New Law Codifies & Streamlines Affordable Housing Development Process
Today, the New Jersey Dept. of Community Affairs (DCA) released calculations on the number of affordable homes each municipality is required to allow over the next decade. Municipalities now have until Jan. 31, 2025 to adopt DCA’s guidance or provide their own calculation consistent with New Jersey law, and until June 30, 2025 to adopt specific plans for how to address that number.
DCA also announced today that they will be launching NJ Housing Opportunities for Municipal Equity and Success (NJHOMES) in early 2025, which will offer comprehensive support — including financial resources, technical assistance and other tools — for municipalities to develop affordable housing that aligns with community needs.
In New Jersey, the constitutional obligation for each municipality to allow its fair share of affordable homes, known as the Mount Laurel Doctrine, is recalculated every 10 years in cycles known as Rounds. Each municipality’s obligations are calculated by looking at factors in various regions of the state — such as job growth, existing affordability, and the growth of low- and moderate-income households — which determines an individualized requirement for affordable housing.
Ahead of the 4th Round of Obligations starting in 2025, Governor Murphy signed landmark legislation (S50/A4) this year that streamlines the affordable housing development process and codifies the methodology used to determine each municipality’s obligations over the next decade. The legislation’s primary sponsors were State Senator Troy Singleton, Senate President Nicholas Scutari, Senate Majority Leader Teresa Ruiz, and State Assemblymembers Yvonne Lopez, Speaker Craig Coughlin, Benjie Wimberly, and Verlina Reynolds-Jackson.
The new law is expected to help address New Jersey’s shortage of over 200,000 affordable homes for extremely low-income residents. It is also expected to help break down barriers to racial and economic integration in one of the most diverse — but also one of the most segregated — states in the country.
“This is an opportunity for municipalities to prioritize sensible and equitable growth, redevelopment, and infrastructure investments that will benefit their communities for generations to come,” said Adam Gordon, Executive Director of Fair Share Housing Center. “We appreciate that DCA produced these calculations on schedule, which we’ll be closely analyzing in the following days and weeks.”
By codifying the affordable housing development process, the new law allows municipalities to more efficiently determine their housing obligations. The updated framework increases transparency, while also safeguarding towns’ discretion in deciding how they want to fulfill their fair share obligation. For towns who cooperate with the process, the new law is expected to reduce municipal costs.
The methodology to calculate municipalities’ affordable housing obligations, known as the “Jacobson methodology,” was adopted as a middle ground between positions of towns, advocates and builders. Towns that have more jobs, fewer environmental constraints, more proximity to transportation corridors, and less existing affordability have larger obligations. Towns that have fewer jobs, more environmental constraints, less proximity to transportation, and more affordability have lower obligations.
There are two types of affordable housing obligations under NJ law: 1) creating new affordable housing (“Prospective Need”), and 2) rehabilitating existing affordable housing (“Present Need”). Since urban municipalities have historically produced far more affordable housing than suburban municipalities, their obligations primarily consist of rehabilitating existing housing — which often in total far exceed suburban obligations numerically.
All New Jersey municipalities are encouraged to engage in the process and create their own plans that realistically zone for their fair share of affordable housing. Towns that do not participate in the process voluntarily are subject to lawsuits from advocates and developers seeking to require rezoning.
New Jersey law gives towns a wide variety of tools to create affordable housing in the way they prefer. Municipalities can choose from a range of options — including 100% affordable housing, mixed income housing, preservation of existing affordable homes that otherwise would no longer be affordable, and accessory dwelling units that a property owner can place on their property. The recently-enacted law and associated bills give towns additional tools like new bonuses, financing options, and credits to meet their obligation.
“Affordable housing doesn’t just improve the lives of its residents — it improves the lives of all New Jerseyans. Families with affordable housing have better health outcomes, better educational outcomes, and ultimately better economic outcomes. Housing shortages hurt the state’s overall economy — all the essential workers who keep our towns functioning need to live somewhere,” added Gordon. “We look forward to working with towns and community leaders to implement the new law and create much-needed affordable homes.”
For additional background:
- Fact Sheet: New Jersey’s New Affordable Housing Law (S50/A4)
- NJ.com: Rather Than Burning Taxpayer Money, Comply With Affordable Housing Law
- Fact Sheet: The Mount Laurel Doctrine
- Next City: New Jersey Just Took Bold Action on Exclusionary Zoning. Will Other States Follow Its Model?
- Gov. Murphy’s Newsweek Op-Ed: Here’s How States Can Make Housing Affordable
