Peter J. O’Connor, Esq. Kevin D. Walsh, Esq. Adam M. Gordon, Esq. Laura Smith-Denker, Esq.
August 1, 2014
BY EMAIL TO: [email protected] Mr. Sean Thompson
Acting Executive Director
New Jersey Council on Affordable Housing. PO Box 813
Trenton, NJ 08625-0813
Re: Proposed Procedural Rules, N.J.A.C. 5:98, 46 N.J.R. 912, June 2, 2014 Proposed Substantive Rules, N.J.A.C. 5:99, 46 N.J.R. 924, June 2, 2014 Dear Mr. Thompson:
The 2010 remedy order by the Appellate Division, 1 affirmed by the New Jersey Supreme Court on September 26, 2013, 2 directed the New Jersey Council on Affordable Housing (“COAH”)
“… to adopt new third round rules that use a methodology for determining prospective need similar to the methodologies used in the first and second rounds. This determination should be made on the basis of the most up-to-date available data. The remand shall be completed within five months.”3 (emphasis added)
1 In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing 416 N.J. Super. 462 (App Div 2010).
2 In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, 215 N.J. 578 (2013).
3 The Supreme Court reaffirmed this remedy and on March 14, 2014 established a new timetable for compliance, requiring COAH to propose and adopt new post-1999 rules, with publication of the adoption notice in the November 17, 2014 edition of the New Jersey Register. In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on Affordable Housing, Order ___ N.J. _____ March 13, 2014.
If COAH had followed this order, it would have ended up with workable rules consistent with the Constitution and Fair Housing Act that would have produced significant numbers of new homes affordable to working families, low-income seniors, and people with special needs and helped rebuild New Jersey’s troubled economy. Unfortunately, COAH’s proposed Substantive Rules do not comply with the Court’s order and are significantly not similar to the Prior Round (1987-1999) rules, as detailed in our comments that follow. The rules, as currently drafted, frustrate the basic tenets of the Mount Laurel doctrine and the Fair Housing Act. They will impede, rather than further, the production of affordable housing in New Jersey if adopted as proposed. They appear to have been drafted deliberately to undermine the Court’s order and fair housing in New Jersey.
The proposed rules require wholesale reconsideration and rethinking by COAH, in three key areas, as detailed below:
1. Fair Share Calculation Issues 2. Fair Share Allocation Issues
3. Creating Realistic Opportunities for Affordable Housing: Compliance Mechanisms We also submit, below, comments on the proposed Procedural Rules.
These comments incorporate by reference all documents referenced herein and a three-DVD-ROM set of files and exhibits to the rules that were hand delivered to COAH on August 1, 2014; additional tables and exhibits are also provided within these comments. Much of those three DVDs consist of files that FSHC received through the Open Public Records Act from COAH and Rutgers – in some cases only after litigation. The vast majority of the files provided should have been made transparent to all commenters of the rules on COAH’s website, as COAH has done on the past. Instead, COAH has attempted to hide the data underlying its rules, perhaps because once those data are examined it becomes evident that they are inconsistent with constitutional and statutory requirements, contrary to common sense, and manipulated in
such a way to reduce fair share obligations instead of painting an honest picture of the great need for homes that low- and moderate-income people in New Jersey can afford.
Respectfully,
Adam M. Gordon Staff Attorney
COMMENTS ON SUMMARY OF PROPOSED SUBSTANTIVE RULES, 46 N.J.R. 924-7
1. 5:99 Summary. COMMENT: The assertion that “proposed new rules include changes which will increase the efficiency and effectiveness of the substantive certification process and facilitate the production of affordable housing ” is unsubstantiated. In fact, the opposite is more likely to occur, as the economic feasibility analyses required by the proposal in the inclusionary zoning process will bog down adoption of credible municipal housing elements and fair share plans. Also, the reduction in the presumptive set-aside to 10% will likely unnecessarily decrease the production of affordable housing. 46 N.J.R. 924
2. 5:99 Summary. COMMENT: The assertion that the “core focus of the Mt. Laurel doctrine is that zoning available land is the preferred means of meeting a municipality’s affordable housing obligation, allowing alternate means where available land is insufficient” is unsubstantiated. 46 N.J.R. 924 Mount Laurel II expresses no preference for “zoning available land.” “Mount Laurel was never intended to produce the perfect model of a just zoning ordinance; it was intended to provide a realistic opportunity for the construction of lower income housing. … We … expect municipalities to do more than pass land use regulations conforming to Mount Laurel I. Where appropriate, municipalities should provide a realistic opportunity for housing through other municipal action inextricably related to land use regulations.” 92 N.J. 158, 264 (1983).
3. 5:99 Summary. COMMENT: The “buildable limit reduction,” which enables “A municipality’s affordable housing obligation … [to be] … reduced to that which can be accommodated as determined by its land capacity per the table provided in chapter Appendix E” is a new concept that undermines implementation of the Mount Laurel doctrine, fails to recognize the reality and importance of redevelopment and would throttle down Mount Laurel implementation based on existing, often exclusionary residential zoning and densities. 46 N.J.R. 925
4. 5:99 Summary. COMMENT: The Summary asserts “Municipalities with buildable limit reductions are required to identify additional opportunities for the creation of affordable housing,” 46 N.J.R. 925 However, the version of the proposed rules published in the New Jersey Register contains no such provision. Such a provision was indeed adopted by COAH on April 30, 2014 for the rule proposal, at proposed N.J.A.C. 5:99-3.3(c), but mysteriously deleted prior to publication. COAH needs to explain how these divergent explanations and changing versions are reconciled, and why the proposal approved by the COAH Board was changed and under what authority.
5. 5:99 Summary. COMMENT: Rental Housing - The assertion that “formulas for the …
rental housing: requirement, family housing requirements. . . have been deleted from the rules as they are … no longer necessary …” is unsubstantiated. COAH has presented no facts presented to support its contention that rental affordable housing and family affordable housing are no longer necessary in New Jersey. 46 N.J.R. 925 This assertion is unsubstantiated by the proposal.
6. 5:99_ Summary COMMENT: Rental Housing – The removal of the 25% minimum rental requirement is not sensible and is contrary to the Council’s goals of providing a realistic opportunity for low and moderate income households. The 25% rental requirement was
implemented and was been found to be effective in previous rule proposals. The Council has historically noted that a significant portion of low and moderate income individuals and families need access to rental units as opposed to strictly for-sale homes. This recognition previously led the Council to include a minimum municipal rental requirement of 20% in its First Round rules, then raised to 25% in the Second Round rules and both versions of the invalidated third round regulations. N.J.A.C. 5:92-5.1(b); N.J.A.C. 5:93-5.15(a); N.J.A.C. 5:94-4.20(a); N.J.A.C.. 5:97-3.10(b). The Council should reinstate the 25% Minimum Rental Requirement to ensure low and moderate income individuals and families have access to affordable housing.
7. 5:99_Summary COMMENT: Rental Housing – Deviation from Prior Round methods – The Council’s proposal unnecessarily and without explanation diverts from the previously used and tremendously effective minimum municipal rental requirement. This departure from previous COAH regulations significantly burdens the prospect of providing a realistic opportunity for low/moderate income families to obtain housing in COAH municipalities. Low and moderate income individuals and families and people with special needs are more readily able to access a rental unit, but many for various reasons either do not qualify for a mortgage or due to life circumstances are not able to own a home. Without a rental requirement, rental units are much less likely to be built and the low and moderate income portion of the population is going to be excluded and not provided with a realistic opportunity. This is something that the Council has an entity has recognized for years. COAH should reinstate the minimum 25% municipal rental requirement.
