Use ‘Em or Lose ‘Em: Municipal Affordable Housing Money to Be Ceded to State

by:  Katharine A. Muscalino

Municipalities have been collecting non-residential developments fees of 2.5% from non-residential developers since 2008, until the state placed a moratorium on these fees to stimulate the New Jersey economy. The funds that were collected, and have not been refunded pursuant to the moratorium, have been deposited in municipal affordable housing trust funds. These funds are earmarked for municipal affordable housing projects, including municipally-sponsored affordable units, rehabilitation of existing units, and conversion of foreclosed market rate homes to affordable units. Pursuant to a 2008 law signed by Governor Jon Corzine, municipalities have four years from their collection of these funds to allocate them to a proper affordable housing purpose. Monies collected by municipalities prior to July 2008 that are not committed to an affordable housing program via an executed contract by July 2012 or being used for an ongoing program will be forfeited to the State. While state representatives have indicated the DCA will use the forfeited funds to build affordable housing in the region of the forfeiting municipality and other affordable housing initiatives in the state budget, many fear that the state will appropriate the funds to achieve Governor Christie’s tax cuts.

Municipalities have complained that they have been unable to properly apply the funds collected to affordable housing programs because of the confusion resulting from the abolition and reinstatement of COAH and the Appellate Division and Supreme Court review of the Third Round rules. Consistent with the courts’ direction that any resulting uncertainty is no excuse for failing to provide affordable housing, Acting Community Affairs Commissioner Richard Constable recently commented “Whether you’re Rumson or Alpine, or whether you’re Newark, you should know that this obligation exists. If there’s money in your coffers, there’s no way you could just shrug your shoulders and say, “Well, I have to wait on a court ruling’ to do what is both legally and, as far as I’m concerned, morally right.”

State legislators have taken up the cause of municipalities who have failed to use their affordable housing funds over the last four years. Assemblymen Anthony Bucco and John DiMaio have introduced A-2717, which would extend the time period for a municipality to commit its trust fund dollars an additional four years. If passed, this would mean that no municipal affordable housing funds would be transferred to the state this July.

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