TO: Lucy Voorhoeve, Executive Director, NJ Council on Affordable Housing
FROM: Dianne R. Brake, President, The Regional Planning Partnership
DATE: March 16, 2007

RE:

1. Proposed amendment to NJAC 5:94-4.4(c) | Payments in lieu of construction
2. Proposed amendment to NJAC 5:94-2.3 (c) | Extends the requirement

1. Proposed amendment to NJAC 5:94-4.4(c): According to the Mt. Laurel Doctrine, the obligation to allow affordable housing to be built within its boundaries rests entirely with the municipality. The Supreme Court created the Doctrine from the fact that zoning is a police power, and according to New Jersey’s Constitution, government’s police powers must be applied to advance the general welfare and the public interest.

Based on the Mt. Laurel Doctrine, therefore, zoning is the touchstone for evaluating a municipality’s plan to meet their affordable housing obligation, to see whether the zoning will produce the variety of types of products that will be affordable to a range of income.

To the extent that COAH’s rules move away from zoning as the touchstone, their rules must be considered flawed, at the very least, and arguably, unconstitutional.

The current regulations and proposed amendments encourage municipalities to leave exclusionary zoning untouched and to shift their responsibility almost entirely to the private sector, without changing their zoning to allow the developers to build the needed units. Changing zoning in this case refers to increasing the density or set-asides, changing from non-residential to residential or to mixed use development. This puts zoning as the last resort, rather than the primary means to produce mixed-income communities.

Without zoning that will produce the variety of housing types that are essential to mixed-income communities, the private sector is limited as to what they can do. What COAH regulations should encourage is the appropriate zoning, then use the private sector to do even more – produce units affordable to a broader range of income groups and/or provide deeper subsidies to households on even more limited incomes.

The extra costs that these amendments will impose on development will make “market rate” housing even more expensive, and it is already unaffordable to most people seeking housing in New Jersey (RPP’s research in our Smart Growth Economy Project demonstrates this). And this will impose an extra cost of doing business in New Jersey, which is already high enough to threaten the viability of our economy.

None of the formulae proposed in this amendment are acceptable, and could be argued to encourage municipalities to collect enormous sums of money, which, if trends continue, will not be spent to advance affordable housing or produce mixed-income communities throughout New Jersey. Currently, municipalities are sitting on an estimated $100,000,000 in collected development fees. The “in lieu” fees would create a pot holding much, much more.

The only thing that municipalities have been likely to do with this money is to fund Regional Contribution Agreements, an abhorrent, although legal, practice brought in by Governor Kean to get the Fair Housing Act enacted. The only good part of the third round rule is the section that disallows the use of the “in lieu” fee to fund RCAs.

That in itself, however, will not encourage the use of these funds to create mixed income communities. It will be spent to fund small pockets of affordable housing, buy-down existing units, or fund group homes or other efforts that do nothing to create opportunities for working families in mixed-income communities.

The first round rules relied heavily on the private sector to build affordable housing from internal subsidies that they generated from the value their land accrued from zoning changes – increases in density – given to them by the municipality. This practice kept to the standard of a 1 in 5 set aside and encouraged the affordable units to be mixed within the market-rate units.

The second round rules diluted this connection by allowing developers to reduce their affordable housing set aside to only 10 or 15%, allowing expensive single family units to be built, with a small number of apartment units or townhouses segregated from the rest of the development. The second round, it seems, was the slippery slope to the total abandonment of the Mt. Laurel Doctrine, completed in the third round rules.

COAH’s current third round rules, even with the standardization that is attempted in the amendments proposed, eliminate the connection to zoning and the internal subsidy needed to reduce the costs of housing and create mixed-income communities. If COAH prevails, money will be collected, but housing will increase in cost, the economy will be threatened, and the Mt. Laurel Doctrine – the advancement of the general welfare – will not be upheld.

2. Proposed amendment to NJAC 5:94-2.3 (c): The proposed amendment to change the requirement for obtaining initial plan endorsement from three years from the date of filing a plan with COAH, to three years from the Council’s grant of substantive certification, is a recipe for delay. This unconscionable amendment should be removed from the proposal.

I understand that this amendment may have been proposed in recognition of how very slow both COAH and the State Planning Commission are to certify and endorse plans. We agree that a municipality has no control over the timing of either organization, and should not be held accountable for that which it does not control. But lengthening the time between the processes is not the way to fix it – it will only make it worse.

A better rule would require a town to file both petitions at the same time, streamlining the requirements to ensure that the town could meet the requirements of both agencies for filing. This would allow interaction among the staff of both agencies, allowing for more informed, more coordinated – better – decisions at the end of the process of both processes. This was the intent of Mt. Laurel 2 and for the memorandum of understanding between the two agencies. The proposed amendment, along with the misguided amendment to change “the Council [shall] may obtain a recommendation from the . . . Office of Smart Growth . . . ” separates planning for affordable housing from planning for Smart Growth. That is unacceptable and contrary to established New Jersey laws.

Thank you for the opportunity to comment on these rules.