8. 5:99 Summary COMMENT: Rental Housing – Alteration from 2nd round methodology – The Council has eliminated the 25% minimum rental requirement that was expressly declared a necessity by the Council during the Second Round commenting period. The Second round rules required at least 25% of all new affordable building to be rental units. N.J.A.C. 5:93-5.15. The Council defended its rental requirement in the Second Round rules in 1994 by stating that “for a municipality not receiving an adjustment pursuant to 5:93-4.2, the rental obligation shall equal 25%.” During commenting about their inclusion of this provision, the Council expressed its recognition of the need for affordable rental units. The Council should correct these rules to include the rental requirement found in the Second Round. If it will not do so, it should explain why the rental requirement is no longer needed.
9. 5:99 Summary COMMENT: Rental Housing – The general public understands the immense need for affordable rental units. During the proposal period of the Second Round some people were actually calling for a substantially higher minimum requirement of 50% of new affordable buildings to be reserved for rental units. The Council responded to these comments by reaffirming the need for a rental requirement, “The production of rental housing is essential to any program designed for low and moderate income households. For that reason it [the Council] has increased the rental obligation from 20 to 25 percent.” It is clear that the Council recognized that a minimum rental requirement is necessary to ensure access to affordable housing for many low income families. Why has the Council contradicted its prior reasoning and removed the rental requirement?
10. 5:99_ Summary COMMENT: Rental Housing – Deviation from the Council’s more recent reasoning – Even more recently than the Second Round rules, in 2004 the Council strongly defended the inclusion of a minimum rental requirement in the rules, yet now completely eliminates this provision. The Council responded to comments on the rental requirement by again expressing its recognition of the need for a minimum rental requirement and its decision to set this minimum at 25%. “The 25 percent rental housing minimum remains unchanged from the Council's Second Round rules. The Council believes that the production of rental housing is essential to any program designed for low-and moderate-income households and that a balance between rental housing and homeownership opportunities is needed. The Council believes that deleting the rental housing requirement would hinder the production of rental housing.” 36 N.J.R. 5748(a). The response from the Council during the 2004 proposal is exactly correct in that deleting a rental housing requirement would hinder the production of rental housing and would fail to provide a realistic opportunity for many. What has brought about the change in the Council’s stance on the minimum rental requirement that was so valuable in the prior rounds?
11. 5:99_ Summary COMMENT: Rental Housing – Deviation from the Council’s more recent reasoning – In 2008, the Council strongly defended the inclusion of a minimum rental requirement when it said, "The Council believes that the production of rental housing is essential to any program designed for low and moderate income households and that a balance between rental housing and home-ownership opportunities is needed".40 N.J.R. 2690(a) What has changed since then? Why has the Council changed its reasoning on a reasonable minimum rental requirement after such consistent incorporation of such a requirement in the past? The Council should resolve this issue by including a 25% or greater minimum rental requirement in its Third Round rules.
12. 5:99 Summary. COMMENT: Rental Housing - The COAH rental housing requirement is still relevant in New Jersey, because many households prefer to rent for reasons of flexibility, affordability, and lifestyle.
Rental units serve a diverse segment of the population. More rental households are families with children than owner households. Rental households tend to be younger and are more likely to be single than households in owner-occupied housing, but renting increased in all age groups during the recession. Life events still trigger changes from ownership to renter status across socioeconomic groups.4
A common misperception about renters is that they would prefer to be homeowners. A survey by Fannie Mae of young renters found that about a quarter of renters were primarily renting to “[make themselves] financially ready to own.” More than half listed cited their main reason for renting as affordability, flexibility, or lower stress levels.5
The broader sample in Fannie Mae’s survey supports the view that renters rent for reasons beyond an inability to purchase a home. Among renters, 53% believe that renting a home is less stressful, 42% believe renting provides more flexibility, 42%
4 Harvard Joint Center for Housing Studies. “America’s Rental Housing: Evolving Markets and Needs.” (December 2013)
believe renting allows a convenient location for living, and 56% believe that renting is better for living within their budget.6
Removing the 25% rental set-aside ignores the evidence that renting is the preferred option for roughly half of New Jersey’s more than one million renting families. The reservation for rental housing ensured that towns could not discriminate against these households. If towns can collectively avoid serving the renting populace, New Jersey will not be able to compete for members of the workforce who need rental housing to relocate for economic opportunity. This includes young workers, who are statistically more likely to rent.
13. 5:99 Summary. COMMENT: Rental Housing - The COAH rental housing requirement is still relevant because New Jersey’s rental shortage is driven by a lack of supply, exacerbated by Hurricane Sandy.
New Jersey’s housing prices increased by ten percent in real terms from 2000 to 2012. This increase in rental housing prices is probably not caused by higher expenses or slimmer margins for landlords. Harvard’s Joint Center on Housing Studies releases an annual report on rental housing. Researchers track returns on rental investments by analyzing data from the national Council of Real Estate Investment Fiduciaries. Harvard’s researchers found that “net operating income for institutionally owned apartments was up by at least 4.9 percent annually over the past 12 quarters” as of December 2013. In the long-term, owners also benefit from increasing returns on their property investments: “Since bottoming out in 2009, Moody’s Commercial Property Price Index for apartment buildings climbed by 62 percent to a new high in mid-2013.”7 By not requiring any minimum rental percentage, the proposed rules do not address this housing crisis caused by increasing rents.
14. 5:99 Summary. COMMENT: Rental Housing - The rental housing requirement is still relevant because , even of affordable units, is not an option financially for many renters. Purchasing a home is not an option for a majority of New Jersey’s renter families. The Census Bureau reports that the median income of rental families is $40,517. This means that the median renter household earns a monthly wage of $3,376.
Many renter families are also likely to lack the assets necessary for the down payment on a house. In 2010, the median renter household nationally had a net worth of just $5,100.8 This is insufficient for even a 10% down payment on even an affordable, deed-restricted homeownership unit.
Renter assets were also likely to be in an illiquid or indispensable format, like a vehicle. Down payment or principal payment assistance would not be sustainable if future increases in home value or property tax rates outstrip any gains in the households’ earnings.
6 http://www.fanniemae.com/portal/research-and-analysis/housing-quarterly.html
7 Joint Center for Housing Studies of Harvard University. “America’s Rental Housing.” (2013)
8 Federal Reserve Bulletin, “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances.” (2010)
Thus, if municipalities are no longer required to develop rental units, it would mean that COAH’s rules only serve families who would be able to afford mortgage payments and a down payment. Meanwhile, lower-income renters would continue to be trapped in units that are already too expensive while a smaller and smaller percentage would have access to the state’s existing stock of affordable units.
15. 5:99 Summary. COMMENT: Rental Housing - Supply is already too low in New Jersey’s rental market. An already-tight market was exacerbated by Sandy, and has not yet recovered. Removing COAH’s 25% rental requirement will only continue to limit options for renters.
