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Smart Growth in Transition – Part IV: Affordable Housing

December 17th, 2009 by

This is the fourth in a series of special “Future Facts” on key policy issues facing Governor-elect Christopher J. Christie as he prepares to take office in January.

  • Most New Jerseyans agree that the state’s long-term prosperity depends on providing housing opportunities for hard-working people of modest means; that it is better for people to be able to live near where they work; that developing housing opportunities should not damage our environment or impede economic growth; and that concentrated poverty is a social and economic drain.
  • Many New Jerseyans disagree, however, on how much affordable housing is enough; where it should be built; and who should pay for it.
  • Since 1985, the Council on Affordable Housing has struggled with these issues, and in doing so has created a statewide system that has produced approximately 73,000 units of affordable housing for low- and moderate income households. While this system is viewed as a model for the rest of the country, it has attracted widespread disfavor within the Garden State.
  • Governor-elect Christie’s housing affordability agenda implies that he wants to take a fresh look at these issues and develop a system that is simple, rational, fair and productive.

In Cities and Suburbs, Housing Policy Hinges on Answers to Three Questions

 

In his responses during the campaign to New Jersey Future’s Smart Growth Questionnaire and to other organizations’ surveys, Governor-elect Christie appears to recognize that cities cannot thrive if their only residents are people who cannot afford to live anywhere else. A consistent theme in his campaign communications is the need to revitalize our cities by bringing back middle-class households and businesses. One way to effectively lessen the negative consequences of concentrated poverty is to dilute it.

Additionally, most of the job growth in New Jersey has been taking place in the suburbs. Between 1990 and 2006, 40 percent of the growth in private-sector employment was accounted for by just 10 suburban townships — places like Parsippany-Troy Hills, Mount Laurel, West Windsor and Brick. If a steady job is a lower-income household’s ticket out of poverty, then affordable-housing opportunities need to follow employment growth, whether that growth is taking place in cities or suburbs.

A state housing policy for New Jersey should go well beyond providing housing opportunities for low- and moderate income households, which is the current focus of debate.  However, within this narrower context, the Christie administration will have to tackle three crucial questions.

How much affordable housing is enough? As New Jersey continues to grow and become more expensive, the answer to this question is likely to be, “Much more than we realistically can produce.” As this debate continues, the Christie administration will need to set an ambitious target that ensures that our workforce can find homes near their jobs, and that those struggling to move up the ladder of self-sufficiency will have a safe and decent place to call home.  Without a target, affordable housing won’t get produced.  One simple type of target is to set a fixed percentage of New Jersey’s housing stock that must be affordable to low- and moderate income households, and delegate the responsibility to purchase, rehabilitate or build these units to municipalities.

Where should affordable housing be built? This is the easiest question to answer. Housing opportunities that are affordable to low- and moderate-income families should be created in the same places as housing opportunities for people with higher incomes — ideally near jobs. A strengthened state planning process would ensure that most new housing, whether market-rate or affordable, would occur in designated growth areas.

In the following quote from a State League of Municipalities questionnaire, Christie suggests that he will look at state planning and growth areas to guide housing decision-making: “The round three regulations issued by COAH are perhaps one of the worst examples of this Governor’s lack of leadership. The Department of Community Affairs ignored the State Plan, the state’s open space and farmland preservation goals, the DEP’s water and wastewater plans and the DOT’s transportation master plan and ordered municipalities across the state to develop new master plans to accommodate ridiculous growth projections.”

Who should pay for affordable housing? In order to create housing at below-market prices, the full cost of land, building materials and operating costs will need to be subsidized in some way. The most equitable approach is to spread this cost among different government jurisdictions, business and development interests and landowners and residents. The current affordable-housing system in New Jersey divides this fiscal responsibility between the state, municipalities, residential developers and the beneficiaries of the housing, but it is time to creatively expand the circle of financial contributors beyond this group.

For all its faults, our current affordable-housing system does produce affordable housing. It has also generated a long list of detractors. The new administration has an opportunity to take the heightened energy and attention around this issue to craft a new and better approach, but this will happen only if all voices are heard. The current system should only be discarded after a new and measurably better system is fully vetted and ready for implementation. Our economy, environment and communities depend on it.

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No Responses to “Smart Growth in Transition – Part IV: Affordable Housing”

  1. While in agreement with your comments on the state of Affordable Housing in NJ it is important for the Christie administration not to throw the entire COAH system out. If he were to do so, it would take a minimum of two years for staff and outside consultants to propose a new system, a year to vet this with municipalities and other stakeholders and another year for the courts to validate. We then would be looking at another “dead” four years in the development of both affordable and market rate housing. Municipalities would not know the rules and developers would not be able to create a project proforma because they would not know the number of affordable units required.
    Maybe the best tact for the new administration would be to tweak the existing system in order to provide for more affordable housing in a more timely manner?

  2. Arthur perkins says:

    A key sentence in this Part IV Affordable Housing article is “The current affordable-housing system in New Jersey divides this fiscal responsibility between the state, municipalities, residential developers and the beneficiaries of the housing.” This is unfortunately true but only because the NJ legislature and governor have given a short-term exemption to a fee schedule on commercial development that was and should be part of the revenue base supporting affordable housing in New Jersey. That exemption expires on July 1, 2010. It will provide a critical funding source for future affordable housing projects.

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