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August 15, 2008

Lucy Vandenberg, Executive Director
NJ Council on Affordable Housing
PO Box 813
Trenton, New Jersey 08625-0813

Dear Ms. Vandenberg,

On behalf of the New Jersey State League of Municipalities, I submit the following comments for your consideration regarding the proposed amendments to  COAH “3rd round” regulations published in the June 16, 2008 New Jersey Register.

GENERAL COMMENTS.
Municipalities across the State maintain their concerns that the regulations, including these proposed amendments, and the methodology, are unreasonable, will negatively impact the economy of the State, and will impose substantial burdens on the property taxpayer in contravention of the Fair Housing Act, which prohibits COAH from forcing municipalities “to raise or expend municipal revenues in order to provide low and moderate income housing”  {N.J.S.A. 52:27D-311(d)}, as we indicated in the NJLM comments of March 22, 2008.   

Comment:  The agency should conduct an economic analysis of the COAH regulations and not rely on the boilerplate language put forth in the economic impact statement.      COAH’s regulations will have a significant impact on the State’s economy, on taxpayers and on the business community.  At the very minimum, COAH owes it to the regulated community, i.e. local governments, to fairly assess the impact on taxpayers.

The citizens of our State deserve no less-particularly where, as here, the economic impacts are profound. In this regard, COAH’s own regulations provide that the average costs needed to subsidize affordable units are $161,000 per unit. Thus, a 115,000 unit statewide need represents a substantial economic burden even if municipalities could reduce the subsidy through reliance on less expensive compliance techniques. Moreover, the elimination of RCAs and the inefficiencies of inclusionary zoning—inefficiencies magnified by COAH regulations—have forced municipalities to dramatically increase their reliance on “municipally sponsored projects”. Therefore, as difficult as it was before for municipalities to secure adequate financing for municipally sponsored projects, it will be far more difficult now. Indeed, municipalities will have to dramatically increase their funding for municipally sponsored projects. Instead of providing any analysis of the obvious ramifications to its regulations, COAH asserts that the regulations will have “a positive economic impact on municipalities…” If COAH is to make such statements, it needs to provide the analysis that supports it.

COAH has not provided all the facts municipalities need to replicate the means by which COAH extrapolated their fair share responsibilities. When COAH first proposed the growth share approach in 2003 and 2004, it acknowledged that its fair share regulations in the first and second housing cycles were unintelligible to the public generally and that it needed to provide a readily understandable way for municipalities to ascertain their fair share responsibilities. Yet, when COAH proposed new regulations, it failed to provide the facts municipalities needed to determine their fair share obligations. COAH has now posted on its web site information it used to determine municipal fair shares. However, even after this posting, planners are reporting to us that they still cannot replicate how COAH determined the fair share of municipalities.

It is unreasonable for the agency to adopt a regulatory scheme that cannot be re-created or explained by other experts in the field.    It is incumbent for the agency to provide to local governments a clear explanation as to how this methodology was developed and utilized. 

Comment: In light of the elimination (through COAH regulations and the passage of PL 2008, c. 46) of various compliance methods, COAH should adopt a definitive written policy that it will not assign growth share obligations unless it is fully funded.   

Comment: Municipalities should be allowed to seek adjustments before filing a COAH petition.   When the underlying data relied upon is suspect, it contravenes any rational approach to require towns to zone at higher, unachievable projections before submitting a petition, and then being authorized to seek adjustments.  

 

SPECIFIC COMMENTS

  • 5:96-16.2 Comment: 

COAH should extend the December 31, 2008 deadline. While the League appreciates the filing extension to December 31, 2008, the agency should reconsider the League’s motion to COAH (heard August 13, 2008) seeking a limited stay of the deadline to file.  

COAH is requiring municipalities to prepare and file petitions based on the very proposed amendments in which we are now offering comment.   These amendments will not be adopted until September or possibly October.

Further, the enactment of PL 2008 c. 46 requires the agency to again amend its third round regulations, which will require further changes to municipal plans. 

