Saving Mount Laurel?

• Author: Hills, Roderick M., Jr.
• Position: Zoning restrictions

Introduction I. The Need for Mount Laurel. Municipal Collective Action Problems II. The Problem with Mount Laurel. Informational Burdens of the Unit-Based Approach III. A Solution to Mount Laurels Problems? Focus on Zoning Restrictions A. The Proposal: A Presumptive Ceiling on Zoning Restrictiveness B. Comparing Mount Laurels Fair Shares to a Ceiling on Zoning Restrictiveness C. Implementing a Ceiling on Zoning Restrictiveness Through Filtering Credits This is about getting Trenton the hell out of the business of telling people how many units they're supposed to have--some arbitrary, ridiculous formula that nobody could ever explain. (1)

--New Jersey Governor Chris Christie, on his efforts to dismantle the Mount Laurel doctrine

INTRODUCTION

Mount Laurel is in trouble--again. But has there ever been a time when this statement has not been true? The Mount Laurel doctrine seems perennially hovering on the brink of extinction. It was surrounded by controversy when it was finally made effective with a "builder's remedy" in 1983, (2) and it barely survived its transition to statutory implementation in the form of the New Jersey Fair Housing Act in 1985. Both Governors James McGreevey, a Democrat, and Chris Christie, a Republican, made open war on it. (3) Governor Christie has gone so far as to attempt to abolish by executive order the Council on Affordable Housing (COAH), Mount Laurels statutorily created guardian. (4) COAH itself has attempted to weaken the doctrine with a "growth share" definition of the "fair share" obligation that the New Jersey appellate division has ruled illegally weak. (5)

Yet Mount Laurel stubbornly draws breath, albeit on life support: Despite the important constituencies in New Jersey that would like to pull the plug, there are other constituencies that stop the euthanizing of the doctrine. The State Assembly, controlled by Democrats with leadership from New Jersey's impoverished cities, has refused to let Governor Christie gut the doctrine with his own version of "growth share," (6) and the New Jersey state courts doggedly resist Governor Christie's efforts to dismantle COAH or municipalities' "fair share" obligation. (7)

It is an oddity when a legal doctrine cannot settle down to a comfortable middle age after thirty years of turmoil. One might impatiently say about Mount Laurel what Oscar Wilde's Lady Bracknell said about Algernon's fictional friend Bunbury in The Importance of Being Earnest. "It is high time that [Mount Laurel] made up [its] mind whether [it] is going to live or to die. This shilly-shallying with the question is absurd." (8)

Why cannot Mount Laurel make up its mind whether it is going to live or die? The dilemma arises from Mount Laurels serving a genuine need in a clumsy way. On one hand, as I explain in Part I, the doctrine helps New Jersey's 566 municipalities and townships overcome collective action problems that otherwise might excessively impede an adequate supply of housing. (9) On the other hand, the specific design of the doctrine--in particular, the assignment of specific numbers of housing units to particular municipalities--undermines the doctrine's effectiveness as a device for overcoming these collective action problems. As I suggest in Part II, this "unit-based" rule--that is, a rule that assigns housing units to particular jurisdictions--places extraordinary informational burdens on judges and bureaucrats, because such a rule forces public officials to do the job of siting housing, a task usually reserved for housing markets rather than law. (10) Because the data and siting criteria are so controversial, unit-based doctrines invite maximum homeowner resistance, as each suburban and rural jurisdiction vies with each other to skew the contestable formulae in their own favor. Inner-ring suburbs, for instance, will want to emphasize "buildable land," as a factor for siting affordable housing, while rural townships will want to encourage infill and redevelopment. This bureaucratic and legislative infighting reproduce the very collective action problem that Mount Laurel was supposed to solve. In this sense, Mount Laurel has created, in Governor Christie's pungent phrase, "some arbitrary, ridiculous formula that nobody could ever explain," because the Mount Laurel formula does not reassure each homeowner that they are being treated fairly--a major point of any "fair share" doctrine.

