Focus Area 8A: Expand and diversify the region’s house supply to meet current and future demand.

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/ Focus Area 8A: Expand and diversify the region’s house supply to meet current and future demand.

What and why. A home does more than just provide shelter. Having a quality home that meets one’sphysical needs and lifestyle preferences is essential to achieving a high quality of life. For those who canafford to buy a home, doing so is often a key way to accumulate wealth—wealth that can help pay for a child’seducation, support a person’s retirement or provide a nest egg that can be passed on to future generations.But North Jersey’s current housing supply is not meeting the demands of its increasingly diverse population.The supply of housing affordable to many of our region’s residents, especially low- and middle-incomehouseholds, is inadequate. Families spend so much on costly housing in North Jersey that many have littledisposable income leftover to spend or save. High housing costs are also undermining the region’s economic competitiveness,making it hard for companies to attract talent and driving up the cost of doing business here. Manyexisting and prospective employers recognize the lack of affordable workforcehousing as a significant impediment to economic growth and expansion.

Having a range of housing types in convenient, appealing locationswould yield many social and economic benefits for the region. Offeringgreater diversity and supply of housing types—especially smaller units,rental apartments and other housing options affordable to workers in a greater

range of jobs—will make the region more attractive both to workersand employers facing stiff competition for talent. More housing choicewill also help meet the changing lifestyle demands of a diverse population,providing appropriately sized, affordable living options for millennials,retiring baby boomers and arriving immigrants. These groups representan increasing share of our region’s population today and are expected tocontinue to grow in coming decades.

/ Strategy 8A.1: Increase housing variety and choice by removing regulatory and other barriers to housing production

How. The strategies recommended as part of this Focus Area are designed to create more diverse and affordable housing options. These strategies include: removing regulatory and other barriers to housing production; providing incentives to encourage production of needed housing types, including housing affordable to a range of incomes levels; protecting the affordability of deed-restricted affordable units; and fostering innovation in the housing sector through pilot programs and demonstration projects.

What and why.Local plans, laws and regulations largely dictate where housing can be built, what type of housing is allowed, how big housing units must be and the number of units allowed on each lot. In many communities, local plans and regulations limit the variety and choice of housing that is available. Local governments in the region should review and revise their ordinances to make it easier for builders and developers to construct a greater variety of housing choices. Plans and regulations should allow a range of housing types and sizes to be built that matches the profile of current and future residents, including families at all income levels, young people just starting out and older residents wishing to age in the communities they already call home. Housing types not widely available in many North Jersey communities include: multi-family buildings, apartments, mixed-use housing over retail, “micro” dwelling units (less than 600 sq. feet), accessory apartments (sometimes called “granny flats”), starter homes on small lots, live-work units and others.

Actions: / Suggested
Responsibility: / Timeframe:
Develop guidance for municipal governments regarding how they can comply with Fair Housing Act obligations under the latest 2015 NJ Supreme Court decision which bypasses the Council on Affordable Housing. / Housing Community Development Network of NJ;
NJ State League of Municipalities, NGOs / Short term
Identify housing variety and choice needs based a profile of current and future residents, including: young people just starting out, aging population, a full range of workforce occupations, people with disabilities and those with fixed and lower incomes. / Municipalities / Short term
Review master plan and land use regulations to identifyexisting barriers to housing variety and choice, including barriers to affordable housing. / Municipalities / Short term
Amend municipal zoning codes to expand housing variety and choice including but not limited to: mixed-use development, new and innovative housing types (e.g. micro-units), and accessory housing (e.g. basement, attic apartments) and others as needed to ensure compliance with municipal obligations under the Fair Housing Act. / Municipalities / Short term
/ Strategy 8A.2: Target financial and other incentives to increase production of housing options not well-supplied in the region

What and why.Builders and developers make decisionsabout new housing by evaluatingmarket and economic forcessuch as changing family size, consumerpreferences, the cost andavailability of land, available financingand many others. In addition toeliminating regulatory barriers thatlimit housing variety and choice,our region should use financialand other incentives to encouragethe construction of housing typesthat are not widely available but inhigh demand. Financial incentivesfor builders and developers shouldinclude low or no-interest loans,grants, and tax breaks. Municipalitiescan also encourage builders anddevelopers to create needed housingtypes by waiving certain feesor expediting the review of projectsthat meet certain criteria. In addition,the New Jersey Housing andMortgage Finance Agency shouldcreate and fund a “micro-unit” pilotprogram that includes developmentof both multi-family and single-familymicro housing units of less than 600 square feet (per unit).Such a program could demonstrate the viability of ultra-smalldwelling units as a living option that has the potentialto promote market-driven affordability.

