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August 29, 2012

RE: Update on Affordable Housing Trust Funds

Dear Mayor:

I write to provide you on an update on the status of the municipal affordable housing trust funds and seek your assistance as we continue our legal efforts to protect this funding.

The League is currently before the Appellate Division on the issues of COAH’s failure to adopt the regulations required by PL 2008, c. 46.  We believe that we have successfully demonstrated through example why the State’s rigid definition of “committed,” first defined in the State’s response brief, is inadequate. For more on this, please see the August 9 Dear Mayor letter summarizing our testimony before the Assembly Housing and Local Government Committee earlier this month.

We now ask for your assistance:  we would like to cite even more local examples of real world projects that are now jeopardized because of the State’s intention to seize the trust fund dollars.  If you have some local examples that we can use, please contact the League as soon as possible with additional details. 

In early July, the Fair Share Housing Center and the League both sought relief from the Courts, asking for an injunction prohibiting the State from seizing funds until COAH promulgated regulations to implement PL 2008. c. 46 and until COAH gave municipalities a reasonable opportunity to comply with those regulations. While the Court denied our request for the injunction, it also outlined certain actions COAH must take before ordering a municipality to transfer trust fund money to the state.   Specifically, the Court required COAH to provide written notice to each municipality, to explain how they calculated the amount due, and to give the municipality an opportunity to contest the transfer.

On July 24, municipalities received correspondence from the Acting Executive Director of COAH.    These letters indicated what COAH understood what funds were not committed. These letters also required municipalities to certify that the information COAH had was correct. This letter also came with a sample certification form that COAH subsequently informed municipalities should be signed by the mayor even though CFOs and not mayors, typically have first hand information about the subject of the certification.   The letter goes on to say that if the information was incorrect that the municipality must update the trust fund monitoring information immediately and include a July 2012 bank statement.   COAH indicated that it would consider a failure to submit the certification as an acknowledgment that the indicated balances are correct. 

Further, the State provided a deadline of Monday, August 13 for municipalities to provide a transfer of the so-called “uncommitted” balances to the State.   If the municipality asserted that some or all of the funds are, in fact, committed, then it was to remit the uncommitted portion along with documentation to demonstrate those funds that are committed.  

After reviewing these letters, the League took the position they provided inadequate clarity and guidance for municipalities and did not comport with the July 13 Court order.  Further, we questioned whether the Acting Executive Director had the authority to require certifications or seize funds without permission of the COAH Board.

The issues returned to the Courts, and an Appellate panel issued an order on August 10 prohibiting COAH staff from acting without consent of its board. The Court stated that the “COAH Board...has not met and has not authorized the demand imposed on the municipalities” through the July 24, 2012 letter.

The Court went on to state that COAH staff is prohibited from “seeking a turnover from any municipality of affordable housing trust funds” without specific instructions from the COAH board, and that “any funds that have been turned over shall be returned to the municipality.”  If and when COAH will meet is not known.   The State has not indicated whether it will appeal the August 10 Order.

So, what we wrote in our August 13 Dear Mayor letter stays the same: municipalities are no longer required to remit to COAH any funds until the COAH board meets and authorizes the action.   Furthermore, it means that towns that have already sent in funds can demand that COAH return that money.

The Court did not deal with the request for the certification of funds in general or the issue as to the appropriate person to sign it.  As we have previously indicated, we are concerned with COAH’s Acting Executive Director demanding that mayors sign the certification because mayors rarely have firsthand knowledge of the information requested.

Certainly, if you believe COAH made errors in its calculations, you may want to consider a letter or some other document informing them of the actual current state of any affordable housing trust funds you have.  We urge you to consult with your municipal attorney and other affordable housing professionals as to whether the certification should be completed and who is the appropriate individual to sign it.

If you can assist or if you have any questions, please do not hesitate to contact Staff Attorney Matthew Weng at mweng@njslom.com or at 609-695-3481 ext 137 or Mike Cerra at mcerra@njslom.com or 609-695-3481 x120. 

Thank you,

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

 

 

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