A New Jersey appeals court threw out the state's plan for providing affordable housing to the poor yesterday, calling elements of the blueprint discriminatory and based on flawed data.

The court gave the Council on Affordable Housing, the agency that sets the state's rules, just six months to devise a new plan.

While housing advocates applauded the court's ruling, the decision means even more delays in the long-standing fight over the obligation that towns have to provide homes for low-income families.

The appellate court threw out a plan that was devised in 2004, five years after the previous plan expired.

"What's disappointing is that the towns, the ones that are the good guys . . . they're the ones in chaos," said Michael Cerra, with the New Jersey State League of Municipalities. "A lot of housing was in the pipeline. A lot of affordable housing is in limbo because of this ruling."

But housing advocates said the rules were so egregious - and unconstitutional - that the only choice was to scrap them.

"It's not like we have a lot to lose," said Adam Gordon, a staff attorney with the Fair Share Housing Center in Cherry Hill. "It's not like they're going out there and building a ton of homes."

The 2004 rules called for towns to build one affordable home for every eight new market-rate homes, and one for every 25 new jobs created - an approach known as "growth share."

Housing advocates noted that this approach does not take into account a town's current need for affordable housing, and argued that towns could restrict low-income housing by passing ordinances to restrict growth. The court agreed.

"Any growth share approach must place some check on municipal discretion," the court wrote in its 127-page opinion. "The rules, as they currently exist, permit municipalities . . . to adopt master plans and zoning ordinances that allow for little growth, and thereby a small fair share obligation."

Housing advocates, who argue that the state needs 650,000 affordable homes, also said the state greatly underestimated the need in the 2004 plan. The court agreed with that as well, ordering the state to recalculate.

The Council on Affordable Housing said in the 2004 plan that 140,000 homes were needed, but 60,000 families would be able to get housing on their own as homes became cheaper over time. The court found that housing has not gotten cheaper, and said the council's reasoning "defies comprehension."

"That's something that didn't even pass the smell test," Gordon said. "The entire system was based on that assumption."

The state also said towns could satisfy half their affordable-housing obligations with homes for senior citizens. The court said that discriminates against families with children.

Susan Bass Levin, the state Department of Community Affairs commissioner, which oversees the Council on Affordable Housing, said "growth-share rules promote affordable housing, sound planning and prevent sprawl."

"We are deeply concerned that some aspects of the appellate court's decision could have the effect of limiting the construction of affordable housing while market-rate housing continues to be built," she said in a statement.

She did not say how the council would respond to the court's mandate to devise new rules. A spokesman for her department did not respond to a request for further comment.

Cerra said the case would likely go the state Supreme Court, which could delay a resolution even longer.

Although 262 municipalities have submitted proposals to meet the 2004 plan, the state had approved just four. Cerra said the state might have been waiting for yesterday's ruling before moving ahead.

"The towns have done the work," he said. "Now they're supposed to start all over."

He said the growth-share process encouraged towns "to enter into the process," whereas many had ignored affordable-housing rules in the past and "took their chances in court."

The affordable-housing rules grew out of a series of court decisions stretching back to the 1970s, and originating from a lawsuit filed by members of the African American community in Mount Laurel.

In 1985, the Legislature passed a law creating the Council on Affordable Housing, which set rules in 1987 and revised them in 1993. Those rules expired in 1999, but the so-called "third round" rules weren't completed until 2004.

Gordon called them "watered down and based on junk numbers."

Gov. Corzine has called for 100,000 new affordable-housing units in New Jersey in the next 10 years. A spokesman for the governor referred questions yesterday to Bass Levin.

"Is that a real commitment? He could provide all those units through this process," Gordon said. "We want to see if Gov. Corzine is committed to this or whether he's going to allow Susan Bass Levin to water down the numbers again."

Affordable-Housing Ruling

Reaction to the state appellate court's ruling invalidating New Jersey's regulations requiring towns to make housing available to low-income residents:

"What we have is a total fiasco," said Peter J. O'Connor, executive director of the Fair Housing Center, among several groups that filed suit against the rules, which were adopted in December 2004.

"The court recognized the rules actually inhibit production of affordable housing," said Paul Chrystie, executive director of the Coalition for Affordable Housing and the Environment, another group that filed suit.

Community Affairs Commissioner Susan Bass Levin emphasized that the court upheld some of the state's affordable-housing policies.

"However, we are deeply concerned that some aspects of the appellate courts decision could have the effect of limiting the construction of affordable housing while market-rate housing continues to be built," she said. "It could also lead to increased density and unnecessary sprawl, a result that would be extremely detrimental to the people of New Jersey."

"The decision puts on hold and undermines the current efforts of hundreds of municipalities to provide for affordable housing," said Bill Dressel, New Jersey State League of Municipalities executive director.

To read the appellate court ruling, go to http://go.philly.com/njcourts

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- Associated Press
Contact staff writer Troy Graham at 856-779-3893 or tgraham@phillynews.com.