New affordable housing rules in NJ spark hope that 2 decades of problems will end

New Jersey’s political leaders grappled for two decades with how to build more affordable housing in the state’s hundreds of towns and cities.

Now, in less than three months, they may have found a fix.

Gov. Phil Murphy signed a major affordable housing reform into law late last month, giving advocates and lawmakers the first sign of hope in years that the state can start to make up a massive housing shortfall while easing a burden placed on courts in the absence of political leadership.

The big question is whether it will truly clarify towns’ housing obligations and jump-start construction or mark another failed attempt by one of the most densely populated states in America to live up to a constitutional obligation.

It comes at a time of heightened awareness nationally of a lack of housing, with rising home prices, high interest rates and a dearth of affordable rentals.

From New York to California, legislators nationwide are seeking ways to make living in their states more affordable.

And President Joe Biden is taking note. He touted his administration’s efforts so far to cut red tape for builders but he’s started campaigning on proposals he argues would help Americans find an affordable home. “Now pass my plan to build and renovate 2 million affordable homes and bring those rents down,” he said during his State of the Union last month.

State and municipal legislators are taking different approaches to solving the problem of affordable housing — but there seems to be a nationwide consensus that more housing is an urgent need. In Utah, for example, the state is investing in the construction of smaller single-family “starter” homes, while in Oregon, zoning restrictions have been changed to allow for denser housing in areas that had been previously restricted to single-family options.

In New Jersey, affordable housing has long been a problem with no clear solutions. The body intended to set affordable housing expectations for towns — the Council on Affordable Housing (COAH) — has been defunct since 1999, leading to confusion on those expectations and a lack of enforcement. This new law seeks to fix that.

“The two biggest things it does is it provides more certainty to everybody, including advocates, municipalities and developers, as to what the rules are,” Adam Gordon, executive director of the Fair Share Housing Center, told POLITICO. “That will enable everybody — at least people operating in good faith — to move forward more quickly to create affordable homes, spend less money on litigation, and focus more on what the tools are that they actually can use to move forward.”

Some are less convinced. Michael Edwards, a partner at the Surenian, Edwards, Buzak & Nolan law firm, which has represented towns in affordable housing lawsuits for many years, says the new law is “reckless” because it doesn’t address impacts on the environment, schools and infrastructure.

Housing policy, he says, has become less and less balanced over time, where towns’ obligations are more than they can handle. “The statute, in my mind, is ill-conceived and poorly written. So I think it will create more litigation than it quells,” he told POLITICO. “And I think they really miss an opportunity to bring this doctrine back under control.”

Under New Jersey’s Mount Laurel Doctrine, based on a set of Supreme Court rulings in the 1970s and 80s, each municipality in the state is given an affordable housing “obligation” it must meet in a given period of time. COAH was created to establish the rules for those towns, and the obligations are intended to be re-issued every 10 years. However, a new round of obligations has not happened since 1999.

Republican Gov. Chris Christie tried to abolish the council a decade ago and put its authority within his administration, arguing that it was broken, but the state Supreme Court overruled him. The courts took over for that body in 2015 and have been mediating disputes ever since.

But the majority of the resources put into the system have been dealing with litigation from towns and housing advocates both disputing the obligations, all while the need for affordable housing grew.

New Jersey has a 214,000-unit shortage of affordable rental housing, according to the National Low Income Housing Coalition. About 2,700 affordable units get built a year, meaning it would take New Jersey 80 years to close the gap, according to the Fair Share Housing Center, a nonprofit founded in the wake of the Mount Laurel decision.

What’s different this time around?

For a system that has been broken to some degree for over two decades, there wasn’t much expectation in Trenton that it would be fixed anytime soon. But virtually out of nowhere late last year, the two most powerful lawmakers said they had a plan with a pressing deadline — the fourth round of towns’ housing obligations, in 2025.

The new law, sponsored by Assembly Speaker Craig Coughlin and Senate President Nick Scutari, bases those obligations on a 2018 case that created what’s known as the “Jacobson methodology.” It’s named after Mercer County Superior Court Assignment Judge Mary Jacobson, who decided on a statewide quota that represented a compromise between higher estimates provided by housing advocates and lower estimates provided by municipalities.

