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July 25, 2012

RE:     Affordable Housing, Trust Funds
            State begins process to seize funds

Dear Mayor,

Yesterday, the Acting Executive Director of the Council on Affordable Housing (COAH) began providing correspondence to municipalities across the State indicating how much of the local housing trust fund dollars the State intends to seize.

It appears the amounts that the State is citing are drawn from the COAH June 2012 report.  The State has not posted a July report.  The June report is posted at: http://www.nj.gov/dca/services/lps/hss/transinfo/reports/ahtf_2008_unspent.pdf.    If you recall, only trust fund dollars that were in the local account in July 2008 and “uncommitted” now are exposed for possible forfeiture.

The COAH letters ask for municipalities to certify that the monitoring information is correct, and comes with a certification form to be filled out by the municipality.    The letter goes on to say that if the information is incorrect that the municipality must update the trust fund monitoring information immediately and include a July 2012 bank statement.    COAH indicates that it will 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 asserts that some or all of the funds are, in fact, committed, then it is to remit the uncommitted portion along with documentation to demonstrate that the funds are committed.  

The League has reviewed these letters, and finds they provide inadequate clarity and guidance for municipalities. Indeed, the letters fail to address a number of outstanding issues and accordingly the League finds that the letters do not appear to comport with the recent Court order, posted online at: http://www.njslom.org/documents/COAH-ORDER-mccdoc.pdf

One unaddressed issue is when did or when will COAH meet to authorize the issuance of these letters and to hear issues and appeals.

The League encourages its membership to provide the State with any and all requested documentation in a timely manner to support that funds have been committed for affordable housing purposes. The League also encourages every local government to exercise its full rights under the law and the court order, and to seek the opportunity to be heard before COAH if the municipality disagrees with the State’s action. 

We note that the Court order required the State to provide notice to municipalities and due process before the seizing of the trust funds.    Under the order, COAH is required to provide an explanation as to how it arrived at the figure, and a municipality is given the right to contest the determination before COAH.  In addition, some municipalities may have escrow agreements that entitle you to notice and a hearing before COAH takes trust fund monies.

We would recommend, therefore, that in addition to providing the necessary documentation in a timely fashion, that you request a meeting with COAH staff in advance of the deadline to resolve any discrepancies between COAH’s determination and your determination.       Further, we recommend that if you disagree with COAH’s determination, that you contest the action and demand an opportunity to be heard before the COAH board.     We further note that a municipality retains the right of appeal of an unfavorable COAH determination to the Appellate Division. 

In pursuing any of the above courses of action, we would advise you follow the advice of legal counsel and planning professionals, who will provide the necessary facts for your municipalities. 

In the meantime, the League will continue its efforts before the Appellate Division.  While the Court denied the request for an immediate injunction, it did not rule on the merits of the arguments.     In this regard, you may have good examples of problems arising from COAH’s failure to fulfill its duty to adopt regulations on the administration of trust fund monies necessitated by PL 2008, c. 46.   We would urge you to share those examples with the League. The League is also considering additional options and will advise you in a timely fashion as well as other important developments.

Questions can be directed to Mike Cerra at mcerra@njslom.com or Matt Weng at mweng@njslom.com, or at 609-695-3481 x120 or x137 respectively.

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

 

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