By Joshua Burd
After decades of litigation and controversy over how to address affordable housing in New Jersey, stakeholders on virtually all sides appear to be coming together on at least one point:
We may finally be inching toward a solution — even if it’s one that is messy, imperfect and still likely to cause additional strife across the state as key details are worked out.
“I think they just want to settle the rules,” said Mike Cerra, assistant executive director of the New Jersey State League of Municipalities, referring to local leaders. “Make the rules reasonable, rational and achievable, which is a key part. Give us numbers, give us objectives that can actually be met and get out of the way.”
Determining the scope of those obligations is still the major unresolved question in the battle over affordable housing policy, but that process is now well underway as the state judiciary attempts to tackle the issue on multiple fronts. Superior Court judges are attempting to broker settlements between municipal governments and housing advocates across the state, while the state Supreme Court prepares to rule in a case in which tens of thousands of units are at stake.
At a conference hosted by the Rutgers Center for Real Estate, stakeholders on Thursday seemed reluctantly willing to accept that the courts would at least bring some degree of certainty to the process, following years of dysfunction and inaction by the executive and legislative branches. It was among the key themes to emerge during the event, which drew hundreds to Newark as panelists dissected the decades-old policy debate and took stock of its future.
“The problem is this uncertainty factor that really puts developers in a very risky position in going forward,” said Anthony Marchetta, executive director of the New Jersey Housing Mortgage and Finance Agency. “The best thing we could do as a state is get beyond where we are today: Come up with a solution. It may not be the best solution, but it is a solution.”
While acknowledging that the courts may in fact bring some clarity to the issue, panelists were still divided over how many low- and moderate-income homes will need to be built as a result. That question is at the heart of an appeal now being heard by the state Supreme Court — centering on the so-called gap years, a period from 1999 to 2015 in which when the Council on Affordable Housing failed to produce permanent guidelines — in what is now the biggest sticking point in determining each municipality’s obligation.
For instance, state Sen. Christopher “Kip” Bateman said that imposing the full gap period obligation would result in a zoning requirement of 3,000 new units in his hometown of Branchburg, representing a 60 percent spike in the township’s housing stock.
“I think, at least in my district, most of the towns that I deal with and represent want to do their share in providing affordable housing,” said Bateman, a Republican with district offices in Somerville. “The problem is the numbers are way out of whack.
“Can you imagine how many affordable units could have been built if we had set criteria? Towns are looking for set criteria.”
Bateman expressed frustration over the fact that his efforts to solve the affordable housing issue through legislation have stalled in Trenton. He added that it would be “devastating” if the state Supreme Court determined that the gap period included hundreds of thousands more units.
Kevin Walsh of the Fair Share Housing Center, the organization that is leading the charge to expand affordable housing, said the law calls for an obligation of some 300,000 new units under the gap years. But even he acknowledged that the number of units that actually get built will not reach that total any time soon, due to both market forces and legal maneuvering that local governments have used to reduce their obligations since the Fair Housing Act of 1985.
He added that “it doesn’t mean that everything has to be done between now and 2025,” as called for under previous guidelines.
“The idea that the sky is falling is simply false,” said Walsh executive director of the organization. “If the numbers are not substantial, by the time you get through the sausage-making and the political adjustments that have already taken the sharp edges off of Mount Laurel … you have nothing else.
“If you start with the obligation being 100,000, because the gap disappears, towns will have to do virtually nothing because of the number of gimmicks that are in place already.”
The panel discussion, moderated by AvalonBay Communities Inc. Senior Vice President Ron Ladell, took place some 20 months after the state Supreme Court stripped the Council on Affordable Housing of its duties. Since then, Superior Court judges around the state taken the lead in establishing guidelines and have brokered nearly 100 settlements between Fair Share and local governments.
Walsh noted that, through that process, towns that have settled have often ended up with a significantly reduced gap year obligation. And he expected another 100 or so settlements to be reached in the coming year.
In the process, developers have been able to move forward with projects in certain towns.
“Every town is different, but I think that sometimes half a loaf is better than nothing at all,” said Brett Tanzman, a senior vice president with Short Hills-based Garden Homes. “And we’re interested in getting jobs built and getting housing built, and hopefully that can help the town get their affordable component.
“In certain towns, we’re frustrated. In other towns, we’re satisfied.”
While state Supreme Court decision in the gap year case is still the great unknown, Walsh and other panelists said it will bring some much-needed guidance to the issue.
“We probably won’t end up with legislation,” Walsh said. “We probably won’t end up with anything dramatic other than the prior round (rules) that will be implemented, I think, and at the end of the day we’ll hopefully have tens of thousands of new homes built by 2020.”
He later added: “We have certainty right now. It might be messy, in ways, but at least we know where we’re headed.”
The panel was one of two discussions at Thursday’s conference at the Newark Museum, which also included two keynote speeches from Jonathan F.P. Rose, founder and president of Jonathan Rose Cos. LLC, and Mass Housing Executive Director Thomas Gleason.
While much of Ladell’s panel focused on the impact of the gap year decision, Marchetta said it could ultimately be a moot point. Affordable housing cannot be built without subsidies, he said, and some of those programs could be in danger under the upcoming Trump administration.
For instance, the state Housing and Mortgage Finance Agency, of which Marchetta is the executive director, has use the Low-Income Housing Tax Credit program and other tools to finance the development of some 85,000 units in New Jersey over the past 15 years. That includes a banner year in 2015 with the development of more than 8,000 affordable and workforce housing units, thanks in part to federal recovery funds tied to Hurricane Sandy and other state programs.
But with those resources dwindling, rising interest rates and threats to the federal tax credit program, Marchetta said that type of production will be difficult to replicate.
“You can come up with any number, but without the gap financing that’s needed … the shortfall on the pro forma has got to be filled with something,” he said. “And if the resources are not there — I don’t care what the number is — the affordable housing will not be built.”
