The residential building boom transforming New Jersey’s landscape is set to accelerate this year — and likely into the next decade — after many towns scrambled to approve deals with developers in the waning days of 2025.

Across New Jersey, municipalities engaged in down-to-the-wire legal fights and negotiations to resolve disputes brought by builders and housing advocates.

The catalyst was a Dec. 31 deadline in a state law that mandates each town provide its “fair share” of affordable housing, as determined by a formula devised in Trenton. The landmark 2024 law could spur the construction of tens of thousands of new units over the next decade for residents with low or moderate incomes — but often alongside huge additions of market-rate housing, which developers say is necessary to make the projects viable.

“We didn’t want this,” Parsippany Council President Paul Carifi Jr. said at a Dec. 16 meeting where the Morris County town approved a proposal to increase a project’s units from 600 to 1,100 to help meet its affordable-housing quota. “This is the state cramming this down our throat. If we don’t approve this … it’s over. It’s going back to the courts.”

Housing advocates, led by the nonprofit Fair Share Housing Center in Mount Laurel, see things differently. They say the process is helping New Jersey address what most observers agree is an affordability crisis in the housing market. Another nonprofit, the National Low Income Housing Coalition, has estimated that the state faces a shortage of about 205,000 housing units attainable for low-income residents.

On Monday, the Fair Share Housing Center stated that about 380 municipalities — “an unprecedented level of participation and compliance in the state’s affordable housing process” — had developed plans by Dec. 31. Another 40 missed the deadline, though some of those failures were because of “minor disputes” likely to be resolved soon, the group said.

“What we’re seeing is nothing short of a sea change,” Adam Gordon, the center’s executive director, stated. “For decades, New Jersey’s affordable housing system was bogged down by delay and litigation. This new law is working exactly as intended — bringing towns to the table, resolving disputes efficiently, and moving us toward the actual construction and preservation of affordable homes.”

Communities had until year’s end to settle challenges or explain to a court why they needed more time. The law also sets a March 15 deadline for towns to adopt their housing plans and adjust local zoning as needed.

Rules challenged in court

The pushback continues nonetheless from suburban communities, many in North Jersey, that say they are being forced to accept overdevelopment and increased burdens on local school systems, roads and municipal services.

Local Leaders for Responsible Planning, a 29-town coalition, has challenged the housing law. A federal judge held a hearing on Wednesday to consider the group’s arguments.

As the legal fight drags on, many municipal governing bodies worked into the last week of December to approve the proposed projects they needed to complete affordable housing plans. Some of those deals included tax breaks known as PILOTs, or payments in lieu of taxes, as incentives for builders willing to reserve a portion of their units as affordable.

Franklin Lakes, Ridgewood, Saddle River and Denville were among the other North Jersey towns to OK development plans by the deadline. As of Dec. 29, Demarest was awaiting a judge’s ruling on a complaint brought by a developer seeking to have his project included in the borough’s plan. The proposal seeks to raze the 19th-century home of the town’s founder to make space for 10 townhome units, two of which would be designated as affordable.

‘Fair share’ or ‘high density?’

The system traces back half a century to the state Supreme Court’s Mount Laurel decision. The 1975 ruling outlawed “exclusionary zoning” that the court said was designed to keep the poor and minorities out of some towns. The Mount Laurel ruling, expanded in subsequent cases, directed municipalities to change local laws to allow for the construction of their “fair share” of affordable units.

The state eventually created a Council on Affordable Housing to enforce that doctrine. But after 15 years of nonenforcement, the Supreme Court in 2015 again weighed in and shifted oversight to the courts. It allowed “builder’s remedy” lawsuits that could compel towns to accommodate projects as long as they offered a minority of the units — often as little as 20 percent — at below-market rates.

A further evolution came in 2024 when state lawmakers passed a law to codify and streamline that process, laying out deadlines for local governments. Towns that comply gain immunity from builders’ remedy suits.