To require municipalities to deplete trust fund dollars, which ideally should be used for actual construction or rehabilitation of affordable housing, to prepare plans which will be changed again and again is indefensible.

  • 5:97, Smart Growth Impact Statement, Comment:

The agency’s contention that the “proposed amendments and new rules are consistent with the New Jersey State Development and Redevelopment Plan” is inaccurate. 

The presumptive densities are put forth absent any substantive data to validate such projections.    The State Planning Commission has not adopted such densities, and if it were to do so, such a plan would have to go through a public hearing and comment process to validate.     We ask, therefore, for COAH to explain how these presumed densities are compliant with the State Plan.  

  • 5:97-2.4(a)1.i Comment:  

This should be amended to match the language in NJAC 5:97-2.4(a)1.ii, adding the phrase, “…or are eligible for credit pursuant to NJAC 5:97-4 toward a municipality’s prior round obligation.”  

  • 5:97-2.5 Comment:

The proposed amendments exempt demolitions resulting from commercial development from growth share.     Residential development, however, is not exempted, creating a clear and indefensible contradiction in the regulations.    Residential demolitions which do not result in growth (a knock down and rebuild, for example) clearly should be exempted from growth share.   

  • 5:97-2.5(b)(v)  Comment:

This exempts hospitals and nursing homes relocating in the same COAH region from a growth share obligation.  We concur with this exemption, but believe it should be expanded to a “reasonable proximity” and not necessarily rely on borders developed by the agency.    We also ask why this is limited to hospitals and nursing homes, and does not consider other industries.  

  • 5:97-3 Comment:

The League objects to the retroactive elimination of previously certified and granted substantial compliance bonuses.    The agency must fully honor prior round bonuses, particularly since compliant municipalities, acting in good faith, implemented fair share plans with these bonuses. 

  • 5:97-3.17 Comment:

This proposes a 1 for 1 bonus for approved affordable housing projects since December 2004.    The League supports this bonus, as it rightly rewards municipalities who acted in good faith and relied on the earlier promulgated regulations.  

  • 5:97-3.18/3.19, Comment:

The 1.33 bonus to promote development consistent with “smart growth” should be higher.    As proposed, the regulations are inconsistent with the State Plan.   A higher bonus will provide an incentive to provide housing for all incomes and help spur redevelopment.

  • 5:97-3.20 Comment: 

The 25% maximum set aside should not be adopted.   The maximum percentage should instead be based on the economics of the project.   Please see below, 5:97-6.4(a)-second comment.

  • 5:97-5.6(a) Comment:  

The section allowing municipalities to request COAH’s review of its adjustment prior to submitting its petition for substantive certification was deleted.    This removal is indefensible, and demonstrates one of the flaws of the regulations.   COAH is relying on a flawed vacant land analysis and inflated growth projections, and then requires municipalities to zone based on this flawed data.    The municipality then can seek an adjustment after it zones based on inaccurate data.     The principles of sound planning and smart growth rely on zoning based on sound, reliable data.  

  • 5:97-6.4 Comment:

This proposal will effectively eliminate inclusionary residential development as a compliance mechanism.   

The proposal would bar municipalities from establishing a Growth Share obligation or requiring a payment in lieu of housing, unless a residential development has minimum densities of 8 units per acre in urban areas, 6 units per acre in suburban areas, and 4 units per acre in rural areas with sewer.  The problem here is that if municipalities choose to increase densities to use inclusionary zoning for compliance, the increased density itself increases the Growth Share obligation.  The permitted set aside will only marginally exceed the increased obligation created by the development.  Inclusionary residential zoning can no longer be used to satisfy any prior round obligation, retroactive Growth Share obligation, prospective non-residential Growth Share obligation, or any prospective residential Growth Share obligation at densities less than specified.  That leaves only municipal construction as the compliance mechanism for the balance of the obligation.

  • 5:97-6.4(a) Comment:

COAH should not force municipalities to incur a growth share obligation for the market units in an inclusionary project when that project is used to address a round three responsibility.

