## Facts

- The federal Low Income Housing Tax Credit (LIHTC) program (26 U.S.C. § 42) requires each state’s housing credit agency to administer tax credits through a Qualified Allocation Plan (QAP).
- The New Jersey Housing and Mortgage Finance Agency (HMFA) is New Jersey’s housing credit agency and adopted a 2003 QAP governing how LIHTC credits would be awarded to developers.
- Affordable housing financed through LIHTC in New Jersey had been concentrated in urban, high-minority municipalities, with comparatively fewer LIHTC developments in many suburban municipalities.
- The 2003 QAP used a single statewide pool of credits rather than separating urban and suburban projects into distinct categories.
- The 2003 QAP added set-asides and scoring preferences for mixed-income housing, aiming to expand affordable housing opportunities across New Jersey and reduce concentrations of poverty.
- Public-interest organizations challenged the 2003 QAP, alleging it would divert limited credits from urban areas with high need, reduce urban affordable-housing production, and perpetuate racial and economic segregation in violation of state law and constitutional obligations.
- Petitioners requested an administrative evidentiary hearing; HMFA denied the request and adopted the QAP as final agency action.

## Issues

1. Whether HMFA’s adoption of the 2003 QAP was arbitrary, capricious, unreasonable, or contrary to law given New Jersey affordable-housing and fair-housing obligations.
2. Whether petitioners were entitled to an administrative evidentiary hearing to challenge the 2003 QAP based on alleged discriminatory impact and statutory violations.

## Decision

- The Appellate Division affirmed HMFA’s adoption of the 2003 QAP.
- The court held the 2003 QAP reflected permissible policy choices within HMFA’s statutory authority and was not shown to be unlawful or arbitrary.
- The court affirmed HMFA’s denial of an administrative evidentiary hearing, concluding QAP adoption is a policy-making action not requiring a trial-type hearing for third-party challengers.
- The court applied a highly deferential standard of review and found no showing that HMFA failed to follow the law or lacked record support for its policy choices.

## Legal Principles

- Courts defer to specialized administrative agencies and will overturn agency action only if it is contrary to law, arbitrary/capricious/unreasonable, or unsupported by substantial evidence.
- Adoption of a generally applicable allocation plan for LIHTC credits is quasi-legislative policy-making; it ordinarily does not trigger a right to an evidentiary hearing absent a specific statutory or constitutional requirement.
- Fair-housing and anti-segregation obligations inform an agency’s housing policy choices but do not require a particular LIHTC allocation formula absent a demonstrated legal conflict or concrete record support establishing unlawful discriminatory effect.
- Predictive disagreements about future allocation outcomes, without a developed record establishing illegality, do not suffice to invalidate a statewide housing-credit allocation plan.

## Conclusion

The Appellate Division sustained HMFA’s 2003 LIHTC Qualified Allocation Plan and its denial of an evidentiary hearing, holding that the agency’s statewide allocation choices were lawful, supported by the record, and entitled to deference as policy determinations.


In re Adoption of the 2003 Low Income Housing Tax Credit Qualified Allocation Plan, 369 N.J. Super. 2 (App. Div. 2004)