$2 Million in Franklin Lakes Funds at Stake in Court Hearing

Appellate judges in Newark heard arguments Wednesday in a case that could impact the fate of a proposed Franklin Lakes affordable housing development.

According to a report by NJ Spotlight, at issue in the hearing was whether to maintain an injunction on the state Council on Affordable Housing’s attempts to claim $164 million collected by municipalities in building fees and stored in affordable housing trust funds.

Under a 2008 law, the funds left uncommitted to an affordable housing project after four years would be collected by the state. The courts blocked an attempt to collect the funds last July, saying that only COAH itself had the authority to collect the funds.

At that time, however, COAH had not met in over a year, and when it did meet last month it distributed letters to municipalities to requesting the return of uncommitted funds. A stay was issued shortly after, and at issue in the hearing Wednesday was whether the order would be maintained.

Franklin Lakes closed a $2 million deal shortly before the July 2012 deadline, purchasing a 14-acre property at the intersection of McCoy and Colonial Roads, where it intended to construct 40 special needs housing units.

But the borough never closed the deal, and the funds went uncommitted because the required approval from COAH never came. Mayor Frank Bivona called the system a “catch-22” after the state requested that Franklin Lakes return the money last month.

“We’re not allowed to spend that money until COAH approves our spending plan,” he said. “And the state is now telling us to send back the money or reduce the purchase plan because we haven’t spent it.”

Attorneys representing New Jersey municipalities echoed Bivona’s assessment at the hearing Wednesday, accusing the state of dragging its feet while sunset approached for the housing trust funds.

“COAH has exclusive jurisdiction over the trust funds; municipalities cannot spend the money without approval,” said Kevin Walsh, associate director of Fair Share Housing Center, the organization seeking the injunction. “There are probably 200 spending plans on COAH’s desk that they haven’t approved.”

“Not a single municipality in the state has been told, ‘You have a commitment to expend money,” he added, according to the NJ Spotlight report.

“In the big picture, this is all supposed to be about spending money to build affordable housing; the towns want to write that check,” said Jefferey R. Suenian, who represented the New Jersey League of Municipalities. “COAH, instead of facilitating the construction of affordable housing is thwarting it.”

The contract to purchase the Franklin Lakes property will expire in July, and though officials say it could potentially be renewed, the fate of the project hangs largely on the decision of the court. Bivona has indicated that the borough will explore other options to appeal the collection of funds if the current suit is unsuccessful.

The state said Wednesday that the issue should be decided through municipal appeals, and argued against the state-wide injunction on reclaiming the money.

Bivona is supportive of the case brought against COAH, which does not address the broader legality of the state’s seizure of the trust funds.

“The courts should look at this and rationalize the whole thing,” he said. “And we should have the ability to use the money that we’ve collected from our taxpayers and use it for affordable housing.”

Judges withheld a decision Wednesday, but indicated that, given time sensitivity, they would issue one soon.