a determination of the Township s Realistic Development Potential, followed by an evaluation of the Township s Fair Share Plan components and a determination of the Unmet Need for the Prior Round, if any, and then, if necessary, an assessment of the Township s program to address its Unmet Need. There will inevitably be digressions to consider ancillary issues, but the course set forth above should be a dependable guide. W:\5000's\Court Master Towns\698 Cherry Hill\698\REPORTS\2015 Reports\ Final Master's Rept\ Final Master's Report.docx Page 74 of 74

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