May 29, 2008
New Rules A Disaster For Affording Housing
by Joseph Maraziti
New Jersey has a twofold affordable-housing problem. It has a pressing need for housing people of low and moderate means can afford. On the other hand, the so-called Third Round Rules recently adopted by the Council on Affordable Housing will result not only in a failure to provide the needed housing, but severely inhibit the effort to revitalize New Jersey's cities and towns.
Housing in reach of low- and moderate-income families is necessary to assure ample work force housing to keep our economy vibrant and to satisfy the goals of an equitable society. However, the new COAH rules are overreaching and counterproductive.
Decades ago, the state Supreme Court in the Mount Laurel case established the legal framework within which the affordable housing debate has continued. The court ruled that municipalities could not use their land use and zoning power to "zone out" lower-income people. The court held that municipalities have a constitutional obligation to create a "realistic opportunity" to build affordable housing. A "realistic opportunity" is not an obligation to create subsidized housing.
In reaction to the indifference, if not the hostility, of most municipalities to creating these zoning opportunities, the court created an enforcement mechanism. If a builder proved a town was not in compliance, the builder would be rewarded for that effort and expense and would be provided a "builder's remedy." That allows builders to construct projects at a much higher density than local zoning permits so construction of some affordable units is financially feasible. Most of the new development consists of market rate housing, not affordable units. Builder's remedies are exactly that: remedies for builders, not much of a help for people in need of affordable housing.
The failure of the Fair Housing Act is evidenced by the fact only about 65,000 affordable units have been produced since 1985. The new rules call for the creation of 115,000 units in the next 10 years. That's a gargantuan task, likely to be met with more hostility — and more costly court battles.
The Third Round concept is dramatically different from the systems in place in the prior rounds, because it operates on the principle of growth share. As a town grows, it must provide a percentage of affordable housing in proportion to its growth. The rules adopted by COAH will impose a 20 percent affordable requirement. For every five new residences, one must be an affordable unit.
By one measure, the cost of Round 3 could be as much as $18.5 billion in the next 10 years. Since new development will be required to produce affordable homes, the perception is developers bear the burden. In truth, the cost will be passed to consumers.
COAH's newly adopted rules are hostile to all redevelopment — urban and suburban — and will have the unintended consequence of inhibiting the revitalization of areas in need of the infusion of major new investments. New Jersey is pouring billions into urban areas in the form of education and economic aid in hopes of revitalizing cities. Now the new growth share rules will inhibit the urban redevelopment the state has encouraged for decades. It is likely developers will shy away from such areas and may shy away from the state altogether.
The economic reasons for the state to take other than a "you do it" approach is that the growth share approach, which shifts the entire multibillion-dollar affordable-housing burden to new growth, creates a major disincentive to build new homes and office buildings in cities and towns. Ultimately, the state will lose its competitive edge to neighboring states — a phenomenon already under way.
It is imperative the Legislature take a hard look at the Fair Housing Act and consider whether it is time to give COAH a new set of instructions and, perhaps, even consider replacing COAH altogether with a new mechanism that will create affordable housing in a more equitable way and without damage to our communities and the state's economy.
Joseph Maraziti is an environmental and redevelopment attorney who has served as the chairman of the State Planning Commission and the Environment of the 21st Century Task Force of the state Assembly.
Published on Asbury Park Press, May 29, 2008.
Published on Daily Record, June 8, 2008.
