Dive Brief:
- A New Jersey panel of appeals court judges has ruled that the state's municipalities do not have to abide by affordable housing rules that were left unenforced by the Council on Affordable Housing (COAH) for 16 years, according to The Wall Street Journal.
- The court ruled that, despite housing advocate arguments in favor of the addition of hundreds of thousands of units to the state's stock of affordable housing, city and town officials will only be held to current and future mandates.
- Proponents of the ruling said it protects municipalities from having to build an unrealistic number of affordable units, but critics said it will prevent the construction of much-needed below-market housing.
Dive Insight:
The state Supreme Court took away the authority of COAH in 2015, reportedly due to it devolution into a dysfunctional authority beginning in 1998, and handed it to local courts. Housing advocates were successful in getting a lower trial court to rule their way earlier this year — forcing cities to fill its affordable housing responsibilities for the 1999-2015 gap — but approximately 300 New Jersey cities and towns filed an appeal, which resulted in this latest ruling.
Affordable housing supply is in great demand nationwide, so municipalities are beginning to enact stricter mandates in order to get builders to include more below-market-rate units in their developments, whether for sale or rent.
In Portland, OR, late last month, city officials instituted a 1% construction excise tax, which will fund affordable housing projects. Commercial and residential projects of $100,000 or more, with some exceptions, are all subject to the tax, which is expected to raise $8 million annually. The new law is a result of the state's reversal of a 17-year ban on affordable housing mandates.
San Francisco recently revised its affordable housing mandate and now requires builders to include 25% below-market-rate units in any new development of 25 units or more. This percentage is up from the city's previous requirement of 12%. Another option for city developers is to pay a flat fee of 33% on the number of required affordable housing units.
Julian Castro, secretary of Housing and Urban Development, said in May that government involvement in housing is critical because unless private companies are on the receiving end of subsidies, building affordable housing doesn't interest them. Federal housing assistance programs currently help 5.5 million renter households. However, a National Low Income Housing Coalition report found there are still more than 10 million low-income families who need 7.2 million housing units.