Attempted Seizure of Affordable Housing Trust Funds
Whether you concur with the Mt. Laurel decisions or not, we can agree that there is a societal need to address housing affordability in our communities and that regardless of how this is addressed, the burden should not fall on local property taxpayers. As such, the State’s recent efforts to seize local affordable housing trust funds are shameful and as mayors we should be loudly objecting to the Governor and our legislators.
On May 1, the NJ Council on Affordable Housing (COAH) met for the first time in over two years to begin State efforts to seize an estimated $160 million dollars of municipal affordable housing trust funds. Then, on Monday, May 13 the Appellate Division issued an injunction, welcomed by local governments and housing advocates, which stayed the State’s efforts and scheduled a court date on June 5 to consider the matter – keep posted. This conflict results from a provision in a 2008 law requiring that municipalities expend or “commit to expend” trust fund dollars four years from the date of collection. COAH has knowingly opted to ignore the requirements of that law, failing to adopt regulations and to define “commit to expend,” as well as act on spending plans.
Municipalities are caught in a catch-22, at risk of being penalized for failing to comply with regulations that were never adopted. Municipalities were without the statutorily mandated guidance, without a definition of “committed to expend,” and without a viable plan in place detailing what obligations the State would impose on municipalities and approved means of compliance.
The affordable housing trust funds are collected by municipalities from developer fees to subsidize the provision of affordable housing. They are meant to assist municipalities in meeting their State mandated housing obligations and to provide a revenue source that is not dependent on the property tax. If the State is successful in taking this funding, it does not remove the State imposed obligations to provide affordable housing, but merely pushes that financial obligation onto property taxpayers and places further mandates on local governments.
It is noteworthy that the historic downturn in the real estate markets, to which construction of affordable housing is linked, has stalled many projects, a condition recognized and addressed by the Legislature via the Permit Extension Act of 2008, which has been further extended twice. However, while relief has been provided to developers on multiple occasions when a bill was approved by the Legislature in June 2012 to give municipalities similar relief, that is two additional years to commit their trust fund dollars, the Governor regretfully vetoed the bill.
Municipal affordable housing trusts are precisely that, trust funds dedicated to the provision of affordable housing and assisting municipalities to meet their State imposed obligations. If the State is successful in seizing these trust funds, it would not be under the same obligation to use the funding for housing. Since this funding is anticipated as general revenue in the current budget, the State could instead use this funding to offset any budget shortfalls or spend on completely unrelated programs.
Hopefully, the Courts involvement will allow for reconsideration of misguided State actions. It is time to stop the State efforts to seize this funding and, instead, partner with local leaders to develop and implement a statewide affordable housing policy that is rational, achievable and does not perpetuate a financial obligation to our taxpayers.