Affordable Housing as an “Unfunded Mandate”

Sorry to keep the focus on New Jersey, folks, but if you are a long-time Rooflines reader, you’ll know that I will, once again, preface this post with: At least we’re talking about an affordable housing mandate (even if that talk is in its third decade).

OK, now that’s out of the way, the affordable-housing-as-mandate discussion in New Jersey is a mess.

In June, when the governor here signed into law a bill that would eliminate Regional Contribution Agreements — a tool used by some towns to wire funds covering their affordable housing obligations to nearby, typically poorer, urban, areas — it was viewed as a triumph by housing advocates because of its anticipated impact on helping to reintegrate neighborhoods, staving off so-called golden ghettos, and providing housing for lower-income residents in even the wealthiest of communities.

The Legislature also passed a measure that would levy a 2.5 percent fee on the assessed value for non-residential construction or improvements. Opponents say that fee is far too small, covering only a portion of a construction project’s affordable housing requirement, leaving the town to cover the rest of the cost.

So the state, with its 566 towns, could not fully come to terms. That’s why the New Jersey State League of Municipalities is challenging the bills, along with some 230 towns that have joined the fight. Conventional wisdom mostly said that any regulations put forth by the state’s Council on Affordable Housing (COAH) would be amended, but implemented at some point, but it now appears we could be sent back to the drawing board.

On September 15, The Star-Ledger reported that one town — Medford Township — would challenge COAH’s rules with the state’s Council on Local Mandates — a powerful state agency whose rulings cannot be overturned by state courts. Medford’s Republican Mayor (yes, this is largely a partisan issue— he is running for state senate) and the township says COAH’s regulations could cost towns roughly $6 million statewide and then cites a 1995 amendment to the state constitution that bans certain unfunded state mandates, the Ledger reports.

This is more than a legal dance — it’s tactical maneuvering that could successfully curtail the implementation of sound affordable housing policy in a state the desperately needs it. While it’s unclear how the Local Mandates council will rule, one thing is clear: the Legislature needs to step it up a notch by:

  • Creating a value-added tax, like a gas tax that would be used strictly for infrastructure. This can be criticized as a regressive tax, but think of the open space tax that New Jersey voters consistently approve.
  • We need to move away from the property-tax-based funding for social mandates that benefit everyone (yes, even you there, living on the horse farm in bucolic northwest New Jersey). The implementation of an affordable housing policy that works and is reasonable can be funded by more than just property owners.
  • The developer’s fee — the aforementioned 2.5 percent fee — and the municipal mandate system of funding affordable housing is ludicrous. This is important because it could very well thwart all economic growth in New Jersey with ratable-generating enterprise moving over to places like Pennsylvania (no offense, Pennsylvania — I’m there often — great commonwealth. We love ya’.)

It’s encouraging that the state legislature here understands the importance of providing affordable housing, but after decades of wrangling, we need to think clearly here, and do what’s got to be done.

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