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Affordable Housing
Requirements
The Latest COAH Developments
Joseph V. Doria, Jr.
By Joseph V. Doria, Jr,
Commissioner, Department
of Community Affairs
Woman relaxing on Couch
A new program providing credit for affordable housing in redevelopment areas has been added under the new COAH requirements, and a number of existing programs, including the accessory apartment program, are more flexible

On December 17, 2007, the New Jersey Council on Affordable Housing (COAH) proposed its revised third round affordable housing regulations. The regulations continue a growth share approach, wherein municipalities provide for affordable housing in proportion to market-rate residential and non-residential growth in their communities.

Highlights of the revised regulations are provided below.

COAH Updates Growth Share Ratios In response to the January 2007 Appellate Division decision requiring COAH to provide more recent data, COAH hired consultants to update its affordable housing need calculations and resulting growth share ratios. The new ratios unveiled in December 2007 provide for one affordable unit among five residential units and one affordable unit for every 16 jobs (previous ratios were one affordable unit among nine residential units and 1 affordable unit for every 25 jobs). The ratios would apply to development taking place between 2004 and 2018, based on certificates of occupancy issued. In total, COAH has determined a need for 115,666 affordable housing units between 1999 and 2018 (previous estimates were 52,000 units through 2014).

The major factor behind the increased affordable housing need and resulting change in ratios was the reduction in the number of units that filter to low- and moderate-income households (filtering is the process by which previously unaffordable market units filter down to low- and moderate-income households).

In addition to the growth share ratios, the COAH rules provide household and employment growth estimates for each municipality, which serve as planning targets when preparing the affordable housing plan. Municipalities may seek adjustments to these planning targets based on lack of available land.

Increased Flexibility The rules expand the period of need to 1999 through 2018, and provide 10 years for municipalities to address their affordable housing obligations (previously 1999 to 2014). The program permits municipalities to use a phased approach to meet their obligations over the 10-year period.

The proposal provides a number of new compliance options for municipalities to meet their affordable housing obligations. New bonus credits are offered for supportive and special needs housing, family rental housing, and very low-income housing. A new program providing credit for affordable housing in redevelopment areas has been added, and a number of existing programs, including the accessory apartment program, are more flexible.

The requirement to obtain plan endorsement from the State Planning Commission has been eliminated. Municipalities are still encouraged to obtain plan endorsement from the State Planning Commission, and to include affordable housing considerations as part of broader planning efforts.

New Funding Source for Affordable Housing To help municipalities finance municipal affordable housing programs, development fee maximums have increased, from 1 percent of equalized assessed value (EAV) for residential to 1 ½ percent of EAV and from 2 percent of EAV to 3 percent of EAV for non-residential development.

Legislation is being considered to establish a statewide development fee bank that would uniformly charge non-residential developers a flat fee, the proceeds of which would be deposited into a statewide fund for affordable housing. This bank is estimated to generate $60 to $80 million per year in revenues for municipalities to meet affordable housing obligations. The proposed regulations continue municipalities’ ability to require payments in lieu of non-residential developers, pending adoption of legislation.

Inclusionary Zoning Provisions The Appellate Division decision required COAH to provide a compensatory benefit to inclusionary developers in exchange for the provision of affordable housing. The Court also required COAH to establish standards for payments in lieu of construction.

In response, the proposed regulations provide a compensatory benefit to developers for providing affordable housing of one market unit for every affordable unit constructed. A reduced benefit of ½ of a market rate unit for every affordable unit would be required for developers electing to make a payment in lieu of construction rather than building the affordable housing on-site. They also establish a payment in lieu standard by region (cost of constructing an affordable unit) averaging $161,000 per affordable unit.

Counting Jobs at the Local Level The Court required COAH to review the method it used to count jobs at the local level. In response, COAH hired consultants to conduct a survey of New Jersey businesses to provide more accurate data on how many jobs are created for various types of non-residential uses. Educational uses are proposed to be excluded from generating a growth share obligation, including K-12 and higher education.

Regional Contribution Agreements The proposed regulations continue to permit municipalities to transfer up to 50 percent of their obligations to other municipalities within the COAH region, pursuant to the Fair Housing Act. The Regional Contribution Agreement (RCA) minimums are proposed to increase from $35,000 per unit to $67,000 to $80,000 per unit, depending on region. Municipalities that had previously entered into agreements would be grandfathered at the lower dollar amounts. These new dollar amounts reflect the blended average of rehabilitation costs and new construction costs for affordable housing.

Age-Restricted Housing In accordance with the January 2007 Appellate Division decision, COAH’s previous cap of 50 percent on age-restricted housing has been reduced to 25 percent of the total obligation.

Rehabilitation and Prior Round New Construction Obligations COAH’s consultants updated the number of units in need of rehabilitation for each municipality to reflect the extended timeframe of 2018. These updates show a need for approximately 51,000 units in need of rehabilitation. Municipalities may receive credit for housing that has been rehabilitated in their communities since 2000.

As directed by the Court, COAH also updated the prior round new construction obligation. Recognizing that many municipalities have participated in the COAH process since the mid-1980s, and in an effort to provide certainty and predictability, COAH elected to revert back to the 1993 new construction obligations under which towns were certified for the second round period (1987 to 1999).

Next Steps The rules were published in the January 22, 2008 New Jersey Register. COAH will be holding five public hearings throughout the state this month. COAH encourages municipal representatives to attend the public hearings or submit written comments to COAHmail@dca.state.nj.us until March 22, 2008. The proposed rules are also available on COAH’s website (www.nj.gov/dca/coah).

COAH’s proposal will be open for public comment until March 22. At that time, COAH will review and respond to all public comments received and revise its regulations accordingly. It is anticipated that final regulations would become effective in June 2008. Under the rule proposal, municipalities would have until the end of 2008 to submit revised affordable housing plans to COAH.

COAH is planning a series of seminars upon adoption of the revised regulations that would assist municipal officials, planners and members of the public in understanding and using the revised third round rules. COAH is committed to providing increased flexibility and a streamlined process for municipalities, and COAH staff are available to meet with municipalities to assist in answering questions and preparing affordable housing plans

 

 

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