Several sources provide insight into the level of rental vacancy in New Jersey’s rental market. Rental vacancy is often used to gauge the “health” of a rental market. If the rental vacancy rate is high, it means there is too much supply for the current demand of renters. Simple economics predict a drop in rental prices if this condition persists. If vacancy is low, it means that renters will have a more difficult time finding housing to meet their needs, and rents could be expected to rise. There is no agreed-upon metric to universally describe a “healthy” vacancy rate. Historical rates and trends thus provide a useful baseline. Rapid decreases in vacancy rates indicate that more rental housing is needed in New Jersey.
According to the most recent American Communities Survey Five-Year Estimate, there were 1,078,712 occupied rental housing units in the State of New Jersey in 2012. There were only 81,081 units that are vacant and for rent (7.0%). By contrast, nationwide (excluding New Jersey), there are 38,663,429 rented, occupied rental units, while there were 3,213,572 available for rent (7.8%). In other words, New Jersey’s rental vacancy rate is roughly ten percent higher than the rest of the nation.9
New Jersey’s housing market is also demonstrating signs of a shortage that may have been impacted by Superstorm Sandy. The Census Bureau’s Current Population survey also reports on rental vacancy rates on a quarterly basis. In the third quarter of 2012, just before the storm, New Jersey’s vacancy rate was reported at 10.8 percent with a 2.3 percentage point confidence interval. In the most recent figures, from the first quarter of 2014, New Jersey’s vacancy rate has dropped to 7.0 percent with a 1.9 percentage point confidence interval.10
Private sector analysts support the general thrust of data from the public sector. In May 2012, the respected New Jersey real estate analysis firm the Otteau Valuation Group reported an apartment rental vacancy rate of only 3.7 percent. This was the lowest rate reported by the firm since 2001, according to the New York Times.11 The number differs from the Census figures because it draws from a different sample base, and focuses only on apartments.
9 American Communities Survey, 2008-2012, Table B25004 & B25032.
10 Figures available at https://www.census.gov/housing/hvs/data/rates/tab1_state05_2014_rvr.xls 11 Capuzzo, Jill. “Signs Point to Rentals” (May 17, 2012) New York Times.
In 2013, Otteau predicted that apartments would reach “virtual full occupancy” as a limited supply of housing continued to be stretched by fallout from Hurricane Sandy.12 By 2014, Otteau reported that New Jersey had only 2.4 months of multi-family rental supply, compared to a six-month supply of single-family homes and a 29-year supply of office space.13
Real estate research firm Reis, Inc. reported a similar trend at the national level. In October 2013, the firm reported a dip in apartment vacancies to 4.2 percent. The firm also shared Otteau’s prediction that rent would increase by four to five percent in 2014 as a result.14
According to private sector experts, the rental shortage situation is even more severe in Sandy-stricken areas. In Monmouth County, for example, rental vacancy rates are estimated to be near or below 1 percent.15
Federal and state efforts to provide housing for Sandy survivors demonstrated the tightness of New Jersey’s rental market. A little over a week after Sandy hit, the Federal Emergency Management Agency (FEMA) announced that it would boost rental assistance to disaster survivors in New York and New Jersey. The payments were based on Department of Housing and Urban Development (HUD) Fair Market Rents, but, according to FEMA, “it was quickly apparent that the cost of available rental units could become a limiting factor” in providing shelter to displaced renter households. 16
FEMA’s hotel housing system was extended several times by New Jersey. The program provides temporary reprieve for disaster victims in hotel rooms as they search for other affordable options. Displaced renters reported that “affordable” private options were often still out of their reach.17 In January, the governor’s office applied for another extension.18 Participants receive housing counseling and guidance on finding permanent replacement housing, but still struggled with relocation. The persistent need for the program signifies the difficulty renters in New Jersey have in finding suitable housing. If the state does not maintain its set-aside for rental housing within its affordable housing requirements, municipalities will have no incentive to provide opportunity to renter households despite their being a very significant part of the need for affordable options. Constricted supply will continue to drive up prices, and there has been little evidence of late that incomes will increase.
16. 5:99 Summary. COMMENT: Rental Housing – COAH’S 25% rental requirement is even more relevant in an era when long-term demographics predict an increase in demand for rental housing.
12 http://www.njbiz.com/article/20130128/NJBIZ01/130129875/High-hopes-for-investors-with-apartments-in-short-supply 13 http://www.njfuture.org/2014/01/29/otteau-restrictive-land-use/ 14 http://realtormag.realtor.org/daily-news/2013/10/03/rental-vacancy-rate-lowest-in-more-decade 15 http://www.njspotlight.com/stories/13/05/08/new-jersey-renters-getting-short-shrift-after-sandy/ 16 http://www.fema.gov/news-release/2012/11/07/fema-announces-temporary-housing-rental-assistance-increase-new-york-and-new
17 Kusisto, Laura. “No Panacea for Sandy’s Displaced” (Jan. 27, 2013) Wall Street Journal. 18 http://www.state.nj.us/governor/news/news/552014/approved/20140129c.html
In their paper “The Evolving Rental Housing Market in New Jersey,” Rutgers University’s James W. Hughes and Joseph J. Seneca analyze long-term demographic trends to explain the history and future of rental housing in New Jersey. They argue that three big trends will increase demand for the state’s existing rental housing stock.
The first trend is the increase in empty nesters. The first member of the “baby boom” generation turned 55 in 2001; the youngest member will turn 55 in 2019. This generation famously swelled America’s population rates when they were born between 1946 and 1964. As they age and become empty nesters, they will desire to downsize their larger houses by either renting or purchasing housing units in areas that would otherwise be ideal for rentals.
The authors point out that the “echo boomers” will be another driver of household formation, and thus rental demand. The first echo boomer turned 18 in 1995, and the last turned 18 in 2013. Because they will not be able to purchase homes immediately after high school or post-secondary education, these younger boomers will also increase demand for rental units in many of the same markets as their baby boomer predecessors.
Demographics from the 2010 Census support the authors’ assertions. In 2010, the youngest of the echo boomers would be 15. The oldest of the baby boomers would be 64. This range described 5.9 million people in New Jersey in 2010. Of these, about 74.9 percent were either echo or baby boomers. Almost half of New Jersey’s population over the age of 15 was 46 or older (48.9 percent).
A third demographic segment is expected to continue to provide pressure on the rental market. Foreign-born residents accounted for one-fifth of New Jersey’s population in 2010. The authors predict that this segment will further add to New Jersey’s overall demand for rental housing.
The three demographic predictors of increased rental demand will increase demand for the limited supply of rental units available. This will raise the market price for rentals, and put more families who rent out of necessity under an additional burden.
17. 5:99 Summary. COMMENT The deletion of rental requirements discriminates against African-Americans and Latinos. According to 2010 Census figures as quoted in a recent Star-Ledger article, “Sixty-five percent of Garden State householders live in homes they own. But for black households, that number drops to 40 percent. For Hispanics, the homeownership rate is even lower, at 36 percent.”19 Why is COAH discriminating against African-Americans and Latinos by refusing to serve housing needs that are greater in those groups?
18. 5:99 Summary. COMMENT: The proposal offers no justification for the explanation that “…criteria for receiving credits from Prior Rounds have been deleted.” The proposal requires municipalities to satisfy the Unanswered Prior Obligation and references N.J.A.C. 5:93 as the standards for crediting, without change. Do those standards in fact remain – for example, the cap on age-restricted housing?
