Administrative fees could hamper affordable housing program

Written by Columb Higgins Wednesday, 22 February 2012 03:54

Township must spend $200K before July or state takes the money

UPPER TOWNSHIP – The township is setting up an affordable housing program that will allocate more than $200,000 to qualified residents for home rehabilitation, but there are concerns amongst committee members that the fees to run the program could cost $37,000.

Township engineer Paul Dietrich said last week that the township must set up a program and utilize $200,000 it has collected in developer’s fees before the state takes the money in July.

The state legislature passed a law in 2008 that said municipalities have four years to spend money it collected from developers for its Fair Share Housing Plan. If the funds aren’t spent in that time period, the state could take the money and use it for projects across the state.

The trust fund was built up by developers who paid money to the township in lieu of building affordable housing units as required by the Council on Affordable Housing (COAH). The majority of the fund, about $150,000, came from ShopRite, which opened in 2009.

The township’s Fair Share Housing Plan identifies three areas where the trust fund money can go: the first is a home rehabilitation program for low and moderate income families, which would provide money for major home repairs; the second is a rental assistance program that would pay landlords to deed restrict their properties for use as affordable housing or pay money directly to qualifying tenants; the third is a mortgage assistance program that would allow qualifying buyers to receive money to buy down part of their mortgage.

Officials said they want to initially focus on rehabilitating owner occupied homes. At issue, however, is how much good the township can do with the $200,000, given the cost to administer the program and state regulations governing how the money can be spent.

Dietrich said costs for a private company to administer the program could run from $4,000 to $7,000 just to set it up, and $3,100 per unit after that. State regulations also require a minimum of $20,000 be spent on owner occupied units, and that a major function such as plumbing, electrical, septic or roofing be repaired, in order for the township to receive credit toward its affordable housing requirement.

Upper Township is responsible for rehabilitating 14 homes, according to its most recent Fair Share Housing Plan.

Mayor Richard Palombo said the regulations would reduce the number of township residents that could benefit to just 10. Accounting for the administrative costs, that number could drop to eight, he said.

“I don’t want all the money going to administrative costs,” said Palombo. “It’s like a charity that doesn’t give any money to the charity it’s supposed to help.”

Palombo said he would prefer to help more residents, even if it means not getting credit for affordable housing from the state.

“There are people who are in need of heat,” he said. “We don’t need to get credit for everything we use the money on, we have 20 years to do that. They might not need ($20,000). They might just need new windows or a new furnace. I want to see us help as many people as we can.”

Dietrich said it’s possible the per unit cost would be lower if the township spends less than $20,000 on a home.

“(A company’s) fee might be less if the scope of work is smaller,” he said.

Committee members asked whether the township could administer the program and save on those costs, but Dietrich said the field is very specialized.

“They determine the scope of work, they do the permitting, they qualify the applicants for income, hire inspectors, set up a list of qualified contractors,” he said.

Deputy Mayor Curtis Corson, Jr. said the township had to contact a private company to administer the program to avoid the appearance of corruption.

“If we run it, there’s going to be accusations of fraud and corruption,” said Corson.

Palombo asked Dietrich to determine whether the $20,000 minimum can be circumvented. Township committee also formed a subcommittee with Dietrich and committeemen Jay Newman and Tony Inserra to study the issue.

“Let’s get the money moving,” said Palombo. “I’d rather use it than lose it.”