NJ’s COAH: Finding Common (and Vacant) Ground

A version of this post first ran on Rooflines -- the blog of the National Housing Institute -- BΩS

--

As New Jersey’s Council on Affordable Housing, or COAH, continues to defend its plan to use a growth-share model to encourage towns to build working class and affordable housing, we’re reminded of one thing that became clear a long, long time ago.

Full consensus is going to be hard to reach, but common ground is attainable.

Since everyone appears, at least in public, to share the same philosophy that communities should have socioeconomic diversity, there needs to be some common ground between the builders and affordable housing advocates who argue the new rules will allow suburbs to not live up to their intended housing goals, and those towns—about half of the state’s 566 municipalities—who argue they will be burdened—both financially and spatially—in being required to build far too much affordable housing based on current models.

Most of the remaining municipalities are currently participating in the COAH process, with the Council granting credit for approximately 70,000 affordable units, 36,000 of which have been completed, 14,000 of which were rehabilitated, and 10,000 that were transferred through Regional Contribution Agreements—a since-legislatively revoked method of fulfilling a town’s growth-share requirement where a municipality can transfer funds intended for affordable housing to another town.

It’s been 30 years since the original court decision that put the wheels in motion for the state to establish some sort of affordable housing guidelines, and they’ve been remodeled several times since. The most recent, established in 2004, outlines a growth-share model that encourages 4:1 ratio for market rate and affordable units, as well as one affordable unit for every 16 jobs created.

COAH has said repeatedly that it’s model is a guideline and that it would work with individual towns as they submit their 10-year COAH proposals, but the balking continues, the posturing mounts. Tough economic times only adds superficial logic (often outlined in the breathtakingly uninformed reader comments in various New Jersey newspaper Web sites) to the case that towns can’t afford to build and that the state should not be mandating them to do so.

So the latest, where The New Jersey League of Municipalities, a voluntary organization of towns throughout the state, has accused state officials of withholding materials that include a state-wide vacant land assessment, is just another step in forestalling goals that we should all work for: inclusive communities, workforce housing, not being priced out of your town.

COAH, according to an article in The Star-Ledger, responded in kind with a 130-page response to the challenges, that makes the case for the new rules, arguing that the agency had been reasonable in fielding municipal concerns.

Back in July 2008, when the state refined its latest COAH model, I argued that the Department of Community Affairs, the agency that oversees COAH, and its commissioner, Joe Doria, should go on a state-wide tour, selling the plan at public meetings, much like Gov. Jon Corzine did on his pitch to raise tolls on some key state roadways. Not everyone agreed with him, but there was an element of respect for the outreach tour—an element that he would be happy to re-tap this year as he seeks reelection. But beyond that, I thought that the state should take a real look at rethinking affordable housing:

• We need to move away from the property-tax-based funding for social mandates that benefit everyone (yes, even you there, living on the horse farm in bucolic northwest New Jersey). The implementation of an affordable housing policy that works and is reasonable can be funded by more than just property owners.

• The developer’s fee—the aforementioned 2.5 percent fee—and the municipal mandate system of funding affordable housing is ludicrous. This is important because it could very well thwart all economic growth in New Jersey with ratable-generating enterprise moving over to places like Pennsylvania.

Hopefully because they were reading Bowie of Suburbia, the state Legislature last month voted on a moratorium for this developer’s fee that exempts projects through July 2010, calling it an impediment to economic recovery, but housing advocates have rallied against the moratorium, saying that a freeze would pose a missed opportunity to generate revenue. The fee, they said, would help to promote that roadmap to more inclusive communities.

Diane Sterner, executive director of the Housing and Community Development Network of New Jersey wrote in a February 2009 op-ed in The Trenton Times that:

[W]e are all responsible in some way for creating the homes we need so our state can grow and prosper. Residential developers pay fees to build. When private individuals build or purchase a home, they pay a real estate transfer fee. A portion of this goes into the state’s housing trust fund to finance housing development.

Agreed, but in a time when major institutions, particularly nonprofits like hospitals and universities, are also struggling with dwindling endowments, but looking to simultaneously expand and remain competitive in the country, a developer’s fee is ever-problematic. The housing advocate’s argument for a developer’s fee goes back to the fundamental case that fees are needed to encourage development. Yes, but let’s do it by way of:

• Creating a value-added tax, like a gas tax that would be used strictly for infrastructure. This can be criticized as a regressive tax, but think of the open space tax that New Jersey voters consistently approve.

We need to get on the stick, and we need to do it now. This economic downturn is scaring a lot of people and it’s only a matter of time before voters are fooled by the shell-game mentality that providing affordable housing is a costly burden for our towns.

It’s an Affordable Housing Victory, But How Do We Win Over the Towns?