Indeed, by forcing a municipality to accept a growth share of one unit for every four market units constructed in an inclusionary project, COAH has extinguished the practical value of inclusionary projects—even with the 25 percent set-aside presumptively authorized in Planning Areas 1 and 2. To illustrate, if a municipality can achieve a 25 percent set-aside in a 100 unit project located in a Planning Area 2 and used to address a round three responsibility, the 75 units will generate a roughly 19 unit growth share: 75 /4 = 18.75. Thus, of the 25 affordable units, the municipality can only apply 6 of the affordable units to the growth share obligation generated outside the project: 25 – 19 = 6. Inclusionary zoning has always been the last choice to comply. Thus, in J.W. Field Co. v. Township of Franklin, 204 N.J. Super. 445, 458 (Law Div. 1985, Judge Serpentelli noted that “the most frequently voiced objection to Mount Laurel compliance” is “the overbuilding which allegedly results from satisfaction of the responsibility through the 20% mandatory set-aside.” Indeed, the Legislature adopted the FHA “to provide various alternatives to the use of the builder's remedy as a method of achieving fair share housing.”  N.J.A.C.52:27D- 303. As much overbuilding as resulted when only 20 out of every 100 units constructed could be used to reduce the municipality’s obligation, that inefficiency is dramatically increased if only 6 out of every 100 units constructed could be used to reduce the municipality’s obligation. Thus, COAH’s proposed regulations, absent special circumstances, render inclusionary zoning a largely ineffective means to address a growth share responsibility. Clearly, the market units in an inclusionary project cannot generate a growth share if this technique, is to remain a useful tool to meet a growth share obligation.

  • 5:97-6.4(a)-second comment

COAH should not presume that inclusionary developers can only accommodate a 25 percent in Planning Areas 1 and 2 and a 20 percent in lower planning areas where they achieve dramatic increases in density. The inescapable corollary to the Appellate Division’s ruling that municipalities must provide a density bonus or other compensatory benefit to justify imposing a set-aside is that there must be a relation between the benefits municipalities confer on Mount Laurel developers and the burdens municipalities impose on such developers. Putting aside that in Holmdel Builders Association v. Township of Holmdel, 121 N.J. 550, 582 (1990) the Supreme Court authorized the imposition of a Mount Laurel responsibility without a density bonus or compensatory benefit, the Supreme Court also made clear in Mount Laurel II that municipalities can and should maximize Mount Laurel yield from inclusionary projects by harnessing the value created by an increase in density. See Mount Laurel II at 267 n.29 (clearly setting forth this principle).  Thus, COAH should not cap the yield a municipality can achieve from a project to 25 percent in a Planning Area 1 or 2 or a 20 percent set-aside in lower planning areas.

 

  • 5:97, Appendix D Comment:

This changes the job projections for warehouses, lowering the proposed job generation ratio from 1.5 to 1.0 job per 1000 square feet.   This new projection is still burdensome.   Further, the agency should allow towns that conduct their own survey of jobs created to submit such a study and allow for the appropriate adjustments. 

  •  5:97, Appendix F Comment:

The proposal seeks to amend municipal level household and employment projections to reflect the DEP WQMP rules, zoning data for municipalities in the Highlands and actual growth in a municipality.     The reliability of this data, however, is suspect and dependent on a flawed methodology.     As before, since the agency did not provide data upon adoption of the proposal and only later posted the data on its website after numerous OPRA requests from municipalities, these local governments have not been given adequate time to refute these projections.  Furthermore, it must be asked why such amendments were only made for Highlands municipalities?

  • 5:97, Appendix F Comment:

This proposes adjustments to the vacant land analysis to incorporate new DEP spatial data.   As before, however, the data remains flawed and suspect, and local governments have been given insufficient time to evaluate the agency’s projections.   

Further, the agency does not take into account the best uses for developable land, particularly in terms of height requirements.   It has always been a principle of sound planning and “smart growth” to take into account the appropriate height differentials.     The agency is attempting to compel increased height requirements, regardless of the suitability of the land based on water and sewer capacity, or the potential economic impact on other municipal services, including fire coverage, infrastructure and school construction. 

  Very truly yours,

William G. Dressel, Jr.
Executive Director

 

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