Commonly Asked Questions About Affordable Housing (from September 2001)

Does affordable housing cause sprawl?
Poor planning and zoning cause sprawl, best defined as wasteful, scattered development. New Jersey had sprawl long before the State Supreme Court's 1975 Mt. Laurel decision, which required municipalities to provide affordable housing as their constitutional obligation. Since 1983, 26,000 units of affordable housing have been constructed. During that same time period, 610,000 residential building permits were issued, and an estimated 480,000 residential units were built. In other words, affordable housing has made up only 5.4 percent of all residential construction in New Jersey - hardly the source of today's over-development.

At the same time, the Fair Housing Act's enforcement mechanism has played a part in some sprawling over-development. Municipalities that fail to submit an affordable housing plan can be sued under the "builders' remedy" provision of the Mt. Laurel doctrine by a developer who will build the affordable housing - but generally as a fraction of a much larger development than the community desires. Mayors and planning board chairs have told New Jersey Future that they sometimes approve over-development simply to avoid the costs of builder-remedy lawsuits. Municipalities can avoid builder's remedies by filing affordable housing plans with COAH. However, plans approved by COAH very often promote sprawl and some municipalities fail to appreciate the loss of local control imposed by builder's remedy lawsuits until it is too late to stop them. The builders' remedy does hinder sprawl management efforts - but it's the reliance on the builder's remedy as the enforcement mechanism, and not the affordable housing program, that drives sprawl.

What is affordable housing?
It's housing that can be bought or rented using 30 percent, or less, of your income.

New Jersey, like most states, operates an affordable housing program intended to ensure there's enough housing that's affordable for low-income individuals and families (those who earn 50 percent or less of their region's median household income), as well as moderate-income individuals and families (those who earn more than 50 percent but less than 80 percent of their region's median household income). New Jersey's median household income was $54,226 in 2000, the highest in the nation - meaning on average, a New Jersey family making $43,000 or less qualifies for moderate-income housing; those making $27,000 or less qualify for low-income housing. In reality, income requirements for state-provided affordable housing vary by region.

Why do we need affordable housing?
Because New Jersey has an acute shortage of housing that's affordable for moderate- income and low-income workers, including new teachers, police and fire recruits, retail and service workers.

New Jersey is the most expensive state in the nation to rent a two-bedroom apartment. Fully 44 percent of all New Jersey renters can't afford the average 2-bedroom apartment rent of $878 per month. In fact, a worker earning minimum wage would have to work three full-time jobs to afford a two-bedroom apartment. Following is a partial list of full-time workers who earn less than $35,000 a year, and so cannot afford rent for the typical two-bedroom apartment in New Jersey.

New Jersey is the fourth most expensive states in which to buy a home. Single-family home prices jumped nearly 13 percent last year, the highest hike in the nation, according to the National Association of Realtors. The median price statewide reached $188,500 in New Jersey, compared with $140,500 in the rest of the Northeast, and $139,600 nationally.

No wonder that almost a third of New Jersey households must spend 30 percent or more of their income on housing, according to the Census 2000 Supplemental Survey. This is virtually unchanged from the 1990 percentage, meaning COAH has not been able to alleviate the demand for affordable housing in 10 years. In fact, because the total number of households has gone up, so has the total number of households in need of affordable housing.

The lack of affordable housing is also driving many employees out of New Jersey - adding to the state's severe traffic and commuting problems. This problem is expected to worsen: Forecasters at Rutgers University project New Jersey will get 908,000 new residents, and 802,000 new jobs in the next 20 years. Considering that roughly half of the new residents will be workers (and the other half non-workers, including retirees, students, youths, homemakers, etc.), it's clear that New Jersey will get a lot more jobs than workers to fill them. Most of these new workers will likely live in neighboring states and commute into New Jersey - a fact acknowledged publicly by employers and developers seeking property close to New Jersey's western borders, and current housing trends. These workers will log more miles on New Jersey's roads, and create more traffic, than would be necessary if they could afford to live here.

What is Mt. Laurel?
Mount Laurel is shorthand for a series of New Jersey Supreme Court decisions beginning with a case officially called Southern Burlington County, NAACP v. Township of Mount Laurel.

In its first Mt. Laurel decision in 1975, the State Supreme Court held New Jersey's municipalities have a constitutional obligation to provide for the "regional general welfare" - including the regional need for housing. The court held that every developing municipality must affirmatively provide its "fair share" of the region's affordable housing needs.

