Published July 19, 2019
By Colleen O'Dea

Call comes amid a stalemate between the governor and leading legislators over the future of state economic-development efforts

Despite the stalemate between Gov. Phil Murphy and Democratic legislative leaders over New Jersey’s major tax-incentive programs, some lawmakers think now is the perfect time to push for new tax breaks aimed specifically at spurring the construction of affordable homes.

Legislation pending in both the Senate and Assembly would provide up to $600 million in tax credits to developers of residential projects where at least half of the units would be affordable for low- or middle-income households, including 13 percent reserved for very-low income residents. Under federal guidelines, a three-person household qualifies as very low-income with income of up to $45,250, while the low-income limit for three people is $67,950.

“The need is outweighing the resources we have in place and we have to get creative,” said Sen. Troy Singleton (D-Burlington), who is sponsoring the Senate version of the bill, S-1482.

New Jersey is among the most expensive states in which to live and last year a Superior Court judge estimated the need for new affordable units at nearly 155,000 statewide.

Advocates for low-income families support the measure and say this would be an opportune time to put such an incentive program in place. Nearly 300 municipalities have adopted affordable-housing plans to meet their obligations to provide a share of the state’s need for low-cost homes through 2025 under the state Supreme Court’s Mount Laurel Doctrine. And for the first time in more than a decade, the state — on Murphy’s recommendation — has agreed to deposit the full amount of dedicated realty-transfer fees into a trust fund earmarked to help build affordable housing. That should make $60 million available to fund low-priced homes.

“This is a good time to consider ways to do tax incentives that can build homes at all levels of affordability,” said Renee Koubiadis, executive director of the Anti-Poverty Network of New Jersey. “Any kind of incentive program would be helpful.”

Key support from former legislative leader
Singleton said he would like to see the incentives to build affordable homes throughout New Jersey because there is a need for low-priced units in both cities and suburbs and in the northern and southern halves of the state.

The legislation, which has not yet had a hearing this session, got a boost last week when former state Sen. Raymond Lesniak urged the governor’s task force looking into the incentive programs overseen by the state Economic Development Agency to support the bill. Lesniak was the original sponsor of the measure, first proposing it in March 2016. The bill was endorsed by two legislative committees but went no further.

“There are tax Incentives that can help these communities which need their neighborhoods redeveloped to keep employees living near their jobs, rather than leaving after the work day is over,” the Democrat told the task force. The legislation “will create a comprehensive urban development strategy designed to transform the state’s urban centers from areas with just offices, to 24-hours-per-day, seven-days-per-week communities with robust residential populations,” he added.

Lesniak’s position was echoed by some advocates.

“Addressing the need for people at every income level to access affordable homes through mixed-income developments would be an economic boon for our state,” said Nina Rainiero, a spokeswoman for the Housing and Community Development Network. “This approach can help our economy and our future by creating jobs, thriving neighborhoods and giving opportunities for our State’s lower income residents.”

Others wonder whether the program would work as well as promised.

“It should be vetted with potential investors and targeted to transformative projects that combine housing with critical job creation investment, or targeted for inclusionary developments meeting a municipal fair share obligation,” said Christiana Foglio, founder and CEO of Community Investment Strategies, a developer of affordable-housing projects.

Incentives under scrutiny
A major roadblock, at least at the moment, is that the state’s tax-credit programs are currently in limbo. Murphy has been calling for reforms after an audit raised troubling concerns about the EDA’s ability to administer them. In the fallout, there’s a grand jury investigating potential criminality and the EDA has been re-examining past awards. On Thursday it announced it was asking for more information from another three companies that got credits under the Grow New Jersey program to address discrepancies in their applications and other legal questions.

New Jersey has had some sort of economic incentives in place for more than two decades. The Legislature last month passed a bill that would extend the existing programs until early next year. But Murphy has promised to veto that.

The governor has a plan for remaking the incentives that does not include a dedicated program for affordable housing. Instead, he has proposed five specific incentives targeting high-growth industries, the redevelopment of brownfields, historic preservation, startups and a gap financing program for commercial, residential and mixed-use projects.

Singleton said that the re-examination of incentive program presents a great opportunity to shift the emphasis of some of the credits given away from corporate and business interests and toward affordable housing, which has never been a major focus of the incentives.

“We have an opportunity to do some really cool and creative things that will benefit communities by utilizing our tax code to help spur affordable housing, thus addressing one problem by using one mechanism that, by all accounts ... is going to be a part of our economic portfolio going forward,” he said. “The details are still being worked through, but because of that, why not use it for a greater community benefit.”

Singleton said that he has spoken with Senate President Steve Sweeney (D-Gloucester) and urged him to make the affordable-housing tax-credit program part of whatever plan for new incentives the Legislature may propose. Sweeney has created his own bipartisan committee to examine EDA incentive programs.

Singleton said Sweeney has expressed an interest in creating a “more inclusive” set of tax incentives. “Where we’re at right now is what the mechanics of that, what the pieces of that, will look like. It is my hope is that this becomes a part of that.”