New Jersey’s Supreme Court ruled Thursday that the state’s controversial “third-round” rules for affordable housing are incompatible with prior mandates requiring municipalities to account for low- and middle-income families in their planning.

Those mandates were put in place through a series of court decisions and legislative acts in the 1970s and ’80s, but new rules adopted in 2008 set forth a “growth-share plan” linking the quota of affordable housing to new development. State authorities have five months to draft new criteria for how many affordable units municipalities are required to provide residents.

Critics say the 2008 rules were too lenient, allowing wealthier towns to skirt the law by restricting growth, while a disproportionate burden fell to towns that struggled with infrastructure costs. Bureaucratic entanglements and legal wrangling similarly led to confusion and meant that many projects for lower-income families languished for years.

In 2011, Gov. Chris Christie dissolved the Council on Affordable Housing, the regulating body that oversaw these requirements. Earlier this year, the Supreme Court ruled Christie’s actions were improper and required a legislative act. Another proposal by Christie to seize the balances in municipal trust funds set up to finance affordable-housing projects was also blocked by the courts.

Thursday’s 3-2 decision, which upheld a lower court’s ruling, would require the state to abandon the “third-round” rules, which were adopted under Democratic Gov. Jon S. Corzine, and draft new rules within the next five months.

The majority opinion, written by Justice Jaynee LaVecchia, found the “third-round” provisions aren’t compatible with the 1985 Fair Housing Act, itself passed in the wake of a 1983 court ruling. However, she encouraged policymakers to re-evaluate how the state handles affordable housing.

“New Jersey in 2013, quite simply, is not the same New Jersey that it was in 1983,” she wrote.

But LaVecchia also wrote that the courts may not be the best place to make sweeping policy decisions.

“Indeed, at oral argument, the many parties to this litigation were questioned as to whether their arguments were better suited for legislative hearings on the subject,” she wrote.

Whatever new rules are drafted, they carry immediate effects for municipalities statewide.

In Egg Harbor Township, which has seen several lawsuits related to affordable housing, Mayor James “Sonny” McCullough said he hopes the revised rules take into account the mobile homes and federal Section 8 housing that were left out of previous calculations.

“I don’t know who in state administration will be rewriting these regulations, but I hope they talk to us here in Egg Harbor Township and the 2nd District,” he said.

Janice S. Mironov, president of the New Jersey State League of Municipalities and mayor of East Windsor Township in Mercer County, said she's optimistic that Thursday's decision will open a “productive dialogue” to resolve the various issues surrounding affordable housing.

The uncertainty around COAH in recent years has hindered progress, she said.

“We are still reviewing the decision and anticipate having discussions with important partners to set policy,” she said. “We can hopefully work together to set out in a reasonable and workable direction.”

A spokesman for Christie declined to comment Thursday. The state Department of Community Affairs, which oversees COAH, did not immediately respond to a request for comment.

Housing advocates saw the decision as a major victory and a rejection of the policies executed under Christie.

The attorney in the case, Kevin Walsh, who serves as associate director of the Cherry Hill-based Fair Share Housing Center, said the requirements are necessary to keep municipalities from excluding the working poor and those with special needs.

“We now have a final decision and look forward to more homes in communities throughout the state,” he said.

Mike McNeil, housing chairman for the state conference of the National Association for the Advancement of Colored People, said he’s hopeful the decision will allow more affordable housing.

“I've experienced housing discrimination myself, which is why I got into this fight, so this victory is especially meaningful for me,” he said.

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