HOW DOES YOUR COMMUNITY VIEW AFFORDABLEHOUSING?

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New Jersey is an extremely expensive state, and even thosewith good, full-time jobs struggle to find an affordable place tolive. Responses to this week's poll indicate that their strugglemay continue. Nearly half (45%) of the responses say that theircommunities have adopted a 'Not in My Back Yard' stance when itcomes to affordable housing. An almost equal number (41%) say thateducation has helped, but affordable housing is not yet widelyaccepted by residents in their area. A mere 14% say their communityembraces it. Lori Grifa, a partner in the law firm Wolff &Samson in West Orange discusses how the community ofnon-residential developers views affordable housing:

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"Generally, the non-residential developers I represent don'tobject to participating in the process of providing affordablehousing in some respect. However, the new regulations that havebeen proposed threaten to derail non-residential development in NewJersey because they are so burdensome.

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"The legislation is helpful in some ways. In this round, theThird Round, a new formula was developed to calculate how muchaffordable housing should go up. This formula, known as the GrowthShare formula, was based on the amount of residential and jobgrowth in the area, and it made some sense. But the law ofaffordable housing says that if you're going to ask a developer toparticipate in this, the developer is entitled to a compensatorybenefit. So, if a municipality tells a developer they have to buildX number of houses that are deed-restricted "affordable", thedeveloper has to get something in exchange for the loss of revenuefor that house. The way that the 2004 Rules were written, neitherthe courts nor the participants could figure out what benefit therewas for the participants. The 2008 version of the Rules, slated foradoption on May 6, tried to address the absence of a compensatorybenefit by relaxing certain zoning rules regarding heightrestrictions, set back requirements, impervious coveragelimitations and maximum floor area ratios.

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"The real problem, the one that causes my clients to fear theend of non-residential development in New Jersey, is the issue offees. During Round Two, which ended in 1999, non-residentialdevelopers were asked to pay a 1% development fee into anaffordable housing trust fund that the town was supposed to use foraffordable housing units. The 2004 Rules raised that fee to 2%, andthe 2008 Rules raised it again to 3%. So if you run those numbersagainst the square footage of the building proposed by thedeveloper, it becomes a significant fee per square foot – one thatis likely to impact the developer's ability to rent whatever he hasbuilt. This 150% increase in the fee between 2004 and 2008 is areal problem. While the increase from 1% to 2% between 1999 and2004 was defensible because there hadn't been an increase for 15years, the additional 50% increase between 2004 and 2008, is alittle hard for the State to justify.

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"There's another problem to consider. In the 2008 Rules, thetowns retained the option either to take a fee in lieu of buildingor require a non-residential developer to build affordable housing,in certain instances on the site of the non-residentialdevelopment. This new regulatory scheme defies sound planningprinciples. If a developer builds a warehouse or a big-box store,under the Third Round Rules, that building is going to generate ahousing obligation. The way the Rules are written, the town couldconceivably force the developer to build apartments, condos ortownhouses in the parking lot. Towns ideally have a master plan, socommercial and business districts are usually unto themselves, withresidential areas located elsewhere. If a developer builds abig-box store but has to create X number of housing units on sitesimply based on the square footage of that store, it absolutelydefies sound planning principles.

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"The Round Three rules enable a developer in this example tomove the housing off-site, which makes more planning sense, but the2008 Rules are even more onerous than the earlier version becauseif the developer seeks to build that housing offsite in a placethat makes better planning sense, the Rules penalize him for doingso.

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"From my perspective and from my clients' perspectives,non-residential developers are basically taking a beating comingand going. I suspect that in the next two weeks, you'll see aseries of lawsuits filed challenging these regulations. It'sinevitable."

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