Affordable Housing Reform: The Controversy Continues

Remaking the state's troubled housing reform is a simple matter of pleasing the legislature, governor and Supreme Court

The quest for affordable housing reform in New Jersey should begin anew next week with the introduction of yet another bill aimed at reforming the current system of requiring New Jersey municipalities to set aside development that is deemed “affordable” for the state’s low- and moderate-income families. Senator Raymond Lesniak (D-Union), who recently saw his latest effort to overhaul the system conditionally vetoed by Gov. Chris Christie, plans to restart the discussion by introducing an entirely new bill from the one that’s been haggled over for the past year.

But before legislators get a chance to consider Lesniak’s newest proposal, many are expecting — indeed, some are hoping — the state Supreme Court will step in with guidance as to how to approach the controversial issue. Currently, there are several petitions before the court asking for new rulings.

It is the state Supreme Court that initiated the controversy, which began 35 years ago with the first of its landmark Mount Laurel decisions. The court found that towns have a constitutional obligation to ensure that residents have affordable places to live. The Fair Housing Act of 1985 created the Council on Affordable Housing (COAH) to oversee towns’ efforts to live up to those rulings.

Lesniak’s bill, as well as a previous incarnation that was conditionally vetoed by Christie, abolishes the much-loathed COAH. He says he has come up with a new measure that he sees as a compromise among the competing issues of the state Senate, Assembly and governor’s office.

“Rather than continue to beat our heads against a wall and beat our chests proclaiming our way is the only way, this new bill will meet everyone’s goals except those who want to keep COAH in place,” he said. “I’m trying to put the best of the best together. Hopefully we can get something done. Right now, the whole process is in limbo. That’s not helpful.”

Lesniak says his new bill will give municipalities more flexibility in providing affordable housing units, while still passing constitutional muster. It will not include regional contribution agreements, which essentially allowed one municipality to pay another to transfer some or all of its affordable housing obligations.

Calling COAH an “abject failure,” Lesniak noted that it resulted in the construction of relatively few affordable units while consuming millions of dollars in taxes to pay for studies, plans and lawsuits. He wants to replace agency with a legislatively dictated system of determining housing obligations.

A Meeting of the Minds

The key question is whether both houses of the state legislature and the Governor’s office can agree to a plan that will meet with the approval of the state’s highest court.

In 2004, COAH changed its rules from a previous highly controversial quota system to a system that linked a towns’ affordable housing obligations to future growth. Those rules — known as growth share — have been overturned by the courts twice, most recently this past fall, when the New Jersey Appellate Court said the state must go back to its original way of establishing quotas.

That October appellate court decision came in the midst of legislative wrangling over new housing rules. At the beginning of the session, Lesniak introduced S1, his bill to change the way towns provide homes for the low and moderate income.

His bill would have set up a modified growth share system, requiring municipalities to ensure that 10 percent of all residential units in most housing developments be affordable and provide for builders to satisfy their requirements through some alternative means.

The measure went through substantial amendments in the Assembly, tying affordable housing requirements to the percentage of children receiving a free or reduced-price lunch. Towns with a substantial number of children considered needy by that measure would either have a reduced obligation or no obligation at all.

A Conditional Veto

Last month, Christie conditionally vetoed the bill in a lengthy, 49-page opinion, saying it was in some ways worse than the current process.

“This bill purports to reform procedures concerning the provision of affordable housing by abolishing the Council on Affordable Housing,” read his January 25 message. “In fact, the bill requires that at least 10 percent of the total housing units in most municipalities be dedicated as affordable housing, creating obligations for many municipalities throughout the state well in excess of what is required under the current failed COAH system.”

The governor had made his feeling about COAH clear when, shortly into his term, he signed an executive order temporarily shuttering the council. He rescinded that order one and one-half months later, after housing advocates challenged it.

It continues to be a highly charged matter. The Housing Opportunity Task Force Christie created recommended more than two dozen immediate reforms that would reduce municipal housing obligations. A Fair Share Housing Center analysis found that report would require towns build only about 7,500 affordable units through 2018.

COAH, on the other hand, says the construction of nearly 138,000 affordable homes is necessary to meet current statewide need, with 104,000 additional units through 2018 given expected growth.
Christie unveiled his own housing policy last May. He called for 10 percent of units in a development greater than 10 units be affordable and that builders pay into a municipal affordable housing trust fund when they erect smaller developments.

Meeting Current Goals

Housing advocates like Kevin Walsh, of the Fair Share Housing Center, say proposals like the governor’s and Lesniak’s are inadequate because they would not meet existing needs for affordable housing and allow municipalities that choose not to grow to get out of providing their fair share of units.

Similarly, COAH’s rules do not meet the constitutional mandate.

Walsh is pushing for implementation of the appellate ruling by March 8, which required COAH to revert to rules like the ones it had previously used in setting out new municipal housing obligations.

The Supreme Court last month stayed that ruling. It is unclear what the court’s next step will be, but several of those involved in the debate believe it will act soon.

“Our expectations are the courts will require the governor and his administration to comply with the laws on the books. That will include placing checks on wealthy towns’ efforts to keep out lower-income families and those with special needs,” Walsh said.
Thomas Carroll, land use counsel with the New Jersey Builders Association, said the group hopes the court will act quickly to enforce the appellate ruling.

“As to growth share, I don’t think there’s any question it is unconstitutional,” Carroll said. “This chaos has been going on for 10 years. We hope the Supreme Court will put an end to it.”

But municipal officials and the state attorneys representing COAH are arguing that New Jersey is a much different place than it was when the court laid down its first Mount Laurel decision and so a change in the affordable housing system is needed.

“A growth-share concept seeks to have affordable housing obligations reflect the reality that far fewer municipalities will ever see the kind of development that took place in the State ten or twenty years ago,” Attorney General Geraldine Callahan wrote in a brief on behalf of COAH.

“Mount Laurel obligations should be consistent with sound planning … Given the emphasis and trend toward redevelopment, growth share may be a preferable approach to achieve the goal of Mount Laurel. Significantly, the legislative and executive branches are best suited to make such a policy determination,” according to Callahan.

The New Jersey State League of Municipalities also strongly supports the use of the disputed “growth share” methodology that would tie future affordable housing obligations to new development as a fairer and more realistic way to ensure units are built. It wants to see the court and lawmakers weighing in soon on the matter because municipal officials don’t know how to proceed at the moment.

“Number one on our wish list is that the Supreme Court takes the appeals of the October decision and really gives some direction,” said Mike Cerra, the senior legislative analyst. “This sort of limbo state, coupled with the downturn in the economy, has slowed things down considerably. Of almost parallel importance is that there is a legislative solution.”

Assemblyman Jerry Green (D-Union) who worked for months to craft the revised COAH bill Christie vetoed, said he is curious to see Lesniak’s new proposal.

“My bill is constitutionally sound … Why should I make adjustments to something that is constitutionally legal?” he said. “I’m prepared to see what the senator is giving in. But if it goes back down the same road the governor wants to go, personally, I am not prepared to make those changes.”

Christie, meanwhile, is not willing to compromise, either.

“The governor fully supported and would have signed S-1 — the original S-1,” said spokesman Michael Drewniak. “The Green bill was a disaster and, in our view, made a bad situation worse. So we look forward to seeing what Senator Lesniak advances, and we appreciate his persistence. But unless it accomplishes what the original bill did, I don’t see it going anywhere. Fake reform will not do.

The bill is likely to be heard first in the Senate Economic Growth Committee that Lesniak chairs. He said he would like to see a bill passed by June 30.