With Future of COAH Still Cloudy, Many Towns Shelve Plans to Build Affordable Housing

Hank Kalet | March 25, 2013 | Housing, More Issues
Advocates argue that real losers in political turf war are low- and middle-income families who need someplace to live

Housing Veto 2
Municipalities say they are frozen in place when it comes to affordable housing.

With the Council on Affordable Housing in limbo because of litigation before the state Supreme Court, including a challenge to the governor’s attempt to eliminate the agency, towns say they are left without direction. They’re afraid to act on plans to spend money designed to help fix the problem. They fear that if they act, they could be penalized later;
but they also fear that, if they fail to act, they will lose the money.

And the loser in all of this, housing advocates say, are the thousands of low- and moderate-income New Jerseyans who are left without access to affordable places to live.

“There are fears from towns that, if they go ahead and spend the money on things everyone agrees is legitimate, then COAH can come and ask for the money back later,” said Kevin Walsh, associate director for the Fair Share Housing Center, an advocacy group in Cherry Hill.

COAH was disbanded by Gov. Chris Christie in July 2011 by executive order. Housing advocates sued and the appellate court ordered that the governor reinstate the housing council on the grounds that it could not be eliminated by executive order. The matter is now before the state Supreme Court, one of two cases concerning COAH. The council has not met since March 22, 2011, and currently has six active members, according to the Department of Community Affairs.

Use It or Lose It

As the battle over COAH has worked its way to the Supreme Court, the Christie administration invoked a provision of Assembly bill A-500, which had been signed into law in July 2008 by then-Gov. Jon Corzine. The legislation reformed the state’s affordable housing rules and required that local trust fund money be spent within four years of it being collected.

In June 2012, the DCA sent letters to municipalities ordering them to remit the money to the state. Towns and housing advocates objected, saying COAH had not promulgated the necessary regulations to govern local trust funds.

A total of about $141 million was to be returned to the state and, while the law called for it to be placed in the state affordable housing trust fund, the Christie administration earmarked it as revenue in the 2012-2013 state budget.

An appellate panel issued an injunction in August, pending resolution of COAH’s status by the Supreme Court.

State officials, however, say COAH and the DCA are reviewing plans and that towns can spend trust fund money. The state is still seeking court-approval to force towns to forfeit unspent trust fund balances.

“Spending plans have been and continue to be reviewed for approval in accordance with the Fair Housing Act, and applicable regulations,” DCA spokeswoman Tammori Petty said in an email.

The War of Words

The Fair Share Housing Center says A-500 required that COAH craft new rules to govern the trust funds. In an opinion piece for Rooflines Magazine, published by the nonprofit community planning group Shelterforce, the FSHC said that the bill’s “language on commitment conflicted with COAH’s existing regulations and because the phrase ‘commit to expend’ was not defined.” COAH, however, “didn’t clarify, and has refused to provide any determination either through regulation or in individual cases of what ‘committed’ means.”

Walsh said COAH is the only agency with authority to write rules for the trust funds, and it is the only agency with the authority to approve individual trust-fund plans. That leaves municipalities in limbo, he said.

“There is no guidance coming from COAH as to what it constitutes a ‘commitment to expend,’” Walsh said.

Michael Cerra, senior legislative analyst for the state League of Municipalities, agrees. He said the attempt by the governor to seize the trust funds and use them in the general budget violates the reasons they were authorized in the first place.

“We want to see towns be able to comply with the law,” he said. “Those trust funds —
these are not state dollars. They are dollars collected locally to help subsidize housing.”

Frank Gambatese, mayor of South Brunswick, said the Middlesex County town has accelerated its use of the trust fund money because it fears the state will seize the money.

“We’re trying like mad to provide as much housing as we can,” he said. “We’re saying, ‘when are they going to grab that money?’ We want to do it as carefully as we can, but it makes it difficult when you put on that kind of pressure.”

He called the attempt to seize the money and COAH’s status “unconscionable.”

