As part of the lawsuit, the intervenors stated that they wanted to provide the Township’s obligation of affordable housing in exchange for being allowed to also build market rate homes. The law typically provides for 15% of rental housing to be affordable, but Hopewell Township was able to reduce this ratio across the board, resulting in less market rate housing for each affordable unit.
Some people would have liked to see 100% Affordable Housing built. Others would have been furious if 653 units of 100% Affordable Housing were built in one or two locations. In the first incarnation of the third-round rules, COAH indicated a preference for “inclusionary” housing, which is housing that is a mix of market and affordable.
Affordable Housing can be funded either by: 1) offsetting profit from contemporaneously built market rate housing units, 2) through investment via tax credit programs administered by the New Jersey Housing and Mortgage Finance Agency, 3) subsidized by a federal program such as HUD, or 4) financed directly by the municipality through taxes. Hopewell Township’s solution utilizing option 1 ensures that taxes will not be used to pay for this Affordable Housing obligation.
Between the breakdown in NJ's Council of Affordable Housing (COAH) third round process and the resulting lack of rules/funding for Affordable Housing, and new 2018 federal tax plan, which substantially lowers corporate taxes and thus lessens their need for credits to offset profits, relying on tax credit funding is extremely unlikely. Funding for 100% tax credit projects is awarded after a lengthy and expensive application process and is most often given in amounts to fund no more than 85 units at a time. Application rounds are usually only announced once every three years and are extremely competitive, especially in this new landscape where every town in New Jersey is being pressured by the Courts to carry out its Affordable Housing Plan. With an obligation of 653 units, the Courts have found that it would not be realistic to rely on 100% Affordable Housing developments, 85 units at a time.