Group ‘Ready to Fight’ Affordable Housing Contract Expiration Rule

A group of about 125 Mahwah residents say they left an Affordable Housing Commission meeting Tuesday night more determined to band together and take potential legal action against the township and the state for a rule regarding the sale of their homes that they say is unfair.

Tuesday marked the second public meeting since the township sent out letters last month informing the residents about the upcoming expiration of their affordable housing contracts.

According to township attorney Andy Fede, about 500 units in Mahwah that were initially purchased as affordable housing units 25 years ago are coming upon the expiration of their contracts. Under the state’s Council on Affordable Housing (COAH) rules, Fede said when homeowners hit the 25-year mark, they could notify the town of an intent to sell the property.

The township, state, or non-profit organizations have a 90-day period to purchase the property at its restricted value, which is supposed to be recalculated by COAH each year. If one of those entities buys the unit, it would maintain its affordable housing designation, Fede said.

However, if they do not buy it within the 90-day period, the owner has the right to sell the property.

About six weeks ago, the township sent letters to the affordable housing homeowners informing them of the state’s “95-5” regulation, which Fede said was instituted as a result of Uniform Affordable Housing Controls adopted in 2004.

The regulation states that if a homeowner sells an affordable housing unit at market value, he or she would keep the restricted value, and have to give 95% of the difference to the town’s affordable housing trust fund.

So, for example, if a home’s restricted value is $137,000, and it is sold for $187,000, the homeowner would keep the $137K. The additional $50K would be split, with 95% of it going to the affordable housing fund, and 5% going to the homeowner.

Members of the township’s Affordable Housing Commission said Tuesday that Mahwah is obligated to enforce the 95-5 regulation, but residents in the crowd questioned the legality of the rule, and Mahwah’s role in enforcing it.

Many residents in the audience questioned how the 95-5 rule could be retroactively applied to their homes’ contracts, which state that after 25 years, the homeowners could sell the units for full market value.

“If you knew [in 2004] that this new stipulation came out, why didn’t [the town] send us a notice then,” instead of waiting until the contracts are almost expired, resident Dean Carlson asked.

Residents also questioned whether or not the township is required to enforce the rule.

“Why is it not [the township’s] position to [help us] fight this regulation that is ex post facto?” resident Joe Busta asked.

Fede told residents their questions were all valid, but not necessarily ones that have answers, because of the uncertain future of COAH, which Gov. Chris Christie attempted to disband, and the fact that Mahwah’s affordable housing units are among the first in the state to reach maturation.

“Many of the questions you’re asking us, there are no answers to,” Fede told residents, because the issues have yet to be decided by the New Jersey Supreme Court.

“We are definitely obligated to abide by the directives given to us by the state,” Mayor Bill Laforet said. “Our position is to be truthful [with residents]. No one here believes this is a fair thing, but this is an issue on the table…[and Mahwah is] the first one up to bat [dealing with it].”

Laforet said the township is not taking a position on the 95-5 rule, and that he feels the issue will likely be decided in court. But, he also said the township has an interest in maintaining the number of affordable housing units it has.

After two hours of fielding comments and questions from the public about the notices, the Commission closed the meeting. Many residents said they left the meeting unsatisfied, and inspired to fight the rule.

“We want to get organized, and see if we can get an attorney,” resident Kathy Errico, who was collecting names and contact information of other residents after the meeting, said. “Right now there is a lot of yelling and a lot of emotions. We need to get together, get organized, and find where we really stand as a group.”

Though Errico said the nature of any future lawsuit is not yet known, she said it would likely be against both the township and the state regarding the implementation of the 95-5 rule.

“We are definitely more determined now to get answers on how this happened, why we were never notified, and what we can do going forward so that people don’t feel that they are getting taken advantage of.”

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