Rethinking NJ’s Housing Market to Meets Needs of Suburbanites, City Dwellers
Housing is more than shelter: It’s a vital component in the health, growth, and economic wellbeing of the Garden State
New Jersey’s next governor faces daunting housing problems that are widespread and complex, ranging from a lack of affordable homes in walkable communities to a glut of McMansions in suburbs that are no longer in vogue — and little available land on which to fix the imbalance, a.
The fifth in The Fund for New Jersey’s “Crossroads NJ” series of reports aimed at informing public debate during this election year has a long title that sums up a good portion of the state’s housing problems: “Communities of Opportunity: New Jerseyans Need More Affordable, Convenient, and Safe Places to Call Home.” (The organization is a funder of NJ Spotlight.)
“There are just simply not the resources available to build the homes that we need and the reason for that is a completely out-of-balance housing market,” said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey. “There’s lot of development that builds very large homes for very wealthy people but does not build starter homes and homes that are available for working families, seniors, and people with disabilities. And we certainly have a huge problem with the availability of rental apartments that families can move into.”
The Christie factor
Both the report and the housing advocates who spoke about it on its release place much of the blame for the lack of affordable housing on Gov. Chris Christie, though not always by name, for diverting funds previously meant for low- and moderate-income units to balance the budget and emasculating the council that oversaw such matters.
“What we’ve really seen for the last nearly a decade … it’s been an outright hostile attack and an effort to gut Mount Laurel, to take all the resources that are available for nonprofit developers and for profit developers,” Berger said, referring to the Supreme Court decisions that found exclusionary zoning unconstitutional and require municipalities to provide their share of the regional affordable housing need.
There’s plenty of blame to go around, though, as Christie’s two Democratic predecessors also did nothing to advance municipal affordable-housing obligations, and most municipalities largely ignored the State Plan’s smart-growth recommendations and zoned for the sprawl that now covers suburban and rural parts of the state.
The report recommends a host of actions the next governor should take, some of them potentially expensive, to make New Jersey an affordable and attractive place to live for millennials and baby boomers, for families and single senior citizens. The most costly suggestion is that the state adopt HCDNNJ’s $600 millionplan, which would build or rehabilitate more than 100,000 new affordable homes.
“That sounds like a lot of money to folks, $600 million, unless you happen to walk down the street and see the State House getting a facelift for $300 million that seemed to materialize out of nowhere,” Berger said. “To us this is really a question of political will. The vast majority of that funding is already being collected by the state.”
It’s crucial for the state to begin solving its housing problems quickly to remain attractive to businesses and their employees. Several studies have found more millennials move out of New Jersey than put down roots here, and the state leads the nation in the proportion of adults 18 to 34 who— almost 47 percent. Time is also running out on the state’s ability to change its housing stock and patterns as New Jersey could reach “near-total build-out by midcentury,” the report states.
There are economic benefits to resolving the crisis, according to the report. . The construction of multifamily homes brings in millions in taxes and creates jobs. Affordable-housing development and community revitalization work done by the state’s community development organizations added $12 billion to the state’s economy over the past quarter century. And the $200 million the state invested in permanent supportive housing beginning in 2005 created both one-time and permanent job and increases in state income and sales taxes and local property taxes.
The report does a thorough job in explaining the depth and breadth of the housing problem.
“For New Jersey’s nearly 9 million residents, housing costs are among the highest in the nation, evictions occur at an unprecedented rate, and residential foreclosures outpace the rest of the country,” the report states. “Development over the last several decades has brought the state close to build-out and the resulting sprawl has separated economic opportunities and affordable homes. Today, too many New Jerseyans struggle to find an affordable, convenient, and safe place to call home.”
More than three of every 10 renters spend at least half of their gross income on rent and utilities, making New Jerseyans the second most-burdened in the nation by that measure. Last year, there were only 29 affordable apartments available for every 100 families with less than $30,000 in income.
That was not always true. The report describes how in 1985 New Jersey sought to deal with sprawling development and exclusionary zoning by enacting both the Fair Housing Act, to govern the process of setting municipal affordabl-housing obligations, and the State Planning Act, to try to direct growth to cities and areas with infrastructure and protect open space.
Neither fulfilled their promises, but the state had been making efforts in the right direction. That has changed.
Kevin D. Walsh, executive director of Fair Share Housing Center, estimated that the lack of action by the state over the past 16 years has created a need for “hundreds of thousands” of affordable homes. Fair Share so far has reached legal settlements with more than 100 municipalities to build some 50,000 affordable homes to meet their housing obligations under the Supreme Court’s Mount Laurel housing decisions.
