New Jersey Renters Getting Short Shrift After Sandy?

Tara Nurin | May 9, 2013 | Housing, More Issues, Sandy
Housing advocates address funding gap in post-hurricane aid for displaced tenants

New Jersey renters affected by Hurricane Sandy are faring far worse than their homeowner counterparts.

That’s the conclusion of a report released yesterday by the Fair Share Housing Center (FSHC), a public interest organization devoted to protecting the housing rights of the state’s poor.

Citing an already prohibitive vacancy rate and accusing Governor Chris Christie’s administration of “exclud(ing) many low-income renters from rebuilding” by allocating fewer federal dollars to renters than to homeowners, the organization warns that the market and the governor’s policies could force renters to permanently move out of their communities or even leave the state.

With approximately half of displaced renters being African-American or Hispanic, and 60 percent earning less than $30,000, Kevin Walsh, associate director of the FHSC, warns this could further segregate one of the most economically and racially divided states in the nation.

“The supply of rentals has been eaten up by homeowners and renters who were displaced,” said Walsh, who noted that some landlords in places like Monmouth County that have vacancy rates lower than 1 percent are raising rents on temporary tenants by 20 to 30 percent.

The price-gouging is resulting in a second displacement for renters, many of whom didn’t have insurance for their ruined possessions and some of whom are paying mortgages on their condemned houses as they sort through the process of rebuilding.

“There’s no doubt we’re seeing a permanent impact. Are lower income folks going to be treated fairly and given a chance to move back to their communities?” Walsh said.

The report comes a week after the federal Department of Housing and Urban Development (HUD) released the first of three rounds of community block development grants, including $380 million for rental programs.

HUD mandated that 30 percent of the initial $1.8 billion allocation be used to fund five rental programs – an amount that marks an increase of $75 million over Christie’s original proposal.

The FHSC and 70 additional housing advocacy groups had pushed the governor to equalize the funding formula from the beginning; they now say that he should have further altered the balance to even more fairly address the needs of the state’s affected renters, who represent 43 percent of the state’s displaced residents.

“The initial plan proposed by the governor drastically undercut the impact on renters and was overcompensating homeowners who tended to be much wealthier,” said Staci Berger, executive director of the Housing and Community Development Network of New Jersey (HCDNNJ), an association of more than 250 housing-related organizations around the state.

But Department of Community Affairs (DCA) Commissioner Richard Constable, the primary administrator of the block grant funds, refutes that assertion and calls the methodology of the housing groups “superficial and inaccurate.”

Constable insists that when calculated according to HUD requirements — which assess the value of damage suffered by renters and homeowners who filed claims with the Federal Emergency Management Agency (FEMA), rather than just the number of claimants — only 28 percent of renters suffered major, severe or substantial damage. And, he adds, low-to-moderate income residents will directly benefit from 70 percent of the funds designated for housing programs in the first round of grants.

“These are very limited resources. Very limited. So here’s what HUD asked us to do — not just look at who picked up the phone and registered but look at the extent of the damage they suffered,” he said. “The only thing that would satisfy (the housing advocates) is having all the money going to rentals.”

The state is implementing five HUD-financed programs for renters, with the DCA-overseen NJ Housing and Mortgage Finance Agency (NJHMFA) administering two of them, plus one more.

By providing block grants along with the usual tax credits and loans, the NJHMFA will spur developers to build rental units for low-and-moderate income residents, including those with special needs. The agency will also launch a new program to provide forgivable second mortgages of up to $50,000 for credit-worthy homebuyers who earn less than 80 percent of the median annual income for their region.

Executive Director Anthony Marchetta says he expects the two rental programs will allow him to disburse funds to 40 or 50 developers (he usually funds approximately one dozen with the $19 million he regularly receives from HUD for these types of initiatives), resulting in the addition of 4,000 to 5,000 new affordable rental units, primarily in the nine counties worst hit by Sandy.

He said most of these developments will consist entirely of units for low-income renters, and developers who wish to win grants will comply with the new qualified allocation plan set to be formally adopted June 17 that encourages locating the developments near good schools, job opportunities and public transit.

“We don’t want to concentrate the poor in one location,” Marchetta said.

But housing activists argue that even if the state weren’t encouraging isolation, the state’s municipalities would be.
“I don’t see that the motivation of communities is to build rental housing. I think there’s always been a stigma,” said Donna Blaze, chief executive officer of the Affordable Housing Alliance.

Marchetta agrees that it’s hard to regulate 565 different zoning plans across the state’s 565 municipalities – a bulky number that helped create the dearth of rental properties in the first place.

“Historically there’s been sensitivity to too much rental housing. It was always given shorter shrift,” he said.

But that’s precisely the attitude that can destroy a community, says James Perry, executive director of the Greater New Orleans Fair Housing Action Center, who traveled from Louisiana to share lessons learned from hurricanes Katrina and Rita at a meeting hosted yesterday by the HCDNNJ.

He said renters and moderate-income workers often draw from the ranks of police officers, firefighters and teachers and make up the staff at the Shore’s beloved amusement parks, boardwalk concession stands and retail shops. Those aren’t jobs that most people travel a distance for but, without them, he asked, who will service the state’s more affluent towns?

“You have to make a serious investment in rental housing. A community that is successful is one that ensures opportunities for all,” he said.

In that spirit, Marchetta said, HUD has required that the first round of grants be disbursed within two years. According to that timetable, the window for multifamily rental construction applications closes at the end of this month for developers hoping to take advantage of an existing 9 percent tax credit program. Awards should be announced on July 31; ground will likely be broken on rental developments late this summer and, said Marchetta, “We expect to see a lot of ribbon cuttings in about two years.”