ROBERTS/WATSON COLEMAN/GREEN UNVEIL PLAN TO CREATE MORE AFFORDABLE HOUSING OPPORTUNITIES

ROBERTS/WATSON COLEMAN/GREEN UNVEIL PLAN
TO CREATE MORE AFFORDABLE HOUSING OPPORTUNITIES

Hearing in December, Action Next Year

(TRENTON) - The Assembly Democratic Leadership team today unveiled a 12-point plan aimed at encouraging the production of more affordable housing in New Jersey through elimination of bureaucratic impediments, increased accountability, and abolishment of counterproductive state housing policies.

The plan was crafted by Assembly Speaker Joseph J. Roberts, Jr.; Assembly Majority Leader Bonnie Watson Coleman, who has long championed efforts to create more affordable housing opportunities in New Jersey; and Assembly Speaker Pro-Tempore-designate Jerry Green, chairman of the Assembly Housing and Local Government Committee.

Roberts said hearings would begin this year, but legislative votes won't occur until 2008.

The plan comes at critical time as problems in the subprime-lending market are impeding the ability of thousands of families to acquire mortgages.  Moreover, recent reports indicate that rising numbers of New Jerseyans are pulling up stakes and moving elsewhere because they find the state unaffordable.

"New Jersey needs to do a better job of providing housing for residents who live on the margins of the state economy," said Roberts (D-Camden).  "We are proposing a series of achievable strategies to attack the affordable housing challenge on multiple fronts."

"New Jersey needs a housing policy that recognizes everyone cannot afford to buy a 'McMansion,'" said Watson Coleman (D-Mercer).  "A housing policy needs to be something more than two options: either you can afford a roof over your head or go move to another state."

"Low-income New Jersey families are burdened by some of the highest rents and housing costs in the nation," said Green (D-Union).  "We have a moral responsibility to countless New Jerseyans - disabled residents, families living on limited incomes, and senior citizens - to ensure access to housing that is safe and affordable."

Speaking at a State House news conference, Roberts (D-Camden) said he and his colleagues have been working on the plan for months.  Roberts said the genesis of the plan was his 2004 call for repealing the state's system of regional contribution agreements, or RCAs, which allow communities to pass off their affordable housing responsibilities to other communities.  That policy is inherently discriminatory and frequently results in the stockpiling of low-income families in urban communities.

Roberts noted that, as he worked on that legislation, the state needed a more comprehensive approach to housing policy.

"An elimination of RCAs alone would only fix one aspect of the state's affordable housing problem," said Roberts.  "New Jersey needs a broader approach and that's what we're announcing today."

12-point plan

Roberts outlined the 12 elements of the plan, which is aimed at increasing production of affordable housing and easing the ability of eligible residents to secure an affordable unit in which to live:

• Abolish RCAs: End the reprehensible practice of allowing municipalities to duck their affordable housing responsibilities, but give urban communities new funding so they don't have to rely on RCAs.
• 20-percent set aside for state projects: Establish a 20-percent affordable housing set aside for all state-assisted development projects - such Smart Growth Areas and Transit villages; state needs to lead by example.
• New Housing Trust Fund: Create a reconstituted state affordable housing umbrella fund with an expanded pool of revenue sources.
• Tax Credits: Make federal Low Income Tax Credits available to private developers; New York, North Carolina, Ohio, Washington, and California already do this.
• Increasing Access: Expand middle-income eligibility for affordable housing units and promote production of housing units for families earning less than 30 percent of the state's median income.
• Utilizing school funding: Use school funding formula to award towns that provide affordable housing to low- and moderate-income students.
• No eminent domain erosion: Prevent eminent domain from reducing existing pool of affordable housing units in New Jersey.
• Use it or lose it: Support DCA's idea of preventing towns from stockpiling - and never using - local trust funds meant for construction of affordable housing.
• Reward balanced housing:  Mandate municipalities provide density bonuses to developers constructing inclusionary developments.
• Create fair-share bonus: Require the Council on Affordable Housing to account for existing affordable-housing units when allocating town's fair share; state regulations need to take into accounts towns that are doing the right thing.
• Long-term planning:  Create a task force specifically assigned to mapping out a "comprehensive housing plan."
• Greater transparency:  Do a better job of tracking progress on affordable housing through regular publication of statistical reports.
   

Inclusive process

Roberts said the plan was crafted after a review of housing policies in other states, discussions with the Department of Community Affairs, other legislators, and input from a wide array of organizations:  Housing and Community Development Network, Community Investment Strategies, Coalition for Affordable Housing and the Environment, Fair Share Housing Center, Homes for New Jersey, the Apartment Associations, New Jersey Chapter of the National Association of Industrial and Office Properties, New Jersey League of Municipalities, and the New Jersey Manufactured Housing Association.