19. 5:99 Summary. COMMENT: Question “The procedures for determining assignment of Realistic Development Potential, unmet need, durational adjustments … have been deleted.” They should be reinstated, instead of the proposal’s use of a vacant land “adjustment“ to eliminate calculated Prior Round housing need. 46 N.J.R. 925
20. 5:99 Summary. COMMENT: The proposal offers no rationale for a significant change in the local housing program requirements: “The provision for the inclusion of rehabilitation of rental units in the municipal rehabilitation program has been deleted.” Why? What purpose is served for those with indigenous need, who are often renters, and cost-burdened? 46 N.J.R. 925
21. 5:99 Summary. COMMENT: The rationale for the deletion of certain compliance mechanisms is misguided. “The sections on accessory apartment programs, market to affordable programs, assisted living residence … have been deleted as delivery techniques for Prospective Fair Share Need because these rules focus on zoning as the appropriate technique for the production of affordable housing.” Mere passive zoning is not the only permissible technique under the Mount Laurel doctrine for affirmative municipal actions to create realistic opportunities for affordable housing. 46 N.J.R. 925
22. 5:99 Summary. COMMENT: The renaming of “supportive and special needs housing” to less inclusive ”community residences for the developmentally disabled” is misguided, antiquated, and not necessary. The State should reincorporate the same, inclusive definitions for these terms used in N.J.A.C. 5:97-1.4, which are an appropriate updating of the Prior Round term “alternative living arrangement” coined by COAH. This wholesale change is unnecessary and exclusionary and diverges substantially from a robust understanding of the current needs served by supportive and special needs housing. 46 N.J.R. 925
23. 5:99 Summary. COMMENT: - Social Impact Analysis – The assertion that “…requiring economic feasibility studies to be done …” will “…ensure that sites selected for inclusionary zoning are likely to attract private sector development … “ and “substantially increase the number of affordable housing units that will actually be built over the next 10 years” is unsubstantiated. The reference to “unrealistic set-asides and inappropriate sites” as the implied reason affordable housing was not built is vague, unsubstantiated, and contradicted by COAH’s own consultant in 2007, Nicholas J. Brunick. 46 N.J.R. 926
24. 5:99 Economic Impact. COMMENT: The proposal’s assertion that the “focus on the economic feasibility of proposed sites for inclusionary developments” … “should result in a substantial increase in the affordable housing units actually built …” is unsubstantiated. 46 N.J.R. 926
25. 5:99 Federal Standards Statement. COMMENT: The State has previously identified exclusionary zoning as an impediment to fair housing choice pursuant to the federal Fair Housing Act in its Analysis of Impediments, including references to the Council on Affordable Housing and its rules. The State should describe here how this proposal does or does not address impediments to fair housing choice and requirements to
affirmatively further fair housing pursuant to the federal Fair Housing Act, including but not limited to the requirement pursuant to 78 Fed. Reg. 14329 to update the analysis of impediments to reflect post-Superstorm Sandy conditions. While federal law imposes different standards from state law, the fact that the State has represented to the federal government that COAH helps address federal legal requirements requires further analysis here.
26. 5:99 Housing Affordability Impact Analysis. COMMENT: The proposal’s assertion that “A primary reason that past rules have not resulted in the creation of more affordable housing is that the financial viability of inclusionary zoning sites was not considered” is unsubstantiated. The Summary fails to note the adverse impact on affordable housing production of the past 15 years of instability and litigation due to COAH delays and two rounds of lengthy, constitutionally invalid of rule-making. 46 N.J.R. 927
27. 5:99 Smart Growth Development Impact Analysis. COMMENT: The assertion that the proposal promotes smart growth as it requires site suitability to be reviewed as part of the economic feasibility analysis is unsubstantiated and misleading. Site suitability has always been reviewed since Mount Laurel II and under Prior Round rules. Municipalities can already and do “consider the environmental and economic realities of a site before designating it for affordable housing.” What is the basis for the anticipation that “the proposed rules will result in even more affordable housing in Planning Areas 1 or 2 and designated centers”? The proposal does not mention PA 1, PA 2, or designated centers as criteria for siting affordable housing (NJAC 5:99-7.1(b)1, in contrast with the Prior Round rules that required conformance with the State Plan, N.J.A.C. 5:93-5.4. 46 N.J.R. 927
28. 5:99 Smart Growth Development Impact Analysis. COMMENT: One would be hard pressed to come up with a more anti-smart growth policy than the removal of redevelopment potential through the so-called buildable limit analysis. The buildable limit analysis should be removed and the Second Round’s vacant land analysis and unmet need procedures, which are far more consistent with smart growth, should be restored. 46 N.J.R. 927
FAIR SHARE CALCULATION ISSUES
29. Appendix A. COMMENT: This Appendix begins with the following statement: “Most aspects of the original method of housing need determination have been produced here despite its complexity because it has been recommended by the New Jersey Supreme Court in its latest Mount Laurel decision. It has also been accepted by field practitioners. The method’s procedures are understood and used by these individuals, and the method's results are both internally consistent and intuitively correct. The existing system’s procedures have been challenged in numerous court cases and have prevailed in most instances due to their accuracy and thoroughness. Procedures have evolved over time in which every aspect of the methodology has been reviewed and either retained or reworked.” Every sentence of this statement is false or misleading. As is detailed further in these comments, the proposed methodology diverges greatly from the Prior Round rules and is untested, not accepted, and in many cases wildly inaccurate. Additionally, this Appendix is far less transparent in detailed information
than that provided with N.J.A.C. 5:93 Appendix A. This introduction should be revised to truthfully reflect the many changes in this methodology – or preferably the methodology should be changed so it is actually reflective of this language.
30. Appendix A. COMMENT: The numbers initially presented here for both 1987-2014 and 2014-2024 are misleading because they include municipalities that have a negative obligation as having that negative obligation, not a zero obligation. These charts and numbers should be revised accordingly.
