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Wednesday, July 30, 2014

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Cascade: No. 55, Summer/Fall 2004

Do the New COAH Rules Meet the Needs of New Jersey Residents?

No: They Are the Wrong Rules at the Wrong Time

Editor's Note: The National Housing Institute is a research center based in Montclair, NJ, that focuses on housing and community development issues, with a particular emphasis on activities that support the work of community development corporations and community-based organizations. It is the publisher of Shelterforce magazine.

The need for affordable housing in New Jersey is growing steadily. Housing production has slowed, while redevelopment, immigration, and real estate speculation have pushed rents and sales prices upward in older cities as well as in suburban areas. The number of families in overcrowded housing has gone up 50 percent since 1990, and according to the U.S. Census, nearly 400,000 renters spend over 30 percent of their income for shelter. Meanwhile, thousands of families continue to move to New Jersey, seeking opportunity in the state's thriving economy.

While the Council on Affordable Housing (COAH) can't solve this problem by itself, it can make a major contribution to meeting these needs. By setting fair-share targets for low- and moderate-income (LMI) housing that reflect the magnitude of the need and by adopting rules designed to ensure that those targets are actually met, COAH can increase the amount of affordable housing and make it happen where it is most needed-in New Jersey's growing suburbs. It is particularly unfortunate, then, that at a time when greater efforts to provide decent affordable housing are needed, COAH last summer proposed new rules that not only fail to address the need but would also reduce affordable housing production 50 percent or more below even the modest levels of the 1990s.

What exactly is COAH proposing to do? The new rules represent a dramatic departure from past practice. Instead of setting "fair-share" obligations through a formula that considers such factors as wealth, job growth, and vacant land, COAH has adopted a "growth-share" approach. Under this policy, municipalities must meet LMI housing needs only to the extent that they grow overall. If municipalities grow through the construction of new homes, shopping centers, or office parks, they must provide affordable housing in proportion to their growth. If they do not grow, they must meet only the indigenous need of LMI families in their communities.

In principle, this approach is not unreasonable, although it runs the risk that some municipalities could block all growth in order to avoid building affordable housing. The problem is that COAH has set the LMI growth share so low that, at best, few units will be built. Instead of requiring one LMI unit for every five new houses or every five jobs added through new construction, as proposed by the Coalition on Affordable Housing and the Environment, COAH would require only one LMI unit for every 10 market-rate houses or for every 30 jobs added. COAH has justified this by systematically under-representing housing needs, ignoring nearly 500,000 households living in overcrowded or substandard housing or spending more than 30 percent of their income on housing.

The inherent weakness of the new rules, however, is compounded by the following two provisions, each of which would have the effect of reducing the amount of affordable housing that will be built:

  • COAH proposes to grant over 16,000 credits to more than 150 municipalities against their future growth-share obligations. In many cases, these credits appear to have no basis in actual housing production up to now in these towns. According to COAH's own 2001 annual report (the most recent available), Woodbridge, NJ, had not produced one housing unit despite a fair-share obligation of 1,351 units. COAH now proposes not only to find Woodbridge in compliance with its past obligations but also to grant it 281 credits against its future obligations as well!
  • COAH proposes to provide bonus credits for activities such as providing rental housing units, counting each such unit produced as up to two units. COAH has never offered a scintilla of evidence to document that providing rental units is so difficult that developers or towns must be rewarded with bonuses. Each bonus granted reduces the number of units provided.

The latest COAH rules expired in 1999, but COAH's proposed new rules will not go into effect until 2004 at the earliest, and they do not require municipalities to take responsibility for growth-share obligations from 1999 to the present. This gives New Jersey's growing townships a "free pass" on affordable housing for a five-year period during which LMI housing needs have increased. Moreover, an analysis I've done finds that only 10,000 units-barely 1,000 per year-are likely to be built in the next decade under the proposed rules, rather than the 48,000 units projected by COAH. This is less than half the number of units produced during the 1990s under COAH's auspices and, following the current five-year de facto moratorium on COAH-supported affordable housing production, is an especially meager offering.

COAH further proposes to increase the percentage of COAH-supported units that each municipality can restrict to senior citizens from the current 25 percent to 50 percent. As a result, the reduction in affordable housing production would have the greatest impact on LMI families with children-the families that make up the great majority of those with the most severe and most urgent housing needs. COAH has proposed this change despite compelling evidence that senior citizens make up even less than the 25 percent of total LMI needs reflected in the previous rules.

Indeed, since COAH proposes to make it easier for suburban municipalities to transfer 50 percent of their fair-share obligations to urban centers through regional contribution agreements, the upshot of the rules is clear. From now on, it appears that New Jersey's suburbs will be able to comply with their fair-share obligations without ever having to build or rehabilitate a single affordable housing unit for a family with young children.

The fundamental principle of the Mount Laurel decision was that New Jersey's municipalities have an obligation to accommodate LMI housing needs. The proposed rules, while claiming to be consistent with that principle, vitiate it—to the point where it is hardly recognizable—by reducing the number of units likely to be built and skewing those units toward the households suburban officials are least likely to object to. Many senior citizens have housing needs, but it is not acceptable to take affordable housing opportunities away from the neediest and most vulnerable members of society: the state's poorest families and their children. COAH has suggested that it will make changes to these rules before they are adopted. We can only hope that the changes will be more than cosmetic and will address these rules' deficiencies forthrightly and responsibly.

*How Many Units Will Get Built" (Nov. 2003), available on the web at www.hcdnnj.org/policy/affordablehousing/index.htm.

For information, contact Alan Mallach at (609) 448-5614 or a.mallach@att.net.