COAH Regulations Could Cost Borough $1 Million

The topic of COAH (Council On Affordable Housing) Rehabilitation was discussed during the Municipal Capital Budget workshop meeting on May 10th in Borough Hall. The talks revealed that the Borough might have to pay up to $1,000,000 over five (5) years to meet the rehabilitation component of an Order of Compliance that the governing body signed in 2009 to avoid going to court against developer AvalonBay Communities. The developer had brought a Builder’s Remedy lawsuit against the Borough through a partnership with Romerovski property owner Israel Braunstein as Roselle Park VP LLC in 2008. In July 2009, mayor and council voted unanimously to agree to negotiated terms which resulted in an Order Of Compliance which included a requirement to satisfy CAOH’s rehabilitation component. The required number of rehabilitation units was 96 – currently there are still 50 or so units that are needed to satisfy the requirement.

The rehabilitation component is the number of units needed to replace the municipality’s deficient housing that will not be rehabilitated by the private market. A portion of the rehabilitation component may be met by new construction because COAH assumes that the private market will rehabilitate the affordable units that are vacated when low- or moderate-income households move into a new housing unit.

5th Ward Councilman Michael Yakubov – one of the three current council representatives who voted to end the lawsuit in 2009 – started the public discussion by stating, with regard to budgeting money to address rehabilitation units, “We have to do it. It’s just a matter of how much it’s going to cost. $200,000 is being estimated and that’s over the five year period.”

Chief Financial Officer (CFO) Ken Blum clarified the issue, “We’re talking about over the next five years, roughly $200,000. If we have to do 50 units at roughly $20,000 a unit – that’s $1,000,000.”

Borough Clerk Doreen Cali gave background on the matter, stating that after the governing body agreed to stop the fight against the Builder’s Remedy lawsuit, the Borough agreed to an Order of Compliance which required Roselle Park to meet their rehabilitation obligation which, according to Ms. Cali, the borough has never done.

“So here’s the question,” councilman Yakubov asked the Borough Clerk, “I’m sorry then, because I misunderstood it. If AvalonBay built tomorrow, we don’t have to do this because we satisfied that portion?”

“No. One has nothing to do with the other,” Ms. Cali responded.

2nd Ward Councilman Marc Caswell asked about the status of COAH in New Jersey. There has been a back and forth between NJ Governor Christie, the courts, and the state legislature about whether or not COAH will be abolished. Ms. Cali stated that regardless of that, the municipality is still obligated to have 96 rehabilitation units due to the court order.

”I understand that,” councilman Caswell continued, “But if the law is deemed no good, how can the court enforce this?”

”This is from our COAH attorney,” Ms. Cali responded, referring to the suggestion from councilman Caswell that the municipality contact their COAH attorney, the law firm of  Jeffrey R. Surenian and Associates, LLC, “We are obligated from 2008 to 2012.”

Councilman Caswell then asked, “The COAH attorney recently told us we have to do this?”

“It’s in a court order. Yes,” answered Ms. Cali.

“Listen, I do law for a living,” continued the 2nd Ward Councilman, “Just because a judge says it’s so it doesn’t mean it’s forever. If the court order is based upon law that is determined to be unconstitutional or invalid they can’t say ‘Well, we don’t care build it anyway’. We get to make a motion to throw it out. So if our COAH attorney recently said that . . . then that’s a different story but I don’t want to assume from ‘08 that we still have to do this.”

1st Ward Councilman Andrew Casais then asked if development fees could potentially cover the amount needed to satisfy COAH’s rehabilitation component. According to the Borough Clerk, anything that needs a Certificate of Occupancy (C.O.) has to pay a development fee which is 1% of the assessed value of the improvement. CFO Ken Blum stated that they potentially could but that right now Roselle Park is in violation of the court order and is open to another lawsuit.

Ms. Cali spoke on her talks with the municipality’s COAH Attorney, “I talked to the COAH attorney five times in the last week. We are under a court order because of the AvalonBay lawsuit to rehab a minimum of 46 -50 units.”

Councilman Yakubov again asked if the $200,000 in the capital budget was an average per year amount for five years.

Doreen Cali answered simply, “Yes.”

Mr. Blum stated that things could change with the capital budget amounts since development fees would offset the cost but as of right now, the municipality does not have those fees.

“Let’s file Chapter 11,” councilman Yakubov mentioned in an off-hand comment, referring to having the municipality declare bankruptcy, “Do it now.”

Taking the calculations of development fees into account, that would mean there would have to be improvements done to properties in the Borough with a combined assessed value of $100,000,000 to cover the proposed $1 million budgeted for COAH regulation compliance.