Democratic Lawmakers Look to Jump-Start Affordable Housing Construction

Colleen O'Dea | February 5, 2016 | Housing
Program would create new class of tax credits to encourage developers to build in certain communities across the state

State Sen. Raymond Lesniak
Two New Jersey lawmakers are looking to boost the amount of affordable housing in the state and the economy as a whole by proposing a new $600 million tax-credit program for low-cost home construction.

While not designed specifically to address the current uncertainty over municipal obligations that has led to a virtual standstill in affordable housing production in the state, Sen. Raymond Lesniak (D-Union) said his bill, S-894, should lead to the construction of thousands of new units for those with low and moderate incomes.

“This is not a panacea solution to the Mount Laurel or COAH issue, but it will certainly help municipalities meet their housing goals,” Lesniak said. “The focus is to rebuild neighborhoods.”

It has been nearly a year since the New Jersey Supreme Court took affordable housing administration away from the state Council on Affordable Housing after that body failed to pass new housing rules and municipal obligations to satisfy the court’s groundbreaking Mount Laurel rulings. No court has yet ruled in a local housing case, and so few affordable units are being built.

Lesniak’s bill, which was pre-filed for the current session, would create a new category of tax credits similar to those the state has been generous in giving to businesses and developers of market-rate housing projects through the New Jersey Economic Development Authority. The state would make a total of $600 million in credits available.

Part of the state’s Economic Redevelopment and Growth Program, the credits would be available to developers building a residential project of at least 25 units in certain communities and meeting specific criteria:

  • The credits could be used in an estimated 155 “distressed” communities, in which the median family income does not exceed 80 percent of the statewide or metropolitan median family income as defined by U.S. Census data. This would include municipalities identified by the Department of Community Affairs to be facing serious fiscal distress.
  • Among the housing units within a development, at least 20 percent would have to be earmarked as low- to moderate-income housing, 13 percent for very-low-income residents, and at least 20 percent as workforce housing.
  • “This bill will incentivize the development of affordable housing,” said Lesniak. “It will rebuild neighborhoods and spur investment in communities. We need to transform cities from areas with just offices to communities with robust residential populations that are alive with activity seven-days per week.”

    “Since the recession, our economy has struggled to rebound like other states and more and more New Jersey families are struggling to get by,” said Assemblyman Jerry Green (D-Union) and chairman of the Assembly Housing and Community Development Committee, who discussed the legislation at a Statehouse press conference with Lesniak on Thursday. “The need for quality, affordable housing for low and moderate income families has never been more pressing. ”

    New Jersey is one of the highest cost-of-living states in the nation and one of the most unaffordable housing markets in the nation. The Annie E. Casey Foundation’s 2015 Kids Count Data Book ranked New Jersey the third-most housing-burdened state in the nation for households with children: 44 percent of all those under age 18 are living in families that spent more than 30 percent of their pre-tax income on housing costs.

    The state Supreme Court’s Mount Laurel doctrine, dating back to the mid-1970s and expanded in 1983, holds that municipalities have an obligation to provide their fair share of affordable housing to those of low and moderate incomes. COAH was tasked with overseeing the process of setting rules and housing obligations and did so through 1999, but it has not approved rules that passed muster with the courts this century.

    When COAH failed to meet a court-ordered deadline to put proper regulations in place, the justices last March kicked responsibility for affordable housing back into the state’s courts. Since then, housing activists, builders, and municipalities have been arguing over local housing plans before Supreme Court judges and have presented competing reports enumerating local affordable-housing obligations but so far no judge has rendered a decision.

    As a result, relatively little so-called Mount Laurel housing has been built in the state in the past 15 years.

    Lesniak said his legislation, if ultimately signed by Gov. Chris Christie, could result in the construction of as many as 8,500 affordable units. But he also sees it as a way to boost the state economy. New Jersey’s recovery from the Great Recession of 2007-2009 has lagged behind that of the nation.

    “It would bring economic activity and investment into neighborhoods by creating affordable housing,” said Lesniak, who chairs the Senate Economic Growth Committee. “The housing market has always been a leading indicator to bring the economy out of a recession. This is one of the tools we can use.”

    The senator also sees this measure as part of the Legislature’s broader effort at reducing poverty in the state, which Democrats announced last month.

    “Providing affordable housing for the low and moderate income also helps lift them up out of poverty, like a higher minimum wage,” Lesniak said. “It’s all part of the effort to improve the quality of life for New Jersey residents, to make New Jersey more affordable.”

    Given Christie’s support of the use of tax credits for business and housing development to date, including other legislation Lesniak sponsored, the senator said he hopes the governor will enact this new program.