March 21, 2008
Lucy Voorhoeve, Executive Director
COAH, Department of Community Affairs
101 South Broad Street
PO Box 204
Trenton, NJ 08625-0204
Dear Ms. Voorhoeve
On behalf of the New Jersey State League of Municipalities and its 566 member municipalities, I would like to submit the following comments for your consideration regarding the newly proposed COAH “3rd round” regulations published in the January 22, 2008 New Jersey Register.
Municipalities across the State are concerned that the regulations, and the methodology, are unreasonable, will negatively impact the economy of the State, and will impose substantial burdens on the property taxpayer in contravention of the Fair Housing Act, which prohibits COAH from forcing municipalities “to raise or expend municipal revenues in order to provide low and moderate income housing.” N.J.S.A. 52:27D-311(d).
These impacts are created by dramatically increasing the growth share obligations, making compliance mechanisms more restrictive, and increasing the cost of those compliance mechanisms without a commensurate funding source to cover the increase. In many municipalities, the projected obligation has quadrupled as a result of more aggressive ratios, and a doubling of the statewide need. Based upon the subsidy needed to create an affordable housing unit, as determined in the regulations, together with the statewide need established, the total cost of satisfying the proposed program is nearly $19 billion The financial obligation to satisfy the need is being placed solely on builders and municipal property taxpayers.
It is our opinion that the regulations, as noted above, violate the Fair Housing Act (N.J.S.A. 52:27D-311(d), are contrary to other State polices such as the State Planning Act, the Highlands Preservation and Planning Act, the Pinelands Preservation Act and will not increase the production of affordable housing.
General Comment 1: The changes to the regulations should have been limited to those issues addressed by the court as areas that needed to be addressed.
Unfortunately, in switching consultants, COAH has permitted a total review of the growth share methodology. Numerous changes have been made to the regulations which were not required by the recent court decision. The effect is to open many areas to debate that should never have been reopened if finality is to be achieved. Those changes made to the regulations which were not required by the court, and which make municipal compliance more difficult, should be rejected. Any change should be supported with reasons, in order to narrow future dispute over the regulations.
General Comment 2: There are procedural flaws in how these regulations were adopted. Two essential elements of “Appendix F” were not available at the time the COAH Board approved the regulations for publication on December 17, 2007.
It was acknowledged on December 17 that the actual municipal projections, “Allocating Growth to Municipalities” were being reviewed for consistency with regulations of the Department of Environmental Protection. We note that these projections were not available on December 17. This report is dated January 2, 2008 and was posted on the COAH website that day.
Furthermore, the report, also part of Appendix F, titled “Analysis of vacant land in New Jersey and its capacity to support future growth” is dated December 31, 2007 and we are advised by the agency was also posted on January 2.
These reports were not considered by the COAH Council when it approved the regulations for publication on December 17, 2007, contravening the Administration Procedures Act.
General Comment 3: Local governments have not been given adequate time or ability to fairly evaluate the impact of these regulations.
After numerous OPRA requests by local governments, COAH posted on its website data referred to as “Data used in the development of the consultant's reports” as recently as the week of March 10.
We ask why this data was made available barely a week before the March 22 deadline to submit comments. Unfortunately, even when this data was posted online, it was still impossible to see how the statewide need was allocated to an individual municipality. We are advised by local governments that there is vacant land mapping with individual GIS layers (without parcels) and without the ability to place each layer on top of one another, as one would with GIS applications.
General Comment 4: COAH costs should be exempt from municipal budget caps.
The costs of a COAH application are significant. Over 200 municipalities already submitted 3rd round plans, and will now be expected to do so again. While most municipalities use their affordable housing trust funds to cover administrative costs, these regulations will be add more costs to local governments. There is no doubt that ultimately the burden will be borne by property taxpayers. The agency should request of the Local Finance Board an appropriations and levy cap exception for costs associated with a COAH application.
General Comment 5: The proposed regulations will have a chilling effect on economic development.
COAH should take into account the impact the job projections will have on economic development and redevelopment efforts throughout the State. Urban areas, in particular, are very concerned that these regulations will substantially deter new businesses from relocating in their municipalities
General Comment 6: The proposed regulations are inconsistent the New Jersey State Development and Redevelopment Plan (State Plan.)