31. 5:99-2.2 and Appendix B. COMMENT: Rehabilitation Share – The methodology used to calculate the rehabilitation share is indeed similar to that used in the Prior Round methodology. In fact, COAH has used the exact same three indices of housing deficiency – overcrowding, lacking complete plumbing, and lacking complete kitchen – used in 1994, moving the cutoff date for qualifying overcrowded units to 1960. This importantly demonstrates that COAH is capable of complying with the Court’s Order, but chose not to for the calculation of prospective need. 46 N.J.R. 930
32. 5:99-2.2 and Appendix B. COMMENT: COAH calculated the Rehabilitation Share at 62,859 units in the proposal, the highest calculated by COAH since 1986 (see chart below). This extent of rehabilitation need supports the argument that the proposal’s total adjusted prospective need is under projected, as overcrowding is the most significant factor contributing to COAH’s 2014 Rehabilitation Share calculation. The housing improvements typically funded by a local housing rehabilitation program to address Rehabilitation Share, such as weatherization, do not remedy overcrowding. Rather, overcrowding is remedied by creating additional new affordable housing units. 46 N.J.R. 930
Statewide Indigenous Need (Rehabilitation Need) Calculated by COAH, 1986-2014 (housing units)
1986 1994 2004 2008 2014
85,134 42,739 40,628 51,891 62,859
Sources: COAH municipal number summaries (1987 and 1993), N.J.A.C. 5:94 Appendix C, N.J.A.C. 5:97 Appendix B, and proposed N.J.A.C. 5:99 Appendix B, 46 N.J.R. 957
33. 5:99-2.3, and Appendix D. COMMENT: Unanswered Prior Round Obligation – The concept of Unanswered Prior Round Obligation is not found in and is not similar to the Prior Round methodology. In addition, four of the factors used by COAH to calculate the Prior Obligation for 1999-2014 are not part of the Prior Round methodology and should be removed from the methodology: vacancies, group quarters, households with assets, and vacant land adjustment. 46 N.J.R. 930-1, and Appendix D; 46 N.J.R. 1011-1036
34. 5:99-2.3(b), and Appendix A. COMMENT: Unanswered Prior Round Obligation – Phasing – The proposal requires municipalities to address only 50% of their 1987-2014 housing obligation (“Unanswered Prior Round Obligation”), thereby eliminating the need for 11,086 needed units by COAH’s calculations. Appendix A introduces the concept of dividing the Unanswered Prior Round Obligation into two equal phases for implementation (“response”) in two periods in the future 2014-2024 and 2024-2034, but 5:99-2.3(b) makes no reference to this second 50% of the obligation and when it is to be addressed. This proposed phasing means that need from 1987-1999 would not be
required to be addressed until 2034, fully 48 years after it first arose, in 1987! COAH should delete the ambiguous phasing proposal and require that 100% of Unanswered Prior Round Obligation be addressed during 2014-2024, to avoid further delay in implementation.
35. 5:99-2.3, Appendix A and Appendix D. COMMENT: Unanswered Prior Round Obligation 1987-1999 – The proposal’s recalculation of municipal prospective need numbers for 1987-1999 is contrary to the 2010 Appellate Division decision on the Third Round rules, affirmed by the Supreme Court in 2013. The Appellate Division affirmed COAH’s policy decision that “…the second round affordable housing obligations established in 1993 to should be used as the Prior Round component of affordable housing obligations under the revised third round rules. COAH's rationale of providing municipalities with predictability and the ability to rely upon COAH's substantive certifications of their Prior Round compliance plans constitutes a reasonable basis for this part of the third round rules.” 416 N.J. Super. 462, 501 (2010) Recalculation of 1987-1999 need in 2014 and its retroactive imposition on municipalities is not necessary, disruptive, and inimical to the creation of needed affordable housing for the very same reasons COAH cited in 2008, namely “…, there needs to be predictability in the process and the towns must be able [to] rely on their substantive certification…” 40 N.J.R. 2690(a), 2860 (June 2, 2008). COAH should use the 1987-1999 prospective need obligations calculated in 1993 as the Prior Round obligations, as required by the Court.
36. 5:99-2.3, Appendix A and Appendix D. COMMENT: Unanswered Prior Round Obligation 1987-1999 – If there were to be an accurate recalculation of 1993-1999 obligation, it would result in numbers statewide increasing, rather than decreasing, given that growth in New Jersey exceeded original projections in this time period. As such, the proposed recalculations are invalid.
37. 5:99-2.3, Appendix A and Appendix D. COMMENT: Unanswered Prior Round Obligation 1987-1999 – As of the writing of these comments, COAH and its consultants have claimed they have been unable to locate the municipal-level numbers used to adjust the 1987-1999 obligation. Given the lack of independently verifiable data on the methodology, it is inappropriate to include these adjustments in the proposed rules, and COAH should instead use the 1987-1999 prospective need obligations calculated in 1993 as the Prior Round obligations, as required by the Court.
38. 5:99-2.3, Appendix A and Appendix D. COMMENT: Unanswered Prior Round Obligation 1987-1999 – The recalculations of the 1987-1999 obligation defy logic and explanation. Some towns see obligations decrease compared to their original 1993 obligation, some towns see obligations increase, and some towns see their obligations stay the same. How was it determined which towns would fall into each category and magnitude of the increases and decreases, which vary greatly? Please provide specific examples from communities in each category and explain how the increase, decrease, or same obligation was calculated.
39. 5:99-2.3, and Appendix D. COMMENT: Unanswered Prior Round Obligation – The proposal states that “The prior obligations are reduced by past affordable housing completed and publicly subsidized affordable housing eligible for crediting pursuant to
N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93.” However, it appears that in many cases the prior obligations are reduced by units that are not eligible for crediting under those standards. For example, in many cases, municipalities are granted credits for age-restricted units in excess of 25 percent of their prior round obligation, which is not allowed pursuant to N.J.A.C. 5:93 and prior case law. What process will ensure that such errors are corrected?
40. 5:99-2.3, and Appendix D. COMMENT: Unanswered Prior Round Obligation – The proposal states that “The prior obligations are reduced by past affordable housing completed and publicly subsidized affordable housing eligible for crediting pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93.” How has COAH verified that such units are indeed eligible for crediting? Self-reporting by a municipality or funding from Balanced Housing, for example, do not automatically mean that a unit is credit worthy. 41. 5:99-2.3, and Appendix D. COMMENT: Unanswered Prior Round Obligation – The
proposal states that “The prior obligations are reduced by past affordable housing completed and publicly subsidized affordable housing eligible for crediting pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93.” How has COAH ensured that there is no double counting – e.g. that a unit credited through municipal self-reporting is not also credited through tax credits or Balanced Housing?
42. 5:99-2.3, and Appendix D. COMMENT: Unanswered Prior Round Obligation – The proposal states that “The prior obligations are reduced by past affordable housing completed and publicly subsidized affordable housing eligible for crediting pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93.” Based on files received via OPRA, which detail these files, which are included with these comments, these numbers are often inaccurate or double count units. For example, in the file for the period since 2000, Lakewood Township is credited with 144 Balanced Housing units, but (a) there are only 72 units in Lakewood in the Balanced Housing spreadsheet provided and (b) these units also received RCA money and so are already credited in the sending municipality, Toms River Township, and to credit them in the receiving municipality violates the FHA and COAH’s rules. Similarly, Franklin Township, Somerset County is credited with 94 Balanced Housing units for Berry Street Commons, but those units are also part of what Franklin Township reported through the CTM system and thus are also credited as part of the “completed” list. Toms River Township is credited with 12 Balanced Housing units, but those units are also part of what Toms River Township reported through the CTM system and thus are also credited as part of the “completed” list. Mantua Township is credited with 58 Balanced Housing units for Royal Oaks, but those units are also part of what Mantua Township reported through the CTM system and thus are also credited as part of the “completed” list. The Sharp Road development in Evesham is also credited twice times for 104 units, through the CTM and Balanced Housing analyses. These analyses are obviously faulty, and show why this information needs to be examined at the municipal level instead of based on statewide information. At the very least, these errors – and surely numerous others – need to be corrected, and going forward since COAH’s lists are obviously far from perfect any party to a municipal fair share plan needs to be able to raise imperfections in the lists (as a municipality does not have an incentive to point out such double or triple counting when it reduces their fair share obligation).