Actions: / Suggested
Responsibility: / Timeframe:
Develop guidance for municipal governments regarding the tools available to encourage housing variety and choice, for example, adaptive reuse of historic sites and structures for housing and mixed use. Include case studies from where tools have been successfully applied. / Housing Community Development Network of NJ;
NGOs / Short
Use incentives such as:density bonuses, short and longer-term tax abatements, fee waivers, and expedited review processes for projects that meet certain performance criteria, to encourage production of needed housing types. / Municipalities / Short term
Create a municipal housing trust fund to support production of affordable units through developer fees and/or payments as part of municipal tax abatement programs. / Governor and NJ State legislature / Medium term
Track and report municipal housing obligation, local affordable housing trust fund balances and expenditures. / Department of Community Affairs / Short term
Create and fund a “micro-unit” pilot program that includes development of both multi-family and single-family micro housing units of less than 600 square feet (per unit). / Governor and NJ State legislature;
NJ Housing and Mortgage Finance Agency / Medium term
Enact and implement the “NJ Foreclosure Transformation Program” to facilitate the purchasing of foreclosed residential properties from institutional lenders and dedicating them for occupancy as affordable homes(A470/S693). / Governor and NJ State legislature;
NJ Housing and Mortgage Finance Agency / Medium term
Create new tax credit program to facilitate the rehab 100% affordable housing to preserve this stock (Currently S928/A2716) / Governor and NJ State legislature;
HMFA and
NJ EDA / Medium term
Create a grant/low-interest loan program to encourage the construction of accessory housing units made available to low- and moderate-income families. / Governor and NJ State legislature
NJ-HMFA / Medium term
/ Strategy 8A.3: Increase the supply of housing affordable to a range of household sizes and incomes, especially in areas well-served by public transit

What and why.Federal and state funding to support the construction ofhousing affordable to low- and middle-income individualsand families has decreased by more than 50 percent inthe past decade. In addition, there is frequently widespreadpublic opposition to the construction of new housingof any type—especially housing restricted as affordable.This is often due to concerns over traffic, densityand an influx of school-aged children, but could also befueled by negative stereotypes and discrimination.

To remain competitive, our region must take the difficultsteps necessary to increase the supply of housingaffordable to a range of households and incomes in ourregion. This should include educating the public and localleaders about the true nature of affordable housing in orderto dispel myths and stereotypes. Municipalities shouldchange local ordinances to require that new housingdevelopments in locations served by(or planned to be served by) publictransit include a minimum of 20percent affordable units and complywith their obligations under the FairHousing Act. The legislature shouldamend the municipal land use law toidentify new housing developmentsthat include a significant portion ofaffordable units as an “inherentlybeneficial” that promotes the generalwelfare. Determining the thresholdthat constitutes an inherenlty beneficialuse should be a matter of publicdiscussion and debate. Finally,municipalities should use a rangeof tools and incentives to encouragedevelopers to build affordablehousing, including land banking,relief from parking requirements intransit-accessible locations, expeditedreview, fee waivers and tax credits.Municipalities should also considerre-purposing vacant or underutilizedoffice buildings and complexes intomixed-use, mixed-income multifamilyhousing in locations where access totransit could be provided.

Actions: / Suggested
Responsibility: / Timeframe:
Develop and implement a public education campaign to raise awareness of the importance of affordable housing to the region’s competitiveness and the affordable housing needs of service workers, teachers, firefighters and other public servants / Business associations, Chambers of Commerce, other Non-profits, NJ Dept. of Community Affairs / Short term
Change local ordinances to require that all new housing developments constructed in locations served by or planned to be served by public transit include a minimum of 20% affordable units / Municipalities / Short term
Amend the municipal land use law to identify new housing developments that include a significant portion of affordable units as an “inherently beneficial use” that fundamentally serves the public good and promotes the general welfare. / NJ Legislature / Medium term
Encourage the adoption of inclusionary zoning approaches and the use of other tools such as write-down/buy-down programs to increase the supply of affordable housing by requiring municipalities to demonstrate they have these programs in place as a condition for receiving state aid to municipalities, including school funding. / NJ Legislature / Medium term
Create incentives at the state level for low-income housing set-asides such as reduction in utility connection fee and utility costs. / NJ Legislature, NJDCA, NJHMFA / Medium term
Employ incentive-based policies at the municipal level for lower income housing production such as density bonuses, reduced-cost and free land, reduced parking requirements, tax abatements and expedited approvals for projects that meet certain criteria. / Municipalities / Short term
Work with nonprofits and redevelopment agencies to create land trusts as a way to keep housing permanently affordable. / Lead: Municipalities / Short term
Amend the rules and regulations governing municipal affordable housing trust funds to require they be spent down within three years, after which time, non-profit affordable housing developers can petition the courts to use the funds to support the development of affordable housing in the community. / NJDCA / Short term
/ Strategy 8A.4: Ensure that the region’s existing supply of deed-restricted affordable housing units remains affordable

What and why.According to state records, 80,000 deed-restricted affordable housing units have been constructed or rehabilitated since the New Jersey Supreme Court decision known as Mount Laurel II and the New Jersey Fair Housing Act was passed in the mid-1980’s. These units are critically important to meet the needs of low- and moderate-income families across our region. The long-term affordability controls placed on these units usually expire after a period of time ranging from 15 to 45 years. Consequently, the affordability controls on many of the earlier units built under Fair Housing Act requirements are or will be expiring very soon. There are a variety of ways municipalities can preserve or extend affordability restrictions. Municipalities should identify affordable housing units in their jurisdiction that are at risk for conversion to market-rate units and work with the New Jersey Council on Affordable Housing, homeowners, tenants and rental property owners to extend affordability controls where feasible.

Actions: / Responsibility: / Timeframe:
Require municipalities to inventory affordable housing units within their jurisdictions, identify all units at risk for conversion to market-rate units in the next ten years and develop a plan for extending the affordability controls for at-risk units. / NJ Legislature / Short term
Identify units at-risk for conversion and work with homeowners, tenants and rental property owners to extend affordability controls where feasible. This may include both payments to owners for extending the deed restrictions for an additional period of time. / Municipalities; NJ Housing and Mortgage Finance Agency;
HUD / Short term
Adopt resolutions extending affordability controls and record new deed restrictions, where necessary and feasible. / Municipalities / Short term