Will Legislature Use Millionaires' Tax to Subsidize Millionaires' Condos?

by: Adam Gordon at Fair Share Housing Center

Mon Jun 27, 2011 at 07:55:28 AM EDT

With four days left before the Legislature breaks for the summer, one of the most controversial and costly bills up for debate - first considered just last Thursday - would provide up to $150 million in state subsidies for luxury condominiums. Think of it as using the proceeds from the millionaires tax to help subsidize condominiums for millionaires.

The proposed legislation, S2972, has as its main sponsor Sen. Raymond Lesniak (D-Union), who has drawn controversy over the past year for a number of legislative proposals regarding housing policy. The bill came to light for the first time late Friday, as an amendment to an existing bill that dealt with other aspects of the Urban Hub Tax Credit. The amendment actually passed Lesniak's Senate Economic Growth Committee on Thursday but the text of the bill was not available to the public until 24 hours later.

The amendment would eliminate a requirement that the "Urban Hub Tax Credit" only be used for developments including apartments and condominiums affordable to middle-class families, and instead place no price limit on developments that could be built with $150 million in state subsidies for residential development. With only four days left before the Legislature's summer break, the full Senate could take up the bill as soon as today.  An identical bill was introduced in the Assembly on Thursday to allow the legislation to pass by June 30.

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According to information on the NJ EDA website about the program's geographic location, every single one of the Gold Coast Real Estate Blog's 10 Most Expensive Condo Listings in Jersey City would have been eligible for the tax credit had it been in existence when the buildings were built.

The bill is one of three pieces of legislation being considered without public input this week to reduce housing opportunities for working families, seniors, and people with special needs to live near jobs and transit. The other two are:

- S2974 (also being sponsored by Lesniak) which would permanently repeal the state's non-residential development fee, a prime source of funding for housing choices. I'd link to it, but the bill text is not even available online four days before the end of the session.

- The state's budget in which Gov. Christie has proposed to divert funding from the state's Affordable Housing Trust Fund and provide zero funding from that fund for construction or renovation of homes affordable to families, seniors, and people with special needs. It is not clear yet whether the Democrats' alternative budget will treat this fund differently.

If the various legislation being considered passes this week, the state will be taking money away from homes for working families, seniors, and people with special needs throughout suburban, rural, and urban New Jersey to fund luxury condos in Hoboken and Jersey City - not to mention all of the other critical budget priorities such as cuts in Medicaid.

Better alternatives would be to only make these subsidies available if the luxury buildings provide 20 percent of their condos affordable to working and middle class families - as current law requires; to redirect the subsidies entirely to places like Newark and Camden; or to fill other budget holes.

Of course, passing a bill in four days tends to cut off reasoned debate over shoveling taxpayer money to luxury condominiums. Which perhaps is the point.