43. 5:99-2.3, and Appendix D. COMMENT: Unanswered Prior Round Obligation – The proposal states that “The prior obligations are reduced by past affordable housing completed and publicly subsidized affordable housing eligible for crediting pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93.” Based on files received via OPRA which details these files, which are included with these comments, these numbers are often inaccurate or double count units not only for the post-2000 data as described above but also for the 1987-1999 data originally compiled in 2008 or earlier. Since that time, many municipalities have entered additional information into the CTM system resulting in double counting. For example, 40 units of senior housing at Dumont Borough is counted in both the 1987-1999 spreadsheet data and the CTM data that we received through OPRA. Again, these analyses are obviously faulty, and show why this information needs to be examined at the municipal level instead of based on statewide information. At the very least, these errors – and surely numerous others – need to be corrected, and going forward since COAH’s lists are obviously far from perfect any party to a municipal fair share plan needs to be able to raise imperfections in the lists (as a municipality does not have an incentive to point out such double or triple counting when it reduces their fair share obligation).
44. 5:99-2.3, 5:99-2.4(b), and Appendix D. COMMENT: Unanswered Prior Round Obligation – The proposal states that “The prior obligations are reduced by past affordable housing completed and publicly subsidized affordable housing eligible for crediting pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93.” How has COAH ensured that all units had affordability controls through the end of the period they purportedly addressed – e.g. units built in the 1980s that may or may not have had affordability controls through 2014, or are in some cases now being used to address prospective obligations through 2024?
45. 5:99-2.3 and -2.4, Appendices A, C, and Appendix D. COMMENT: Unanswered Prior Round Obligation – Group Quarters – The proposal adds to both Prospective Need and Prior Round Obligation a factor for people who live in “non-institutional group quarters,” which COAH defines as people living in “emergency shelter, on the street, at soup kitchens and so on.” 46 N.J.R. 953 The COAH definition conflicts with the definition of the U.S. Census Bureau, COAH’s data source, which defines group quarters as “a place where people live or stay, in a group living arrangement, that is owned or managed by an entity or organization providing housing and/or services for residents.” The U.S. Census Bureau specified five types of “non-institutional group quarters” in 2010: emergency and transitional shelters, group homes intended for adults, residential treatment centers for adults, religious group quarters, and workers’ group living quarters and job corps centers. Obviously no one lives at soup kitchens. And people “on the street” are not living in a group quarters, as defined by the Census Bureau.
http://www.census.gov/acs/www/Downloads/data_documentation/GroupDefinitions/2010 GQ_Definitions.pdf
In the proposal, COAH adds 1,888 units for “group quarters” to “total need” in the calculation of Prior Obligation (46 N.J.R. 1012) and 4,406 units in the calculation of Projected Need (2014-2024) (46 N.J.R. 953). COAH’s undercounts this population: “For 2010, the number of individuals in other noninstitutional group quarters was 15,734.” According to the Census, the correct number was 29,320 individuals (U.S. Census Bureau. 2010 Census, Summary File 1, Table P43, QT-P13). COAH states that “A portion of residents living in ‘other’ noninstitutional group quarters are included in this
methodology” (46 N.J.R. 953), but does not disclose what portion or what criteria it used to derive its numbers. COAH needs to explain its basis for this apparent undercounting of group quarters.
46. 5:99-2.3 and -2.4, Appendices A, B, C, and Appendix D. COMMENT: Affordable Housing Obligation – Reallocated Present Need – The proposal fails to reinstate “reallocated present need,” a key component of the Prior Round methodology, at N.J.A.C. 5:93-2.3. Mount Laurel II recognized, at 92 N.J. 214-5, that “many of our urban areas” have a disproportionate share of their regions’ indigenous poor, many living in substandard housing, as COAH’s Appendix B, an analysis of the 2010 Census, attests still persists. Through the concept of “reallocated present need” COAH, preceded by the Superior Court in 1984 in AMG v. Warren, had assigned, fairly, some of the “indigenous need’ of urban area with concentrations of lower income households living in substandard housing to other municipalities in their regions, which became a component of the obligation of generally suburban and rural municipalities to create realistic opportunities for the creation of new affordable housing units. For example, COAH in Appendix B assigns Jersey City a Rehab Share of 3,446 units, Passaic a Rehab Share of 4,652 units, Newark a Rehab Share of 3,310 units, Elizabeth a Rehab Share of 4,293 units, Trenton a Rehab Share of 1,034 units, Camden a Rehab Share of 783 units, and Atlantic City a Rehab Share of 530 units. These large, disproportionately high rehabilitation obligations demonstrate the need to reallocate some of this need, as was done in the Prior Round. COAH should revise the proposal to calculate and allocate “reallocated present need,” using a methodology similar to that used in the Prior Round.
47. 5:99-2.3, Appendix D. COMMENT: Vacant Land Adjustment – COAH adds a new concept to the methodology, a “vacant land adjustment,” for 1987-1999, and uses this reduction to decrease the Prior Obligation by 4,958 units (46 N.J.R. 1012). Such an adjustment was not part of the Prior Round methodology and therefore should be abandoned by COAH.
48. 5:99-2.3, Appendix D. COMMENT: Vacant Land Adjustment – COAH adds a new concept to the methodology, a “vacant land adjustment,” for 1987-1999, and uses this reduction to decrease the Prior Obligation by 4,958 units (46 N.J.R. 1012). COAH needs to explain in more detail how this radical new adjustment works and why it is being added in at the regional level of fair share calculation and not as part of a case-by-case analysis of municipal vacant land as in the past.
49. 5:99-2.3, Appendix D. COMMENT: Vacant Land Adjustment – Unmet Need – The proposal uses its “vacant land adjustment” to eliminate 4,985 units of 1987-1999 need, in a manner not similar to the Prior Round rules. Under the Prior Round rules, N.J.A.C. 5:93-4.1 and -4.2, municipalities with limited developable land, greenfields and/or suitable for redevelopment, had an opportunity to demonstrate to COAH that land was a scarce resource by calculating and dividing the Prior Round obligation into two components: (a) realistic development potential (“RDP”) and (b) unmet need. If land was indeed a scarce resource, the full, allocated housing need that could not be satisfied by the developable land, quantified as the unmeet need, did not disappear. Rather, it was a recognized, continuing responsibility of the municipality to satisfy. COAH should reinstate the important RDP and unmet need provisions of the Prior
Round rules. Also, N.J.A.C. 5:97-1.4 and -5.3 had a helpful definition and provisions on unmet need as that provision was implemented in the Prior Round that COAH should also incorporate into the Third Round rules.
50. 5:99-2.3 and -2.4, Appendices A, C, and D. COMMENT: Buildable Limit Losses – COAH adds a new concept to the methodology, a “buildable limit loss,” and uses this reduction to decrease the Prior Obligation by 28,993 units and the Fair Share (prospective need) by 8,814 units (46 N.J.R. 955, 987, 1013). Such an adjustment was not part of the Prior Round methodology. It is not similar. It is a radical new concept. COAH should abandon this concept and factor for the Third Round.
51. 5:99-2.3 and -2.4, Appendices A, C, and D. COMMENT: Vacancy – COAH adds a new concept to the methodology, a “vacancy rate,” and uses this factor to increase the Prior Obligation by 3,008 units and the Fair Share (prospective need) by 2,268 units (46 N.J.R. 953, 985, 1012). Such an adjustment was not part of the Prior Round methodology. It is not similar. COAH should abandon this concept and factor for the Third Round.