Timeline for action

Speaker Roberts said the plan was being rolled out today in advance of the annual meeting of the New Jersey League of Municipalities.  He said the plan is to begin debate and deliberation on the various elements now, but actual legislative votes on the plan would not begin taking place until next year.

Roberts said the challenge of securing passage would be aided by the fact that new state Commissioner of Community Affairs Joe Doria understands the legislative process, and has demonstrated a strong command of the issue along with the ability to reach across the political aisle to build consensus.

Green said the process would begin within weeks as he announced that his Assembly Housing and Local Government Committee will hold a hearing on Roberts' RCA repeal legislation (A-3857) on December 10.

"For the sake of our residents, our economy, and our future, we need a plan that puts affordable housing in reach of all residents - regardless of where they happen to live," said Roberts.

-- Affordable Housing Reform Plan Below --

Affordable Housing Reform Plan

This memorandum outlines proposals that will lead to the creation of greater affordable housing opportunities in New Jersey.  The policy alternatives were identified after a review of housing policies in other states, discussions with other legislators and input from the following stakeholders: 1) the Housing and Community Development Network; 2) Community Investment Strategies; 3) the Coalition for Affordable Housing and the Environment; 4) the Fair Share Housing Center; 5) Homes for New Jersey; 6) the Apartment Association; 7) the New Jersey Chapter of the National Association of Industrial and Office Properties; 8) the New Jersey League of Municipalities; 9) the New Jersey Manufactured Housing Association; and 10) the Department of Community Affairs.   

• Eliminate Regional Contribution Agreements 
   
  RCAs - which the State sanctions - allow affluent municipalities to sell off half of their affordable housing obligation to cash-strapped urban communities.  A wealthy "sending" town in an RCA arrangement pays another town to assume its low- and middle-income housing and the urban "receiving" communities take the money because they need it.  The negative consequences of RCA arrangements are obvious.  By allowing a municipality to cut its affordable-housing obligation in half, RCAs make it challenging and sometimes impossible for working New Jerseyans with modest incomes to live in the suburban communities where they work.  RCAs also lead to concentrated poverty.

RCAs are bad public policy and should be eliminated.  But they should not be abolished in a vacuum.  Municipalities currently relying on RCA funds from "sending" communities will need to make up for the lost revenue.  The State has an obligation to provide this substitute funding and to work with mayors and affordable housing advocates to make this a reality.

• Require State development projects to include 20% affordable units  

Establish a 20% affordable housing set aside for all State-assisted development projects, including projects in Smart Growth Areas and Transit Villages. The State also should direct all State agencies with land-use authority (e.g., Pinelands Commission, Meadowlands Commission, Highlands Council, and Sports and Exposition Authority) to incorporate mixed-income housing development requirements into their master plans, redevelopment plans, and development regulations.

• Create an "Affordable Housing Trust Fund"

New Jersey should create its own single, centralized trust fund for affordable housing.  Although the realty transfer fee is the most popular source for state housing trust funds, many other revenue streams are also dedicated for this purpose nationally.  These include interest from real estate or title escrow accounts (Connecticut, Maryland, Minnesota, Washington, Wisconsin); lottery earnings (Kentucky, Oregon); document recording fees (Delaware, Missouri, Ohio); interest from tenant security deposits (Oregon); interest from unclaimed property (Arizona); bond and fee revenues (Kansas, Nevada, New Hampshire); capital budget funds (Washington); and the state income tax (Louisiana, Massachusetts).  Nine state housing funds receive revenue from more than one source.

In order to increase funding, the State could combine dedicated realty transfer fee revenue with an additional source or sources of funding.  The new trust fund would be the repository of the State's housing related revenues.

• Allow private developers of inclusionary development projects to compete for Federal Low-Income Tax Credits 

Current Housing and Mortgage Financing Agency (HMFA) regulations prohibit inclusionary development projects (those that include both market rate and affordable units) from competing for Federal Low Income Tax Credits.  Because inclusionary development projects are the State's primary method of constructing affordable housing, this restriction is an impediment to the production of affordable units. 

To increase affordable housing production, we need to make Federal Low Income Tax Credits available to private developers of inclusionary development projects.  Because this funding is very limited, however, eligibility should be restricted to private development projects that (1) exceed their maximum affordable obligations or (2) go beyond the Council on Affordable Housing's (COAH) affordability requirements (i.e., are priced to be affordable to low- or very-low income families).

• Increase the maximum income that an individual may earn and still qualify for affordable housing and set aside affordable units for very-low-income residents

A-4385 (Watson Coleman) would permit "middle income" families (those making 80% to 110% of a region's median income level) to qualify for affordable housing.  For a family of four, maximum income limits would be increased from a State average of approximately $63,000 to an average of approximately $87,000.  A-4385 was introduced on June 14, 2007 and referred to AHO.  At the same time, however, we must be careful not to divert existing resources from low- and moderate-income families.  While we can no longer continue to overlook the needs of "middle income" families, we must not do it at the expense of lower income families.

