A bonus for developers

This was another point of view on COAH that we wanted to share.

A bonus for developers

The Trenton Times, Tuesday, March 06, 2007

BY WILLIAM G. DRESSEL JR.

On January 25, the Appellate Division of New Jersey handed down its decision regarding the New Jersey Council on Affordable Housing’s (COAH) regulation authorizing municipalities to require developers to provide affordable housing. While the court upheld substantive portions of the regulations (such as the concept of growth share, regional contribution agreements and various aspects of the credits), it also invalidated the rule that permitted municipalities to require developers to fold — that is to say, to include — affordable housing in their market- rate projects without receiving a “density bonus” in return.

Last week, Gov. Jon Corzine and COAH’s Chairwoman Susan Bass Levin elected to begin a rule- making process to obtain better data while also requesting a stay for clarification of the appellate di vision’s decision to ensure that construction of affordable housing in municipalities continues. But the most important thing they did was to appeal the decision that would have forced municipalities to provide additional compensation to developers when they fulfill their obligation to fold affordable housing in their projects. In fact, this appeal was their only responsible option for the citizens of New Jersey.

The growth share concept has been embraced nationwide in states facing similar circumstances: finite land, escalating land prices and statewide initiatives such as the practice of smart growth. The growth share concept takes into account the need for municipalities to employ smart planning, access to public transportation, schools and employment opportunities, while also bearing in mind ever-escalating property taxes throughout New Jersey. In short, it takes into account the issues with which mayors across this state have been contending every day for years, with an eye on the needs of our citizens.

Growth share ordinances have led to a constructive dialog between municipalities and developers to provide affordable housing without the havoc wreaked by the density bonus. Municipalities, which had never previously gone to COAH, were now developing plans. COAH has made great strides in the last five years in partnering with municipalities. In fact, more than 120 municipalities have adopted growth share ordinances and more than 260 municipalities have, to date, voluntarily submitted “third-round” affordable housing plans to COAH.

These are record numbers that represent an unprecedented level of cooperation among the state, municipalities and developers with an eye toward providing affordable housing for New Jersey’s citizens.

So, the most troubling aspect by far of the appellate division’s ruling is that it requires that municipalities pay a “density bonus” to developers to build affordable housing. In fact, it has been the developers’ insistence on a density bonus in the past that has been the primary source of public opposition to the doctrine. That’s why it was disappointing to see the appellate division determine that developers must be given additional financial compensation to build affordable housing.

The financial compensation is expected to be paid to developers from municipalities across the state as they fulfill their affordable housing obligation. The ruling comes at a critical point in New Jersey’s history. We are at a stage in this state wherein elected officials from both sides of the aisle have come together in an effort to tackle the scourge of ever-escalating property taxes. Municipalities across New Jersey have hit a breaking point that has resulted in tough choices being made every day, and taxpayers have inevitably felt the impact.

Both houses of the Legislature recently came together on a bipartisan basis to craft property-tax reform legislation. The appellate division’s decision to force municipalities to provide developers with extra financial incentive to construct affordable housing would deal a significant blow to citizens across the state already struggling with exorbitant property taxes.

In fact, the portion of the appellate division’s decision that the Corzine administration appealed would serve to inflate property taxes statewide while also putting a grinding halt to the most significant progress made in the construction of affordable housing in New Jersey’s history.

The growth share ordinances adopted by 120 towns in reliance on the stricken regulation require builders to include affordable housing as part of their development projects. If these ordinances are not saved, market-rate housing will spring up all over the state, without the needed affordable housing as part of the development.

Unless the appellate division decision is corrected, its lasting impact will be a flood of lawsuits by developers; the loss of thousands of units of affordable housing for the poor pursuant to ordinances adopted based upon COAH regulations; increased property taxes for citizens already buckling under the weight of financial burdens; and chaos for hundreds of municipalities that reasonably relied upon a COAH regulation soundly rooted in the Fair Housing Act and, for the first time ever, sound planning principles.

It would be profoundly regrettable if the clock were turned back on all of our progress on affordable housing and property-tax relief.

William G. Dressel Jr. is executive director of the New Jersey State League of Municipalities.

© 2007 The Times of Trenton
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