Besides codifying this methodology, the new law transfers the responsibility for publishing obligations to the Department on Community Affairs. It also establishes an Affordable Housing Dispute Resolution Program to resolve issues of fair housing law, taking some of the pressure off of the courts, and sets a specific timeline for proposals, disputes and resolutions for towns in the fourth round.

Having the support from Coughlin and Scutari, as well as Murphy, made it “definitely something different,” Gordon said.

Major affordable housing reforms have been a long time coming in New Jersey. But previous attempts at this kind of legislation have not benefited from the same level of leadership support. Since 2000, after COAH failed to issue third-round obligations, only one major piece of affordable housing legislation has been sponsored by the head of either chamber. That bill, A500 in the 2008-09 legislative cycle, had then-Assembly Speaker Joseph Roberts as a prime sponsor — and was signed into law just four months after its first introduction.

That 2008 bill marked the largest reform since the turn of the century, Gordon said, as it banned Regional Contribution Agreements, which had allowed municipalities to pass off a portion of their affordable housing obligations to another town in the same region.

A polarizing mandate

Sen. Troy Singleton, one of the new law’s top sponsors, told POLITICO that housing has become increasingly polarized since 2009. “This issue particularly has been draped in partisan politics ever since if you go back to when COAH was disbanded by a former governor, Chris Christie,” he said.

Republicans opposed the bill Murphy signed, calling it a “disastrous policy” that forces “unreasonable mandates, quotas, and deadlines [that] pave the way for overdevelopment, traffic congestion, and sharp spikes in school enrollment.”

“We need to help more people in New Jersey without jamming more development down every community’s throat,” Republican Assemblymember Paul Kanitra said in a statement. “This bill doesn’t differentiate between a 1-square-mile town and a 50-square-mile town.”

And for some, the speed at which the law was passed poses even greater concerns. Edwards, the housing lawyer, criticized the lack of financial analysis prior to the bill’s passage and called the timeline of the law “dramatically unreasonable.”

The Legislature “could have started talking about this legislative action five years ago, in which case, you could have come up with an appropriate response,” he said. “You could have done an adequate market study.”

And for others, environmental concerns raise another issue. In full Assembly debate, a number of members opposed increasing the amount of affordable housing in municipalities they represent — especially in the Highlands region, a portion of northern New Jersey with an environmentally protected status since 2004.

Ben Spinelli, executive director of the New Jersey Highlands Council, is concerned about conflicts between the new law and the sustainability of the region, which he said sends nearly 900 million gallons of water a day to the rest of the state.

“As you build within the region, you both increase the demand on those resources within the region, and you reduce the ability of the region to be able to export resources,” he told POLITICO.

While states have tried for years to deal with affordable housing, it has become a key issue for voters nationally.

Biden has made affordable housing is a crucial element in his reelection campaign, acknowledging, in short, that “the rent is too damn high.” He has pushed for incentives to promote construction and tax credits aiding lower-income renters and first-time homebuyers, using a campaign speech in Nevada to make his pitch for further affordable housing.

Sarah Saadian, senior vice president of public policy and field organizing for the National Low-Income Housing Coalition, laid out two proposals for federal affordable housing policy that she sees as necessary to address the market failure of a lack of low-income housing. The first is rental assistance, which would be most effective in helping people to afford units that are already built but have had their rents skyrocket in recent years. The second is assistance in building more affordable housing, especially units for those at low or extremely low income levels.

Saadian referenced California as a state that has succeeded in implementing affordable housing laws, in part by allowing developers to turn pricey beachfront properties into multifamily rental housing.

“They make it a lot easier for developers to bypass the normal processes so that they can move forward,” she told POLITICO, referencing the ability for. “The developers were able to move forward with building affordable housing without the normal NIMBYism in place.”

New York’s Legislature has been embroiled in a battle on housing reforms, including solving the crisis in New York City. Last month, a revival of a major real estate tax break was floated as a part of a larger housing package. Within the city, officials are calling for an additional $2 billion in city capital funding over four years to fund expanded affordable homeownership.