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With Christie's Veto, NJ Towns Risk Losing Affordable Housing Money

Fair Share Housing Center, municipalities league ask appeals court to decide debate over unspent funds.

Gubernatorial vetoes have put municipalities at risk of losing $161 million earmarked for the creation of affordable housing throughout the state, although a judge has ruled New Jersey can’t take funds from at least one municipality and an appeals court will consider motions that could decide the fate of the money.

There is widespread confusion among municipal officials and anger by legislators who worked to give towns two more years in which to spend their money from the state’s Affordable Housing Trust Funds.

“A lot of these towns were depending on this opportunity to use this money to create affordable housing, rather than give it to the state general fund,” said Assemblyman Jerry Green (D-Union), sponsor of one of the bills Gov. Chris Christie vetoed last Friday

Certain development fees and other payments are by law banked on behalf of municipalities to build low- and moderate-income housing. Communities are required to earmark the money within four years or it reverts to the New Jersey Housing Trust Fund. The date by which the first fund deposits have to be committed is July 17.

In his original budget proposal, Christie sought to take as much as $200 million from the municipal funds to spend on a dozen purposes, including state rental assistance and homeless prevention programs and services for senior citizens, veterans, and the developmentally disabled. At least some of those had been funded by general state appropriations.

Lawmakers inserted language into the state budget that would have allowed municipalities to keep their money by passing a resolution stating the intention to spend the funds. And they approved Green’s bill, A2950, giving municipalities two more years to use the money, Christie vetoed both the bill and the language.

That would affect $161.3 million of $252.2 million total in the municipal funds as of June 5, according to figures from the state Department of Community Affairs. In all, $589 million in fees have been collected and $336.9 million of that spent on housing. Municipal funds would retain about $89 million not yet subject to state seizure.

However, a Monmouth County Superior Court judge last week issued an injunction preventing the state from taking funds from Marlboro and scheduled a July 13 hearing on the matter with representatives of DCA and the Council on Affordable Housing. Marlboro had the largest unspent balance, $11.7 million, as of June 5, according to the DCA data.

But Tammori C. Petty, a DCA spokeswoman, said all funds remaining uncommitted and unspent as of July 17 “are still subject” to being taken by the state.

Michael Cerra, senior legislative analyst with the New Jersey State League of Municipalities, said the court injunction applies only to Marlboro at the moment. In total, 221 towns have affordable housing trust fund balances, with 45 of those having more than $1 million unspent.

“It’s contradictory and confusing,” Cerra said. “With the budget language deleted, there continues to be no guidance for municipalities as to what ‘committed for expenditure’ means.”

He said the law establishing the funds and setting the deadline for spending them required COAH to adopt regulations regarding them.

But COAH has been in limbo almost since Christie took office. He tried to block the council’s actions early on, but backed off when the appellate division stopped him. A year later, the Legislature passed a bill abolishing COAH, but Christie conditionally vetoed that and lawmakers did not agree with his demands. Christie then issued an executive order reorganizing DCA and eliminating COAH, but earlier this year an appeals court panel ruled Christie had overstepped his authority.

That ruling should have led to the restoration of the 12-member body first created by the Fair Housing Act in 1985 to ensure that municipalities meet their constitutionally obligated share of affordable housing as decreed by the state Supreme Court in its Mount Laurel decisions. But that has yet to happen.

“We’re in the unusual situation that towns are at risk of having their trust funds seized for failing to comply with regulations that were never even proposed,” Cerra said.

Like Cerra, the Fair Share Housing Center, which has fought all of Christie’s anti-COAH efforts, issued a statement decrying the governor’s vetoes and saying that “seizing funds without any rules on what can be done to prevent such seizure violates basic principles of due process.”

On Tuesday, the center asked the NJ Appellate Division to stop the state from taking the money. The court agreed and scheduled arguments for Friday, July 13. It has vowed to rule before the July 17 deadline, according to the League of Municipalities, which joined the suit.

Christie’s office did not return a request to comment.

Green, who had also co-sponsored the vetoed bill that had sought to eliminate COAH, said many municipalities are missing out on good opportunities to create much-needed affordable units.

“This is a most confusing issue facing us all,” he said. “The courts say he [Christie] can’t just gut COAH. He has not been able to let me know what his plan is. He’s drawing back this money and has no plan in place.”

The Fair Share Housing Center statement echoed Green’s concerns: “What is Governor Christie’s solution to New Jersey’s housing problems, including one of the nation’s worst foreclosure crises?”

The center also complained about a third Christie veto last Friday, of the New Jersey Residential Foreclosure Transformation Act, S1566, which would have created a state agency to purchase and deed-restrict foreclosed properties to be used as affordable housing.

It is unlikely the Democrats will be able to muster enough votes to override any of Christie’s vetoes.

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