“Despite the demonstrated need for, and the economic and societal benefits of, affordable homes, state investment in affordable homes in New Jersey has dwindled over the past decade,” the report states. New Jersey’s “resources and political will” to address housing and related issues “have diminished.”
The report details how money from the Affordable Housing Trust Fund that is supposed to be used to build affordable homes has been diverted to pay for rental assistance and other non-housing production programs formerly funded through the state’s general fund. Last year, $52 million was diverted. The state has cut or eliminated three other housing-assistance programs since 2010.
“They’ve taken all the money” meant for housing, Berger said of the Christie administration.
Another challenge facing the state is the fact that the demand for housing is also shifting from the rural suburbs to the cities and towns with walkable downtowns and, especially, mass transit. And it’s not just millennials who are interested in these more compact and vibrant locations, but also aging baby boomers and immigrants — the three largest population groups in the state. That has an impact on existing suburbs, as well.
“Unfortunately, that emphasis on the urban areas is having a negative impact on the desirability of the state’s suburban towns,” said Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University. “For those suburbs that were so desirable 20 or 30 years ago, they are not experiencing that same market demand. And those towns need to take steps to keep and attract companies and workers and those towns need a thorough review of what are their assets, what are their liabilities, and then undertake a program to attract a new generation of residents and workers.”
Add to that is the problem that past development patterns have made New Jersey among thein the nation. The report cites data from the 2010 census that shows New Jersey’s residential segregation between non-Hispanic whites and Hispanics was sixth highest in the nation, while its black/white segregation ranked 11th highest. It notes that nearly 70 percent of the state’s municipalities are at least 70 percent non-Hispanic white.
Segregated from opportunities
“We see it in the segregation, especially, of lower-income African-Americans and Latinos in New Jersey,” said Walsh. “It’s segregation that detaches people from opportunities in the region. It’s segregation that detaches people from educational opportunities, job opportunities.”
Its first recommendation, HCDNNJ’s plan, would lead to both the improvement of older housing stock and construction of new homes — both rental and owned — where needed, particularly near where people work and near transit. Funding for the $600 million proposal is envisioned coming from general revenue, matching federal funds, realty transfer fees charged on the transfer of property and from New Jersey Housing and Mortgage Finance Agency (HMFA) loans.
The report also suggests providing tax credits to developers who build affordable mixed-income housing in economically distressed areas, those where the median family income does not exceed 80 percent of the state median. It advocates the reinstatement of the Office of the Public Advocate, with fair-housing issues as one of its major mandates, adequate funding for the state’s Legal Services system, and an expansion of the Judiciary’s Foreclosure Mediation Program.
Buying foreclosed properties
And it proposes the state create an HMFA program to purchase vacant foreclosed residential properties to be refurbished for occupancy as affordable homes, a program that lawmakers have tried to create but that Christie has vetoed several times.
While not costly, some of the recommendations are controversial given the state’s long history of home rule.
For instance, the report recommends that state and regional agencies be given the authority to approve projects of regional significance, overriding local zoning if necessary. And it suggests the creation of a regional planning body to protect the state’s coastal areas, with an emphasis on climate resiliency, open-space acquisition, and a variety of housing in appropriate neighborhoods. A number of other recommendations should be an easier sell. One, for example, urges the state to help towns that agree to meet their court-sanctioned affordable housing obligations by giving them preferential treatment in applying for funds and other support. Others seek to update the moribund State Plan, update the regional Highlands, Pinelands and Meadowlands plans, and restore the New Jersey Meadowlands Commission to the status of an independent agency.
“That model of all towns sharing in the costs and the benefits of development enables decision making that transcends the physical borders and allows for a more regional approach,” Reinhart said, referring to the former tax-sharing among the 14 Meadowlands municipalities. “Another recommendation in the report calls for a more coordinated approach to planning in the coastal region. The unique geography of the coastal area presents opportunities to address land-use issues like those around climate resiliency, use of Blue Acres money to buy out properties that frequently flood.”
Despite the many challenges, Reinhart said the future is not completely bleak. “New Jersey is still a very desirable state to live in and work,” he said, “but it is in danger of losing market share to other states if we don’t do more to address the housing needs of current residents, as well as future ones. And that will require leadership, political will, from the governor and the Legislature, but also from the counties and from the local municipalities ... The private sector needs to be engaged as well.”