“We believe in affordable housing,” Gambatese said. “We were among the first towns to submit a plan for the third round even though we didn’t agree with the numbers and we are proceeding as though we are trying to meet the third-round obligation.”

The township’s third-round plan, like most in the state, has not received certification. But the township has been moving forward. During the first two rounds, it had built 669 affordable units out of a total obligation of 1,331 and created what housing advocates say is an aggressive “buy-down, write-down” plan.

A Key Component

Gambatese said the trust fund is a key component of the township’s approach to affordable housing. The township has been using its trust fund money as part of buy-down program, in which it purchases existing housing throughout the township for up to $250,000, deed-restricts them for affordable housing, and then sells them to low- and moderate-income buyers for about $100,000. The township has bought 18 houses, so far, he said, with a goal of buying 42. The money also is used to repair and upgrade existing affordable housing, he said.

In addition, the township is looking at property that can be purchased using trust fund money and turned over to a local nonprofit, the South Brunswick Community Development Corporation. SBCDC, which runs two other complexes for low-income seniors and disabled residents in the township, would then apply for funding from the federal Department of Housing and Urban Development.

“We were more than careful in past, because we didn’t want to just spend the trust fund down,” he said. “We wanted to make sure the money had a good purpose.”

Other towns are facing similar quandaries. Burlington Township, for instance, has been using its trust fund money to extend the deed restrictions on its affordable units. Burlington Mayor Brian Carlin joined Gambatese and Mayor William Kochersperger of Pemberton Borough in August in testifying before the Assembly Housing and Local Government Committee. Other towns are using the money to buy land and build housing.

Towns still have access to their trust funds, Cerra said, but the funds’ questionable status and the questionable status of COAH more generally is making it more difficult for towns to address housing needs.

“There are a whole host of Bergen County towns that have United Way projects that are kind of in the pipeline and they are not sure if they are going to be able to finish them,” Cerra said. While COAH’s future is unclear, he added, the board “could be acting on spending plans.”

Walsh agrees.

“The council could meet,” he said. “Three members could call a meeting and they could make the decisions themselves.”

Mixed Signals

Instead, the state has been sending mixed signals, he said. COAH staff had been giving towns guidance through 2011, even without the adoption of formal regulations. And the Department of Community Affairs, which was to take on the role of administering the Fair Housing Act, had proposed rules and then later rescinded them when the status of the trust fund money became an issue. Walsh estimates that as much as $250 million could be at stake, including the $141 million initially sought by the state.

“It was sending mixed messages on the rules, but now it has a consistent message,” Walsh said. “Now it says it is going to do what it can to get as much money for the state as possible.”

Cerra said that, if the state is successful in taking the trust fund money, it would leave towns with few options to meet their housing obligations under the Fair Housing Act. Even some federal funding would be imperiled, he said, because most federal projects require local “seed money.”

“Towns will still have an obligation, but they will have lost their subsidy and they will have to find other sources of funding or will have to rely on new construction exclusively,” he said.

That would mean greater suburban sprawl as towns are forced to rely on the older developer model in which towns granted density to builders in exchange for a minimum number of units being designated as affordable housing.

Just as troubling, Walsh said, is that the governor’s actions have given many towns an out. While there are towns like South Brunswick and Burlington Township that are attempting to move forward with housing plans, he said, there is another, larger group of towns that is using COAH’s unsettled status “as an excuse” to do nothing. These towns — which he wouldn’t name — want to preserve the trust funds without having to spend the money on housing.

“They have no sense of urgency,” he said. “They are sort of content to just hang out there with no money being spent.”

That’s helped create the standoff between the governor and the towns, Walsh said.

“What the governor did is bad, in not saying what the standard was for the trust funds and then trying to do it retroactively,” he said. “But what those municipalities were doing at the same time wasn’t right.”

In the end, he said, the issues of executive power and home rule are secondary to what really matters.

“The losers all around on this are the lower-income households for whom this money was collected,” Walsh said.