Coffer for affordable housing is drying up

In COAH, new jersey fiscal crisis on January 26, 2009 at 3:31 pm

Trenton may waive town mandates, developer fees

Monday, January 26, 2009
Star-Ledger Staff


A landmark affordable-housing law signed by Gov. Jon Corzine at an outdoor ceremony in the heat of summer is facing troubles in the midst of the nation’s economic deep freeze.

A big component in the law was setting up a funding source to help build more affordable housing: a 2.5 percent fee on developers of commercial and industrial property. But because of the recession, it has raised just a small fraction of the hundreds millions of dollars it was expected to produce, according to state Sen. Ray Lesniak (D-Union).

A Senate committee led by Lesniak, responding to a call from Corzine in his State of the State address, will consider a bill to suspend the fee today. The measure before the upper house’s economic growth panel would also relieve towns from building affordable housing as long as the state does not pony up money to replace the lost revenue.

Lesniak said the fee was expected to yield as much as $160 million in its first year — other estimates have been in the range of $80 to $100 million — but instead has discouraged development in an already depressed economy. He said just about $10 million has been raised from the fee in its first six months.

“This fee is an impediment to affordable housing,” Lesniak said. “Two and half percent of nothing is nothing. Our economy is sinking and sinking fast and this 2.5 percent fee is a drag on job creation.”

Assembly Speaker Joseph Roberts, the major force behind the law, supported Corzine’s call for freezing the 2.5 percent fee. He could not be reached for comment late last week.

James Hughes, dean of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, said suspending the development fee in today’s economic climate makes sense despite the need for affordable housing.

“The overall condition trumps anything else,” he said. “This is an extremely perilous economic time.”

Housing advocates, however, worry that the actions could water down a law that was enacted after a long grass-roots lobbying effort.

“We should be giving the changes in the bill passed six months ago — that Senator Lesniak himself sponsored — a chance to work instead of trying to undo those significant positive changes in the law,” said Adam Gordon, a staff attorney for the Cherry Hill-based Fair Share Housing Center.

Staci Berger, director of advocacy and policy for the Housing and Community Development Network of New Jersey, questioned how it would affect more than 200 municipalities that already have filed affordable-housing plans with the state Council On Affordable Housing.

“It would be good public policy and certainly fair to find out how those plans are coming along before we stop them,” she said.

The New Jersey State League of Municipalities has opposed the 2.5 percent fee since it was debated in the Legislature last year, said director William Dressel, who called it “the wrong tax at the wrong time.”

Dressel noted the assessment on developers was intended to replace regional contribution agreements, which allowed upper-income suburban towns to pay poorer cities to take on their affordable-housing obligations. Opponents of those agreements, known as RCAs, called them a form of unspoken racism that kept the poor concentrated in cities. They were abolished under the new law.

“This (the fee), quite frankly, was going to be the funding lifeline for affordable housing,” Dressel said. “But we felt it was going to inhibit the development of affordable housing.”

Lesniak said his bill would waive the municipal obligation to build affordable housing unless funding is found to replace the lost development fee revenue. It calls for diverting $15 million from the state’s long-term obligations and capital expenditure fund to affordable housing. Lesniak said other revenue could come from anticipated federal stimulus aid.

Dressel said that as long as the state is suspending the fee, it is only fair to suspend the obligation to build affordable housing, a burden he said would have fallen heavily on municipal taxpayers.

Amy Whilltin, a spokeswoman for the New Jersey Builders Association, said the group had no immediate comment on Lesniak’s proposal.

In addition, Lesniak’s committee will consider bills that would exempt projects on property of the New Jersey Sports and Exposition Authority, including the sprawling, $2 billion Xanadu shopping and entertainment complex in the Meadowlands and the Jets’ new football training facility and headquarters in Florham Park, from both the 2.5 percent fee and the obligation to build affordable housing.

Those proposals, sponsored by Sens. Paul Sarlo (D-Bergen) and Joe Pennacchio (R-Morris), are coming under fire from critics as a giveaway to Xanadu developers.

Jeff Tittel, director of the New Jersey chapter of the Sierra Club, said Xanadu’s developers would have to pay about $50 million in developers’ fees to accommodate the hundreds of affordable houses its 20,000 jobs would require. “This is a cynical attempt to save Xanadu $50 million,” he said.

But Chris Eilert, Sarlo’s chief of staff, said the bills are expected to be changed to require the development fee be paid to the state, which would assume the obligation of building the affordable housing.

Rudy Larini may be reached at rlarini@starledger.com or at (609) 989-0379.


  1. Holy smokes Batman! Are Liberals finally beginning to learn that when you claim to flood a desert, you are actually emptying a lake somewhere.

  2. 1+1=2


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