Statement of the NJLM on S-1
Before the Senate Economic Growth Committee
Monday, February 1, 2010.

Good morning Chairman Lesniak and members of the Committee.  On behalf of the League, I would like to thank Chairman Lesniak for the leadership on the issue of affordable housing and for bringing this legislation, S-1, forward for discussion today.   Mr. Chairman, we look forward to continuing our work with you on this crucial issue in the weeks ahead.

There is no need to go into great detail with our concerns with the Council on Affordable Housing (COAH.)    Suffice it to say, COAH’s 3rd round regulations sparked unprecedented municipal opposition, not to the concept of affordable housing, but rather to a fatally-flawed methodology.   The result is nearly two dozen separate legal challenges.   Oral arguments in these appeals were held on December 1 and we await a decision from the Appellate Division.

However, our purpose here today is not to discuss this past but rather the future.   And in that regard, the introduction of S-1 is a positive first step in what we believe is the necessary and overdue reform to the Fair Housing Act. 

To us, the key issue is the formulation of the criteria for determining whether a municipality has complied with their obligations under the Fair Housing Act.    As introduced, the bill defers this determination to the State Planning Commission.  

We support the Sponsor’s intention that this very important determination not be left once again to an administrative agency, but rather clearly defined by statute. 

Further, we believe that in crafting these criteria great weight should be given to the efforts of municipalities which have engaged the COAH process, some of which for 25 years and for municipalities who have provided their fair share, whether through the COAH process, the Courts or on their own.  

Once the criteria are determined, we would ask for clarifying language that a town that meets the standard can continue to utilize compliance mechanisms, including a set-aside, to maintain this status going forward.  

If a municipality does not meet these criteria, it is to pass an ordinance with a 20% set-aside for low, moderate and workforce housing.    We would ask that that the bill be as specific as possible that the obligation generated by residential development can be met offsite through rehabilitation, or buy down programs, group homes, special needs housing and so on.   We believe this is clearly the intention of the bill. 

The League also believes it is important to note that for the municipalities that do not meet the criteria, that the criteria not be established as a goal or objective.    For many reasons, the criteria might not be achievable for certain municipalities.  For example, if this legislation had passed in 2007, before the onset of the recession, many municipalities would be hard pressed to meet the criteria because of the slowdown in the real estate markets.   Thus, in such circumstances we would not want to see to see a municipality sued for failure to meet the criteria, when it was doing everything it could within the law.

We have seen reports that S-1 “restores” Regional Contribution Agreements (RCAs).       Such statements are misleading.    What S-1 does do, in fact, is allow for agreements that were in the pipeline when RCAs were abolished in July 2008 to be reconsidered.    A process is established so that if both municipalities, sender and receiver, want to reinstate the agreement, it can be considered again.    This is particularly important since, in many cases, public funds were committed to the agreements and the flow of funding for housing into our urban areas and centers has slowed dramatically since July 2008.     The bill statement indicates that up to 5,000 housing units and up to $116 million in funding could result.    While we doubt all these units and all these dollars will materialize, there could be a significant amount of dollars and the construction of a significant number of affordable housing units as a result. 

One issue not addressed in S-1, but which the League would like to bring to your attention is how housing trust fund dollars will be used going forward.    If a municipality meets the yet-to-be-determined criteria, thereby satisfying its housing obligations, and has remaining dollars in their trust fund dedicated for housing purposes, how can the municipality utilize these dollars?    We would ask for additional flexibility so that such a municipality can, in addition to using the funding to continue to provide for affordable housing locally, or, at local discretion, share the dollars on a regional or State basis to provide for needed housing elsewhere. 

Our objectives moving forward are relatively simple: on behalf of our municipalities and our already overburdened taxpayers, we seek the avoidance of more burdensome bureaucracy, a simple solution to affordable housing issues, and lessening the cost of compliance.

We thank the sponsor, and the members of the Committee for their consideration of our comments and questions.   We look forward to continue working on this issue with Senator Lesniak and this committee in the upcoming weeks.