New Jersey state officials will have $15 million to spend on building affordable homes in the coming year as a result of the most recent changes to the 2019 budget.
The $37.4 billion spending plan to which legislators and Gov. Phil Murphy finally agreed last weekend puts aside the $15 million from the state Affordable Housing Trust Fund for use to construct homes. But it still allows for the diversion of some $60 million for purposes other the fund’s stated intention — to pay for the construction or rehabilitation of homes so they will be affordable to those with modest means. Monies from this fund, which is subsidized by a realty-transfer tax when a home is sold, have been diverted from its original intent for years in order to plug holes in the state budget.
“It’s a very great step in the right direction,” said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey. “It puts the Housing Trust Fund back on track to be used as intended, which is to help provide critical investments in an array of housing choices in all of New Jersey’s communities … For the last nine years, all the funds were diverted.”
Candidate Murphy had pledged specifically that he would not follow former Gov. Chris Christie’s practice of raiding the trust fund. But his original budget proposed doing just that and more.
The 2019 budget still uses trust fund money to pay for housing-related programs that are supposed to be covered by general fund dollars, including the State Rental Assistance Program, shelter assistance and a homeless prevention program. But legislators succeeded in keeping $15 million in the trust fund, reducing to $31.5 million the amount of trust fund dollars that will cover client housing, emergency assistance and social services programs for the homeless within the Department of Human Services.
NJ, a difficult place for renters
Additionally, the budget Murphy signed on Sunday still includes a diversion of as much as $18.5 million from the state Housing and Mortgage Financing Agency, which helps provide financing for affordable developments, for the State Rental Assistance Program. SRAP provides rental assistance grants for up to five years to tenants, most with income less than 30 percent of the median — $95,100 for the state.
A recent national report called New Jersey the sixth least affordable state for renters in the nation and a Superior Court judge ruling in a housing case found that the state needs close to 155,000 more affordable units by 2025.
It’s unclear how many homes the state may be able to finance using the $15 million because that will depend on whether they are refurbished apartments or new construction, where they are located, the size and type of units and whether they will need to include the purchase of land, in addition to the cost of construction.
The money is sorely needed now, as some 200 municipalities have reached court settlements with the Fair Share Housing Center, agreeing to zone for or even build tens of thousands of affordable units. Administered by the Department of Community Affairs, the housing trust fund provides money to municipalities, nonprofit organizations and developers. Often, the money fills in financing gaps to complete a project when other subsidies or private funding fall short.
Promoting neighborhood revitalization
In addition to the $15 million for housing, Berger cheered the budget’s expansion of the Neighborhood Revitalization Tax Credit by $5 million to $15 million, the first increase in the program’s 14-year history. The program gives businesses a 100 percent credit against various state taxes for investing in the revitalization of low- and moderate-income neighborhoods in certain municipalities.
It is “one of the most successful community revitalization tools available, returning about $7 in leveraged private and public investment,” Berger said. Currently, 26 approved neighborhood plans, including ones for Asbury Park’s West Side, Unity Square in New Brunswick and the Greater Spruce Street Neighborhood in Paterson, are funded through the tax credit.
Berger said that advocates will be looking to ensure that the state continues its investments in affordable homes and that includes increasing the amount spent on actually creating more housing opportunities with the trust fund money.
“This budget is a great first step to solving our housing crisis,” she said. “We expect to spend a lot of time over the next twelve months making sure officials see the value and impact those dollars have.”