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Conditional Veto Could Gut Affordable-Housing Policies, Advocates Say

Governor argues that it’s time for Legislature to significantly revise New Jersey’s landmark law

affordable housing

Housing advocates are decrying a proposal by Gov. Chris Christie that would allow municipalities -- rather than the state -- to set their own affordable-housing goals, essentially gutting a nearly 30-year-old housing program that was mandated by the courts.

Christie did this by conditionally vetoing a housing-fee moratorium Wednesday that had nearly unanimous, bipartisan support in both houses of the state Legislature and was touted as a way to jumpstart the state’s construction industry. The fee -- imposed on commercial development to pay for construction of affordable housing and rehabilitation of older units – was viewed as a tax that deterred development.

Kevin Walsh, director of the Fair Share Housing Center in Cherry Hill, which advocates for construction of low-income housing units, said the governor likely does not expect his proposal to make it through the Legislature. Walsh said Christie’s goal is probably to use the housing fee to force the Legislature to eliminate the affordable-housing rules.

Vetoing the fee moratorium, Walsh said, can have positive short-term consequences, because it reduces the amount of money generated for local trust funds. In a sense, he said, the governor “is doing something that is temporarily good for lower-income households, so that he can destroy the overall system that helps them.”

The fee moratorium -- A-1907 -- was approved by the Assembly, 70-0, on June 23 and by the Senate, 29-1, on June 30. It would have, retroactive to January 1, 2013, waived a fee of 2.5 percent of assessed value on new nonresidential development. The money would have been placed instead in local housing trust funds to be used either for construction of new affordable housing or rehabilitation of existing housing. The fee initially had been put in place in January 2009 and was extended in 2011. It expired in 2013.

Legislators from both parties said the fee discouraged nonresidential development, which cost the state jobs and caused municipalities to lose out on potential property tax revenue.

The governor vetoed the bill, which had nine Senate sponsors and 18 Assembly sponsors, even though he generally supports the development-fee moratorium. In his veto message, the governor said it was time for the Legislature to significantly change the state’s affordable-housing laws and that the moratorium “cannot be considered in isolation.”

“Instead, as a component of the existing patchwork of affordable-housing laws, our approach to funding affordable housing must operate in concert with concrete reforms to improve affordable-housing policies and assist municipalities in meeting their affordable housing goals,” he said.

There is a need for reform that is “simple, direct, and predictable so that municipalities can develop organically, expanding the availability of affordable housing as they grow.”

In his conditional veto, the governor proposed legislation that mirrors an earlier affordable-housing compromise that passed the state Senate in 2010. That bill would have replaced the state Council on Affordable Housing, which has been charged with setting local targets for the construction of housing for low- and moderate-income residents, with a requirement that developers set aside 10 percent of their units for low- and moderate-income families. Builders would have been allowed to meet the requirement through rehabilitation of older units, construction of new units at a different site or payment of a 2.5 percent fee. Commercial development would not have been charged a fee, unlike under current COAH rules.

The 2010 bill was ultimately vetoed by the governor after it was modified in the Assembly, which tied obligations to the percentage of children in the community participating in federal free- or reduced-price lunch programs. A total of 71 towns would have been exempted under the Assembly version.

In the meantime, the Christie administration was sued over its decision to unilaterally abolish COAH and transfer its functions to the state Department of Community Affairs. The courts ruled in January 2013 that the governor exceeded his authority and COAH was reinstated.

A separate suit was filed against COAH by the Fair Housing Center alleging that the agency had failed to follow the state Fair Housing Law by not establishing local housing numbers. The case was decided in September 2013, when the state Supreme Court ordered COAH to promulgate guidelines designed to provide 53,000 affordable units, 22,000 of which the court said should have been built more than two decades ago, along with the rehabilitation of almost 63,000 existing units. COAH was then accused of stalling in drafting the new rules.

In his conditional veto, the governor essentially offered a version of the 2010 Senate plan, says the Fair Housing Center. That, says Walsh, will make it too easy for towns to avoid building new units. He said it is “not a serious approach to housing policy.” Developers and towns could meet the 10 percent set-aside in a 100-unit development through rehabilitation, he said, by “providing five new air-conditioning units and five new roofs (in 10 houses) and they would not have to do anything else.”

“All that is required is that you fix one major system in the house,” he said.

The proposal also essentially caps a town’s affordable-housing obligation, he said. Towns in which 7.5 percent of their units are affordable or in which one-third of their units are apartments, attached housing, or mobile homes would be exempt, he said.

“This will lead to bizarre results,” he said. “You can have extremely wealthy towns like a Princeton or towns in Bergen that have a fair number of attached homes not have much of an obligation and towns that are comparatively much more modest in terms of wealth that could have bigger obligations.”

He said the governor’s plan would fall short of the court’s 53,000-unit target and far short of an estimated need of 150,000 affordable-housing units statewide.

The state League of Municipalities, which represents all 565 New Jersey municipal governments, however, disputes FHC’s predictions. Michael Cerra, the league’s legislative director, said current law already allows for rehabilitation of existing units and “nothing about that has changed.”

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