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."
