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State Plans to Seize Unused Housing Trust Fund Dollars

Municipalities in New Jersey have to draft affordable housing spending plans, or the state will empty their accounts.

The state is poised to seize more than $169 million in housing money from New Jersey municipalities, because of a deadline set four years ago as part of then-Gov. Jon Corzine's affordable housing reforms, though towns are prepared to challenge the takeover.

The state, as part of the 2008 reform, gave towns until July 17 to spend or account for money raised by their affordable housing trust funds. According to figures from the state Department of Community Affairs, there was $169 million in unspent affordable housing money sitting in local trust funds as of April 4. South Brunswick has $3.5 million in unspent housing funds. 

The State Takes a Hard Line

Local mayors and the New Jersey League of Municipalities blame the state for failing to establish guidelines for its use and are worried that the money will not be used by the state to provide affordable housing.

The state, however, says the towns have had four years to develop plans. It intends to take the money when the deadline passes.

“Municipalities in receipt of trust fund dollars have had a minimum of four years to spend or commit the money," said Lisa Ryan, spokeswoman for the state Department of Community Affairs. “Only those towns that chose not to use the money to provide affordable housing within the four-year time span will lose control of those funds."

Cities Argue the Four-Year Deadline

The mayors of at least two towns in New Jersey are crying foul on the DCA's plan.

South Brunswick Mayor Frank Gambatese says the money his township has collected should stay in the town. 

“If the state takes our money, we cannot buy the houses we are expected to buy,” he said.

Mayor Gambatese added that South Brunswick was the first municipality in the state to draft a spending plan. He believes they will spend the remaining $3,535,207 on affordable housing projects as long as the state stays out of the equation. .

The township's Council on Affordable Housing (COAH) consultant informed South Brunswick they could dedicate money to fund previous work by township employees on phase three of the affordable housing plan going back to 2005.

In East Windsor, Mayor Janice Mironov sees the state’s takeover of the trust fund dollars as a “Trenton-type absurdity.”

“Common sense would be for the legislature to provide an extension of time in
light of the lack of affordable housing requirements,”Mironov said.

In fact, the affordable housing requirements are in litigation in the state Supreme Court right now.

William G. Dressel, executive director of the League of Municipalities, writes in a March 20 “Dear Mayor” letter on the League’s website that the Council on Affordable Housing was not clear with its standards for expenditure of the funds.

No Way Out For Towns?

Now, the municipalities face forfeiture of their trust fund dollars, though the regulations were confusing from the start. 

“It’s all very confusing, and downright contradictory,” said Mike Cerra, senior legislative analyst for the League of Municipalities.

“The projected state budget for the next fiscal year includes this $169 million,” Cerra said. Clearly, the state is anticipating a big windfall.

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