From NJBiz:
New Jersey and builders in the state are locked in a high-stakes battle over affordable housing that is rapidly coming to a head. At issue are state regulations covering fees that builders are required to pay to municipalities in lieu of constructing affordable homes.
Since the regulations allow municipalities to charge basically what they want, builders are suing to overturn the rules. Nor are they satisfied with proposed guidelines for limiting fees that the Council on Affordable Housing (COAH), which administers the regulations, plans to introduce for comment next week.“Whatever the builder pays is passed on to the buyer,” says Patrick O’Keefe, CEO of the New Jersey Builders Association (NJBA). Such expenses include taxes, fees and all costs involved with the production and marketing of a property. “Ultimately, all of those costs have to be recaptured in the sales price, or the builder goes bankrupt,” he says.
The NJBA is one of four organizations that in 2005 sued COAH over provisions of the affordable housing regulations that include the municipal fees. Oral arguments were heard last October in state appellate court in Atlantic City, with a decision expected early this year.
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At the root of this dispute are the so-called third-round affordable housing rules COAH introduced in 2004. Under these rules, which cover the period through 2014, a developer is responsible for producing one affordable unit for every eight market-rate homes that go up, or for every 25 jobs generated by a commercial project such as an office building. The money collected from the in lieu fees must be used to provide affordable housing within the municipality.Since the third-round rules took effect, 117 of New Jersey’s 566 municipalities have adopted or are in the process of adopting the necessary ordinances to apply them, according to the DCA.
In addition, 250 towns have submitted affordable-housing plans to COAH for review. Based on these plans, the DCA projects that nearly 25,000 affordable units will be rehabilitated and about 53,000 units will be newly built under the disputed rules. This compares with the 18,000 rehabbed units and 49,000 units of new construction that were completed or approved under the second-round rules that covered the period from 1993 to 1999.
But developers say the progress has been costly. According to McGuinness, affordable housing fees can run as high as $1 million per home. “It’s really invited some extreme, abusive sort of situations where there’s no limit, no cap on what they can charge,” he says.
I have heard that the fees were outrageous in some towns but a million per home? I think either that municipality is trying to acquire land or make it very difficult to build there. A municipality could easily acquire some land and many municipalities have some banked. Usually this is the hardest part once that is done rezoning is usually required. But you are talking $8 million acquired for 1 affordable unit. Something is fishy here.
According to McGuinness, affordable housing fees can run as high as $1 million per home.
I’m sorry, but that’s not even remotely possible. It’s rather telling that there is no town mentioned.
I’m really disappointed in that reporter, because their ears should really have pricked up at at that one. You can’t let something that nuts get into the story without checking out what the guy is talking about.
I’m not going to leave this one alone.
Here’s another big reason that is extremely unlikely: It would be exceptionally rare for a municipal lawyer to give a town’s council something that is substantially different from the laws in other towns.
Believe it or not, municipal attorneys in NJ are allowed to do something called “value billing.”
What that boils down to is that if town a passes a law (say a cigarette vending machine ban) than in all of the town’s where they want to pass a similar law the municipal attorney usually does little more than copy the first town’s ordinance with changes to the town’s name and the relevant dates.
It makes sense, but taxpayers still get screwed, because the second firm gets to bill as if they did all the legal legwork that the first town did.
Just to be perfectly clear, that means if the attorney who created the ordinance submits a bill for 70 hours of work on it, which he may well have done, the next guy can submit a bill claiming the same number of hours despite have a paralegal spend an hour and a half making the changes and checking for typos.
Yes, the racket is that bad.