New Jersey’s Affordable Housing Trust Fund could face what some advocates say is another raid on its dedicated fund in the coming fiscal year if Gov. Phil Murphy’s budget is adopted as drafted by lawmakers.
Administration officials say they do not consider the proposed use of $20 million from the fund for the NJ Housing and Mortgage Finance Agency’s (HMFA) Down Payment Assistance program as a raid. That program provides a $10,000 interest-free forgivable loan to first-time homebuyers in the state to cover a down payment and closing costs. There is an income cap to qualify, but it’s 140% of the area’s median income, which is not limited to a single county. Trust-fund money is supposed to build or support homes for those with no more than 80% of the median income.
The difference between those two income levels is substantial.
Bergen County, the state’s most populous county, had an area median income of $104,200 last year. A moderate-income household would have no more than $83,360 in income, while the limit for the down payment assistance program would be $145,880, or $62,000 more than the maximum that would qualify for affordable housing aid.
“The idea that we are going to take money from the Affordable Housing Trust Fund and give it to HMFA, I can say that we unequivocally oppose the proposal in its current form and are deeply concerned that funding that should be used to create homes for lower income New Jersey residents would somehow be eligible to be used for wealthier homeowners,” said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey.
A history of diverting housing funds
A diversion of money from the housing trust fund is not new: Former Gov. Jon Corzine first proposed using some of the fund for rental housing assistance, rather than new construction, in 2008, and Gov. Chris Christie continued the diversions throughout his tenure. But during his first campaign, Murphy vowed to end the practice. In his first year, however, Murphy, along with Democrats who control the Legislature and signed off on his budget, diverted all of the trust-fund money. It wasn’t until 2019 that he put all of the money from real estate transfer fees earmarked for the Affordable Housing Trust Fund into the fund.
The Department of Community Affairs did not start awarding that money to counties until last December, in part due to delays caused by the COVID-19 pandemic. It announced close to $20 million to seven community developers and nonprofits around the state to build 93 new affordable units and fund other housing programs.
Groups have submitted about 50 applications for additional grants — so advocates were disappointed by Murphy’s announcement to use $20 million in trust-fund dollars for the down payment program.
“The governor has been so good on so many issues, but on this one, I think they are on the side that works against New Jersey becoming prosperous again,” said Connie Mercer, founder and CEO of the Mercer County-based HomeFront. “Anything that goes against using the Affordable Housing Trust Fund for low- and moderate-income people is not a good idea.”
Essential workers and underserved residents
Pasqualina DeBoer, a spokeswoman for the housing agency, said the down payment program’s goal is to help expand home ownership for those who would otherwise have trouble qualifying, including essential workers and those in underserved populations, and that it would adhere to whatever criteria it must.
“NJHMFA is excited to have new tools available to assist in implementing Governor Murphy’s comprehensive affordable housing strategy,” she said. “Details on the DPA (down payment assistance) expansion will be forthcoming but our program will be compliant with any applicable obligations.”
Advocates were skeptical, though.
In the state Budget in Brief, Murphy writes only that the money would be used for “qualified first-time homebuyers,” without addressing the issue of the program’s higher income limit. It states that the money would help the agency provide close to 2,000 mortgages and that it is “replacing expired federal funds.”
Lisa Ryan, a DCA spokeswoman, said the state is continuing to process other applications for development assistance that would lead to new affordable construction.
“Applications are being accepted and are being reviewed on a rolling basis,” she said. Pointing to the $20 million distributed late last year, she added, “As the awards demonstrate, DCA is getting the Affordable Housing Trust Fund monies out to nonprofit organizations to develop different types of affordable housing projects that will strengthen and create more vibrant neighborhoods.”
Some praise Murphy’s move
Some groups praised Murphy’s decision to bolster the down payment program. In a statement, the New Jersey Institute for Social Justice said, “We are pleased that the Governor plans to increase mortgage down payment assistance for qualified first-time home buyers. Racial disparities in home ownership in the state must be eliminated and we look forward to working with the Administration to ensure that programs serve the needs of Black and other homebuyers of color who have for too long faced barriers to building home equity through home ownership.”
Berger said that Murphy’s budget includes spending on a number of positive housing initiatives, including additional money set aside for housing during Code Blue freezing weather events, additional homelessness assistance for the LGBTQ community and the proposed new $2 million rental assistance program for vulnerable pregnant women. But the trust fund was intended to create and preserve affordable housing and not pay for a down payment program that benefits those with incomes above the state median, Berger said.
“There are a lot of really important funding decisions that are proposed here,” Berger said. “This is not what Gov. Christie did in the sense that they’re not taking all of the money and using it to support non-housing items in the budget. But it’s not where the money was intended to go. And we will be working through the budget process.”