52. 5:99-2.3 and -2.4, Appendices A, C, and D. COMMENT: Filtering – COAH relies on the Econsult analysis from 2007, commissioned by COAH (N.J.A.C. 5:97 Appendix F.3. Estimating The Extent To Which Filtering Is A Secondary Source Of Affordable Housing, Econsult Corporation, November 16, 2007), to extrapolate filtering rates and uses this factor to decrease Prior Obligation by 36,429 units and the Fair Share (prospective need) by 24,925 units (46 N.J.R. 954, 985, 1012). However, COAH fails to disclose that Econsult determined that filtering took place in both directions in the housing market, and forecast both net downward filtering, making some housing affordable to low and moderate income households, and net upward filtering, thereby increasing the demand for affordable housing. The COAH proposal only incorporates net downward filtering. To be fair, the proposal should be modified to also incorporate net upward filtering, which Econsult determined occurred in three types of housing markets: gentrifying urban cores, affluent suburbs, and Shore resort towns. While upward filtering, which increases the demand or need for affordable housing, was not part of the Prior Round methodology, incorporating the concept in the Third Round is fully consistent with and mandated by the Court’s order to use "the most up-to-date available data." The Econsult data is the most up-to-date available data, but COAH has selectively used only some of the data. So that the Econsult data is used fairly in the fair share methodology, COAH should modify it methodology to incorporate net upward, as well as net downward filtering, when filtering is incorporated in the calculation of net municipal prospective need, after the allocation of regional need to municipalities. 53. 5:99-2.4(a), 5:99-3.3, and Appendix E. COMMENT: Buildable Limit Cap - The notion
that development will take place going forward based on the existing commercial/industrial/residential split in a municipality essentially undermines the entire Mount Laurel doctrine. It uses existing exclusionary zoning in communities that have encouraged non-residential development and discouraged residential development as a cap on the response to that exclusionary zoning. In contrast, municipalities that have zoned for more residential development have higher obligations. This unfounded assertion is unconstitutional.
54. 5:99-3.3(c) and Appendix C. COMMENT: Fair Share of Prospective Need – COAH’s proposed calculation of prospective need for 2014-2024 is seriously and fatally flawed, with numerous substantial deviations from the Prior Round methodology, as will be detailed in the specific COMMENTS that follow. COAH should abandon its third flawed attempt at a post-1999 fair share methodology and comply with the Court’s order by proposing, adopting and implementing a methodology similar to the Prior Round methodologies.
55. Appendix A and C. COMMENT: Housing Region - COAH proposes no change in the composition of the six housing regions, the first step in the fair share calculation process, which are composed of three or four counties with commuting ties. The proposal is identical and hence similar to the Prior Round methodology. No change recommended.
56. Appendix A and C. COMMENT: Prospective Need Population Projections – In the Second Round rules, COAH used population projections from the New Jersey Department of Labor as the second step in calculating prospective need, averaging population projections from two of its models by county for 30 years into the future. At that time, in 1994, COAH even noted that this approach was “…purposely chosen to be similar to those used for the New Jersey Department of Community Affairs Comprehensive Housing Affordability Strategy (CHAS), the Impact Assessment of the New Jersey State Development and Redevelopment Plan, and the most recent transportation modeling efforts of the New Jersey Department of Transportation.” N.J.A.C. 5:93 Appendix A. By contrast, COAH has not used a similar methodology in the pending proposal. Instead, COAH departs significantly from the current, official State population projections of the New Jersey Department of Labor and Workforce
Development, accessible from the NJDLWD website at
http://lwd.dol.state.nj.us/labor/lpa/dmograph/lfproj/lfproj_index.html .
Instead, COAH uses what it describes merely as “our procedures” (46 N.J.R. 952) to alter and reduce the official State projections, by 20%:
COAH does not disclose what “its” procedures are and why it deviated from the Prior Round methodology. A lower projected population leads inexorably to a calculation of a smaller regional housing need in the future. COAH should revert to the Prior Round methodology and use the official NJDLWD population projections, without secret modifications or adjustments, as the starting point for calculating prospective need.
2010 2015 2025 2010-2025Change NJDLWD, 2014 8,791,894 9,024,000 9,446,200 654,306 COAH, 2014 8,791,894 8,954,531 9,312,806 520,912 Difference 69,469 133,394 133,394 % Difference -20.4% Sources:
U.S. Bureau of Census, 2010 Census
COAH Proposed N.J.A.C. 5:99 Appendix A, 46 N.J.R. 952 Prepared by David N. Kinsey, FAICP, PP, July 10, 2014
Projections of Total New Jersey Population, 2010-2025
57. Appendix A and C. COMMENT: Prospective Need Population Projections and relationship to Secondary Sources – COAH apparently applied “its” procedures to reduce population projections, but applies no similar procedures to also reduce secondary sources. While these procedures are dubious themselves as described above, it is even more dubious to assume that the housing market will grow more slowly yet filtering and conversions will continue at the same pace.
58. Appendix A and Appendix C. COMMENT: Income Qualification of the Low and Moderate Income Population – COAH determined that low and moderate income households represent 40.622% of all households in New Jersey, using a methodology similar to the Prior Round methodology. 46 N.J.R. 950 and 46 N.J.R. 983-4 This is intuitively correct, as the income definition for these households is those with incomes less than 80% of the median, i.e., 40% of the total, and reasonable. No change is recommended.
59. Appendix A and Appendix C. COMMENT: Household Projections – Household projections are critical in the fair share methodology, because, by definition, households live in housing units.20 The Second Round methodology determined headship rates, i.e., the probability that a person is the head of a household, by first calculating headship rates by county by age group observed in 1990 and then extending those rates into the future at one-half of the rate of change observed between 1980 and 1990. The pending COAH proposal also determined headship rates by age group and county, as of 2010, but extended those rates into the future at the same rate of change observed from 2000 to 2010. COAH should explain why it is departing from Prior Round methodology by using the full rate of change instead of one-half of the rate of change. 60. Appendix A and Appendix C. COMMENT: Household Projections – Headship rates
dropped dramatically nationwide between 2000-2010 due to the economic recession. Since 2010, headship rates have begun to recover and the general economic outlook is more positive than in the previous decade. See Paciorek, Andrew D, The Long and the Short of Household Formation, Finance and Economics Discussion Series, Federal Reserve Board v. 2013-26, April 1, 2013, at 26-27 (8-9 of ppt), available at
http://www.federalreserve.gov/pubs/feds/2013/201326/201326pap.pdf (a PowerPoint presentation of this paper is included in the exhibits for these comments). When controlling for aging, headship rates nationally were lower in 2010 than at any other time over the past 40 years. Id. at 29 (12 of ppt). Headship rate projections, then, should not rely solely on the change from 2000-2010 in predicting future headship rates. Why did COAH not project forward from 1990-2000 headship rates or otherwise incorporate more typical rates in its calculations?
20 The U.S. Census Bureau definition of “household” is: “A household consists of all the people who occupy a housing unit. A house, an apartment or other group of rooms, or a single room, is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters; that is, when the occupants do not live with any other persons in the structure and there is direct access from the outside or through a common hall. A household includes the related family members and all the unrelated people, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living alone in a housing unit, or a group of unrelated people sharing a housing unit such as partners or roomers, is also counted as a household. The count of households excludes group quarters. There are two major categories of households, "family" and "nonfamily".”
