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First Suburbs: Affordable Housing Notes from NJ

June 9, 2010

Affordable housing policy is near the top of any First Suburbs agenda and rightly so. In towns that are experiencing the economic disinvestment described earlier – the loss of industry and large and small businesses – the value of the housing stock becomes more critical to the property tax base. And because education is by far the most expensive part of public services, a strong housing market is essential. Yet, the housing markets in First Suburbs suffer the same kind of disinvestment. How can the cycle be broken? Of course, that’s the multi-billion dollar question. And, of course, there’s no way I can answer it. All I can offer here is a resource for your further investigation of the regional and statewide inclusionary zoning system that has evolved over the past 35 years in New Jersey. I hope that these notes and links can inform the conversation and spark some ideas that help SEPA’s First Suburbs as they advocate for more equitable housing policies in their own region.

The New Jersey Fair Housing Act was passed in 1985 to try to even out social, economic and educational disparities between cities and suburbs. The Legislature passed it in response to a couple of New Jersey Supreme Court rulings, Mt. Laurel I (1975) and Mt. Laurel II (1983). The first decision basically found that large-lot zoning laws didn’t allow for a variety of housing types at varied price levels, which excluded people of color and of lower incomes. The second decision created the foundation for a system for determining a “regional housing need,” the “fair share obligation” of individual municipalities in that region, and the “builder’s remedy,” described below.

The Fair Housing Act created a Council on Affordable Housing and a vast body of regulations and calculations to assign a “fair share” number of low- and moderate-income units to each town based on a variety of factors. The program was voluntary. Towns could submit Housing Plans, get them certified through a lengthy process, and then be monitored for compliance. The “carrot” part of this approach was that if towns did this, they couldn’t be sued by builders or housing advocates over their zoning. But if they didn’t participate in the system, they could be subject to “the builder’s remedy” whereby a builder/developer could sue the town to increase the zoning density so that he could provide affordable units in a new development – usually 20%, which would remain affordable (price-restricted) for 30 years. Special housing courts with judges and court masters – urban planners who specialized in affordable housing – would hear these cases and make decisions, essentially taking zoning control away from the non-participating towns. That was the “stick.”

When the Legislature stepped up to pass the Fair Housing Act (and stop the Supreme Court from interfering with local zoning), it created a mechanism – Regional Contribution Agreements (RCAs) – to water down the court’s influence by allowing towns to buy their way out of up to 50% of their affordable housing obligation. “Sending” towns could pass bond ordinances and send the money – based on an agreed-upon per unit fee – to a designated “receiver” city in their region. In this way, some towns reduced the number of affordable units built within their borders, but they also provided urban areas with much-needed rehabilitation and new construction funding at a time when the federal government was cutting these programs. Still, it was clearly a way around the original intent of the court decisions.

More than 25 years later, in July 2008, the NJ Legislature and Gov. Jon Corzine abolished the RCA provision and also created a non-residential development fee of 2.5 percent to be charged on non-residential construction or improvements to raise revenue for the construction and rehabilitation of affordable and workforce housing in the state.

New Jersey’s system grew out of strong, grassroots advocacy for lower income people in the state’s cities, who knew that inner-city residents were being systemically kept out of better public schools, and safe and clean environments due to exclusionary housing laws. Builders were also pushing against these laws for their own gain during a period of generally remarkable economic growth in a state with ever-diminishing developable land.

We are in a very different economic and political environment now. One of Gov. Chris Christie’s first moves was to order a 90-day moratorium on most of the activities of the Council on Affordable Housing. The NJ courts once again stepped in and issued a stay on a portion of the order, while it is on appeal. The Governor is now reviewing the results of a Task Force on the matter. Even though many suburban towns truly voluntarily participated in this system, changed their zoning, and opened up their communities and schools to low- and moderate-income residents who might not otherwise have been able to live there, the complexity and the burdens of this system are legendary here. It has certainly produced affordable housing (see numbers here) and some degree of economic and educational opportunity for thousands. But there are still very real differences separating our cities and more affluent suburbs, namely, blatant racial segregation. Still, I think those Supreme Court justices back in the ‘70s and ‘80s were on the right track, recognizing that ordinances and public policy can have discriminatory effects and staying on the alert to try to counteract any systemic inequities.

New Jersey’s property tax/school funding system is broken – to say nothing of “home-rule,” our 566 municipalities and 605 school districts! The current widespread fiscal crisis only puts that in high relief. Finding political, social and economic solutions, that are also pragmatic, remains our challenge – and probably will be for some time to come. Taking New Jersey’s experience into consideration, though, may help SEPA’s First Suburbs get a better feel for how some housing policies might play out at the intersection of the private and public sectors in their own hometowns.

Note: The original post said that Gov. Christie’s recent order was repealed; a stay was issued on a portion of the order while it is under appeal.

Sue Repko is a writer, licensed urban planner in New Jersey and a member of the American Institute of Certified Planners. She grew up in Pottstown and blogs at Positively!Pottstown.

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