In the opinion of the agency, are the growth projections statewide and at the municipal level reflective and consistent with the State Plan?
If so, please explain how they are consistent and how the State Plan was used to project growth?
Has COAH submitted the regulations to the Office of Smart Growth and the State Planning Commission for a determination of consistency with the State Plan?
If so, please describe the opinion of the Office of Smart Growth and the State Planning Commission on the consistency of the proposed regulations with the State Plan?
General Comment 7: The proposed regulations are inconsistent with the Highlands Regional Master Plan (Highlands Plan.)
In the opinion of the agency, are the growth projections statewide and at the municipal level reflective and consistent with the Highlands Plan?
If so, please explain how they are consistent and how the Highlands Plan was used to project growth?
Has COAH submitted the regulations to the Highlands Council for a determination of consistency with the Highlands Plan?
If so, please describe what the opinion of the Highlands Council on the consistency of the proposed regulations with the Highlands Plan?
General Comment 8: The proposed regulations are inconsistent with the Pinelands Comprehensive Management Plan (Pinelands Plan.)
In the opinion of the agency, are the growth projections statewide and at the municipal level reflective and consistent with the Pinelands Plan?
If so, please explain how they are consistent and how the Pinelands Plan was used to project growth?
Has COAH submitted the regulations to the Pinelands Commission for a determination of consistency with Pinelands Plan?
If so, please describe what the opinion of the Pinelands Commission on the consistency of the proposed regulations with the Pinelands Plan?
General Comment 9: The proposed regulations are inconsistent with regulations and policies of the Department of Environmental Protection (DEP.)
Has COAH submitted the regulations to the DEP for a determination of consistency with its regulations and policies?
If so, please describe what the opinion of the DEP on the consistency of the proposed regulations with its regulations and policies?
1. Occupied buildings which are demolished and replaced should not create a growth share obligation. The proposed regulations impose a growth share obligation where there is no growth in housing and jobs. Growth obligations at the municipal level should be based upon net certificates of occupancy, not gross. If new construction replaces an existing building, there should be no growth share assigned since there is no new housing or jobs created (e.g., a house is demolished and rebuilt; a commercial building is demolished and replaced with a building of the same size). If there is an increase in the square footage of the new versus old in a commercial building, then the additional space should count toward growth share; and, if a building is unoccupied, and has been so since before the start of round three (1999), a replacement building could be considered to create new jobs and count toward growth share, thereby satisfying the court’s concern over redevelopment.
2. Retroactive growth share obligations. Growth share should not impose any retroactive obligation upon municipalities. Growth share, as a concept, works on a prospective basis. The compliance mechanisms are not well suited to a retroactive obligation without burdening the property taxpayer, and it is especially unfair to impose greater obligations on municipalities that implemented growth share at 1 for 8, only to tell them now that the ratio is 2 for 8 (1 for 4). The obligation from 2004 until the adoption of these regulations should be based upon the 1 for 8 units and 1 for 25 jobs established in the 2004 regulations, as all parties were on notice of those ratios, and the new ratios should only apply prospectively. To avoid unfairness, at least, there should be grandfathering for those municipalities that relied upon the 2004 regulations. Moreover, there should not be a growth share imposed on projects approved before December 20, 2004 since municipalities have no means of changing the conditions of those approvals to capture the affordable housing obligation these projects will generate if they are developed in the 2004-2018 period.
3. The regulations need to respect earlier third round housing activities by municipalities. The proposed regulations are silent as to what is to happen with growth share implemented by municipalities based upon the prior growth share regulations. Municipalities have required developers to build affordable units based upon the prior 1 for 8 requirement, and have collected payments in lieu of construction with some of those payments in excess of the amounts now proposed. By remaining silent, the regulations leave municipalities in the situation where they will face litigation over growth share ordinances adopted based upon the prior regulations before they were invalidated. The regulations should provide a grandfathering provision for those compliance activities, or at the very least, provide clarity as to how those compliance efforts are to be treated.
