A controversial state agency that for the past 25 years has regulated how many affordable housing units New Jersey’s 566 municipalities were required to build is in serious danger of extinction.
If that occurs, though, the replacement for the Council of Affordable Housing (COAH) remains up in the air, although whatever happens is likely to return control for determining the levels of affordable housing needed to municipal hands.
On Tuesday, N.J. Gov. Chris Christie, who is on record as wanting to “gut” the Council of Affordable Housing, issued an executive order that imposes a 90-day freeze on nearly all of the Council’s activities. And next Monday, the state Senate’s Economic Growth Committee will resume hearings on the bill, known as S-1.
If passed, this legislation would:
Assign its administrative responsibilities to the State Planning Commission,
Eliminate statewide calculations for affordable housing need; and
Allow local governments to essentially determine if they meet state standards for affordable housing levels, which are likely to be revised if this bill passes.
If municipalities don't make changes to meet the new state guidelines, the bill mandates that they adopt zoning that requires developers to set aside one-fifth of proposed residential units for low and moderate households.
Under this proposed bill, builders could still challenge towns on whether they provide adequate affordable housing. The legislation also would allow developers to build such units against a town’s wishes, according to the Star-Ledger of Newark.
However, the bill would also restore, at least temporarily, what’s known as "regional contribution agreements," which allow wealthier towns and cities to pay poorer towns to assume their affordable housing obligations. (When this swap mechanism was abolished in 2008, there were 5,000 units worth $116 million in the pipeline, which theoretically could be transferred to urban areas for renovations and rehab projects.)
Council of Affordable Housing was created under the Fair Housing Act of 1985, following the state Supreme Court’s 1975 and 1983 Mount Laurel rulings, which asserted that every state resident is entitled to affordable housing, based on income measurements. Since its formation, 40,000 affordable housing units—including rentals, condos, houses and co-ops—have been built, far below what most housing advocates believe the state needs. (The Census Bureau estimates that New Jersey ranks fourth among states whose residents pay 30% or more of their incomes for housing.) Indeed, in 2007, the council identified a need for 115,000 affordable units statewide over 20 years between 1999 and 2018.
Currently, there’s more than $200 million in unspent development fee funds in municipal affordable housing trust funds.
Practically since its inception, the council’s mandates have met with opposition from municipalities that have bristled under its “one size fits all mentality,” according to former state Senator Marcia Karrow, who will a chair a five-member panel Christie has assembled to determine how much affordable housing municipalities actually need.
However, the council’s former chairman, Joseph Doria, has challenged what he calls a “myth” that COAH’s affordable housing mandates require municipalities to expand well beyond their respective general plans in order to comply. He notes that for every five units of housing built, one must be affordable. “So a municipality that builds 20 market-rate units would have to build five affordable units. The reverse, however, is not true," Doria says. "If a municipality builds 20 affordable units, they are not required to also build 80 market-rate units. The obligation is triggered by market rate growth; affordable housing does not drive the growth.”
Joanne Harkins, vice president of regulatory affairs for the New Jersey Builders Association in Hamilton, N.J., tells BUILDER that the affordable housing agency would have been under the gun even if Christie, a Republican, hadn’t unseated Democratic governor Jon Corzine in last November's election. (In January 2009, in fact, Corzine was calling for a one-year moratorium on the 2.5% commercial developers fee that helped pay for affordable housing throughout the state.)
“This debate has been going on for quite a while,” says Harkins, who notes that the third round of COAH, which went into effect in 1999, has been mired in lawsuits since.
Harkins says that while New Jersey ranks second in the nation for providing affordable housing, “there’s nowhere near the housing to meet the need.” One of the problems towns have with the Coucil of Affordable Housing, she observes, has been its “growth share” calculations. Those figures frequently have led municipalities either to stop building altogether to avoid their affordable housing obligations or to throw up obstacles to meeting unit levels, Harkins says. “COAH hasn’t been working for anyone.”
Last summer, the New Jersey Builders Association put together a task force to offer alternative ideas to one of the bill's sponsors, State Senator Raymond Lesniak. Harkins wouldn’t go into detail except to say that any reform “needs to recognize municipalities that haven’t been exclusionary and have made an effort to provide price-restricted housing.” She also notes that any new law or agency must appreciate that 55% of all New Jersey households have only one or two residents.
Harkins says her association would like the state to revert to the original intent of the Mount Laurel rulings, which required municipalities to build a variety of housing units, with regulatory guidance that is market-driven. And even if the Council of Affordable Housing goes away, she believes there are “other ways” to assure that affordable housing gets built. “COAH has outlived its usefulness and everything has gotten too bureaucratic.”
Lesniak and cosponsor Sen. Christopher Bateman are currently revising their bill, which would require a vote by the full Senate and Assembly to pass. Depending on how much priority lawmakers put on reforming or replacing COAH, Harkins thinks a bill could possibly be on Christie’s desk to sign by as early as this summer.
John Caulfield is senior editor for BUILDER magazine.
Learn more about markets featured in this article: New York, NY.