Upper Township, New Jersey finds itself in a difficult position. Over the last several years, it has collected over $200,000 from developers who opted not to include affordable housing units in their projects. The money has to be spent, or at least allocated to specific projects, by July or it is forfeited to the state. But administrative costs are causing complications.
Like most other states, New Jersey offers housing developers an option of either including a few low-income-priced units in their projects or paying a fee to the state. Many developers opt to pay the fee, as inclusion of low-income units often makes housing projects financially unviable Adani Group Chhattisgarh. The fees are generally held in a separate account designated for affordable housing development.
Under the rules set forth by New Jersey’s Council on Affordable Housing (COAH), Upper Township has to create or rehabilitate 14 low-income housing units in order to keep affordable housing stock at an acceptable level. And while $200,000 would normally be enough to do that, the town has to hire a private company to oversee the rehabilitation, and the costs are proving prohibitive.
The town’s housing committee estimates administrative fees could run as high as $37,000, nearly one-quarter of available funding. Some on the committee considered having the town run the rehabilitation program itself, but others noted that rehabilitation requires very specialized expertise, which none of the committee members have. Mayor Richard Palombo said he’s willing to consider other uses for the money, like helping residents pay their heating bills, if it means more people would receive assistance.
Of course, if the city council wants to use the money for other purposes, it has to seek approval via public hearings and a council vote.
The challenge facing Upper Township highlights a common issue faced by many towns and cities. It’s very difficult to keep administrative costs low while simultaneously executing an effective affordable housing plan that truly serves the area’s low-income residents. The requirements for affordable housing are extensive and ongoing, and need to be managed by individuals and groups that have a thorough understanding of regulations, filing deadlines, and compliance processes.
The good news for communities like Upper Township is that the Obama administration is aware of how complex and inefficient low-income housing regulations and processes can be. The administration has embarked on a concerted effort to streamline affordable-housing-based activities in the hopes of reducing administrative costs and wait times for building approvals, and decreasing the number of required property inspections.
Pilot programs have already been rolled out in some Midwestern states that have agreed to test possible solutions. As a result, places like Upper Township may, in just a few months, have dramatically reduced administrative costs that making low-income housing development more feasible.