N.J. Struggles with Mt. Laurel Affordable Housing Mandate

February 15, 2012; Source: NJ Spotlight

The NPQ Newswire has recently noted the actions of New Jersey Gov. Chris Christie regarding fair housing and affordable housing in the Garden State, including abolishing the Council on Affordable Housing (COAH) and its Mt. Laurel housing mandate. With COAH’s dissolution, the process of getting suburban communities to build affordable housing, or getting urban communities to accept suburban payments that would subsidize the construction or rehab of affordable inner city units, has come to a veritable standstill. This NJ Spotlight article offers the choice of “chaos or crisis” to describe New Jersey’s affordable housing situation.

Although COAH is gone, the state legislature is considering a bill, cosponsored in the State Senate by Ray Lesniak (D-Union), to create a new state agency that would purchase foreclosed housing and make the units available for affordable redevelopment. Lesniak says that the new agency, to be lodged in the state’s Housing and Mortgage Finance Agency (HMFA), would make the foreclosed properties available as deed-restricted affordable housing—that is, the deeds would be restricted to affordable sales prices or affordable occupancy, preventing speculators from acquiring, milking, and flipping the properties.

An agency is one thing, and money for it to operate is another. Lesniak thinks that the agency could tap the $500 million available from the State Affordable Housing Trust Fund along with federal moneys and even funds from the recent national mortgage foreclosure settlement in addition to HMFA bonds to acquire and rehab the properties. He estimates that the results would be 10,000 foreclosed properties that would be transformed into affordable “workforce housing” for the middle class. NJ Spotlight cites RealtyTrac’s listing of 35,456 properties currently in some stage of the foreclosure process, a number that probably doesn’t include many tens of thousands of other properties that have already gone through the foreclosure process and now sit as vacant, often vandalized eyesores.

Interestingly, the article cites developers, bankers, and city governments debating whether this is good or bad, but only one nonprofit: the Fair Share Housing Center in Cherry Hill, which supports the bill, but is concerned about a provision that would give suburban communities a two-for-one credit against their Mt. Laurel housing obligation for every foreclosed property brought back onto the market. The article doesn’t address the fact that nonprofit developers in New Jersey are the mainstays of affordable housing production, especially for families who don’t quite make it into the middle class. Nonprofits around the state that have been bringing their expertise to bear on foreclosed housing redevelopment under the federal Neighborhood Stabilization Program should be consulted to make sure that Lesniak’s projections make sense. Foreclosed property redevelopment is more expensive and more time-consuming than many people think. Hopefully Lesniak designed this bill in consultation with New Jersey’s vigorous nonprofit affordable housing sector. Or if not, hopefully he’ll turn to them for advice and direction when he is compelled to revise it.—Rick Cohen