4. Compliance with growth share obligations should be based upon issuance of certificates of occupancy (COs). The regulations should be revised to state there is no obligation to zone, provide RCA money, municipal construction (including evidence of control, funding, and other requirements), or any compliance mechanism, until the obligation based upon CO’s is established. Otherwise, the projection (which in many cases is far from accurate) becomes the obligation, and inaccurate projections will require growth where it would otherwise not occur. The requirement in the Fair Housing Act (i.e., N.J.S.A. 52:27D-314) that municipalities shall adopt a fair share ordinance within 45 days of substantive certification should only apply to the obligation known at the time, and then be subject to periodic review
5. COAH should not require a municipality to acquire a site to satisfy a portion of its obligation through its redevelopment powers before COAH has certified the municipality’s affordable housing plan. If a municipality seeks to satisfy any portion of its affordable housing obligation through municipal redevelopment powers, COAH requires a municipality to acquire a site before COAH will certify the plan. Thus, COAH forces a municipality to expend the public’s money before COAH has made a determination that the site qualifies as “suitable”. COAH should not require municipalities to expend public funds before COAH determines a site is suitable.
6. Filtering as a secondary source of supply should not be arbitrarily reduced. The consultants found there would be 47,306 units created through filtering. The methodology reduced that number to 23,626 by arbitrarily eliminating urban filtering. This arbitrary reduction of those filtered units creates greater obligations for urban, suburban and rural municipalities alike.
7. The filtering of rental units needs to be considered. The consultants changed the definition of a filtered unit from what had been established in prior round methodologies, by requiring an undefined “substantial” shift in housing price and household income. In order to determine pricing, the consultants reviewed deed recordings. Deeds, by their very nature, relate to sales of units, not rental. As done in the past, filtering of rental units needs to be included in the methodology. The definition of a filtered unit should not have been changed by the consultants from what had already been established by COAH in prior rule adoptions. What the court required in the third round was that filtering be reviewed based upon more current data, not that the definition be changed or segments of filtering be eliminated.
8. Spontaneous rehabilitation as a secondary source of supply should not have been eliminated. Spontaneous rehabilitation has always been a part of the methodology. The court did not require COAH to do anything in this regard, and it should have been retained as a secondary source of supply.
9. All of the programs of the Housing and Mortgage Finance Agency should be considered as secondary sources of supply. HMFA housing efforts should not be considered as irrelevant to the need for affordable housing. HMFA should be relied upon as a source for providing affordable housing, with municipalities and developers being required to only provide the balance of the need. The present proposal eliminates all publicly funded housing as a secondary source of supply, thus unreasonably increasing the obligation which must be satisfied by municipalities and developers alike. Tax credit housing was eliminated as a secondary source of supply, because COAH believed there was a double counting in that it reduced statewide need, and was used by municipalities to satisfy the individual obligation. However, in the prior adopted growth share regulations only those projected tax credit units from non-participating municipalities were considered as secondary sources of supply, and there was no double counting. Moreover, many of the HMFA programs create mortgage based restrictions on affordability, and are not considered by COAH as affordable housing because they are not deed restricted. Whether deed restricted or mortgage restricted, all affordable housing programs of the State should serve as secondary sources of supply. It is also important to preserve the ability for municipalities which complied through municipally sponsored projects to retain their right to credits from those projects.
10. Growth projections need to be more accurate. Projections of growth should have been based upon census data from 2000 as the 1999 base, actual certificates of occupancy since that date, and information from the State Planning Commission’s cross acceptance process, or other authoritative source, to project to 2018. Instead, the growth projection model extrapolates housing and jobs for 1999, and then estimates 2002 numbers in order to project out to 2018. The 2004 projections are then derived from those straight line or linear projections. The model is designed to predict what has already occurred, when actual certificates of occupancy should have been analyzed to derive real numbers. We know what the 2000 census provided, and we know that DCA tracks certificates of occupancy. Actual growth could have easily been determined from 1999 to 2004. Projected growth to 2018 should have considered State Planning information from the most recent cross acceptance process, or some other economic growth and development projections supplied by the State Planning Commission pursuant to N.J.S.A.52:27D-307, and as directed by the court. By creating a model, and then not cross checking the results of the model against actual events, or considering State Planning Commission projections in a meaningful way, there are substantial errors in the municipal projections.
