New Jersey’s affordable housing rules are in desparate need of reform.
The new round of obligations issued in December by the state Council on Affordable Housing boost requirements by creating onerous obligations for some towns, further exacerbating the already tenuous support income-restricted housing has among municipal officials.
The new regulations were issued in response to a January 2007 decision by a state appellate panel that invalidated a previous set of third-round rules. The court said the rules, which allowed municipalities to determine their own housing obligation and al´lowed half their units to be age-restricted, were insufficient. The court also said the original third-round rules underestimated the number of units needed.
The proposed rules, which more than double the number of required units statewide from 52,000 to 115,000, are based on a “growth share approach” that measures the need for affordable housing based on the amount of residential and commercial development expected to take place between 2004 and 2014.
All of this makes sense. After all, the point behind the state’s affordable housing program is to provide housing for low-income residents and to ensure diversity of incomes. The Mount Laurel decisions of the 1980s specifically focused on the discriminatory nature of what was then described as “exclusionary zoning” — essentially, zoning that allowed for big, single-family houses and not multi-family units that was designed to keep out the poor.
The problem always has been in figuring out the best way to provide low-income housing without overburdening one or another constituency. Initially, developers were granted density bonuses that resulted in a massive expansion of not just affordable units but high-density multifamily complexes, as well. This led to a huge increase in residential development — helping drive up school costs and property taxes.
The state also created what are called regional contribution agreements — a mechanism that allows towns to pay poorer communities to take on half of the richer town’s affordable housing obligation. Both Cranbury and Monroe have made use of this tool, which has helped cash-strapped cities like New Brunswick and Perth Amboy and helps sending towns meet their obligations without having to build, but circumvents the goal of diversity.
Housing trust funds followed, which allowed towns to charge developers that did not include affordable units in their projects a fee that would be used to provide housing. This mechanism, for instance, allowed Cranbury to build housing on its own without resorting to developer bonuses.
During its first 15 years, the program functioned moderately well. But third-round rules ran into problems and COAH did not issue regulations until 2003. Those regulations allowed towns to calculate their own requirements with approval from COAH, a program that eventually was overturned.
This brings us to the current proposal, which calls for one affordable housing unit for every 16 jobs or five residential units created. The original third-round rules called for one unit per 25 jobs or nine housing units — a growth-share that municipal governments around the state are challenging.
William G. Dressel Jr., executive director of the state League of Municipalities, wrote in a letter to New Jersey mayors dated March 10 that the rules were “unreasonable,” and that they “will negatively impact the economy of the state and will impose substantial burdens on the property taxpayer.”
In many municipalities, the projected obligation has quadru´pled as a result of more aggressive ratios and development projections, resulting in a doubling of the statewide affordable housing need. Based upon the subsidy needed to create an affordable housing unit, as determined in the regulations, together with the statewide need established, the total cost of satisfying the proposed program is nearly $19 billion. The financial obligation to satisfy the need is being placed solely on builders and municipal property taxpayers.
Cranbury — as we’ll detail in a story in The Cranbury Press tomorrow — will be particularly hard hit. The town has a population of about 3,500, with about 900 housing units, but could be required to build upwards of 700 units of affordable housing, according to township officials.
And Cranbury is not the only town complaining. The mayor of East Rutherford, Joe Casella, issued a press release today criticizing the COAH rules and challenging a state Department of Community Affairs report that called for some environmental and zoning rules to be weakened to make it easier to build affordable housing. According to The Star-Ledger,
The report suggests requiring state and local governments decide quickly when developers seek to build — and automatically to approve projects if no decision is made within 90 days.
It calls for rewriting DEP rules to make them “flexible” and giving the state Planning Commission the power to override DEP rules and local laws. It would also prevent DEP from stopping construction within 300 feet of a waterway if the area was developed in the past, and allow sewer line construction in environmentally sensitive areas.
The paper quotes the report:
“The … barriers prevent a predictable and efficient land use system from existing, which in turn prevents the state from meeting its current and projected housing demand,” the report concludes.
The report is unlikely to result in a drastic change — at least if state Environmental Commissioner Lisa Jackson has any say:
“Affordable housing must be done in an environmentally sensitive manner,” Jackson said (to The Star-Ledger). “I have heard a lot of people complain they can’t build on flood plains. They tell me it is the only land left. Building affordable housing there would be morally wrong.”
The municipal complaints and the DCA report, when taken together, are an indication that the state’s approach to affordable housing must change.
That’s exactly what Assembly Speaker Joe Roberts (D-Camden) plans to do. He is proposing legislation that would eliminate RCAs and replace the cash that poor towns lose with a new trust fund created by taking “$20 million from the $380 million in annual state realty tax revenue and use it for urban housing through a new Affordable Housing Trust Fund,” he told The Star-Ledger. The speaker also wants to see affordable housing fees charged to commercial development increase to 2.5 percent, from 2 percent, and to force towns to use their trust funds of turn the money over to the new state fund.
He calls the elimination of RCAs a primary component of his plan.
“I have felt for a long period of time that it is poor public policy and has resulted in a concentration of poverty in New Jersey’s urban areas,” Roberts said.
He is proposing that “towns and developers … produce a higher percentage of affordable housing units” and that a quarter of the new units be set aside for households with annual incomes of about $19,000. And he wants to broadened eligibility to “allow more residents to qualify” by increasing the “$63,000 income limit for a family of four to about $87,000.”
I’m inclined to agree with Roberts’ thinking — more people should qualify and more housing should be spread around the state with the state pitching in on the costs — but it is too early to know if the specifics of his bill will result in a better program. That said, his legislation deserves a hearingunderstand.
What is clear, however, is that sweeping changes are needed to ensure that the program expands housing opportunities without creating a different set of problems.
South Brunswick Post, The Cranbury Press
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Hank Kalet 