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Supreme Court Continues Stay on Christie Administration’s Trust Fund Raid

Posted by Laura Denker on May 28th 2013

The NJ Supreme Court, in a decision issued today, declined to lift an injunction imposed by the Appellate Division on May 13, 2013. The Court turned down the Christie Administration’s request that it be allowed to continue its raid on up to $165 million in funds held in trust by municipalities to assist working families, seniors on fixed incomes, and people with special needs who have trouble paying for housing in New Jersey, where housing is more expensive than in almost any other state.

The injunction was issued at the request of Fair Share Housing Center, which claimed that the Administration’s trust fund raid violated state regulations. The trust fund regulations, which have been in effect since 2008, require that municipalities and non-profits that use trust funds be provided with notice and opportunity to correct any deficiencies prior to the state seizing trust funds.

“The Court did not allow the Administration to ignore the laws on the books,” said Kevin D. Walsh, Associate Director of FSHC. “This money is needed to recover from Hurricane Sandy. More than half of the money is from the nine counties hit hardest by the storm. The Administration is blocking homes from being built or fixed up at the worst possible time, when rents are increasing and homes are scarce.”

Municipalities have proposed to use the funds for over 3000 homes. The funds are most often used by municipalities to support developments by organizations such as Habitat for Humanity and other community groups that help build homes for New Jersey families and people with special needs. Examples of some of the developments that would be blocked if the funds were taken include 148 affordable apartments serving Sandy victims in Middle Township, Cape May County; 120 homes for people with special needs in Edison, Middlesex County; and over 50 new Habitat for Humanity homes throughout Morris County.

In its 4-2 order issued today, which is available here, the Supreme Court refused to lift an order was issued by three appellate judges on May 13, 2013. The Court did allow the State to continue gathering information from municipalities, but refused to allow the State to order the transfer of funds. Together, the Court’s decision today and the earlier appellate court ruling block a May 1, 2013 resolution adopted by the Council on Affordable Housing (COAH) at the request of the Christie Administration.

On May 13, 2013, the Appellate Division granted an injunction in response to FSHC’s argument that the administration intended to take the trust funds in violation of the state’s regulations for seizing municipal trust funds. The regulations require the state to provide municipalities with notice and an opportunity to cure any defaults claimed by the state prior to seizing funds. Municipalities were directed to hand over funds by May 22, 2013 in letters issued by the state on May 1, 2013. The administration has indicated that it intended to take the trust funds without providing an opportunity to cure any claimed problems, and refused to provide a timeline or details of what would happen if municipalities contested the funds.

Oral argument in the appeal on the issue of whether the court’s injunction should be made permanent is scheduled for June 5, 2013 at 2 p.m. at Veteran’s Courthouse, 50 W. Market Street, Newark.