In Part III, I will suggest that these informational burdens and, less confidently, the political controversy, might be mitigated by supplementing or even replacing Mount Laurels unit-based rule with a doctrine targeting zoning restrictions. (11) In particular, I will suggest that state law might impose on every municipality a minimum zoned residential density to eliminate excessive restriction of multi-family and other forms of "least-cost housing"--that is, housing that uses the smallest marketable amount of land and materials to construct. The point of this density requirement would not be to second-guess housing markets by siting units in particular jurisdictions, but instead to create a sufficient reserve of zoning entitlements so that builders could decide where housing could be most profitably produced in response to consumer demand. By removing regulatory barriers to housing supply, this revised doctrine would alleviate the problem of housing affordability without dictating to the market where housing ought to be located. Using "anti-snob zoning" statutes in Massachusetts, Connecticut, and Rhode Island as rough models, I will suggest that Mount Laurel might face less opposition if it focused less on fixing the precise number of units to be allocated to each municipality and more on forcing municipalities to justify the exorbitant quantities of land that they require per dwelling unit.

1. THE NEED FOR MOUNT LAUREL: MUNICIPAL COLLECTIVE ACTION PROBLEMS

   Consider, first, how "affordable housing"--meaning, fox' the purposes of this Essay, housing priced at less than the price of the median residential structure in the municipality where the housing is located--gives rise to a collective action problem. The problem arises from a conflict between affordable housing's local costs and regional benefits. On the one hand, affordable housing imposes uncertain local fiscal, political, and social costs on municipalities that host it. The fiscal cost results from affordable housing's being liable for lower ad valorem property taxes than the median structure, allowing the former's occupants to consume the same level of services for a lower tax price than that paid by the occupants of median-valued housing. This effective redistribution of wealth from high-valued to low-valued property will be capitalized into the price of both, raising the price of the latter, lowering the price of the former, and reducing the tax revenue available to both for local services. (12) The political cost arises from correlation of tastes for local public goods with income. Assuming that services like parks and recreation, education, and environmental enhancement are normal goods, demand should rise with income, leading to conflicts between different socio-economic groups about their local government's spending priorities. Economic heterogeneity leads to ideological heterogeneity, which, in turn, leads to fights that undermine the trust needed for political cooperation. (13) Finally, affordable housing can have social costs to the extent that it is occupied by very poor households with unstable family structures; both crime and low educational achievement are correlated with either concentrated poverty of a neighborhood or parental instability associated with such poverty. (14)

   Exclusionary zoning is a rational way for individual municipalities to reduce the risks of these fiscal, political, and social costs. By requiring residents to purchase an identically valued structure on which a uniform tax rate is levied, such zoning transforms the ad valorem property tax into a lump-sum fee, insuring that each resident pays the same amount in taxes, receives the same package of services, and thereby reveals by their migration to the municipality that they value the services at the taxes charged. (15) Uniformity of housing type promotes uniformity of income and, thus, uniformity of demands for social services. The exclusion of poor households is also a heartless but effective way for higher-income groups to insulate themselves from the social costs of poverty.

   The solution of exclusion, however, has regional costs that individual municipalities are likely to discount or ignore. The coexistence of households with different incomes can produce benefits for all income groups--jobs for poorer households, workers for richer municipalities, and various agglomeration benefits from denser housing that permits multiple employers to locate in the same community. (16) Low-income households can avoid neighborhood violence and increase their income and employment by residing in a community with higher median household income. (17) Moreover, low-income households can gain these benefits at little cost to the neighbors if the number of affordable dwelling units is small. Consider, for instance, Ethel R. Lawrence Homes (ERLH), the residential development built as a result the original Mount Laurel litigation. ERLH contains only 140 dwelling units, (18) a tiny number compared to Mount Laurel Township's 18,249 dwelling units reflected in the 2010 census. (19) Len Albright, Elizabeth Derickson, and Douglas Massey found ERLH had no effect on Mount Laurel's crime, property values or taxes when Mount Laurel was compared to a matched set of neighboring townships. (20) Indeed, in a survey conducted by Massey and his colleagues, one-third of the neighbors did not even know affordable housing existed in the neighborhood, and, among those who did know, only forty percent could successfully name the project. (21)

   Individual...