With Christie's Veto, NJ Towns Risk Losing Affordable Housing Money

Gubernatorial vetoes have put municipalities at risk of losing $161 million earmarked for the creation of affordable housing throughout the state, although a judge has ruled New Jersey can’t take funds from at least one municipality and an appeals court will consider motions that could decide the fate of the money.

There is widespread confusion among municipal officials and anger by legislators who worked to give towns two more years in which to spend their money from the state’s Affordable Housing Trust Funds.

“A lot of these towns were depending on this opportunity to use this money to create affordable housing, rather than give it to the state general fund,” said Assemblyman Jerry Green (D-Union), sponsor of one of the bills Gov. Chris Christie vetoed last Friday

Certain development fees and other payments are by law banked on behalf of municipalities to build low- and moderate-income housing. Communities are required to earmark the money within four years or it reverts to the New Jersey Housing Trust Fund. The date by which the first fund deposits have to be committed is July 17.

In his original budget proposal, Christie sought to take as much as $200 million from the municipal funds to spend on a dozen purposes, including state rental assistance and homeless prevention programs and services for senior citizens, veterans, and the developmentally disabled. At least some of those had been funded by general state appropriations.

Lawmakers inserted language into the state budget that would have allowed municipalities to keep their money by passing a resolution stating the intention to spend the funds. And they approved Green’s bill, A2950, giving municipalities two more years to use the money, Christie vetoed both the bill and the language.

That would affect $161.3 million of $252.2 million total in the municipal funds as of June 5, according to figures from the state Department of Community Affairs. In all, $589 million in fees have been collected and $336.9 million of that spent on housing. Municipal funds would retain about $89 million not yet subject to state seizure.

However, a Monmouth County Superior Court judge last week issued an injunction preventing the state from taking funds from Marlboro and scheduled a July 13 hearing on the matter with representatives of DCA and the Council on Affordable Housing. Marlboro had the largest unspent balance, $11.7 million, as of June 5, according to the DCA data.

But Tammori C. Petty, a DCA spokeswoman, said all funds remaining uncommitted and unspent as of July 17 “are still subject” to being taken by the state.

Michael Cerra, senior legislative analyst with the New Jersey State League of Municipalities, said the court injunction applies only to Marlboro at the moment. In total, 221 towns have affordable housing trust fund balances, with 45 of those having more than $1 million unspent.

“It’s contradictory and confusing,” Cerra said. “With the budget language deleted, there continues to be no guidance for municipalities as to what ‘committed for expenditure’ means.”

He said the law establishing the funds and setting the deadline for spending them required COAH to adopt regulations regarding them.

But COAH has been in limbo almost since Christie took office. He tried to block the council’s actions early on, but backed off when the appellate division stopped him. A year later, the Legislature passed a bill abolishing COAH, but Christie conditionally vetoed that and lawmakers did not agree with his demands. Christie then issued an executive order reorganizing DCA and eliminating COAH, but earlier this year an appeals court panel ruled Christie had overstepped his authority.

That ruling should have led to the restoration of the 12-member body first created by the Fair Housing Act in 1985 to ensure that municipalities meet their constitutionally obligated share of affordable housing as decreed by the state Supreme Court in its Mount Laurel decisions. But that has yet to happen.

“We’re in the unusual situation that towns are at risk of having their trust funds seized for failing to comply with regulations that were never even proposed,” Cerra said.

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