Terminology and Frequently Asked Questions From
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AFFORDABLE HOUSING IN NEW JERSEY AND HOW IT AFFECTS MORRIS TOWNSHIP: Terminology and Frequently Asked Questions November 26, 2018 PHILLIPS PREISS GRYGIEL LEHENY HUGHES LLC PLANNING & REAL ESTATE CONSULTANTS Terminology Affordable Housing The Supreme Court in 2015 Housing with a sales price or found that the COAH admin- rent within the means of a very- istrative process had become low, low-, or moderate-income non-functioning and, as a result, household. returned primary jurisdiction over affordable housing matters to the trial courts. Builder’s Remedy A Builder’s Remedy lawsuit is a Fair Housing Act process created by the Mount In 1985, the New Jersey Legis- Laurel II decision which allows lature, in direct response to the a developer to bring litigation Mount Laurel decisions, enacted against a municipality to change the Fair Housing Act, which cre- zoning on a particular site if that ated the Council on Affordable developer demonstrates that the Housing (COAH). municipality is not in compliance with its Fair Share obligation or is engaging in exclusionary zon- ing practices. The developer in Fair Share Housing Center a Builder’s Remedy lawsuit must (FSHC) promise to include a 20 percent Fair Share Housing Center set-aside of low- and moder- (FSHC), founded in 1975, is a ate-income housing as part of its 501(c)(3) non-profit organiza- development. tion devoted to affordable hous- ing advocacy in New Jersey. In response to a motion FSHC filed with the New Jersey Supreme COAH (Council on Court to enforce litigant’s rights, Affordable Housing) the Supreme Court in 2015 Established by the 1985 Fair found that the COAH admin- Housing Act COAH had primary istrative process had become jurisdiction for the administra- non-functioning and, as a result, tion of housing obligations, i.e., returned primary jurisdiction to assess the statewide need for over affordable housing matters affordable housing, allocate that to the trial courts. Under the need on a municipal fair share 2015 Supreme Court decision, basis, and review and approve FSHC has “a seat at the table” municipal housing plans aimed to comment on every affordable at implementing the local fair housing plan in every town in share obligation. the State. AFFORDABLE HOUSING 2 IN NEW JERSEY AND HOW IT AFFECTS MORRIS TOWNSHIP Fair Share Obligation needs, particularly with regard Income, Moderate A municipality’s constitutional to low and moderate income Households with a gross income obligation to provide through its housing. equal to more than 50% but less land use regulations a realistic than 80% of the median gross opportunity for a fair share of its household income for house- region’s present and prospective holds of the same size within needs for housing for low and Housing Region the housing region in which the moderate income families. A geographic area of not less housing is located. than two nor more than four contiguous, whole counties which exhibit significant social, Fair Share Plan economic and income similari- Income, Very-Low A plan or proposal by which a ties, and which constitute to the Households with a gross income municipality would satisfy its greatest extent practicable the equal to 30% or less of the obligation to create a realis- primary metropolitan statistical median gross household income tic opportunity to meet its fair areas as last defined by the Unit- for households of the same size share of the very-low, low-, and ed States Census Bureau prior within the housing region in moderate-income housing needs to the effective date of the Fair which the housing is located. of its region and that details the Housing Act. affirmative measures the munic- ipality proposes to undertake to achieve its fair share of very- Intervenor low, low-, and moderate-income Inclusionary Development Builders, developers, land own- housing. A residential housing develop- ers and other interested parties ment in which a percentage of who are allowed to “intervene” the dwelling units are affordable in the declaratory judgment to very-low, low- and moder- proceedings that determine a Household ate-income households. municipality’s fair share obliga- The person or persons occupy- tion. Intervenors typically take ing a housing unit. the position: 1) that the munici- pality has failed to zone for the Income, Low creation of enough affordable Households with a gross income housing and/or 2) that the inter- Housing Element equal to 50% or less of the venor owns a specific site that That portion of a municipali- median gross household income the town should allow for devel- ty’s master plan consisting of for households of the same size opment of affordable housing. reports, statements, proposals, within the housing region in maps, diagrams and text de- which the housing is located. signed to meet the municipal- ity’s fair share of its region’s present and prospective housing AFFORDABLE HOUSING IN NEW JERSEY AND 3 HOW IT AFFECTS