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[quote="Cranbury Conservative"]Can be found at:
http://www.bizjournals.com/philadelphia/stories/2008/06/30/story2.html?b=1214798400%5E1659912

Friday, June 27, 2008
N.J. housing rules deploredPhiladelphia Business Journal - by Natalie Kostelni Staff Writer

Developers and business-related organizations contend that new affordable housing rules in New Jersey that went into effect this month are burdensome and have begun to discourage economic development across the Garden State.

Rick Riccardi, president of Marathon Engineering and Environmental Services Inc. in Logan, Gloucester County, is starting to see the impact of the affordable housing rules that were enacted June 2.

Developers of commercial projects are abandoning plans; others are trying to figure out, if they do move forward, how to pony up millions of dollars to satisfy new financial requirements that fund affordable housing statewide.

For example, a developer of a proposed power plant in West Deptford, Gloucester County, will need to pay a $45 million lump sum to the state before receiving certificate of occupancy, Riccardi said.

"If it were deferred over 30 years that would be one thing, but there's no way to pay $45 million up front," Riccardi said. In the end, it also costs him business when developers needing his services drop projects on which he consults.

The $45 million figure is derived from charging 2.5 percent of the total assessed value of commercial projects and putting that money into an affordable housing fund. Residential projects are charged 1.5 percent.

States and municipalities struggle to strike a balance between financing and providing housing to moderate- and low-income residents while still encouraging commercial and residential development.

The issue is also being debated in Philadelphia where the city is pondering an inclusionary affordable housing law that would mandate market-rate developers to add a certain number of affordable units to any residential project.

Developers in New Jersey and Philadelphia contend the laws cut into their profits in what they believe is an already over-regulated, costly business environment.

New Jersey's Council on Affordable Housing, or COAH, believes the new rules are warranted to provide quality housing for "hardworking" men and women who wouldn't otherwise be able to pay for it. The rules are also one way to help reach Gov. John S. Corzine's goal of creating 100,000 housing units for low- and moderate-income households over the next decade.

The rules actually help attract businesses and development, said Lucy Voorhoeve, executive director of COAH. "We think the rules are going to promote affordable housing and not hurt the economy but strengthen it by providing affordable housing to workers who work in businesses and allow the businesses to grow," Voorhoeve said. "We have heard from employers who are concerned about the lack of affordable housing and affordable housing near employment centers and affordable housing makes it more desirable to workers to work in these areas and businesses to locate."

The new regulations, prompted by an appellate ruling last year that threw out an old set of COAH rules but required the agency to come up with new ones within a designated timeframe, were challenged early on. COAH, which is an affiliate of the New Jersey Department of Community Affairs, received nearly 5,000 comments. While many of the suggestions were incorporated, many weren't. COAH has proposed amendments to the adopted rules, and will hold a 60-day comment period on those amendments that will close Aug. 15.

An example of an amendment that will likely be adopted includes incentives offered for development in smart growth areas near transit and redevelopment sites, Voorhoeve said.

Thomas F. Carroll III, a partner with Hill Wallack, a Princeton law firm that represents the New Jersey Builders Association, said the adopted amended rules will be less controversial but still likely be appealed and challenged.

Aside from assessing development fees, the new rules revised what is called a "growth share ratio," in which a certain number of affordable new housing units need to be built for every 16 jobs a municipality creates.

"The new jobs is evidence there is growth and therefore affordable housing should be happening along with that job growth," Carroll said. "The whole notion of tying COAH to growth is something that serves as a huge disincentive to economic development."

The New Jersey Chamber of Commerce worries the new rules hurt economic development efforts in New Jersey and discourage employers from growing jobs, especially at a time when the economy is in the doldrums.

The development fees, which can be "exorbitant" depending on the project, also deter development, Carroll said.

Riccardi already believes the rules are having an unintended chilling effect. While some developers are shelving projects, others are considering moving forward with projects but in Pennsylvania instead.

"People can move across the river and never have to pay it," he said.

nkostelni@bizjournals.com | 215-238-5139

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