However, New Jersey's municipalities failed to comply with the Mount Laurel decision and the courts became clogged with lawsuits seeking municipal compliance. The Supreme Court consolidated these lawsuits into one appeal known as Mount Laurel II. In its 1983 Mount Laurel II decision, the court affirmed that municipalities must meet specific "fair share" housing obligations, and this time set out guidelines and procedures for meeting these obligations. The court also instituted "builder's remedies," lawsuits that could be brought against any town without a certified plan for affordable housing, to enforce fair share obligations. The legislature responded with the Fair Housing Act of 1985. The act created the Council on Affordable Housing (COAH) and charged the agency with implementing the Mount Laurel decisions.

How much affordable housing has COAH produced?
As of August 2001, COAH reports it has 26,800 homes for low- or moderate-income families built or under construction statewide. In addition, it reports 10,400 homes have been rehabilitated. Advocates have estimated the need for affordable housing at 900,000 homes, as 900,000 families live in housing that is either substandard or too expensive for them to afford.

Why do we need affordable housing in the suburbs or rural areas?
So that New Jerseyans have the choice of living in, or near, the communities where they work, and so that everyone benefits from less traffic and shorter commuting times. The median sales price for a home in rural Hunterdon County is $304,000 - the second highest in the state. Schoolteachers, police recruits, and service workers in Hunterdon County face a shortage of housing they can afford, and often lengthy commutes. The same is true in other suburban and rural counties where median home sales prices are comparable and which are host to significant employment centers, including Somerset County ($309,200) and Morris County ($294,500).

Does affordable housing bring down surrounding property values?
A number of studies have shown that property values do not decrease when affordable housing units are built in an area. Extensive study in two counties with the nation's most progressive affordable housing programs - Montgomery County, Maryland, and Fairfax County, Virginia - have shown that creating mixed-income neighborhoods with up to 20 percent affordable housing has had no adverse impact whatsoever on the resale values of market rate homes.

Is a community's "fair share" fair?
Not always. By using a complicated and confusing affordable housing obligation formula based on regional growth, among other factors, COAH imposes obligations that are not necessarily connected to any one town's actual growth and resources. When one town chooses to grow, all of the other towns in the same region are burdened with increased COAH obligations.

Are there ways to fix the problems in our current affordable housing system?
Below are three ways to improve today's affordable housing system and increase the amount of affordable housing that's built, without imposing sprawling development on any community.

Adopt a Growth Share Approach - New Jersey Future believes a town's affordable housing obligation should be based on its own growth, rather than the region's growth. This approach to affordable housing is known as "growth share." Growth share requires that growing communities build affordable housing as well, as a fixed percentage of their growth - typically 20 percent. Had New Jersey adopted a "growth share" approach, the state over the past six years alone would have gained as many as 60,000 affordable homes - in communities that wanted to grow.

Public support for the growth share approach is strong. Fully 71 percent of voters statewide said they favor requiring that all new housing include 15 percent for low- and moderate-income families in a May 2000 poll commissioned by New Jersey Future.

Reform the Builder's Remedy - We can fix today's builder's remedy by providing more incentives to build affordable housing, with different consequences for municipalities for that fail to meet their constitutional obligation. Rather than giving profit-oriented developers the sole power to enforce Mt. Laurel obligations, we should encourage and help public-interest advocates to enforce Mount Laurel. Public interest litigants are more inclined to keep the good of the public in mind, over the profit margins of an individual corporation. Public interest advocates also will build more affordable housing without additional, sprawling, market-rate housing.

Abolish Regional Contribution Agreements - New Jersey's affordable housing system has not only failed to lessen racial segregation and concentrations of poverty, it has encouraged them. Only seven homes in every 100 built as affordable housing benefit former residents of poverty-impacted areas. The vast majority goes to first-time homeowners or recent retirees already living in the community. What's more, Regional Contribution Agreements allow wealthier towns to avoid building affordable housing in their communities by paying poorer towns and cities to build a portion of their fair share, for far less than the costs of housing construction or rehabilitation. While this does funnel much needed money into urban area, this also shuts out many poor and even moderate-income people from living in many New Jersey communities, where they may already work as teachers, police or retail employees. It also perpetuates poverty by excluding poor children from the better education and job opportunities within non-poverty communities - education and jobs that are necessary to break New Jersey's cycle of poverty.

It's time to abolish Regional Contribution Agreements. RCA money currently funneled into needy communities for additional affordable housing can be replaced by tax sharing and other needed modifications to today's property tax system, which increase incentives for communities to build the housing today's market needs; rather than the kind of housing today's property tax system rewards.