New Jersey may seize more than $161 million set aside by municipalities to meet state affordable housing mandates after Gov. Chris Christie vetoed legislation that would have extended the July 17th deadline to spend the funds.
Local municipalities with the most at stake include Middle Township, Ocean City in Cape May County, and Stafford Township in Ocean County; each has millions on the line. Towns collected the money, which was to be used to build or renovate low- and middle-income homes, from developers prior to the same date in 2008.
Cherry Hill-based Fair Share Housing Center, a non-profit housing advocate, has filed for an injunction to prevent the state from seizing the funds. The injunction will be considered by an appellate court Friday.
Christie has said some municipalities allowed the money “to just sit there” for years without helping people. Local officials, however, say a bureaucratic and legal morass has made it difficult to spend the money or even determine if pending commitments will be honored by the state. Christie dissolved the Council on Affordable Housing last year, sparking a legal battle.
“Right now, towns are unsure if their trust fund dollars are at risk of exposure or not,” said Mike Cerra, the senior legislative analyst for the state League of Municipalities. “Some towns have made commitments to earmark funding, but no one knows.”
The state Department of Community Affairs, which took over COAH oversight, estimates more than $161 million remain in the funds. Officials say removing those funds, combined with previous committments, would create an unfunded mandate; the brunt would fall on taxpayers, municipal officials say.
“If the state takes the money, the obligation remains,” said Frank Donato, Ocean City’s director of finance.
Donato said the city has already split its $2.6 million trust fund between two pending projects: a $2.1 million bid proposal to renovate the former Bellevue Hotel as senior housing, and another $550,000 roofing project to improve existing affordable housing for seniors.
But the vagueness of the Council on Affordable Housing’s regulations — they don’t define what qualifies as “committed” funds — means the state may take those funds for next year’s budget.
If Ocean City lost the $2.6 million in its trust fund, Donato said, replenishing it would require a single-year tax rate increase of two cents.
If that happened, Donato said, “a $500,000 home would get hit with a $100 tax increase just for that amount of money alone — not even considering what the rest of the budget may or may not do.”
And most Ocean City residents would be hit even harder, Donato said, since the average home is worth about $630,000.
Bonnie Flynn, director of community development for Stafford Township, another municipality with a large trust fund balance, said its money has also been earmarked.
About $700,000 has been set aside to provide subsidies for low-cost housing in a mobile home park, a program that has continued since 2007, she said. Another $1.4 million is going toward a plan to build single-family and group homes in the township. Then 30 percent of all incoming developer fees are set aside for other assistance, such as help with down payments.
“There should be a process,” Flynn said. “The state should say, ‘we’re coming to take your money; tell us why we shouldn’t’.”
Other municipalities have rushed to encumber their trust funds in anticipation of the deadline.
Somers Point approved an ordinance this month that would use its $221,000 trust fund balance for housing rehabilitation, down payment assistance and other subsidies, said Councilman Ralph Triboletticq.
“As a municipality, we’ve done what we need to do to secure those,” Triboletti said. “That’s according to how the legislation reads today, but who knows what it’ll be when the governor makes up his mind.”
After Christie vetoed a bill that would extend the deadline and clarify the definition of “committed” on June 29, the Fair Share Housing Center filed suit requesting an injunction against the state seizing the municipal trust funds.
“It’s a bad idea to take money needed for housing for working folks and people with special needs, and use it to give out a tax cut,” said Kevin Walshcq, the center’s associate director.
The filing, which will be considered by a Newark appellate court Friday, has received the support of the League of Municipalities.
“This is probably the first time on an issue like this the towns and housing advocates have united to fight back against the governor on a housing policy,” Walsh said. “The only one in the whole state who thinks this is a good idea is the governor.”
Spokesmen for Christie declined to comment on the trust funds or pending legal action, instead pointing to the governor’s prior comments.
“This deadline on affordable housing has been set long before I became Governor,” Christie said during an Apr. 18 press conference. “Now they haven’t spent this money. We’re going to spend it on housing across New Jersey.”
If Christie moves ahead with his plan, Cerra said it could lead to a legal morass as various municipalities fight to protect their trust funds. Indeed, one township — Marlboro in Monmouth County — has already received a temporary injunction to keep its $13 million.
“I expect other towns will be looking to do the same,” he said. “If this injunction fails, there will probably be a wave of it.”
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