The New Jersey Department of Community Affairs recently established the calculation methodology and allocation of prospective affordable housing need for all 564 municipalities in the state.
The “Affordable Housing Obligations For 2025-2035- Fourth Round” report (DCA Report), released Oct. 18, must be promulgated because of the recently enacted A4 affordable housing law, P.L. 2024, c.2. (AH Law).
The AH Law creates a streamlined process, providing the methodology for calculating and allocating municipal housing obligations. Specifically, it establishes the deadlines for municipalities to complete their compliance filings and procedures, and for challengers to file their respective objections. The AH Law describes how disputes between adverse parties in these matters are to be adjudicated, including the creation of a dispute review and resolution process known as the “Program.” As a first step in the new process of determining municipal affordable housing need in the Fourth Round, the DCA was enlisted with the task of preparing a report based on calculations set forth in the AH law. The eagerly awaited DCA Report is the product of that process.
The DCA Report strictly adheres to the statutory methodology prescribed in the AH Law, resulting in a statewide affordable housing need of 84,698 units. The DCA Report then allocates the statewide prospective housing need to each of the six housing regions. The allocation of affordable housing need is focused primarily within Region 1 (Hudson, Bergen, Passaic, Sussex), with 27,743 units, and Region 2 (Essex, Union, Morris and Warren), with 20,506 units. In contrast, Region 6 (Atlantic, Cape May, Cumberland and Salem) has an affordable housing need of 1,889 units. Using this regional allocation of need, the DCA Report then allocates affordable housing need to each municipality.
Overall, the concentration of affordable housing need to Regions 1 and 2 results in substantial housing obligations in New Jersey’s northern municipalities. Many of these municipalities are fully built out, meaning that vacant, developable land is at a premium. The accommodation of this substantial affordable housing need will require special attention to areas in need of redevelopment and redevelopment plans for these municipalities. In contrast, municipal affordable housing obligations in central and southern New Jersey (Regions 3-6) are, for the most part, lower than the obligations established in the Third Round.
The DCA calculation of need is nonbinding, allowing municipalities flexibility in calculating their specific affordable obligations. By Jan. 31, 2025, municipalities must pass binding resolutions setting forth their present and prospective fair share obligations. Municipalities may consider the DCA’s report for its calculations. Any proposed adjustment to the DCA Report allocation of prospective housing need will be reflected in the individual municipal resolutions. However, as it appears that the DCA methodology and the data used to calculate and allocate affordable housing need is sufficiently accurate, municipal individual adjustments are likely to not result in substantial changes to need.
On or before Feb. 28, 2025, any interested party may file a challenge with the Program after adoption of the binding resolution and must allege that the municipality’s determination of its present and prospective obligation does not comply with the requirements of the AH Law. Close attention should be paid to any municipality where for-profit or affordable housing developers seek to create inclusionary or 100% affordable housing projects.
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