Let's get one thing clear: at least in New Jersey, we're _having_ the affordable-housing-as-mandate discussion. The fact that so many taxpayers, elected officials, and housing advocates in the Garden State are committed to implementing some sort of affordable housing set-aside as development and jobs increase is a good thing.

That said, it's time to realize that a uniform housing rule might not be the way to go.

On Thursday, Gov. Jon Corzine "signed into law":http://www.nj.com/news/index.ssf/2008/07/gov_jon_corzine_signed_legisla.html legislation that is being touted by proponents of the bill as a major step forward in ensuring that representation from all income brackets can be part of the same community.

In addition to creating an affordable housing trust fund, the new law also eliminates RCAs, or Regional Contribution Agreements, which are typically used by wealthier localities who send their affordable-housing requirements by way of a financial contribution, to, most often, a nearby poorer community. Naturally, critics of RCAs claim that all towns, not just rich ones, have moral obligations to supply affordable housing within their borders.

The RCA elimination is a hallmark of the incumbency of Democratic Assembly Speaker Joseph J. Roberts Jr., and the bill signing took place in Mount Laurel Township -- the namesake of the original landmark lawsuit that resulted in a State Supreme Court ruling requiring all towns to provide affordable housing. What made the event all the more symbolic was that Corzine & Co. brandished their signing pens at the Ethel Lawrence Homes, named after one of Mount Laurel's original litigants.

In order to finance affordable housing, the bill also mandates a 2.5 percent commercial developer fee that is gauged by the value of new construction. The fee is expected to raise about $80 million per year and has the support of the New Jersey Builders Association, a trade association. The group has also endorsed Corzine's plan to increase affordable housing and apartments by 100,000 units by 2018.

At the bill signing, Roberts touted the amendments:

bq. New Jersey's affordable housing laws have failed to live up to the promise of providing home for low- and moderate-income residents while having the insidious side effect of concentrating poverty in our inner cities. [T]he state's almost barren affordable housing landscape from one of lost opportunities to one of hope and promise for thousands of families.

As Rooflines contributor "John Atlas writes":http://www.rooflines.org/1032/new_jersey_regional_coalition_wins_affordable_housing_victory, RCAs have commonly been charged with concentrating poverty in the inner city and with perpetuating segregation. This is mostly indisputable, but towns are still trying to wrap their brains around the new bill. In New Jersey, where home rule is, sadly, still the rule, some localities are balking.

New Jersey's Council on Affordable Housing, or COAH, an arm of the State Department of Community Affairs in June enacted its latest regulations as part of the ongoing Mount Laurel agreement. In those regulations, developers must provide one affordable unit for every four market-rate units built. Further, for commercial development, one affordable unit must be built for every 16 new jobs created by commercial development.

Towns notwithstanding, academic institutions and hospitals are not very pleased with the latter regulation.

But by way of the New Jersey State League of Municipalities, "161 towns have thus far contributed more than $80,000 to help finance a legal challenge":http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-11/121618294437120.xml&coll=1 against COAH's rules.

The challenge is not directly related to the bill Corzine signed last week, but it does point to a fundamental difference in philosophy between the Legislature and more than 20 percent of the state's 566 (or 567 depending on who's counting) municipalities. Opponents of the latest affordable-housing rules worry that costs associated with housing requirements would be levied upon the taxpayer. A League lawyer told _The Star-Ledger_ that COAH's calculations were "fatally flawed," and that they should be "thrown out," citing worries that towns would be forced to pay for affordable housing. Under the regulations, towns would have to make sure developers comply.

Moreover, there is the matter of workforce housing. If these mandates were only for workforce housing, that would be a different story, but the affordable housing law requires towns to market affordable housing affirmatively -- meaning _anyone_ who qualifies is eligible for the housing -- not just people who work or have lived in the town for a generation -- but also people who qualify from elsewhere. We should be meeting our local needs first, and then market housing affirmatively. Have a waiting list, have a local town preference, and then move forward.

Now what about ethnic and racial diversity? It's immensely important, but poorer people -- no matter the ethnicity -- who work within the community should have the preference for local affordable housing. It makes sense environmentally, it makes sound transportation sense, it makes sound smart growth sense.

While the League's complaint will not be heard until the fall, I maintain that the state legislators and other proponents of COAH and the recent Corzine bill should travel the state, recognizing these concerns, while explaining the vast social and long-term economic benefit of housing low-income and working-class residents close to where they work.

Just like Corzine and Roberts held a symbolic bill-signing in Mount Laurel to make clear the importance of the housing bill, they need to, at the very least, make clear why this is important for residents who worry -- like the blue-collar workers who can't afford to live near their places of employment -- that they too will be taxed out of their neighborhoods.