Gov.’s affordable housing law is destructive to New Jersey

Guest Column • Sen. Jennifer Beck

In response to a letter to the editor written by a resident of the 12th Legislative District, I would like to clarify my position on affordable housing and separately on Gov. Jon Corzine’s new affordable housing law.

No one disagrees that New Jersey needs affordable housing — state legislators agree unanimously with that premise.

I believe the state Legislature needs to address the cost of housing or we will continue to lose residents young and old to other states. The current debate is over how to accomplish that goal.

I would argue that Gov. Corzine’s newly enacted affordable housing law and regulations will not only halt affordable housing development, but will be destructive to New Jersey’s future economic growth.

The Corzine affordable housing law mandates that for every 16 jobs that are created by commercial development, one affordable housing unit must be built (the average estimated cost for a municipality to directly subsidize the construction of a unit is $161,000).

New Jersey will be the only state in the nation that penalizes job creation in this economic crisis. It also should be noted that the housing law does not reduce the obligation for jobs recently lost.

Secondly, the Corzine affordable housing law taxes all commercial development at 2.5 percent of the project’s assessed value. If a company is looking at Pennsylvania, New York and New Jersey as options for locating its headquarters, it will see New Jersey offering, not only the highest taxes in the United States, but also an additional 2.5 percent tax for affordable housing.

Our state is ranked dead last in terms of small business environment, according to the 2009 State Business Tax Climate Index released in 2008 by the Tax Foundation, and this new policy adds to that designation. Even our own Appellate Court has stated this about the COAH-imposed fees on developers:

“A regulatory regime that relies on developers to incur the uncompensated expense of providing affordable housing is unlikely to result in municipal zoning ordinances that make it realistically probable that the statewide need for affordable housing can be met.”

The final fatal flaw with the governor’s affordable housing law is the number of affordable housing units each municipality is mandated to construct.

According to a recently released study conducted by Rutgers University, the state grossly overestimated the supply of developable land by 15 percent, and state officials had that information a full three months before the third round of COAH obligations were enacted. The study also states that the build-out capacity was overestimated by 17 percent.

In an example of how ignoring this study has affected municipal COAH obligations, Red Bank’s obligation is 672 affordable housing units, of which 86 may be met by rehabilitating existing housing units.

Under Corzine’s law, if a municipality wishes to meet the obligation without expending municipal revenues, it must rely on a residential developer to provide one affordable housing unit for every five market rate units constructed.

In Red Bank, if the borough allowed its entire affordable housing obligation to be

met by a private developer, a total of 3,360 units would need to be built within its 1.8-squaremile borders. Marlboro was assigned an

obligation of 1,700 units — multiply that times five.

If those numbers become brick and mortar, the face and character of every town in our state will be changed forever.

The excessive number of units assigned to each municipality and the penalties for job creation and commercial construction is partly the reason we have seen a halt in new construction in New Jersey.

As Corzine’s law increases unrealistically and dramatically municipal affordable housing obligations, it also limits the avenues by which this can be done.

Regional Contribution Agreements allowed “built out” municipalities or those with a rural character to contribute up to 50 percent of their affordable housing obligation to another town. Because of the repeal of RCAs, all of that potential construction remains in limbo.

I believe we must permanently repeal the 2.5 percent commercial development tax (and not just delay its implementation for a year) and the requirement that a company must contribute to build an affordable housing unit if it is deemed to have created 16 jobs in New Jersey.

The affordable housing obligations assigned to each town must be recalculated in accordance with statutory requirements, and RCAs should be reinstated.

Affordable housing is necessary, but we must remember that it is a delicate balance between housing, open space and business and would be better addressed using a scalpel, not a bulldozer.

Jennifer Beck is a Republican state senator who represents the 12th Legislative District, which covers parts of Monmouth and Mercer counties.