11 Vacant land has to be accurately evaluated at the local level. While the proposal includes a purported analysis of vacant land on a statewide basis, the analysis is not applied at the municipal level to assign growth projections in any understandable way. Assignment of growth projections without regard to actual vacant land at the local level is unreasonable. Additionally, reliance on outdated information to determine the amount of vacant land, at any level, is inappropriate. The agency should explain explicitly how vacant land was used to create municipal growth projections.
12. Regional and environmental restrictions on development need to be considered at the local level. While the consultants’ reports review vacant land availability on a Statewide level, discuss the fact that build out is being achieved in places, and recognize generally that Pinelands and Highlands legislation have impact, there is no analysis of those and other impacts at the municipal level. The methodology needs to consider statutory and regulatory restrictions on the ability to satisfy projected municipal growth, especially those restrictions which were adopted after the period of historical review of growth used to form a linear progression out to 2018. For instance, it makes little sense to project significant growth in municipalities located largely, if not totally, in the preservation area of the Highlands, or to expect greater development where zoning is impacted by C-1 stream buffers or septic nitrate dilution models, or where development is substantially restricted by other environmental constraints.
13. COAH should allow an adjustment to municipal growth share where there is inadequate sewer capacity, water availability, or other deficient infrastructure to support projected growth. Projected growth which will not occur because of a lack of infrastructure needs to be taken into account, and the projections adjusted in order to be more accurate. It has been held that tracts without water or sewer service do not provide a realistic opportunity for the construction of affordable housing. 338 N.J.Super. at 120-121. COAH’s limitation to adjustments of growth projections based solely on vacant land is unreasonable since for rural municipalities it is often not lack of land, but rather a lack of infrastructure to support the projections. Furthermore, the presumptive densities for developable tracts of 45 jobs per acre and 6 dwelling units per acre are inappropriate and very often cannot be achieved for lands without infrastructure. The matter takes on great importance since the regulations require municipalities to plan to satisfy that growth obligation as a minimum. To project growth where it cannot occur is unreasonable
14. Municipalities should have a mechanism for challenging projections of growth. Many municipalities are being assigned projections of growth in excess of actual anticipated growth. Proposed NJAC 5:94.6 sets forth a complicated, difficult to understand, and subjective method by which COAH may allow an adjustment to growth projections. At the same time, those municipalities are required to use the projections as the minimum for submission of a plan of compliance. Once submitted, unless the regulations are changed, COAH will require municipalities to zone for that growth, or otherwise implement the plan. Such an approach will, in and of itself, compel growth contrary to the concept of growth share and the requirements of the Mount Laurel doctrine. COAH needs to establish a simple, clear and objective mechanism whereby the accuracy of growth projections can be challenged as part of or prior to submission of a plan of compliance. The Appellate Division relied upon the following language from AMG Realty:
“Any reasonable methodology must have as its keystone three ingredients: reliable data, as few assumptions as possible, and an internal system of checks and balances. Reliable data refers to the best source available for the information needed and the rejection of data which is suspect. The need to make as few assumptions as possible refers to the desirability of avoiding subjectivity and avoiding any data which requires excessive mathematical extrapolation. An internal system of checks and balances refers to the effort to include all important concepts while not allowing any concept to have disproportionate impact.” In re Adoption, 390 N.J.Super. at 17.
COAH should not commit error by violating the above stated rule of law when a municipality can show that the information upon which COAH has relied is unreliable or that there is superior data at the municipal level. In addition, there must be an appropriate check and balance to a methodology in order to assure it is supported by the best available data. To force a municipality to comply with a fair share that vastly exceeds the fair share derived from the use of the best available data is a flawed approach.
15. Municipalities should be permitted to contest job projections established in Appendix D. The court was critical of COAH’s establishment of an exhibit establishing the number of jobs to be created based upon square footage of non-residential development. The court found reliance upon use group computations can produce results that do not fairly measure employment, and directed that actual jobs be counted. 390 N.J.Super. 64-65. In response, the COAH consultants decided to increase the number of jobs projected to be created for each 1,000 square feet for various types of non-residential development. Simply increasing those projections does not address the court’s concern. We understand why COAH wishes to count jobs based upon square footage, since square footage is reported to DCA in the construction process. However, the one size fits all approach is not an accurate indicator of jobs. For instance, office space can be either back office clerical space or corporate offices, each with different numbers of job growth in the same amount of space. In order to satisfy the requirements of the court, and provide a check on the consultant’s projections, municipalities should have the ability to refute the estimates as applied to any non-residential development based upon the actual creation of jobs resulting from the issuance of a certificate of occupancy.