MORRIS TOWNSHIP Judgment of Overlay Zoning Unmet Need Compliance/Repose A zoned area of a municipali- The differential between the A judgment issued by the Su- ty in which very-low, low- and realistic development potential perior Court approving a mu- moderate-income housing may and a municipality’s allocated nicipality’s plan to satisfy its fair be built as a matter of right in fair share obligation. share obligation. This judgment addition to another use. protects a municipality from Builder’s Remedy lawsuits. Vacant Land Adjustment Prospective Need An adjustment in a municipal A projection of housing needs affordable housing obligation Mount Laurel Doctrine based on development and due to available land capacity. The New Jersey Supreme Court, growth which is reasonably A vacant land adjustment deter- in Mount Laurel I (1975) and likely to occur in a region or a mines a municipality’s realistic Mount Laurel II (1983), declared municipality. development potential (RDP). that municipal land use regu- lations that prevent affordable housing opportunities for the Realistic Development poor are unconstitutional and Potential (RDP) ordered all New Jersey munic- The municipal obligation based ipalities to plan, zone for, and on available land capacity as take affirmative actions to pro- calculated pursuant to a Vacant vide realistic opportunities for Land Adjustment (VLA). their “fair share” of the region’s need for affordable housing for low and moderate-income people. Together, these two Su- Special Master preme Court decisions comprise An expert appointed by the the Mount Laurel Doctrine. The Court to assist the court in Mount Laurel Doctrine prohibits reviewing Fair Share Plans. A economic discrimination against master’s function is essentially the poor by the state and mu- as a mediator between the mu- nicipalities in the exercise of nicipality and Fair Share Housing their land use powers. Center and Intervenors. AFFORDABLE HOUSING 4 IN NEW JERSEY AND HOW IT AFFECTS MORRIS TOWNSHIP Frequently Asked Questions Administration of Affordable Units What is Affordable Housing? Housing with a sales price or rent within the means of a very-low, low-, or moderate-income household. Who Qualifies for Affordable Housing? In order to be eligible for affordable housing in New Jersey, a house- hold’s income must be below the income limit for the region in which the affordable housing is located, either for very low-, low- or moder- ate-income levels. A moderate-income household is classified as earn- ing between 50 percent and 80 percent of the area median income. A low-income household is classified as earning less than 50 percent of area median income. Very low-income households are classified as earning less than 30 percent of area median income. How Are Affordable Housing Units Administered? The administration process is the same regardless of the type of unit. The municipality hires or appoints a Municipal Housing Liaison. The Mu- nicipal Housing Liaison (MHL) may perform all administrative functions for affordable housing throughout the municipality or may oversee a contract with an Administrative Agent (AA). The MHL and/or the AA must follow rules set forth in the Uniform Housing Affordability Con- trols (UHAC), found at NJAC 5:80-26.1, regarding establishing initial sales prices or rents, bedroom distribution, affordability average, low- and moderate-income split of units, and the very low-income set-aside. How Are Rental and Sales Prices Initially Set? Initial sales prices and rents are based on targeted “model” household sizes for each size home as determined by the number of bedrooms. With the exception of assisted living facilities, initial sales prices and rents must adhere to UHAC rules. These maximum sales prices and rents are based on Annual Regional Income Limits at the time of occu- pancy. For rental units, annual rent increases are permitted in affordable units governed by UHAC. Rent increases are permitted at the anniversary of tenancy according to COAH’s Annual Regional Income Limits Chart. AFFORDABLE HOUSING IN NEW JERSEY AND 5 HOW IT AFFECTS MORRIS TOWNSHIP These increases must be filed with and approved by the Administrative Agent. Calculating the maximum resale price (MRP) for an ownership unit involves applying the annual percentage increase corresponding with each calendar year since the Seller bought the house. The Seller of an ownership unit may ask the Administrative Agent to increase the sales price of their home beyond the maximum sales price under limited cir- cumstances. UHAC states that only those improvements “that render the unit suitable for a larger household or that add an additional bath- room” can increase the calculated maximum sales price. In no event shall the maximum sales price of an improved housing unit exceed the limits of affordability for the larger households. How Do You Find Out About An Affordable Unit or Home? All affordable units that are governed by UHAC are required to be affirmatively marketed using an Affirmative Marketing Plan.