Governor Chris Christie on Thursday proposed major changes to the way the state requires municipalities to build affordable housing, giving towns a far larger role in determining their own obligations.
Under his proposal, which requires legislative approval, affordable housing quotas would be eliminated, as would a 2.5 percent fee on commercial development.
New Jersey courts have ruled that towns have an obligation to provide housing for lower-income people but haven't set a quota. The state Council on Affordable Housing, known as COAH, was formed to implement those rulings and determine how much affordable housing there should be. But many municipal officials have criticized it as overly bureaucratic.
"We're going to get rid of COAH, eliminate COAH and repeal the Fair Housing Act," Christie said. "It has not achieved the things it set out to achieve when the Fair Housing Act was passed well over 20 years ago."
Its complex rules and regulations have changed several times as the result of ongoing lawsuits. It also has been criticized for the way in which it determines a town's obligation - by tying it to job growth, economic development and available vacant land.
Christie's plan would disband COAH and allow towns to figure out their affordable housing needs. "Any future affordable housing obligations would be based upon rehabilitation and future development and not some artificial number or quota that comes from Trenton," Christie said.
New development would be tied to affordable housing obligations. For every two to 10 new units built, developers would be required to pay 1.5 percent of the fair market value of the development into a municipal trust fund. The trust fund can use the money to provide offsite affordable housing in the town or in another city willing to take it.
For new developments with more than 10 units, developers must set aside 10 percent for development of affordable housing or pay a 2.5 percent fee into a municipal housing trust fund.
Adam Gordon, of the nonprofit Fair Share Housing Center, which has fought the state to provide more affordable housing, said developers will usually pay the fee because it's easier and cheaper than building affordable housing units.
For example, a developer would have to spend $400,000 to build two units in a development of 20 new condominiums or pay just $100,000 into the trust fund.
"It's just about paying a fee. That's far cheaper," Gordon said. "This is a plan for no affordable housing in any town that doesn't want it."
In order to seek protection from legal challenges and court-imposed remedies, towns must submit their housing plans to the Department of Community Affairs, which will make them publicly available. Only if a plan is challenged will Community Affairs check it to see if it's consistent with the law.
Local governments that fail to file affordable housing plans can put themselves at risk of lawsuits from builders seeking to put up dense developments in exchange for a smaller number of affordable units.
Christie's plan is a hybrid of a current bill sponsored by Sens. Ray Lesniak, Christopher Bateman and Jeff Van Drew and recommendations made by a task force the governor commissioned. So far, municipalities are pleased with the approach.
"The governor's proposal represents a new approach, offering a sustainable policy to promote affordable housing," said Bill Dressel, executive director of the New Jersey League of Municipalities.
Affordable housing advocates and environmentalists, however, say towns may still be vulnerable to such lawsuits since they are the ones deciding their own obligations. "We're going to end up with a lot of lawsuits and as a result, developers will be allowed to build in environmentally sensitive areas," said Jeff Tittel of the New Jersey Sierra Club.
Christie's plan doesn't address regional contribution agreements, under which suburban towns typically pay struggling cities to take their affordable housing requirements. In 2008, lawmakers outlawed them. Lori Grifa, the acting Community Affairs commissioner, said officials are still trying to determine whether past agreements should still be considered valid.
Grifa said about $280 million sits in various municipal housing trust funds to build and rehabilitate homes. Because of the changing rules and regulations over affordable housing, many towns haven't spent their money.
