TRENTON – With less than a month left before the state takes them over, municipalities are taking steps to spend, or in some cases secure, their hefty affordable housing trust funds.
The move by the state is backed by legislation passed in 2008, bill A500, which among other things, lets the state take over unspent municipal affordable housing funds if they haven’t been tapped out after four years. The money would go to the Department of Community Affairs.
Now, that time has come due.
On Thursday, two committees will hold hearings on three bills that call for extending the deadline by another few years.
One bill, S2011, sponsored by Sen. Brian Stack, (D-33), of Union City, will be heard by the Senate Community and Urban Affairs Committee.
Also, the Assembly Housing and Local Government Committee will hold a hearing on two bills concerning the issue: A2717, whose sponsors are Assemblyman Anthony Bucco, (R-25), of Boonton, and Assemblyman John DiMaio, (D-2), of Northfield, and bill A2950, which is sponsored by Jerry Green, (D-22), Plainfield.
When the Department of Community Affairs compiled data earlier this year, it had originally projected to collect more than $220 million if the municipalities didn’t spend the money for the purpose of affordable housing.
While DCA officials have said they still expect to collect that amount, others said towns have the money designated for specific projects, and the amount that would go to the state would most likely not be that high.
Stacy Berger, of the Housing and Community Development Network of New Jersey, estimates the current funds at risk for state takeover to be about $160 million.
DCA Commissioner Richard Constable has disputed assertions by some lawmakers, mostly Democrats, that the money is being diverted to close state budget gaps.
He has said the money will be used – not necessarily for affordable housing construction – but for various housing programs, such as funds to prevent homelessness, rental assistance, and other related causes.
DCA spokesperson Tammori Petty said in an email that the funds “are not permitted to be used for general municipal purposes.”
Still, towns are anxious to have a say and control those funds before any of them are forfeited in the state.
In North Brunswick in Middlesex County, township officials teamed up with a developer, Community Investment Strategies of Lawrenceville, to form a public-private partnership and spent $5.25 million to buy an apartment complex.
The complex, Oak Leaf Village, will be renamed North Brunswick Crescent. The new complex will consist of 183 apartments, all designated as affordable housing.
“We partnered with a private developer,” said Michael Hritz, the township community development director. “We entered into a contract. They have to deed restrict the property.”
The township closed on the deal with Community Development Solutions on March 30.
In addition to deed restricting the apartment complex as affordable housing, Hritz said, Community Investment Solutions is required to build a community building, a playground, and have background checks conducted
Also, Hritz said, North Brunswick will allocate some $2.5 million toward its community-wide rehabilitation program, which fixes homes in disrepair or shoddy condition. Once those funds are used on a particular property, Hritz said, those homes are deed-restricted as affordable housing.
Other uses for those funds will go toward rental subsidies for a 150-unit senior housing development. Another $250,000 will be spent on housing for developmentally disabled residents, he said.
“We satisfied the requirements,” Hritz said.
The administrator said the possible forfeiture of the funds did create a sense of urgency to spend the funds, but for their intended purpose.
“We certainly acted in a more expeditious manner,” he said.
In Monroe Township in Middlesex County, the governing body drew up an ordinance to create the Monroe Township Affordable Housing Irrevocable Trust. Officials described the trust fund as a new way to commit the affordable housing funds that Monroe has collected from development fees over the years.
DCA data show it has $10.1 million in its municipal trust fund account.
Monroe government officials had the ordinance created upon the advice of the township attorney, Joel Shain, who said it would protect the funds .
The township administrator, Wayne Hamilton, did not mince words about the state’s planned takeover of unspent funds, especially since towns have been left in limbo regarding the future of the now-defunct Council on Affordable Housing.
“It’s ludicrous they are putting unreasonable timelines,” Hamilton said. “The whole thing has been an absolute travesty.”
Hamilton said the township plans to “commit” $6.7 million toward a “veteran affordable housing project.”
But committing funds may not be enough. Petty, of DCA, said municipalities could still lose money if they merely committed funds and they are not actually spent on construction.
In East Hanover, which DCA said has more than $4.5 million in its affordable housing trust fund, township administrator Joe Tempesta, in an email, said broadly, the township “has specific plans to spend the remaining funds and those specifics will be available in the near future.”
He added, “we are currently under contract negotiations to engage with a COAH Developer which will be completed before the DCA deadline.”
He provided no additional details, citing negotiations.
Other municipalities that have several millions of dollars accumulated in their trust funds include Paramus ($5 million), Parsippany ($3.7 million), Edison ($3.3 million), and Warren Township ($4.3 million).
Officials in each of these municipalities could not be reached for comment.