Affordable Housing in New Jersey: No Turning Back from Court Control?

Colleen O'Dea | June 3, 2019 | Roundtables
At NJ Spotlight roundtable, assemblywoman makes case for resurrecting Council on Affordable Housing, but advocates say current court-controlled process must continue

Peter Reinhart
As many as 50,000 affordable homes may be built in New Jersey through 2025 as a result of the current process through which municipal officials are reaching court settlements, which housing advocates say proves that mechanism is working.

But an assemblywoman highly critical of this procedure said these court settlements could wind up adding between 250,000 and 300,000 total housing units to the state and she called for bringing back the much-despised state Council on Affordable Housing or some other state system to oversee the process.

The question of who should be responsible for setting municipal housing requirements probably brought the greatest disagreement among speakers at an NJ Spotlight roundtable held last Friday in Hamilton. During the event, the group delved in depth into the complicated issue of how to provide homes for those with low and moderate incomes.

A lack of enough homes affordable to families with low or moderate incomes, the disabled, senior citizens and others is a critical issue in one of the nation’s most expensive states. Estimates are that as many as 40 percent of New Jerseyans do not earn enough to pay for all their basic needs, including food, shelter, heat and medicines, said DeAnna Minus-Vincent, an assistant vice president at RWJBarnabas Health.

“There’s over 8,000 people who are homeless. Some are on the street. Some are couch-surfing. This is a huge problem,” she said. “One-point-nine million New Jerseyans are living in overcrowded housing, housing that does not have sufficient plumbing and heating. I think that matters.”

COAH was judged incapable

New Jersey municipalities are required to provide for their fair share of regional housing needs under a series of rulings by the state Supreme Court — whose first decision came in 1975 in a case involving Mount Laurel Township — and other courts that originally oversaw fair housing cases and now under the Fair Housing Act passed a decade later that created COAH and set the rules for its functioning.

More than four years ago, the Supreme Court took the responsibility for determining local affordable housing obligations back to the courts, after judging COAH — which was 16 years late in adopting valid rules for the process — no longer capable of overseeing it. Now municipalities can seek court approval for their housing plans, a process which happens through negotiations with such advocates as the Cherry Hill-based Fair Share Housing Center.

For a long time, COAH was “a four-letter word,” said Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University.

Assemblywoman Holly Schepisi (R-Bergen)
But some municipal officials and others would welcome back the agency, on the grounds that the court process is expensive and the settlements are not really voluntary, with officials feeling forced into agreeing to sometimes large numbers of affordable homes.

“It’s really surreal for me to be sitting here now saying this, after seeing firsthand how COAH was dysfunctional, and yet I am one of the people advocating that we put COAH back in place because it’s better that what we are doing now,” said Assemblywoman Holly Schepisi (R-Bergen), a panelist who is sponsoring a bill (A-1645) to do just that.

But during his keynote address, Reinhart said he does not favor such a return.

“Following that 2015 (Supreme Court) decision, I thought there would have been a legislative push to take back the process back from the courts … but that didn’t happen and, in my opinion, it is far too late for that to happen,” he said. “It would only further delay the creation of the much-needed affordable housing, including those thousands of units that grew in that backlog from that 10-year period when there was a stalemate.”

‘To stop it now … would be immoral’

Kevin Walsh, director of Fair Share and another panelist, said putting COAH back in charge should not even be up for discussion because the court process “is wildly doing better than what preceded it in the past 20 years.” Instead, the focus should be on ensuring that the units for which municipalities have zoned get built.

“Should this court process continue forever? Hopefully it doesn’t. I need sleep,” Walsh said to chuckles from the audience of almost 200. “To stop it now and not replace it with anything, which is what the proposals are … would be immoral.”

According to Walsh, Fair Share has “inked” settlements with 283 municipalities and is working with another 50 or 60. A few have said they expect to go to trial rather than settle. He noted that a Superior Court judge determined a statewide need of 155,000 units but said far fewer would wind up being built. That’s due at least in part to the complex rules governing the process that give municipalities bonus credits for certain types of housing built — for instance, supportive housing for the disabled. He estimated that as many as 50,000 homes could be built through 2025.

“A lot of that will depend on the market; a lot of that will depend on the availability of public subsidies,” he said. “If we are wildly successful at this … We’re talking in the best day of about a 1 percent or so increase in the state’s housing supply. That’s what we’re freaking out about? It’s absurd.”

But Schepisi said the responsibility for housing should be in the hands of elected lawmakers and not appointed judges.

Legislators ‘have abdicated’ responsibility

“We are here to make the laws for the state of New Jersey,” she said. “We have abdicated our responsibility and our jobs as elected officials by having this be determined through the courts.”

Christiana Foglio, founder and chief executive officer of Community Investment Strategies and a former chair of COAH, said the court process was necessary but she also sees a need for the state to retake control of the issue.

“But for the settlement agreements, I do believe we would be in a no man’s land in terms of moving affordable housing forward,” she said. “I think it was a necessary evil … however, once you get through this, I still believe we have to go back to an administrative agency so that the planning would be done in a comprehensive way, in a transparent way.”

Reinhart called for the creation of a task force of both governmental officials and private sector leaders from both the for-profit and nonprofit sectors to create a state housing policy — which New Jersey does not have — as well as a revitalized State Planning Commission.

“One of the real downsides to home rule is the lack of coordination of land-use policies,” he said. “It’s going to take a while to come up with a state housing policy to be recommended … This new state housing policy should be adopted alongside a newly revised state development plan.”

Foglio was critical of how state officials have handled the allocation of limited resources in advancing the Fair Housing Act, both in the diversion for more than a decade of about $60 million annually in realty transfer fees that are supposed to be dedicated for affordable housing construction and in not subsidizing inclusionary developments — those that have both low- and market-rate units. While municipalities must zone for affordable housing, they do not have to build it. Usually, builders do that, when a project makes sense for them financially.

Waiting for final budget

“The state has not really stepped up to the plate in how the original drafters of the Fair Housing Act thought the state would be a player,” she said. “I do believe there is a role, whether it be talking about the COAH or talking about state housing policy; there needs to be some state direction and then we can look at leveraging the dollars.”

Gov. Phil Murphy has recommended putting all the allotted realty transfer dollars into the Affordable Housing Trust Fund to be used to build homes for the first time in more than a decade, although Foglio pointed out that is still just a recommendation and the final state budget won’t be hammered out until the end of this month.

John Restrepo, chairman of the board of the Housing and Community Development Network of New Jersey and a director of the Garden State Episcopal Community Development Corporation, said that while COAH was inactive and the state was diverting money from the affordable housing construction fund, the need for more affordable homes grew. This was especially true in urban areas that millennials favor, where rents have skyrocketed to what Restrepo called “Central Park West rents” of as much as $5,000 for a two-bedroom apartment in downtown Jersey City.

Restrepo said that while he doesn’t know exactly how much the state could have spent to build needed housing during the last decade, “it was definitely more than zero and those dollars could have been used to tackle the foreclosure crisis in the inner cities.”

He acknowledged that affordable housing is a complicated issue but stressed, “We have to figure it out and we have to figure it out fast because the need is increasing.”