Senate passes bill to overhaul how NJ towns will meet affordable housing mandate

How much affordable housing will New Jersey towns be required to zone for, build, convert or renovate over the next decade?

Gov. Phil Murphy is expected to sign a bill the Legislature passed Monday that aims to streamline the process that determines how municipalities fulfill a constitutional mandate to provide their “fair share” of homes that low- and moderate-income families can afford.

The bill would codify a formula to help towns come up with the number of units they must allow to meet their constitutional mandate.

The bill passed the Senate 22-14 along party lines, to the sound of applause in the chamber. The Assembly approved amendments that had been added since it passed the bill 51-28 in February.

“We face a somewhat perfect storm of low housing inventory and escalating pricing, which leaves thousands of working families all across our state with no viable options,” said Sen. Troy Singleton, D-Burlington, a sponsor of the bill. “Without securing the most basic human needs — a place to live — the other policies we pass cannot be as effective.”

Hailed as landmark legislation

Under what advocates hail as landmark legislation, A4/S50 shifts court negotiations over town affordable housing quotas to the Department of Community Affairs, which will rely on a formula based on a 2018 state Supreme Court decision to give towns initial numbers of units they are required to zone as affordable.

A panel of three to seven experts appointed by the courts will oversee any challenges to the proposed numbers. The bill appropriates $16 million to establish the program.

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It maintains a ban on regional contribution agreements, a practice that let towns pay cities or other towns to rehabilitate affordable housing instead of building their own units, and abolishes the Council on Affordable Housing, a defunct agency that ceased operations in 2015, after failing for 16 years to adopt rules for towns to follow.

A series of significant state Supreme Court cases beginning in 1975 created the Mount Laurel Doctrine, which said municipalities must zone for and provide a “fair share” of affordable housing for low- and moderate-income families, which typically means that a household would spend no more than a third of its monthly paycheck on housing expenses. The fourth “round” of negotiations is scheduled to start in July 2025.

Without a fair share agreement in place, towns are at risk of builder’s remedy lawsuits and other legal challenges, in which developers could forgo zoning approvals and choose where to build as long as at least 20% of units were affordable.

Concerns about straining infrastructure, overdevelopment

Opponents, mostly consisting of municipal officials and Republican lawmakers, expressed concerns about straining infrastructure and overdevelopment, saying obligations are often met when developers build complexes with market-rate units making up 80% in order to cover the cost of the affordable units. Under this inclusionary zoning, meeting a need of 250,000 affordable units with only this type of project would require 1 million new units.

“Why can’t the towns build projects that are 100% affordable?” said Senate Republican leader Anthony Bucco, R-Morris. “Well, because developers don’t do that. A town could undertake that responsibility, but that costs money.

“If a town zones for 100% affordable units, and a developer does not come forward to build the project, the town has to put up its bonding capacity so that the project can be built. Then what does that do for infrastructure projects and other things that the town would need to have that financing available for?”

Inclusionary zoning is not the only way towns can approach the process.

The bill incentivizes fixing up existing affordable units and offers bonus credits for a fraction of the town’s obligation, with a certain type of housing worth more than one credit, including:

• Special needs housing.

• Ownership units sponsored by a nonprofit housing developer.

• Housing near transit.

• Age-restricted units.

• Housing on certain land that used to be retail, office, or commercial.

• Existing affordable units where affordability is extended.

• Certain 100% affordable developments.

• Certain housing for very low-income families.

• Certain market rate units that are turned into affordable units.

NJ affordable housing need of up to 250,000 units

Proponents have stressed that A4/S50 is not the panacea for solving the affordable housing crisis and addressing infrastructure needs, school funding, and other land use and planning factors.

The legislation relies on a March 2018 decision from Judge Mary C. Jacobson, who determined that between 1999 and 2025, New Jersey needed to plan for 154,581 affordable units statewide. Now advocates estimate that the need is between 200,000 and 250,000 units.

Jacobson weighed the amount of developable land, growth in numbers of households and change in non-residential property values, among other things, to determine how much affordable housing was needed in the Mercer County towns of Princeton and West Windsor.

“After this decision was issued, even though other courts and towns did not have to use the calculation method, essentially every judge in every municipality accepted [it],” Singleton said. “Since its inception, there have been zero challenges or litigations about this methodology.”

“Under the current system, towns have to hire their own experts to calculate the numbers," Singleton said. "Now the Department of Community Affairs will calculate the numbers using the same framework and methodology that has been used for the last eight years.

“Towns can either choose to accept it or come up with their own, consistent with the standards in this bill, based on that methodology,” he said.

New transparency measures

The bill also includes new transparency measures, requiring the DCA to post information on its website including the balances and spending in towns’ affordable housing trust funds, and the start and end dates of deed restrictions.

Last week, the Senate approved four pages of amendments to the bill that included technical changes and others, such as requiring the Highlands Water Protection and Planning Council to give a list of municipalities within the Highlands to the DCA, and clarifying that if towns miss certain deadlines, they would lose protection from zoning litigation at the end of the third round.

In a speech on the Senate floor, Singleton recounted stories of New Jerseyans who benefit from affordable housing, such as a 58-year-old grandmother and New Jersey Turnpike Authority employee who moved into the first home she has owned with the help of Habitat for Humanity.

He pushed back against fears of rising property taxes, pointing to a study by Princeton University that found no difference in property tax values after affordable housing was built in Mount Laurel, the epicenter of New Jersey's constitutional mandate, where day care teacher Ethel Lawrence fought for 36 affordable garden apartments for Black families in the town where her family had lived for six generations.

In the new process, here are the dates eligible towns would be required to meet:

• Dec. 1, 2024 (or within 7 months of effective date of the bill, whichever is earlier): The DCA publishes towns’ obligation numbers.

• Jan. 31, 2025: Towns must adopt their obligations by binding resolution to be protected from exclusionary zoning litigation.

• Feb. 28, 2025: Challenges can be filed through a new “Affordable Housing Dispute Resolution Program.”

• April 1, 2025: A resolution to any disputes must be finalized.

• June 30, 2025: Towns must establish housing element and fair share plans to meet their obligations.

• Aug. 31, 2025: Interested parties can challenge the fair share plan and housing element.

• Dec. 31, 2025: Towns must commit to revising the plan or explain why it won’t make certain changes.

• March 15, 2026: Towns must adopt changes to municipal ordinances.

This article originally appeared on NorthJersey.com: Bill passes to overhaul NJ towns affordable housing mandates