16. The cost of compliance mechanisms has to be balanced with the funding sources. The proposal includes costs of compliance which cannot be satisfied by the proposed funding, thus requiring property taxpayers to fund affordable housing in violation of the specific requirements of the Fair Housing Act. N.J.S.A. 52:27D-311. Since payments in lieu may not be used to pay for an RCA, the ratios and development fees must, at least, yield sufficient revenues to fund an RCA unit. The 2004 growth share regulations were in economic balance, whereas, the current proposal is not. If we assume an average price of a new market unit to be $500,000 (which is higher than the statewide average), we see the imbalance. In 2004, an obligation of one unit of affordable housing was generated by 8 market units. At $500,000 each, there was a total market value of $4,000,000, and when the 1% development fee was applied there was a total of $40,000 in revenues to offset a proposed $35,000 RCA, leaving funds for costs of administration. Under the present proposal, 4 units result in an obligation at a ratio of 1 for 4. Assuming the same pricing, those 4 units would yield a total market value of $2,000,000, and a 1.5% development fee would result in only $30,000 in revenues to offset RCA costs of $67,000-$80,000, let alone the cost of administration. Under the present proposal, property taxpayers will be required to fund $37,000- $50,000 of an RCA cost, and pay for the administrative expenses. In regions where the RCA cost is higher, the taxpayer burden is greater. The same applies with reference to the commercial development fee of 3%, as commercial space would have to have a much higher value than the current market to cover the cost of an RCA. There needs to be a balance among the ratio (the quantity of development which creates the obligation for a unit), cost of an RCA unit, and development fees in order to avoid property tax impact.
The League does not take a position on what the costs of an RCA should be, since we represent both the sending and receiving municipalities. The cost of an RCA should be balanced with the funding mechanism for an RCA. Otherwise, it places a burden on the property taxpayer, which is violative of the Fair Housing Act.
17. Municipalities should be permitted to establish actual construction costs and sales prices specific to the municipality in order to avoid property taxpayer impact when computing a payment in lieu. The payment in lieu needs to reflect the actual cost of construction and sale prices in order to avoid property tax impact, and a violation of the Fair Housing Act. The proposed regulations estimate cost of construction and sales prices of units by region to derive the amount of a payment in lieu. Construction costs vary throughout regions, and COAH requires sale prices to be individually determined by municipalities. For various municipalities the proposed construction costs are too low, and the stated sale prices high, thus leaving a shortfall for municipal taxpayers to absorb. The court was critical of COAH for not establishing a method to calculate payments in lieu, since the prior growth share regulations said it was an amount to be negotiated between the developer and the municipality. The League argued that the standard should be the difference between municipal sales prices and the cost of municipal sponsored construction, established by ordinance. The standard in the proposed regulations, which is a region based estimate, will leave many municipalities short of sufficient funds to pay for municipal sponsored construction. COAH should establish the amount of a payment in lieu as a presumption, not an absolute, which can be rebutted before COAH by a municipality.
18. The third round municipal obligation should include the remaining prior round obligation, and not the total prior round. In proposed N.J.A.C. 5:94-2.2(a), the third round fair share obligation includes: rehabilitation; prior round obligation; and growth share. In the growth share regulations adopted in 2004, N.J.A.C. 5:94-2.1(a) stated the obligation as: rehabilitation; remaining prior round obligation; and growth share. By changing the obligation from the remaining prior round to the total prior round, COAH reimposes obligations on municipalities which have already been satisfied, and artificially increases the gross obligation of municipalities that have complied with their prior obligations. Municipalities should not be required to seek reapproval of past compliance efforts, and suffer potential rejection of those efforts after the fact.
19. Credits for prior round housing compliance should not be denied. Third round regulations should include any remaining, that is unsatisfied, second round obligation, but not the entirety of the first and second rounds. This issue arose after adoption of the prior growth share regulations. The regulations provided that the third round was to include the rehabilitation share, any “remaining” second round obligation, and growth share. COAH and the handbook then required the entire second round obligation to be included, with credits for prior housing activity then applied using various percentage requirements for age restricted units, rental units and RCAs. This interpretation was unnecessarily complex, and resulted in a denial of certain credits for prior housing compliance by municipalities. The problem arises as a result of insistence that the obligations remain cumulative from one round to the next. Municipalities that satisfied second round obligations should not be denied credits for that compliance, and any excess units produced in prior rounds should count as a credit on a one for one basis against any growth share obligation before consideration of various percentage requirements and restrictions.