“We face a somewhat perfect storm of low housing inventory and escalating pricing, which leaves thousands of working families all across our state with no viable options,” state Sen. Troy Singleton, a Burlington County Democrat and sponsor of the legislation, said at the time. “Without securing the most basic human needs — a place to live — the other policies we pass cannot be as effective.”

But critics like Montvale Mayor Mike Ghassali and Parsippany Mayor James Barberio have railed at the big housing complexes they say they have to approve to satisfy the state mandate.

“High-density housing may seem like a solution, but it raises serious concerns about our infrastructure and budget,” Barberio said during a 2024 meeting of mayors in which the state’s housing rules were blasted. “It seems like the state wants us to sacrifice quality for quantity.”

In July, Hawthorne Councilman Michael Sciarra said he was “disgusted” about having no better alternative than to endorse a plan designating two sites for construction of 111 new units, including 23 affordable ones.

“Does anyone ever get the feeling that you’re getting something shoved down your throat?” he asked his colleagues. “Well, that’s this going on right now. I can’t tell you how sick I am that we have to digest this, and take the bitter pill, because it’s the lesser of two evils.”

Tax breaks for developers

His ire was still evident on Dec. 22, when the Hawthorne Council met again to approve a final deal with one of those developers.

“Too often, the state checks boxes by meeting quotas,” Sciarra said. “Developers make money, and municipalities are left to deal with long-term consequences.”

In some cases, like in Parsippany, existing projects already under construction were later awarded PILOT tax breaks after developers said they needed additional financial help amid soaring construction costs.

The prominent PARQ project in Parsippany, at the crossroads of interstates 80 and 287, was originally slated for 600 apartments and townhouses; the first 275-unit phase has already opened. But the town sweetened the deal for the developer when it agreed to expand its project to 1,100 units, helping the municipality complete its affordable housing plan by the year-end deadline. Of those units, 120 will rent at affordable rates and the rest at market rate. Those 120 units, and 80 “credit points” earned for building on redeveloped property, would fulfill the town’s latest obligations.

More towns crunch deadline

Next door to Parsippany, Denville in December passed a PILOT incentive for an existing 60-unit project. In a resolution, the township council said it needed “to improve the feasibility of the redevelopment, operation, and maintenance of the project.”

The construction along Route 53 is one of several efforts tied to Denville’s affordable housing goal. A court-appointed special master warned that failing to move forward with the Station Village project could result in a judge stepping in or imposing stricter requirements, Township Attorney Fred Semrau said during a Dec. 2 council meeting. Of the 60 units, nine would be set aside as affordable.

Semrau said the project was approved without a PILOT in 2020, and he acknowledged that granting one after construction had already begun was unusual. But the legal risk could not be ignored, he said.

“As [the developer] started to complete construction, they started really pressing: ‘Well, where’s the PILOT?’” Semrau said. “Our opinion was it was too late — you started construction. So, with that, they got the special master involved.”

The special master, he said, indicated the town was required to assist the developer in completing the project since it was part of the housing plan.

Some towns ‘are buying in’

Not every town that sweated out the year-end deadline was critical of the mandate. Around New Jersey, hundreds have cooperated, noted the Fair Share Housing Center. The nonprofit was a party in numerous challenges around the state where it pushed towns to meet Mount Laurel requirements.

Gordon, the center’s executive director, was recently appointed to Gov.-elect Mikie Sherrill’s transition team. He criticized the latest efforts by municipalities seeking relief in court.

“This small group of wealthy towns have filed lawsuit after lawsuit trying to block the affordable homes New Jerseyans desperately need — and they have lost at every stage, including several state court decisions emphatically rejecting the lawsuit’s claims,” he stated. “We’re confident the federal court will once again reject these efforts and uphold a law that is already working.”

Editor’s note: Staff writers Marsha Stoltz, Philip DeVencentis and Stephanie Noda contributed to this article. It first appeared in the Daily Record and then was distributed on the USA TODAY Network via Reuters Connect.

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