Could COAH ruling aid distressed properties?

When the New Jersey Supreme Court ruled towns must factor in the so-called “gap years” from 1999 through 2015 when calculating their affordable housing obligations, some saw it as a major hindrance to communities and developers, many of whom will have to redo existing projects to meet the court mandate.Carl Goldberg sees it as a major opportunity for the state to address “the biggest land use problem that plagues New Jersey.”

Goldberg, a longtime real estate leader who is the managing member of Canoe Brook Management, feels the ruling could help solve the state’s glut of vacated suburban office complexes.

Goldberg suggests the state create a program to help turn these office complexes into mixed-used facilities with a strong affordable housing component.

“I think it would take some type of preferential zoning process, similar to when the state Legislature put in a program to expedite all the approvals for 55 and older communities, that weren’t being built,” he said.

“There has to be an assumption that, if an open property is under duress, there is a predictable process to go through where a residential component would be set aside for affordable housing.”

Goldberg said such regulations would open up new possibilities for properties that are struggling to find new users — all while helping to address affordable housing needs.

“These properties might include some type of office component and some retail, but there would have to be a residential component that have a large amount of affordable housing set aside,” he said. “The municipality would have to have a specific reason to oppose it, but there would be a presumption that it would be approved.”

That being said, Goldberg said he doubts municipalities would object.

“This would be very positive for the host municipalities,” he said. “Suburban office projects that are under duress have been an albatross for the municipalities because of their continued success with tax appeals.

“If you could revitalize these properties, not only would it create new places of destination, it would create new ratables as well as satisfying affordable housing needs.”

New projects, Goldberg said, could move quickly because one of the biggest issues that slows development — environmental concerns — already has been addressed.

“There are no environmental issues,” he said. “It’s not a vacant land issue, because it’s the repurposing of lands that have been developed and have been approved. There are no storm water management issues, wetlands issues or endangered species issues because these are fully developed sites.

“It’s a win for environmentalists, a win for housing advocates, a win for municipalities and a win for suburban office assets under duress. It’s very rare where you can paint a scenario where every stakeholder benefits.”

Such optimism was not necessarily heard after the ruling last Wednesday.

Joseph M. DeCotiis, managing partner of Teaneck-based DeCotiis, FitzPatrick, Cole & Giblin, said the decision could negatively impact development.

“This ruling clearly creates potential challenges for municipalities who already built out much of their developable land over the last 16 years,” he said. “Additionally, many developers who already have planned market rate housing on properties in many of these municipalities may be forced to reconfigure those designs to meet new requirements at their own cost.”

Ron Ladell, the senior vice president of Avalon Bay who was selected as No. 1 in the NJBIZ Real Estate Power 75, said the ruling was just the latest step in a drawn-out battle where there are few winners.

“As we are fast approaching the two-year anniversary since the New Jersey Supreme Court put COAH out of business, we have another court decision that, while giving solace primarily to the affordable housing advocates who clearly had the better argument, will ultimately result in more delay and costs,” he said. “Despite the 2015 Supreme Court decision, which contemplated an expeditious resolution of the affordable housing conundrum, and excluding the approximately 90 towns that have already settled with interested parties who can move forward and provide badly needed affordable residences, there are many other lawsuits that are not any closer to resolution.

“Today’s decision should not have even been necessary, but was unfortunately required, as there are some parties that seemingly will never resolve their disagreements and differences despite the fact that taxpayers and developers continue to unnecessarily fund these cases.”

Ladell said the state deserves better.

“All in all, there certainly was a better path forward for New Jersey.”

E-mail to: tomb@njbiz.com
On Twitter: @tombergeron