20. “Unmet need” as the result of a vacant land adjustment in the second round should not be carried forward into the third round. Many municipalities assigned numbers in the second round found it necessary to obtain vacant land adjustments, because there was insufficient land to accommodate the assigned number. COAH, while recognizing the obligation could not be satisfied, never reduced those obligations, and instead considered those obligations as “unmet need”. The proposal considers that “unmet need” as part of a remaining second round obligation to be carried into the third round. The result will likely be repeated requests for vacant land adjustments. Since no new land is being created, once a vacant land adjustment is granted the resulting “unmet need” should not be carried forward into the next round of obligation. Municipalities without adequate land to satisfy a prior imposed obligation should not be compelled to justify the adjustment over and over again, and COAH should simply acknowledge that the prior assigned numbers in those cases were too high to begin with.
21. COAH should not compel a municipality to address its unmet need in its entirety before it can address its growth share obligation. Many municipalities have substantial unmet need and modest growth share obligations. Such municipalities, as a practical matter, will never be able to address their unmet need. If these municipalities must fully address their unmet need before they can begin to address their growth share obligations, they will never be able to comply with their growth share obligation. COAH regulations should not make compliance unattainable.
22. COAH should not overreact to the Appellate Division decision, and ignore municipal zoning when projecting growth. The New Jersey Builders Association argued that the problem with growth share was that a municipality might downzone to avoid affordable housing obligations. In response, COAH predicts growth in Appendix F without regard to the zoning of municipalities. It is unreasonable to predict growth without regard to the zoning in a municipality. The zoning is an essential component to predicting growth.
23. Accessory apartments should not be subject to affirmative marketing requirements. COAH has recognized that accessory apartments as a compliance mechanism has not been highly successful. The reason, in our view, is that COAH requires accessory apartments to be affirmatively marketed. Affirmative marketing constitutes a chilling effect on the establishment of such units. It should make no difference if someone establishing an accessory apartment rents such a unit in their home to someone they know or chose, rather than having a tenant assigned at random, provided the tenant is income qualified.
24. With respect to development fees, COAH should eliminate the 6 percent limit for additional units and for additional non-residential development. COAH did not conduct a study to justify the 6 percent figure when it imposed it. Moreover, if the value of the rezoning exceeds the figure derived from the 6 percent calculation, municipalities should not lose the ability to capture their fair share of the benefits conferred through a rezoning or use variance.
25. COAH should not confine the 1,000 unit cap limitation to the prior cycle obligation. The FHA clearly states that:
“No municipality shall be required to address a fair share beyond 1,000 units within ten years from the grant of substantive certification, unless it is demonstrated, following objection by an interested party and an evidentiary hearing, based upon the facts and circumstances of the affected municipality that it is likely that the municipality through its zoning powers could create a realistic opportunity for more than 1,000 low and moderate income units within that ten-year period.” N.J.S.A. 52:27D-307(e). (Emphasis added).
26. Recomputed second round obligations need to be applied consistently, if they are to be revised at all. In N.J.A.C. 5:93, COAH established the second round obligation of municipalities. Recognizing those assigned numbers were too high, COAH recomputed those numbers in adopting the growth share regulations in 2004. In the current proposal, COAH indicates it is returning to the original assigned numbers for the second round. 40 N.J.R. 240. However, a number of municipalities are now being assigned a higher second round number than originally assigned in the second round regulations. While we fail to understand the reason why COAH adjusts second round numbers time after time, any readjustment should be made on a consistent basis. In reassigning numbers based upon prior methodologies, COAH should not assign a municipality a higher obligation for the second round than originally assigned.
27. The Fair Housing Act and COAH need to expressly state that municipalities have the right to extend affordable housing controls on all COAH certified affordable housing units.
