Property Taxes, School Funding issues | ||||||||||||
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Assembly Majority Office:
This memorandum outlines proposals that will lead to the creation of greater affordable housing opportunities in
- Eliminate Regional Contribution Agreements
RCAs – which the State sanctions – allow affluent municipalities to sell off half of their affordable housing obligation to cash-strapped urban communities. A wealthy “sending” town in an RCA arrangement pays another town to assume its low- and middle-income housing and the urban “receiving” communities take the money because they need it. The negative consequences of RCA arrangements are obvious. By allowing a municipality to cut its affordable-housing obligation in half, RCAs make it challenging and sometimes impossible for working New Jerseyans with modest incomes to live in the suburban communities where they work. RCAs also lead to concentrated poverty.
RCAs are bad public policy and should be eliminated. But they should not be abolished in a vacuum. Municipalities currently relying on RCA funds from “sending” communities will need to make up for the lost revenue. The State has an obligation to provide this substitute funding and to work with mayors and affordable housing advocates to make this a reality.
- Require State development projects to include 20% affordable units
Establish a 20% affordable housing set aside for all State-assisted development projects, including projects in Smart Growth Areas and
- Create an “Affordable Housing Trust Fund”
In order to increase funding, the State could combine dedicated realty transfer fee revenue with an additional source or sources of funding. The new trust fund would be the repository of the State’s housing related revenues.
- Allow private developers of inclusionary development projects to compete for Federal Low-Income Tax Credits
Current Housing and Mortgage Financing Agency (HMFA) regulations prohibit inclusionary development projects (those that include both market rate and affordable units) from competing for Federal Low Income Tax Credits. Because inclusionary development projects are the State’s primary method of constructing affordable housing, this restriction is an impediment to the production of affordable units.
To increase affordable housing production, we need to make Federal Low Income Tax Credits available to private developers of inclusionary development projects. Because this funding is very limited, however, eligibility should be restricted to private development projects that (1) exceed their maximum affordable obligations or (2) go beyond the Council on Affordable Housing’s (COAH) affordability requirements (i.e., are priced to be affordable to low- or very-low income families).
- Increase the maximum income that an individual may earn and still qualify for affordable housing and set aside affordable units for very-low-income residents
A-4385 (Watson Coleman) would permit “middle income” families (those making 80% to 110% of a region’s median income level) to qualify for affordable housing. For a family of four, maximum income limits would be increased from a State average of approximately $63,000 to an average of approximately $87,000. A-4385 was introduced on June 14, 2007 and referred to AHO. At the same time, however, we must be careful not to divert existing resources from low- and moderate-income families. While we can no longer continue to overlook the needs of “middle income” families, we must not do it at the expense of lower income families.
In addition, A-1343 (Watson Coleman) would promote the production of affordable housing for very-low-income families (those earning less than 30% of median income, or roughly $19,000 annually) by requiring all State housing programs to set aside 25% of affordable units for very-low-income residents. A-1343 passed out of AHO on May 10, 2007 by a vote of 4-1-1.
- Ensure new school funding formula accounts for municipalities that accept low- and moderate-income families with school age children
The new school funding formula should provide enhanced funding to school districts located in municipalities that provide affordable housing for low- and moderate-income families with school-age children. Too many municipalities attempt to meet their affordable obligations without providing housing for young families because of the cost of educating additional students (e.g., by constructing age restricted housing or by participating in RCA agreements). Increasing the funding available to schools with low- and moderate- income students will provide an incentive for municipalities to provide this much needed housing.
- Require one-for-one replacement of affordable housing units lost through redevelopment
In addition to constructing new affordable units,
- Require towns to spend municipal housing trust fund dollars on affordable housing within their borders
In New Jersey, COAH-certified municipalities maintain their own municipal housing trust funds, which are funded by development fees, payments in-lieu of construction fees and (in some cases) revenue generated from RCAs. The revenue generated by these funds must be used for affordable-housing purposes. It is estimated that these trust funds have accumulated over $150 million dollars in surplus revenue because municipalities refuse to accept affordable-housing development projects or because they are stockpiling revenue to fund future RCAs.
Eliminating RCAs would go a long way toward correcting this problem. As an added safeguard, the State could require towns to either (1) spend money deposited into their local trust funds within three years of receiving it; (2) provide a detailed plan of how this money will be spent; or (3) turn the money over to the State to be deposited into the Balanced Housing Fund. This would ensure that money dedicated for affordable housing is used for that purpose.
- Require COAH to mandate that municipalities provide density bonuses to developers constructing inclusionary developments
The
The Legislature should require COAH to mandate that municipal land use ordinances provide offsetting density bonuses to stimulate production of low- and moderate-income housing.
- Require COAH to account for existing affordable-housing units when allocating a town’s fair share
COAH’s third-round “growth share” formula assigns every municipality an identical obligation based upon the amount of growth a town experiences, regardless of a town’s existing affordable housing stock. To ensure that urban and inner-ring municipalities do not continue to house disproportionate shares of the State’s low-income families, the Legislature should require COAH to account for a town’s existing affordable housing stock when calculating that town’s obligation (this process is referred to as “reallocated present need” and was an integral component of COAH’s first and second round methodologies). Please note that the recent appellate court opinion upheld the third-round’s elimination of reallocated present need, although the court did concede that this was a close call.
- Create “Comprehensive Housing Plan”
This proposal is based on
- Require regular publication of affordable housing statistics
Although the Fair Housing Act contemplates DCA issuing an annual report documenting affordable housing construction, this report has not been made available since 2003. The Legislature should require DCA to make available this year’s report. The Legislature also should require COAH and HMFA to report on the affordable housing they have financed.