Dalina Manor in Woodbridge, a recently opened, 57-unit affordable housing development by Ingerman and BCM Affordable Housing. — Courtesy: Township of Woodbridge
By Joshua Burd
When it comes to zoning for new affordable housing, Jeff Surenian says he has spent the past several years fighting to preserve each municipality’s right to choose.
But at some point, he said, they have to actually choose.
“Everyone understands that there is a body of law. And it’s really clear: You do it, or it’s going to be done for you,” said Surenian, an attorney who has represented dozens of New Jersey towns in affordable housing cases. “So everyone is just struggling with what is the best choice for each community.”
It’s among the many uncertainties that remain in one of the state’s longest-running policy battles. More than 100 municipalities have yet to reach settlements on their zoning for new affordable housing, despite a now-three-year-old order to do so by the state Supreme Court.
And even with the ruling in a high-profile trial in Mercer County — which many see as a guidepost for other cases — stakeholders expect many towns to continue the fight with advocates and developers over their obligations to low- and moderate-income residents.
Plenty of questions remain, experts say, even for the roughly 200 towns that have in fact reached settlements:
- With the competition for state and federal subsidies, how will developers finance the more than 150,000 units that advocates say are needed to fulfill unmet demand?
- If municipalities have to rely on market-rate projects with affordable housing set-asides, will the market support hundreds of thousands of new apartments?
- Will (and should) the Legislature or the four-month-old Phil Murphy administration take a larger role in affordable housing?
- Despite the ruling in Mercer County, will litigation continue in other jurisdictions?
“That decision is now still sort of unraveling itself in terms of how it applies statewide,” said Rick Hoff, founding partner of Bisgaier Hoff LLC, referring to the March 8 decision by Superior Court Judge Mary Jacobson, sitting in Trenton. The ruling found that Princeton and West Windsor were drastically undercounting their obligations for affordable housing.
Hoff, who represented the New Jersey Builders Association in the case, spoke April 10 at the Atlantic Builders Convention in Atlantic City. He said at the time that he believed the opinion “will be incredibly influential” in the state, noting that stakeholders have started to apply Jacobson’s methodology to every other municipality.
For instance, a calculation by NJBA consultant Art Bernard, which the panel released at the conference, resulted in a total statewide need of about 153,000 units. Others have recognized the formula as a middle ground between the numbers sought by the Fair Share Housing Center, the advocacy group at the center of the litigation, and those of Econsult Solutions Inc., a firm hired by some 200 municipalities to calculate their obligations.
Surenian, who has clashed with Fair Share in several municipalities, agreed that Jacob’s decision would at least serve as a benchmark to some of the towns that had not settled.
“I do think it’s useful that we now have a standard and that we can start looking at that standard to determine how you settle, when you settle,” said Surenian, speaking April 16 in Livingston at a program hosted by the Urban Land Institute of Northern New Jersey. “And it provides useful guideposts for municipalities.”
The battle over how local governments in New Jersey should allow for affordable housing goes back more than four decades, beginning with the landmark Mount Laurel case in 1973. The litigation spawned the 1985 Fair Housing Act and the creation of the state Council on Affordable Housing, or COAH, but the agency became mired in litigation over how it determined municipal obligations, prompting the state Supreme Court to strip COAH of its oversight in 2015.
Since then, Superior Court judges and so-called special masters have been brokering settlements between local governments and other stakeholders, including Fair Share and the NJBA. Nearly 200 of the 330 towns that had faced litigation have settled and crafted zoning plans for developers, but insiders say the path to delivering those units is anything but clear.
Lara Schwager, vice president of development with PIRHL, noted that many towns will look to satisfy their obligations with 100 percent affordable projects. But such projects hinge on state and federal subsidies, such as the Low Income Housing Tax Credit, which are already in short supply and are about to become even more competitive.
“You’ve got a whole bunch of those that are in settlements right now that may not work a year from now,” Schwager said. “We know that not all sites are created equal in the tax credit world.”
