New Jersey’s Affordable Housing Trust Fund could face what some advocates say will be another raid on its dedicated fund in the next fiscal year if Gov. Phil Murphy’s budget passes as drafted by lawmakers .

Administration officials say they don’t see the proposed use of the $ 20 million fund for the NJ Housing and Mortgage Finance Agency (HMFA) down payment assistance program as a raid. This program offers an interest-free forgivable loan of $ 10,000 to first-time homebuyers in the state to cover a down payment and closing costs. There is an income cap to qualify, but it’s 140% of the region’s median income, which is not limited to a single county. Money in trust funds is supposed to build or maintain homes for those with no more than 80% of the median income.

The difference between these two income levels is considerable.

Bergen County, the most populous county in the state, had a median income zone of $ 104,200 last year. A modest-income household would have no more than $ 83,360 in income, while the limit for the down payment assistance program would be $ 145,880, which is $ 62,000 more than the maximum eligible for income assistance. affordable housing.

“The idea that we are going to take money from the Affordable Housing Trust Fund and give it to HMFA, I can say that we unequivocally oppose the proposal in its current form and are deeply concerned about the fact that the funding that should be used to create housing for New Jersey residents would somehow be eligible for use by richer landlords, ”said Staci Berger, president and CEO of the Housing and Community Development Network from New Jersey.

A story of embezzlement for housing

A misappropriation of money from the housing trust fund is nothing new: Former governor Jon Corzine first proposed using part of the fund for rental housing assistance, rather than new ones constructions, in 2008, and Gov. Chris Christie continued hijackings throughout his tenure. But during his first campaign, Murphy vowed to end the practice. In his freshman year, however, Murphy, along with the Democrats who control the legislature and approved his budget, embezzled all the money from the trust fund. It wasn’t until 2019 that he put in all the money from property transfer costs allocated to the Affordable Housing Trust Fund in the fund.

The Department of Community Affairs only started allocating this money to counties last December, in part because of delays caused by the COVID-19 pandemic. It announced nearly $ 20 million to seven community developers and nonprofits in the state to build 93 new affordable units and fund other housing programs.

The groups submitted around 50 additional grant applications – so advocates were disappointed with Murphy’s announcement to use $ 20 million in trust funds for the down payment program.

“The governor has been so good on so many issues, but on this one, I think they’re on the side that is preventing New Jersey from becoming prosperous again,” said Connie Mercer, founder and CEO of HomeFront, based in the Mercer County. “Anything that goes against the use of the Affordable Housing Trust Fund for Low and Moderate Income is not a good idea. “

Essential workers and underserved residents

Pasqualina DeBoer, spokesperson for the housing agency, said the goal of the down payment program is to help expand home ownership for those who would otherwise have difficulty qualifying, including essential workers and underserved populations, and that it would adhere to all the criteria it should.

“The NJHMFA is excited to have new tools to help implement Governor Murphy’s comprehensive affordable housing strategy,” she said. “Details on the expansion of PAD (down payment assistance) will be available, but our program will comply with all applicable obligations. “

The lawyers were skeptical, however.

In the State budget in briefMurphy writes only that the money would be used for “qualified first-time home buyers” without addressing the issue of the program’s higher income limit. He says the money would help the agency provide nearly 2,000 mortgages and “replace expired federal funds.”

Lisa Ryan, a spokesperson for DCA, said the state continues to process other requests for development assistance that will lead to affordable new construction.

“Applications are accepted and are considered as they arise,” she said. Highlighting the $ 20 million distributed at the end of last year, she added: “As the awards show, DCA is providing funds from the Affordable Housing Trust Fund to nonprofits to develop different types of affordable housing projects that will strengthen and create more vibrant neighborhoods.

Some praise Murphy’s movement

Some groups have lauded Murphy’s decision to step up the down payment program. In a statement, the New Jersey Institute for Social Justice said, “We are delighted that the governor is considering increasing mortgage down payment assistance for qualified first-time homebuyers. Racial disparities in homeownership in the state must be eliminated, and we look forward to working with the administration to ensure that programs meet the needs of Blacks and other buyers of color who have faced too long. barriers to building home equity through homeownership.

Berger said Murphy’s budget includes spending for a number of positive housing initiatives, including additional funds earmarked for housing during the freezing Code Blue weather events, additional homeless assistance for the LGBTQ community and the proposed new $ 2 million rent assistance program. for vulnerable pregnant women. But the trust fund was intended to create and preserve affordable housing and not pay a down payment program that benefits those with incomes above the state’s median, Berger said.

“There are a lot of really important fundraising decisions coming up here,” Berger said. “That’s not what Governor Christie did in the sense that they don’t take all the money and use it to support non-housing items in the budget. But that’s not where the money was intended. And we will work throughout the budget process.