Reconsidering 100% Rentals

[Jersey Dad]

Why should Cranbury consider a mix of ownership and rental units?

The strategy of the 2005 Plan was 100% rental units, to "maximize bonus credits". At the time, all rentals received COAH bonus credits. Also, landlords enjoy a modicum of additional control, although not much. It is illegal to screen-out or remove many potentially bad tenants, except for credit or non-payment issues.

Now, the rules have changed. There is a cap on bonus credits. If Cranbury builds 100% rental units in Round 3, we will exceed the cap and we will not get bonus credits for an estimated 22 rental units. We do not need to build 100% rentals to maximize bonus credits.

A mix of ownership units has advantages for residents and neighbors, is consistent with successful strategy of other CHA developments and has financial advantages for Cranbury.

Advantages to residents and neighbors
* Pride of ownership and the American Dream
* With the opportunity to build equity comes a vested financial interest in the community.
* Residents and neighbors alike benefit from a stronger community and greater security.

Consistency
* Cranbury has two 100% affordable family rental developments. Old Cranbury Road is brand new and Bennet Place is only 6 years old. Affordable rental housing is a 30 year commitment.
* These developments are only 20 and 16 units, respectively, smaller than the proposed ranges in the plan.
* Bergen Drive , Danser and South Main are 75% owner occupied .

Financial advantages for Cranbury
* We could sell 20 units for $2 million (based on average prices).
* Savings = about $1,500 for every household in Cranbury (more when you consider financing).
* Plus, operational costs of rental units are higher than ownership units. Paint, carpet, appliances, turnover- all increase management expenses. Rental units generate less than $1 dollar per day for Cranbury.

Where practical, a mixture of ownership units in the village could be a win-win-win!

[Guest]

JD,

How are owned homes under COAH taxed? I assume they are taxed at market rate with an assessment equal to the sale price or at the very least taxed.

Under an ownership model at least the COAH homes (unless they are free of property taxes) would lead to at least a slight offset as opposed to rental units which would contribute no tax revenue.

The only concern I have with ownership is that no screening can take place and removing people at least is a possibility under rentals as opposed to no possibility under owned homes. However, that's really a slight issue since there are bigger items to consider.

[Guest]

[Jersey Dad]

Cranbury has two 100 percent affordable family rental developments (not including SERV), both of which are substantially smaller than what has been proposed and the oldest of which is 6 years old.

My understanding is when Cranbury commits to affordable family developments, we commit for 30 years. That said, I'm not sure anyone knows what the COAH rules will be 30 years from now.

[Guest]

According to today's Star-Ledger-

[Jersey Dad]

Unlike SCCOAH, who manages affordable housing for Princeton, Piazza and Associates does NOT do criminal background checks on prospective renters. Even so, it is not clear if they can use background checks to screen out potentially dangerous tenants.