State of New Jersey Department Of The Public Advocate 240 West State St. P.O. Box  851   Trenton, NJ 08625-0851 Phone: (609) 826-5090    Fax: (609) 984-4747

JON S. CORZINE Governor For Immediate Release:  October 25, 2007

RONALD K. CHEN Public Advocate Contact: Kathy Bird 609-826-5054 609-417-0038(cell)

Public Advocate Report Urges Action To Meet Critical Housing Need

TRENTON, NJ –Public Advocate Ronald K. Chen today issued a call for action and said the Council on Affordable Housing (COAH) has an important opportunity to issue meaningful rules that will deliver on the promise of the state constitution’s affordable housing mandate.

COAH is the state agency responsible for ensuring that low- and moderate-income families have a fair and equal opportunity to live in affordable homes.

Chen issued a report that examines several key affordable housing issues, as well as the constitutional underpinnings of New Jersey’s affordable housing mandate.  The report concludes that more than 20 years after state lawmakers adopted the Fair Housing Act and created COAH to assist the state’s municipalities in meeting their obligations, there still remains a critical need to accurately measure the scope of New Jersey’s affordable housing problem.

The report, Affordable Housing in New Jersey: Reviving the Promise, outlines several specific policy approaches that COAH should take to facilitate the effective implementation of the constitutional right. 

COAH is under court order to adopt rules by Dec. 31, 2007, that comply with the constitutional mandate outlined in a series of state high court decisions beginning with the New Jersey Supreme Court’s Mount Laurel decision in 1975.  The most recent rules issued by COAH – commonly referred to as the “third round rules” – were supposed to be issued in 1999 but were not adopted until 2004.  The Appellate Division of the Superior Court invalidated significant parts of the rules last January.  The rules estimate the state’s affordable housing needs through 2014.

“Affordable housing is the gateway for economic opportunity and quality of life for our state’s families, especially our low-income residents. Access to an affordable home is more than a dream.  It is a constitutional mandate.  The state has an opportunity in the upcoming COAH rules to make affordable, decent housing a reality for tens of thousands of New Jersey families,” said Chen.

“We are encouraged that the new Commissioner, Joseph Doria, has reached out to us and the housing community and has expressed a commitment to transparency.  His substantial knowledge in this area is well known and we look forward to working with him,” said Chen.  Doria is acting commissioner of the Department of Community Affairs.

COAH’s projections of the statewide affordable housing need have dropped dramatically each time they have been issued.  In 1986, COAH projected a need of roughly 11,000 new units of affordable housing per year.  In 1993, COAH projected a need of roughly 6,500 per year.  COAH’s most recent projections were for just 3,500 units per year until 2014.  Since the Fair Housing Act was enacted in 1985, New Jersey municipalities have reported to COAH the construction of only 41,000 units of affordable housing.  The report notes that while housing prices soared more than 80 percent between 2000 and 2005, median household income in the state rose by less than 14 percent, from $54,276 to $61,672. 

“If implemented effectively, the Mount Laurel mandate can leverage the talents and resources of the State, local governments and developers to create housing opportunities across New Jersey,” the report says.

“If COAH generates an accurate estimate of the real need for affordable housing in New Jersey, accompanied by strong and clear rules that will facilitate the creation of housing for families at all eligible income levels, it will be a major step toward addressing our decades-long affordable housing crisis,” the report says.

The report makes recommendations in several key areas that would help ensure that COAH accurately measures the true scope of the state’s affordable housing need:

1. The COAH rules must address the housing needs of those with very low incomes, and must require municipalities to meet the needs of these families in their affordable housing plans.  COAH defines low-income households as those earning less than 50 percent of median income, or approximately $32,000 per year.  Actual COAH income eligibility limits vary considerably based on region and family size.

The report states that the 2004 COAH rules will not create significant housing for families that earn less than 40 percent of median income because the rules allow towns to meet their affordable housing obligation while still excluding most of New Jersey’s low-income families.  About 580,000 households in the state have incomes less than 40 percent of the median income. 

2. The report urges COAH to consider “cost-burdened” families in calculating New Jersey’s affordable housing needs.  Cost-burdened families are those who spend 30 percent or more of their pre-tax income on housing.  Nearly 700,000 families – or 60 percent of the low- and moderate-income families in the state – spend more than 30 percent of their pre-tax income on housing.  Roughly 325,000 of these households pay more than 50% of their pre-tax income toward housing.  Under COAH’s methodology, most of them are excluded from the calculation of New Jersey’s affordable housing need.

3. COAH should support its estimate of the state’s affordable housing need with current and reliable information.  The report explains how COAH’s “filtering” projections in its third round rules relied on questionable assumptions and outdated data.  Filtering refers to a process by which homes occupied by middle- and upper-income families are vacated and then become affordable to low- and moderate-income families.  In other words, the cost of the home decreases relative to the incomes of COAH-eligible families, making a once unaffordable unit affordable.

The Appellate Division of the Superior Court struck down as unsupported COAH’s projection that filtering would address the affordable-housing needs of more than 59,000 families.  The Public Advocate’s report confirms the court’s conclusion that COAH had offered no compelling data to support its filtering claim and had made no attempt to identify the towns where filtering was occurring in New Jersey.  Recent reports from COAH indicate, however, that it is now recalculating its filtering projection using more precise and reliable data.

The report urges COAH to adhere to several principles to ensure a clear and accurate projection of New Jersey’s affordable housing needs, including:

• Engaging in a transparent and open process that provides access to its data and methodologies and substantiates assumptions with relevant and timely data.
• Devising incentives that actually result in the construction of affordable housing and avoiding incentives that credit towns for units that are not built.
• Using methodologies that reflect the realities that confront New Jersey families, acknowledging, for example, that redevelopment often forces families out of their homes and results in a loss of affordable units, which should be taken into account in calculating the community’s affordable housing obligation.

Chen also stressed the need for all levels of government to work together to address the state’s housing crisis: “The work of COAH is just part of what must be a larger effort by the state to address the extreme shortage of affordable housing.  Environmental laws, transportation policies, and an array of other government actions directly affect the construction of affordable housing,” he said.  "All levels and branches of government should take whatever steps are possible to facilitate the creation of housing that low- and moderate-income families can afford.”

 

Read Affordable Housing in New Jersey: Reviving the Promise