December 15, 2010 Urgent Legislative Alert
RE: S-1/A-3447, Passes Assembly - Abolishes the Council on Affordable Housing (COAH)
S-1/A-3447, which abolishes the Council on Affordable Housing (COAH) and makes other changes to the State’s affordable housing laws, was approved by the Assembly Housing and Local Government Committee on Friday and then approved by the full Assembly on Monday. On Friday, the Assembly Majority Office released projected estimates of units municipalities need to meet their COAH obligation based on the bill.
The League asked that the Assembly not vote on the bill so that municipalities and other stakeholders could review the significant amendments to the bill that were made late Friday. The League also requested confirmation of the projected estimates by the Office of Legislative Services and the Department of Community Affairs. The Assembly proceeded with the vote, and the bill passed by a 43-32 margin.
The League also identified a number of remaining issues with the legislation, including:
- Definition of “qualified housing units” should be expanded, to include such units as mobile homes, rent control units, and units provided through a regional contribution agreement;
- The requirement that 50% of municipal obligation be met through inclusionary zoning should be removed. Municipalities should be given flexibility as to how to comply with options which do not require a large number of market rate units.
- Required densities/set-asides will require an excess of market rate units.
- Safe Harbor for municipalities: Language should be strengthened to protect compliant municipalities from both the variance and litigation process.
Below please find a summary of the major components. This listing certainly is not exhaustive, and because of the significant number of amendments to the bill as recently as Friday, we may provide additional information as we continue our analysis of the legislation. For the sake of this summary, we will break down municipalities into 4 categories: “Urban compliant,” “Compliant by Statute,” “Deemed to be Compliant,” and “Non-Compliant.”
COAH Abolished/ Commercial Fee Eliminated
The legislation abolishes the Council on Affordable Housing (COAH) and eliminates the 2.5% fee on commercial development that was enacted as part of PL 2008, c. 46.
“Qualified Housing Unit”
Qualified Housing Unit is defined in Section 21, as units subject to 30 year deed restrictions, public housing and special needs housing.
Variance Procedure/Inherently Beneficial Use Standard
Non-compliant municipalities, as defined below, are subject to inherently beneficial use variance applications at mandated densities until its full obligation is satisfied.
Trust Fund Dollars
The 2.5% fee on commercial fee is eliminated. Every municipality, except for the “urban compliant” municipalities, shall charge a residential development fee of 1.5% of the equalized assessed value of the development in a non-inclusionary zone. The payments will be made into the municipal affordable housing trust fund.
Collected fee are to be committed within two years of collection and disbursed within three years, except for projects requiring scheduled payments. Any funds not disbursed within 3 years, will be deemed by the DCA as excess funds and will post a notice of availability for non-profit organizations. Any municipal trust fund dollars collected prior to the effective date of the law shall be committed within two years. Any unspent funds will also be deemed as excess funds.
The legislation also establishes new criteria for compliance with the Act, as follows.
Municipalities with more than 50% of school children qualifying for free and reduced lunches are exempt from most of the provisions of the law (“urban compliant.”) These municipalities will only have a rehabilitation obligation going forward.
Compliant by Statute
A municipality may demonstrate that 10% of its total housing stock, or 8% if more than 20% and less than 50% of the school children in the municipality qualify for free/reduced school lunches, are qualified housing units, as established by the bill, provided that:
- 50% of the total number of qualified units are qualified low income units;
- 13% of the total units constructed after the effective date of the Act are qualified for very low income households;
- no more than 25% of the total qualified units are age-restricted;
- no more than 25% of the total qualified units shall be reserved for person living or working within the municipality.
Municipalities that fall into the above category will have 60 days from the effective data of the Act to prepare and adopt a housing element certified by a “licensed housing compliance professional,” a new title created by the law. The plan will have to identify and address the municipality’s rehab obligation. This certification will carry a presumption of validity, which shall only be overcome by clear and convincing evidence, should the plan be subject to litigation.
Deemed to be Compliant
A municipality that does not fall into the above categories may be deemed to be compliant if, within 8 months of the effective date of the law, it adopts and files a housing element and enabling ordinances that will meet one of the following:
- A plan to meet 50% of the needed housing to reach either 10% or 8% of housing stock as qualified. A municipality with more than 20% and less than 50% of their children qualifying for school lunches will have a 8% obligation, while all others will have a 10% obligation; or,
- A plan to build the same number of qualified units as was required under COAH’s 2nd round methodology (1993—1999); or,
- No more than 1000 units.
If the municipality chooses to build the same number as its COAH 2nd round obligation, none of the previously qualified units in the municipality may be credited towards the number. All of the units must be provided as new units.
Municipalities that fall into this category will be required to pass an inclusionary zoning ordinance, with minimum presumptive densities and set-asides for affordable housing. At least 50% of the total required units must be through inclusionary zoning.
The set-aside will be a range from between 15% and 20%. The presumptive minimum densities will be between 6 and 20 units per acres. However, if the municipality has a gross population density over 5,000 persons per square mile or more than twice the number of jobs as residential homes, the presumptive minimum densities will be between 10 and 50 units per acre.
A developer in an inclusionary zone may choose to commit the low and moderate units as rentals, which will include a 15% set-aside and increase the minimum gross density by 20% over what is specified in the ordinance.
These submitted plans must be certified by a licensed housing compliance professional, and shall also carry a presumption of validity, overcome only by clear and convincing evidence.
For “non-compliant” municipalities, there will be an expedited variance procedure. In these circumstances, projects including 20% affordable units will be deemed to be an inherently beneficial use, as referenced above.
S-1/A-3447 must go back to the State Senate for concurrence, and may be voted on next Monday, December 20. If passed by the State Senate, the bill will proceed to the Governor. At Friday’s hearing, DCA Commissioner Lori Grifa expressed serious reservations about the bill and whether the Governor would sign the bill should it reach his desk.
The League will continue to provide updates as circumstances warrant. In the meanwhile, questions and comments can be directed to Mike Cerra at firstname.lastname@example.org or 609-695-3481 x120.
Very truly yours,
William G. Dressel, Jr.