61. Appendix A and Appendix C. COMMENT: Household Projections – The pending COAH proposal determined the Population in Household/Total Population rates by age group and county, as of 2010, and extended those rates into the future at the same rate of change observed from 2000 to 2010. COAH should explain why a steady rate of change over time is the best predictor for Population in Household/Total Population rates.
62. Appendix A and Appendix C. COMMENT: Household Projections – The Second Round methodology separates household projection data into eight age cohorts with each cohort between 25 and 75 years of age spanning no more than ten years and two cohorts spanning only five years each (N.J.A.C. 5:93 Appendix A). The Initial Third Round Rules separate household projection data into seven age cohorts, combining the two five-year age cohorts from the Second Round (N.J.A.C. 5:94 Appendix A). The pending COAH proposal lumps these cohorts even further for a total of four cohorts each spanning a minimum of twenty years. Larger cohorts lead to less accurate projections as the variations between ages become averaged out. COAH should explain why cohort sizes two to four times as large as previously used were implemented.
63. Appendix A and Appendix C. COMMENT: Household Projections –In a major departure from the Prior Round methodology, COAH adjusted significantly downward projected future households based on a new flawed factor, residential certificates of occupancy (“CO”) issued in 2011-2013. COAH used this new factor to reduce population projections by 30% for 2010-2015 and by 15% for 2015-2025. 46 N.J.R. 952 Two flaws are important. First, a CO merely signifies that a housing unit may be occupied, i.e., that “…the construction authorized by the construction permit has been completed in accordance with the construction permit …” N.J.A.C. 5:23-1.4. A CO does not signify that a housing unit is occupied.
64. Appendix A and Appendix C. COMMENT: Household Projections – Second, and most important, COAH arbitrarily chose data from the lowest three year period of COs in recent history, as shown in the chart below, despite its access to and use of CO data for 2000-2012 elsewhere in its methodology, in its allocation factors (Appendix A, 46 N.J.R. 951):
Source: New Jersey Department of Community Affairs website,
http://www.state.nj.us/dca/divisions/codes/reporter/co.html, and John Lago, Division of Codes and Standards Prepared by David N. Kinsey, FAICP, PP, July 10, 2014
COAH should revert to the Prior Round methodology and not use arbitrarily selected residential certificate of occupancy data to reduce population projections and hence to reduce household projections and calculations of prospective need.
65. Appendix A and Appendix C – Prospective Need – Households with Significant Assets (“paid off mortgage) – The COAH proposal introduces a new factor for reducing gross prospective need not found in the Prior Round methodology, a deduction for projected lower income households who have fully paid off their mortgages, own their homes, and spend less than 38% of their income for housing. This radical change is problematic on several grounds. First, the well-established nation-wide norm is that a household should devote no more than 28% of their income for mortgage payments (principal and interest), taxes, insurance, and homeowner association and condo fees. Indeed this is the standard adopted by COAH’s sister agency, the New Jersey Housing and Mortgage Finance Agency in the rules applicable for all housing units proposed for credits by COAH and referred to in the pending proposal at proposed N.J.A.C. 5:99-10.3(a), the so-called Uniform Housing Affordability Controls, at N.J.A.C. 5:80-26.6(c). Why is the 38 percent figure used?
66. Appendix A and Appendix C – Prospective Need – Households with Significant Assets (“paid off mortgage) – The second major problem with deducting households with significant assets is that prospective need is for new households projected by COAH to be formed in the future. A much higher percentage of existing low and moderate income homeowners will be in this category compared with new households. It is not reasonable to anticipate that a new lower income household will acquire a house and pay off a mortgage all within the 2014-2024 projection period used by COAH. COAH
!"!!!! !5,000!! !10,000!! !15,000!! !20,000!! !25,000!! !30,000!! !35,000!! 2000! 2002! 2004! 2006! 2008! 2010! 2012! 2014! Cer$ficates*of*Occupancy*Issued*for*Housing*Units*in*New*Jersey,* 2001?2013* C0s!(housing!units)!
should delete this factor, which COAH used to eliminate 8,155 units of need in the 2014-2024 period and also delete it to the extent used in 1999-2014 projection period. 67. Appendix A and Appendix C. COMMENT: Fair Share Calculation – Reallocation of
Projected Households below Age 65 – The Second Round methodology pooled on a statewide basis and then assigned the working age (<65 years) component of projected low and moderate income household growth to regions where jobs previously increased. The methodology retained projected growth in >65 years households, which COAH presumed to be non-working, in its original region. The reallocation factor was the proportional regional share of nonresidential ratable growth, as a surrogate for job growth. The COAH intent was “to house low- and moderate-income families of working age in locations where jobs grew” recently, as well as “…to house the elderly where their growth occurred naturally.” N.J.A.C. 5:93 Appendix A To be faithful to the Prior Round methodology, COAH should revise the Third Round methodology to include this reallocation of projected working age low and moderate income households.
68. Appendix A and Appendix C. COMMENT: Fair Share – Urban Aid Cities – The COAH proposal treats Urban Aid municipalities differently than the Prior Round methodology. In the pending proposal, prospective need (“fair share”) is allocated to Urban Aid municipalities and then reallocated to a statewide pool for distribution, i.e., allocation, to municipalities (46 N.J.R. 951, 955, 986-7). Allocating need to Urban Aid municipalities, even temporarily, is approach not similar to the Prior Round methodology, which simply did not allocate need to Urban Aid municipalities that met certain criteria on comparative housing deficiency and population density (N.J.A.C. 5:93-2.3(b)). COAH should revise the Third Round methodology to treat Urban Aid municipalities in the same manner as in the Prior Round.
69. Appendix A and Appendix C. COMMENT: Fair Share – Urban Aid Cities – The COAH proposal treats Urban Aid municipalities differently than the Prior Round methodology. In the pending proposal, prospective need (“fair share”) is allocated to Urban Aid municipalities and then reallocated to a statewide pool for distribution, i.e., allocation, to municipalities (46 N.J.R. 951, 955, 986-7). Use of a statewide pool and statewide allocation method violates the Fair Housing Act, which requires a regional approach to fair share determination. COAH should return to the allocation methods in the Prior Round, which do not initially allocate need to urban aid municipalities and then reallocate it elsewhere.
70. Appendix A and Appendix C. COMMENT: Fair Share – Urban Aid Cities – As the below chart shows, the COAH proposal, through a treatment of Urban Aid municipalities that is different from the Prior Round methodology, eliminates an astonishing 27,515 homes from need – nearly as much as the total need from 2014-2024. Essentially, urban filtering is used to reduce suburban need. This process is summarized below and then more detailed information for each urban aid municipality is provided in Exhibits A-1 and A-2.
Urban aid municipalities 2014-2024 1999-2014
TOTAL 1999-2014
Initial Allocation of Prospective Need 13911 17072 30984
PLUS Group Quarters 3076 1318 4394
TOTAL Prospective Need + Group
Quarters 16987 18390 35378
MINUS Households with Assets 1255 1747 3002
PLUS Vacancies 811 940 1750
Total Need after asset/vacancies 16543 17584 34126
Calculated Need After Secondary Sources; Reallocated on Statewide
Basis to Non-Urban Aid 5377
