TRENTON, NJ—In a unanimous decision, the NewJersey Supreme Court dealt a devastating setback to the Council onAffordable Housing (COAH), determining that COAH had failed to meetits obligation to develop rules governing municipal compliance withaffordable housing obligations. The court effectively dissolvedprovisions of the Fair Housing Act that required housing advocatesto challenge municipal regulations through administrativeprocedures, and permitted those challenges to go back to the courtsystem.

Noting that COAH was required to develop a set of rules calledthe “Third Round Rules,” but had not done so, the court said, “Wethus are in the exceptional situation in which the administrativeprocess has become nonfunctioning, rendering futile the FHA'sadministrative remedy. The FHA'sexhaustion-of-administrative-remedies requirement, which staves offcivil actions, is premised on the existence of a functioningagency, not a moribund one.” The court concluded that “Due toCOAH's inaction, we agree that there no longer exists a legitimatebasis to block access to the courts.”

The court ordered a 30-day transition period in which somechallenges would be permitted to move to the court system andothers would need to be certified separately. The court also saidits decision did not prevent COAH from acting to develop the ThirdRound Rules, nor did it block the state legislature from“considering alternative statutory remedies to the presentFHA.”