N.J.A.C. 5:94-4.2(c) states that “[i]f the credit is to be applied toward the growth share obligation, the controls on affordability shall be in place through December 31, 2018 or, if expiring during the third round period, shall be renewed in conformance with N.J.A.C. 5:94-9 and UHAC.” There exist a substantial number of affordable housing units in this State that were created prior to the original COAH regulations being adopted but were subsequently certified by COAH. The deeds and master deeds governing these units do not provide for extending controls, and many do not provide for 95/5 repurchase by municipalities. In all likelihood, these controls cannot be extended without costly, protracted litigation, as owners have an expectation that these units will convert to market units upon expiration of the current controls and that the owners will reap the profits from market sales.
28. COAH should ensure that municipalities secure credit for units that came into existence between April 1, 19080 and December 15, 1986 "notwithstanding any other law to the contrary." provided that they meet the applicable criteria.
In the past, COAH has made clear that municipalities are entitled to full credit for units constructed between April 1, 1980 and December 15, 1987 regardless of whether the units are age-restricted:
“COMMENT: The Council should revise the proposed rule to limit the number of credits for new, post-1980 construction of senior citizen units to the same maximum percentage as COAH applies to fair share plans, that is, 25 percent.
RESPONSE: The Council’s philosophy on credits has been to recognize good faith efforts to create low and moderate income housing that occurred between April 1, 1980 and the Council’s rules. Municipalities that created housing opportunities during that period could not anticipate that the Council would impose restrictions on age restricted units. Therefore, the Council does not believe that it is reasonable to impose such a requirement at this time.” (emphasis added)23 N.J.R. 2307.
This policy is consistent with and indeed required by the Fair Housing Act, which specifies that municipalities are entitled to credit for units constructed in this window—even if they are not deed-restricted “[n]otwithstanding any law to the contrary”. See N.J.S.A.52:27D-307. We believe that the intent of COAH’s current regulations was to continue to honor a municipality’s right to credit for units that came not existence during this period “[n]otwithstanding any law to the contrary”. Therefore, we would urge COAH to clarify that it intends Proposed Regulation 5:94-4.2(a) and 5:94-3.10-3.12 to allow municipalities to apply credits against their fair share responsibilities for creditworthy units created during this period regardless of whether the credit arises from a deed restriction or from a unit that meets the statutory credits without controls requirement and regardless of whether the unit is age-restricted or not.
29. COAH should allow municipalities to secure credit for transitional housing regardless of whether the housing came into existence between December 15, 1986 and December 20, 2004 or thereafter.
COAH regulations included crediting opportunities for transitional housing facilities and other congregate living arrangements in Cycle I, Cycle II, and the first iteration of its Cycle III regulations. However, in the proposed amendments, although COAH continues to offer housing credits for transitional housing units created between December 15, 1986 and December 20, 2004, COAH also eliminated crediting opportunity for transitional housing created after December 20, 2004. See N.J.A.C. 5:94-6.10(a). Eliminating crediting opportunities for this important type of housing is unwarranted, and will result in a disincentive for the construction of such facilities. COAH should therefore keep transitional affordable housing as an eligible affordable housing component of special needs and supportive housing in the third round. Permanent transitional affordable housing, which provides individuals and households with housing for up to one or two years, is a key and necessary part of the continuum of affordable housing, especially in urban and developed suburban areas. COAH’s own definition of ‘individuals with special needs’ acknowledges this continuum of needed housing by including ‘individuals and families who are homeless’. Many temporarily homeless individuals, including single parents with children, cannot afford to secure an affordable unit on a temporary basis, and instead need a transitional affordable unit for months or a few years to get back on their feet. Moreover, various associated services are typically offered with this type of housing, which assists individuals and households with job training, GED classes, and other life skill training. The purpose of such housing and training is therefore to provide safe, decent housing to individuals and families endeavoring to take the steps necessary to ultimately be able to afford more traditional low and moderate income housing. Finally, it is important to remember, however, that the providers of transitional affordable housing typically operate these facilities on a permanent basis for a minimum 30 years and thus should be eligible for COAH third round affordable housing credit.
The League of Municipalities, therefore, expresses its opposition to the proposed regulations. We have identified issues which we believe must be reconsidered by Council before adoption of the new regulations, and we ask for careful reevaluation of the proposed regulations.
Very truly yours,
William G. Dressel, Jr.