Assembly Committee Says Towns Should Be Allowed to Keep Affordable Housing Funds — for Now

In a hearing marked by testy exchanges, the state argues that municipalities must return $142 million in unspent funds

Assemblywoman Bonnie Watson-Coleman (D-Mercer)
Municipalities should not be forced to surrender their affordable housing funds to the state until the Council on Affordable Housing meets and makes decisions on how to move forward, said members of the Assembly Housing and Local Government Committee yesterday. The hearing was to discuss the Christie administration’s demand that the money previously set aside to build local housing should be returned to the state’s coffers.

Sean Thompson, acting executive director of COAH, last month demanded that towns give the state back the $142 million that is supposed to pay for low-cost housing within their borders. Yesterday, Chuck Richmond, a deputy commissioner of the state Department of Community Affairs who has acted on behalf of COAH testified on the administration’s behalf, which led to several testy exchanges with lawmakers.

Committee members questioned the administration’s authority on the issue, since the Appellate Division of Superior Court has ordered the state to reinstate the council, but it still has only five of 12 positions filled.

Richmond told committee members that municipalities have only themselves to blame for the loss of the funds, because they knew a 2008 law required them to use accumulated affordable housing dollars within four years or they would revert to a state fund for the provision of units. But legislators asked Richmond over and over how COAH was demanding the money when the council, disbanded by Gov. Chris Christie last year, does not even appear to have enough sitting members to constitute a quorum and has not met in some 18 months.

Dodging the Question

Richmond repeatedly ducked these questions, saying he could not comment because there is pending litigation over Christie’s executive order tossing COAH. The Appellate Division has ordered the council’s restoration; the administration is appealing that decision to the state Supreme Court.

Assemblywoman Bonnie Watson-Coleman (D-Mercer) characterized Richmond’s answers as a copout.

“That is convenient to say that here,” she said the third time Richmond said he could not answer a question about COAH’s operations. She characterized the department’s refusal to answer as “hiding behind the convenient excuse of pending litigation.”

Watson-Coleman told Richmond that if the department could not explain how it is following state law and making affordable housing decisions, “then we should leave the money where it is, instead of trying to fill a budget hole and take from Peter to pay Paul, when Paul was not the intended recipient.”

She asked why money coming from the municipal funds — originally estimated at $200 million but reduced to $142 million as of July 17 in a list released by the DCA — is not going into a state fund to build housing, as required by the 2008 affordable housing law. Instead, it is being put into the general fund.

Richmond said specific language in the current budget allows for that, leading Watson-Coleman to dismiss that argument curtly, saying that the budget allows it only “because the governor said so.”

A Looming Deadline

While legislators sided with those municipalities that have been trying to use their funds to buy or build affordable units, Richmond said repeatedly the fault lies with towns that did not act when they knew a deadline was approaching. Less than half of the $258 million collected in builders’ fees and deposited into local funds has been committed to be spent for housing, Richmond said. He added that $24.5 million of the amount budgeted by municipalities was spent on administration, rather than buying or building houses. Some 68 communities did not spend $1.00, he continued, noting that Marlboro has an unspent trust fund of more than $10 million.

“Many have been sitting on those monies for much longer than those four years,” Richmond said. “Everyone understood the requirement to spend the money or be prepared to transfer it to the state.”

Municipal officials and housing advocates argued that the turmoil surrounding COAH, including a pending Supreme Court appeal of the council’s most recent affordable housing quotas, left officials unsure of the rules. They added that Christie’s abolishing of the council through an executive reorganization in June 2011 only added to the confusion. The meaning of the 2008 requirement that municipalities “commit to expend” their housing funds also was unclear and COAH never clarified it, advocates said.

Richmond disagreed, saying, “This should not be a surprise to municipalities. Municipalities are required to conform to the Fair Housing Act … No one told them to stop building.”

Arnold Cohen of the Housing and Community Development Network of New Jersey said that only by ensuring that the funds are spent for their intended purpose — to create more units for low- and moderate-income residents — will lawmakers boost the state’s affordable housing stock. He urged Assembly members to try to override Christie’s vetoes of several measures designed to help increase the amount of low-cost housing. These include a measure giving municipalities more time to spend their funds; if they failed to do so, the money would revert to the counties, which would be required to create units.

Thompson’s letter gave municipalities until Monday to dispute the amount the state says they must give back. As of July 17, that sum was $142 million. If the municipalities were able to prove that they have “committed to expend,” say, $42 million — they would instead owe the state $100 million.

Injunction Denied

The New Jersey State League of Municipalities and Fair Share Housing Center were denied a court injunction to stop the state from taking the funds. Nevertheless, the Appellate Division has kept jurisdiction over the case, and the housing groups could go back to the judges for a more favorable decision — depending on how Thompson or others in the DCA rule on individual municipalities’ arguments that they have committed to spend their funds.

Three mayors travelled to Trenton yesterday to tell the Assembly committee they have been trying to spend their funds but are unsure state officials will agree.

“I am not going to pretend there weren’t some towns that turned a blind eye,” said Burlington Township Mayor Brian Carlin. “They are not going complain. It’s been the towns that have made a real effort to try to comply with the spirit and intent of the act that are being hurt.”

He said his municipality has been trapped in a “Gordian knot,” trying to prove to the state its commitment to spend its trust fund. In order to get a contract, considered proof of a commitment to spend, Burlington Township needed approval from the state, but that was not forthcoming despite the township having written to DCA seeking that permission, Carlin said.

Committee chair Assemblyman Jerry Green (D-Union) said he wants to hold another hearing on the matter in September and this time get answers to all the panel’s question from the DCA commissioner himself, rather than an assistant.

“We need to know in writing who is making these decisions, how this money is being spent,” Green said. “Who is in charge? Who is laying out the plans? Legally, can they do what they are doing?”

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