Many of those projects will not meet the New Jersey Housing and Mortgage Finance Agency’s long list of criteria for allocating the tax credits, she said, or they will simply lose out to projects that check more of those boxes.
“You’re going to have to open up some of these settlements for projects that may not work anymore and you may need to switch them out,” said Schwager, who has engaged several municipalities on their zoning plans. “And having more flexibility in that process would be so much more beneficial.”
Stakeholders have also raised alarm about the prospect of trying to satisfy obligations through so-called inclusionary projects, in which a market-rate development includes a set-aside for affordable housing. The set-asides typically range from 10 to 20 percent, raising questions about whether the apartment market will remain strong enough to support the large influx, especially given that some towns have obligations of several hundred units.
“I just see a train wreck coming, because I don’t see how the availability of money and the demand of the marketplace is going to result in the construction in the number of units in all of these plans,” Surenian said. “And I think that municipalities are going to find themselves being accused when it’s not their fault.”
Adam Gordon, associate director of the Fair Share Housing Center, called Jacobson’s decision “a very thorough blueprint” for how to address municipal obligations. But he noted “there have always been adjustments” to the numbers — going back to the days when COAH was overseeing the process — for issues such as land shortages, inadequate sewer infrastructure or environmental sensitivity.
He also pointed to the fact that towns can earn bonuses that allow for one new home to be counted as multiple units, for instance, along with provisions that can cap a municipality’s overall requirement.
“It doesn’t matter equally for all towns and I think that’s really important,” Gordon said. “And I think a lot of the towns that have gone through the settlement process have realized that the number is not the be-all, end-all. It’s also these adjustments that are very town-specific and also how you comply with them.”
As the court continues to oversee settlements, it’s unclear if the state’s new governor will reassert the executive branch. COAH has been dormant since 2012, even before being stripped of its duties, but Gov. Phil Murphy’s transition team cited the need to address affordable housing by coordinating policy, reducing barriers and incentivizing housing production by expanding programs and empowering other agencies.
Lori Grifa, a former Department of Community Affairs commissioner under Gov. Chris Christie, said that includes the concept of creating a senior deputy commissioner of housing within the DCA. She was hopeful that the position would be filled by someone with institutional knowledge of housing policy and development, but said that was still to be determined.
Speaking at last month’s NJBA conference, she posed another question to the attendees: “If DCA is going to do something, will it be the entity that reviews and enforces the settlements?”
“At least right now, I would say I don’t think that’s the case,” said Grifa, an attorney with Archer & Greiner. “But I would argue that maybe that’s a role for the (NJBA) — to ask DCA to get involved — because right now they have a lot of institutional knowledge, they have a lot of experience. They’ve seen and heard everything — from the most recalcitrant town to the most manipulative developer. They have seen all of it.
“They’re uniquely positioned to provide some guidance here.”
During an appearance about two weeks later before NAIOP New Jersey, Lt. Gov. Sheila Oliver said the new administration was “committed to the creation of affordable housing.” She also said she was encouraged by the settlements, but lamented that it had taken judicial intervention to get this far.
“At DCA, at this point, our role is simply monitoring what is happening in communities, posting on our website what outcomes are and the implications that they have,” said Oliver, who also serves as the DCA commissioner within the Murphy administration. “Our administration has adopted a position that we’re sorry that this has moved front and center and the courts continue to be in control,” she added. “We feel that it should have been a deliberate kind of collaboration between the state and the court and that we should have been able to have the input of our local communities, mayors and their governing boards and just the community at large to solve this.”
Oliver also indicated that “this is something that we’re going to have to tackle during this administration,” but did not say whether Murphy was exploring any specific proposal.
Speaking at the ULI panel on April 16, developer Ron Ladell echoed the need to have “an agency in place under the auspices of DCA that allows the implementation and facilitates and monitors these settlements.” As for whether lawmakers should attempt to play a role, he minced no words.
“The Legislature should not get involved,” said Ladell, a senior vice president with AvalonBay Communities. “I don’t want to say it has worked — it hasn’t — but it’s moving forward at the end of the day.”