In addition, A-1343 (Watson Coleman) would promote the production of affordable housing for very-low-income families (those earning less than 30% of median income, or roughly $19,000 annually) by requiring all State housing programs to set aside 25% of affordable units for very-low-income residents.  A-1343 passed out of AHO on May 10, 2007 by a vote of 4-1-1.

• Ensure new school funding formula accounts for municipalities that accept low- and moderate-income families with school age children

The new school funding formula should provide enhanced funding to school districts located in municipalities that provide affordable housing for low- and moderate-income families with school-age children.  Too many municipalities attempt to meet their affordable obligations without providing housing for young families because of the cost of educating additional students (e.g., by constructing age restricted housing or by participating in RCA agreements).  Increasing the funding available to schools with low- and moderate- income students will provide an incentive for municipalities to provide this much needed housing. 

• Require one-for-one replacement of affordable housing units lost through redevelopment  

In addition to constructing new affordable units, New Jersey needs to preserve the affordable housing stock that we already have.  Eminent domain and redevelopment reform should require one-for-one replacement of all affordable units lost through redevelopment.

Require towns to spend municipal housing trust fund dollars on affordable housing within their borders

In New Jersey, COAH-certified municipalities maintain their own municipal housing trust funds, which are funded by development fees, payments in-lieu of construction fees and (in some cases) revenue generated from RCAs.  The revenue generated by these funds must be used for affordable-housing purposes.  It is estimated that these trust funds have accumulated over $150 million dollars in surplus revenue because municipalities refuse to accept affordable-housing development projects or because they are stockpiling revenue to fund future RCAs. 

Eliminating RCAs would go a long way toward correcting this problem.  As an added safeguard, the State could require towns to either (1) spend money deposited into their local trust funds within three years of receiving it; (2) provide a detailed plan of how this money will be spent; or (3) turn the money over to the State to be deposited into the Balanced Housing Fund.  This would ensure that money dedicated for affordable housing is used for that purpose.  

• Require COAH to mandate that municipalities provide density bonuses to developers constructing inclusionary developments 

The Mount Laurel doctrine requires municipalities to create realistic opportunities for the construction of affordable housing.  Third-round rules, however, actually discourage such construction by allowing municipalities to order developers to build affordable units without providing any offsetting benefit as incentive.  This not only impedes construction of affordable housing, but it also increases the cost of market-rate housing because developers are forced to raise prices in order compensate for the revenue lost to deed-restricted units.

The Legislature should require COAH to mandate that municipal land use ordinances provide offsetting density bonuses to stimulate production of low- and moderate-income housing. 

• Require COAH to account for existing affordable-housing units when allocating a town's fair share

COAH's third-round "growth share" formula assigns every municipality an identical obligation based upon the amount of growth a town experiences, regardless of a town's existing affordable housing stock.  To ensure that urban and inner-ring municipalities do not continue to house disproportionate shares of the State's low-income families, the Legislature should require COAH to account for a town's existing affordable housing stock when calculating that town's obligation (this process is referred to as "reallocated present need" and was an integral component of COAH's first and second round methodologies).  Please note that the recent appellate court opinion upheld the third-round's elimination of reallocated present need, although the court did concede that this was a close call.

• Create "Comprehensive Housing Plan"

New Jersey's housing problem is complex, systemic and long-standing.  It is therefore necessary for the State to ensure that affordable housing remains a top priority for future administrations and legislatures.  The Legislature should make permanent Commissioner Doria's housing task force comprised of a diverse body of government officials, as well as public and private stakeholders.  The Housing Task Force would be charged with developing a "comprehensive statewide housing plan" and submitting annual reports to the Legislature over a 10-year period. 

These annual reports should evaluate progress toward achieving the State's affordable housing goals and recommend aggressive remedial strategies where necessary. 

This comprehensive housing plan would focus on coordinating existing housing services and targeting resources to priority populations. 

This proposal is based on Illinois legislation enacted into law in 2006 and is strongly supported by the Housing and Community Development Network.  New York City also recently developed a comprehensive affordable housing plan aimed at realizing its goal of developing 165,000 units in 10 years.  Since implementing the plan three years ago, the city has produced 75,000 units. 

• Require regular publication of affordable housing statistics

Although the Fair Housing Act contemplates DCA issuing an annual report documenting affordable housing construction, this report has not been made available since 2003.  The Legislature should require DCA to make available this year's report.  The Legislature also should require COAH and HMFA to report on the affordable housing they have financed.