Township Preparing Round III COAH Plan – Again

Deputy Mayor Kristin McCarthy leads the subcommittee charged with updating the Township’s plan to comply with the third round of home building required by the Council On Affordable Housing (COAH). “We have a rough draft, prepared by our COAH expert Shirley Bishop. The completed plan has to be submitted by December 31. There will be a joint meeting of the Township Committee and Planning Board at 8PM on December 2 to adopt the plan. At 7 that evening the public is invited to learn and ask questions about COAH in the meeting room at the Town Hall. Both meetings are open to the public”, Deputy Mayor McCarthy said. The plan will record how many units of “affordable” housing the Township may have to build between now and 2018, based on the State’s projections of rates of development and job creation in the Township during that period.

Delaware and all other state municipalities had gone through the process of drafting and approving Round III COAH plans in 2005, only to see them all thrown out after the State lost a lawsuit filed by the builders’ lobby. Under the Round III rules governing the plan the Township is now drafting, home builders have largely gone out of the business of building affordable housing, preferring instead to build market-rate homes that cost more, leaving the financing of home building for lower income residents to the municipalities themselves, while also precluding the possibility of the municipalities making money by their effort.

Under the 2005 plan approved by COAH a municipality was required to have one new affordable unit for every eight new market rate units. The township had a “growth share” ordinance that allowed it to satisfy this requirement by contributing to the Township’s municipal COAH development fund for each affordable unit. The Township was allowed to collect this share from homebuilders, if they elected not to build the affordable units themselves. This money was called the “COAH development fee”, and was to be spent by the Township within the Township to build affordable housing. The COAH-approved plan calculated that the development fee for Delaware Township should be just over $280,000 per affordable unit to be built. Each eight new market rate units required construction of one affordable unit by the developer. The COAH requirement for development of less than eight units could be satisfied by payment of a pro rata share – $35,000 for 1 unit, $140,000 for four units, and so on. Of course, the $280,000 fee is not enough to acquire land and build a housing unit in Delaware Township, so the balance was to have been made up by Township tax revenues.

Under the new rules COAH has eliminated the idea of “growth share” from its new rules. The COAH development fee paid by builders has been cut from just over $35,000 per unit to 1% of the assessed value of each market-rate unit to be built. For example, on a $500,000 house, this would be $5,000. The Township has submitted a plan to COAH allowing it to collect 1.5%, or about one fifth of the old COAH development fee; COAH has not approved this yet. “Basically, there’s much less revenue for construction of affordable housing coming to the Township now”, Deputy Mayor McCarthy said.

“So when Roger Locandro took his subdivision approval to the Board of Adjustment and asked for a density bonus because he was promising to build 2 COAH units for the 12 market-rate units he was building, when his requirement at the time was only 1.5 COAH units, the plan was approved. Mr. Locandro is fulfilling his COAH obligation as a developer”.

While cutting Township revenues, the new COAH rules also increase the Township’s obligation to build housing. Under the 2005 rules, municipalities were required to provide one affordable unit for every eight market-rate units. The State’s loss to the homebuilders’ lawsuit made this more onerous, by changing the ratio to one for five. These units often take the form of “accessory apartments” that homeowners may build within their home, or in an outbuilding, and deed-restrict for COAH for a period of ten years; or they can be in “group homes”. “The Township is actively looking for people who want to build accessory apartments, and we will pay up to $20,000 toward their cost”, Deputy Mayor Mc Carthy says.

So, where will the Township get the money to pay for COAH? Affordable housing is an unfunded mandate imposed by the State on municipalities, and yet, Deputy Mayor McCarthy notes, “The State says we’re not supposed to raise taxes. My preferred way to meet our COAH requirements would be to pay residents for apartments in existing buildings and another group home, because these are more affordable to the Township. We’re not going to do more than we have to. And I don’t think we’re going to grow as fast as Trenton says we will. Previously the Township issued about 10 Certificates of Occupancy (CO’s) a year. This is what determines our COAH requirement – one COAH unit for every five  ‘market rate’ units that are occupied. During this real estate market downturn we’ll probably issue about six CO’s a year. We also have to account for all the potential developable lots out there. That’s the tricky part”.

Numerous lawsuits have been filed against COAH since the 2007 revision of its rules, one by Clinton and a group of municipalities, and one by the New Jersey League of Municipalities. Delaware Township is a party to the latter suit, in part because it costs less, $3,000 instead of $10,000, and in part because the lawsuit brought by Clinton et al asserts that the COAH rules are unconstitutional. “I’m not a lawyer, but the constitutionality issue has been tried and upheld, so we’re not going to join that one. The argument that you don’t have to provide affordable housing is, I think, one you can’t win”, Deputy Mayor McCarthy said.

“COAH has an idiosyncratic idea of baseline zoning – unrealistic – but they don’t want to hear it. The lawsuit primarily addresses COAH’s methodology, calling it flawed. My guess is that in another six months we’ll have another court decision about COAH and we’ll have to re-do our plan again. It’s a moving target”.

The New Jersey League of Municipalities sent out a “Dear Mayor Letter” dated July 17, 2008, explaining why it had filed a notice of appeal with the Appellate Division of the Superior Court of New Jersey appealing the regulations adopted by the New Jersey Council on Affordable Housing on June 2, 2008. In a July 15 press conference the League stated explicitly that it supports the provision and purpose of affordable housing. “Our actions are not meant to hinder the production of affordable housing. On the contrary, our actions are in support of achieving a sustainable housing policy and in defense of property taxpayers”.

The New Jersey State Assembly bill A-500 which made the new COAH rules law is available online. The League’s challenge “focuses on the economic imbalances in the regulations, and the flawed methodology comprising the vacant land analysis, the computation of jobs and housing projections through 2018”.

The “Dear Mayor Letter” goes on to say that, due to the challenge to the COAH regulations and the uncertainty regarding their continued validity, the League would seek a suspension of the December 31, 2008, deadline.   “If granted, it will allow municipalities to continue to satisfy their affordable housing obligations by imposing obligations on developers”. The purpose of the stay is to prevent municipalities from again expending significant financial resources drafting plans when the regulations are being challenged, additional changes are already being suggested by COAH, and approval of A-500 will bring further changes to COAH regulations.

This Fall the State rejected the League’s plea for suspension of the December 31, 2008 deadline. Now municipalities have no choice but to continue to work on their revised Round III COAH plans, even though they will likely be obsolete on date of completion.

The builders’ lobby has filed a new lawsuit, too, seeking more changes to its advantage.

Deputy Mayor McCarthy told The Post, “to control its expenses, Delaware Township does as much of the work as possible with volunteer labor; we call in our experts only when absolutely necessary. Volunteers do all the clerical work and trips to Trenton”. But while the Township is controlling its costs, it is still moving forward to achieve COAH compliance. “We have a moral obligation, I believe, to the residents of the Township to do everything we can to protect ourselves from a builders’ remedy lawsuit”.