The Future of Affordable Housing
On July 15, the League of Municipalities filed with the Appellate Division its notice of appeal challenging the recently adopted COAH “third round” regulations. Not surprisingly, COAH and a variety of other housing advocates criticized our actions, and defended the regulations. In doing so, some advocates have distributed “Fact Sheets” or other documentation, alleging that those who oppose the regulations are distorting the facts and that local governments are simply resisting their constitutional obligations. We find this ironic, since many of those who seek to correct the record are themselves distorting the facts and challenging the regulations.
So, let us take this opportunity to provide an overview of what we see as the fundamental flaws in the COAH regulations and respond, in part, to some of the assertions directed at local governments and, ostensibly, the League.
The League’s challenge of the regulations centers on what we believe is a flawed methodology and a flawed vacant land analysis, which resulted in inflated projections of growth for both households and commercial development; on the economic imbalances in the regulations, which will create a burden on property taxpayers and make the State less affordable overall; the inconsistencies between the COAH regulations and other state planning efforts, including the State Plan, the Highlands and Pinelands Plans, among other concerns.
As we announced our legal challenge, the League made it clear that the litigation is not a challenge of the “Fair Housing Act,” or what is commonly referred to as the “Mount Laurel” doctrine. Further, while the League opposed A-500, which was signed into law just two days after our announcement, we also made it clear that our challenge was not a challenge of that particular bill.
As this article is being written, 250 municipalities have made financial pledges and contributions towards this challenge. This is a remarkable sign of support for our efforts and a repudiation of the COAH regulations. The League’s brief in our challenge is due to the Court in the first week in January, and ultimately these issues will be heard and decided by the Court.
While the assertions being made against local governments are numerous, let us focus on the ones that seem pertinent to the central issues.
Municipalities are manipulating the stigma commonly associated with affordable housing.
Municipalities do not oppose the provision of affordable housing, but a regulatory structure that creates overwhelming and sometimes impossible burdens on property taxpayers. The fact that the overwhelming majority of communities who have been previously COAH certified, and filed third round plans based on the 2004 regulations, are part of this legal challenge proves this assertion demonstrably false. These communities have provided and will continue to provide their fair share.
Municipalities are claiming that they are going to be required to build affordable housing in back yards, school grounds, preserved open space and other land that is clearly not developable.
At no point has the League, or any local government of which we are aware, asserted that COAH is forcing construction on such lands. In fact, what we assert is that COAH erred in relying on a vacant land analysis which counted such land as suitable for development, in many, many circumstances, while calculating the state’s supply of vacant developable land. What we assert is that COAH relied on such undevelopable land in calculating the statewide need of approximately 115,000 units.
A municipality is only required to build affordable housing when market-rate housing and commercial development occurs.
This is the fundamental premise of “growth share,” which the League has advocated as a solution to the affordable housing policy debate; build as you grow. If COAH’s regulations were truly “growth share” we could support them. But the reality is that these regulations are growth share in name only. COAH has assigned to every municipality a target number, or “projected need,” and every municipality must submit a plan to the agency that puts zoning and other mechanism in place to accommodate such projected growth.
There is a provision in the regulations by which a municipality may seek a vacant land adjustment, which could adjust its projected need based on on-the-ground reality. We question why the burden is placed on local governments to undertake its own (often expensive) land analysis to disprove COAH’s projections. Those regulations, however, provide that the agency will only grant an adjustment after a municipality conducts its own analysis, increases densities and intensity of use to the COAH presumptive numbers and the results are greater than 10 percent less than their projections. However, even then, the municipality must continue to provide mechanisms to capture the obligation projected in the regulations. This is one of the reasons why we have dubbed COAH’s regulations a “self-fulfilling prophesy.”
There is adequate funding and the COAH regulations will not drive up property taxes.
Historically, most municipalities have provided affordable housing through “inclusionary zoning,” by which the local government zones for high density housing with a percentage of the housing set aside for low and moderate income households. But now inclusionary zoning is a less viable option since every market rate unit that must be constructed itself adds to the municipality’s growth share, further exacerbating the economic imbalances in the COAH regulations.
In view of the inefficiency of inclusionary zoning, and the elimination of regional contribution agreements, municipalities will increasingly rely on 100 percent affordable projects, which puts local governments, directly or indirectly, in the construction business. The problem here is funding, since many municipalities have limited funds in their trust fund account and face a potentially huge funding obligation.
In June 2008, the League wrote to the Department of Community Affairs and asked for a breakdown of funding for affordable housing, in light of the passage of A-500. We waited over four months and COAH finally published on its website, “A Guide to Affordable Housing Funding Sources.” In this publication, the agency asserts there will be approximately $800 million annually in subsidies available for the provision of affordable housing.
We should certainly hope that the amount of available subsidies is as high as COAH asserts; otherwise, an additional financial burden is placed on property taxpayers. A cursory examination of the document, however, indicates that some of these alleged financial resources, both on the state and federal levels, have not been funded and/or are not currently available.
Further, on November 17 the League was provided a copy of an analysis conducted by the non-partisan Office of Legislative Services (OLS), the research arm of the State Legislature. This analysis projects a funding shortfall of up to $2 billion per annum. As this article is being written, the League is engaged in an analysis of these documents, and will report our findings to the League membership.
Historically, we call to your attention the League’s commitment to working with COAH in its previous rounds to educate its membership on methodology and to assist municipalities in meeting their affordable housing obligations. In the past the League has defended COAH in various challenges brought by builders and housing advocates. For the first time, the League is now put in a position of advocating a position contrary to COAH. In our view, our actions are supportive of the intent and provision of affordable housing, sound planning principles and preservation of our natural resources.
Ultimately, all stakeholders in this debate must look beyond these flawed regulations. We’re not in the prediction game, so we will not offer a guess as to what the Court will do with COAH’s regulations. But what we do know is that the League, on behalf its member municipalities, will make a very compelling argument that the regulations are fundamentally flawed and that the agency should be charged with developing a methodology consistent with the Appellate Division’s January 2007 division. Unfortunately, COAH went far beyond what the Court had directed in its 2007 decision, and adopted a methodology which we believe is contrary to the Fair Housing Act, the Court’s decision, and is in other ways unreasonable and burdensome to the state as a whole.
Upon reversal of the regulations, or sooner we hope, we look forward to working with all stakeholders in this debate (even those who oppose us now) in putting forth a sustainable and achievable affordable housing policy.