Barnegat has settled a year-and-a-half-old lawsuit with local developer Walters Group over the township’s affordable housing obligations, with both parties agreeing to the construction of up to 94 residency units for low-income families on a 10-acre tract on Route 9.

In 2009, the Township Committee scuttled the firm’s plans to build a 74-unit development on Pennsylvania Avenue – a development that would have offset Walters’ recent market-rate construction in the Township ­– by failing to pass a required zoning ordinance, said Township Administrator David Breeden.

Walters sued, saying the township was not fulfilling mandates from the state Council on Affordable Housing, which requires municipalities to ensure a certain percentage of new homes built are affordable to low-income families.

The development agreed upon in the settlement will consist of 84 to 94 housing units on the site of the former Down the Hatch Gentleman’s club and adjacent former campground at 465 and 473 Route 9, paid for not by taxpayer dollars, Breeden said, but out of the township’s affordable housing trust fund. Developers are required to contribute a certain percentage of the costs of new building projects to the fund.

The agreement allows Barnegat to satisfy its Round II COAH requirement of 54 units, said Breeden, and anything beyond will count toward its Round III requirements.

“We know what’s happening in Trenton right now,” Breeden said, referring to recent efforts to reform COAH by state legislators and the Christie administration. The state Supreme Court agreed to reexamine affordable housing laws.

“Whatever happens with COAH, this township will still have an obligation to fulfill,” said Breeden.

Joseph Del Duca, partner and general counsel with the Walters Group, said the units will be comparable to the three-story apartment buildings completed last year at Stafford Park in Manahawkin. The 112 units there won Walters a nod from state, which presented the firm with a Governor's Award for Excellence in Housing for the project.

"We are excited about the project and pleased that we were able to work together with Barnegat to make that happen," said Del Duca in an e-mail. "We appreciate all the hard work Barnegat and its professionals put in, and we look forward to building a first-class project that everyone in Barnegat can be proud of."

Making good on the township’s COAH mandates has taken almost a decade. Back in 2002, officials approved regional contribution agreements, or RCAs, that would have allowed its required affordable housing to be built in Asbury Park and Long Branch instead of in Barnegat, said Breeden.

But low-income housing advocacy group Fair Share Housing Center sued to block those agreements and many others statewide, saying they defeated the purpose of the state’s affordable housing law.

“It was in limbo for a good six years,” Breeden said, and in 2008, the state outlawed RCAs, and Barnegat, like other municipalities, had to start looking for ways to fulfill COAH obligations without going outside the community.

The Route 9 solution is an acceptable one to officials, said Breeden, because there is less existing development in the area, and mass transit is easily accessible. Walters has also agreed to install sidewalks in the Whispering Pines development as part of the settlement, he said.

Negotiations over the purchase of the 10-acre plot are ongoing, said Breeden, but Walters is moving ahead with environmental testing of the site.