New Jersey Housing and Mortgage Finance Agency Executive Director Melanie Walter was on hand at the 9th Annual Jersey City Summit by roundtable&advisory as a participant during the day’s first panel discussion.
After taking part in the Affordable Housing segment, Walter spoke with NJBIZ about what NJHMFA gets out of the annual event, Jersey City’s approach to the segment, how other communities can work to replicate its successes, the agency's efforts to address the “missing middle” and more.
Questions and answers are edited for length and clarity. NJBIZ EDITOR JEFFREY KANIGE: The first question I have is, obviously, what do you think of this conference? Why are you here? What do you hope to get out of it?
MELANIE WALTER: These are great events and they help us to bridge between the traditional affordable housing developers we see every day and people who are entering the space for the first time and want to get a sense of the way the financing works, the market works and how best to design a project to sustain.
Q: Now you work, obviously, in housing affordable housing. Affordable housing issues are incredibly important in the state. First of all, let's start with Jersey City, since we're here, how do you think they're doing in terms of providing the kinds of housing that everybody in the city needs? When I talk to people who work here, that's a primary want. How are they doing and what do they need to do with the momentum that they have?
A: They've been a tremendous incubator for new ideas. One of the challenges Jersey City had in facing the affordable housing need was that they accelerated through the growth stages so rapidly that sometimes things were a little behind the eight ball. So, they had to be very innovative to make up for that. And so at this point, the city has some of the most impressive inclusionary zoning rules anywhere in the country.
They've really pursued middle income supports in ways that other communities have not necessarily had to or have yet gotten to. And they've put a lot of money and resources behind their different initiatives to make sure that it's not just conversation, it's actually happening.
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Q: Is that a model that can be replicated or is that something that's unique in Jersey City, the situation that you have here in terms of the political leadership, the economic development? Is it something that Newark, or any other town or city, or suburb really, in New Jersey, that’s facing an affordable housing shortage could adopt?
A: Other communities have started to undertake some of the same initiatives that Jersey City has. There are certain facets of Jersey City the massive distinction between th e high end and low end the market, that are somewhat unique to this particular area. It's almost like a component of the New York market coming over, but you see it in Hoboken, you're seeing it starting in Newark. The wonderful thing about Jersey City has been that they've been able to think about it and address it actively, and there's been a lot of buy-in for that. Until communities feel the need, they tend not to react to the need. And so seeing other communities around the state, they're starting to see those kinds of challenges. Adopting these different models is why I say Jersey City has been an incubator for so much of the creativity.
New regs
Q: The sort of approach, the legal approach ... that's changing right now. How are you keeping up with that? How do you think the other constituencies who are involved in building and maintaining housing around the state [are keeping up]? What is that going to mean for them?
A: So, one of the important things to understand about that framework is that it was essentially static for a couple of decades. As our entire society has evolved, particularly post-COVID, that's accelerated. So, it's wonderful timing to see an update in the process.
What we're hoping to see is a transition to something that's more judicial and more mediation-based instead of it being purely litigation from day one. Also because we're being more realistic about the way that we calculate numbers the way that we help count and implement and we're bringing resources to bear to support their efforts. There have been $1.5 billion in subsidy put into affordable housing in the last three years. That's an extraordinary amount. And just in cash that the state has brought to bear, we've seen $500 million of new direct subsidies to support affordable housing construction. That has propelled construction all over the state on backlog, third round deals and is helping to create some comfort that if those resources continue to be available, there's a pathway to successfully meet fourth round obligations.
Tough environment
Q: And what about the housing market in general? I mean, there's a lot of discussion about that, particularly coming out of the pandemic. Single-family housing, for example, is extraordinarily hot, very difficult inventory. ... What do you see in the market now? Is it helping or hurting that cause?
A: It's still extraordinarily tight. You're seeing more households renting than you have in the past in terms of the percentage of ownership versus rental households in the state and across the country. We are trying very hard to address that missing middle because what we've seen is roughly a hundred thousand households in New Jersey that are what we would call home ownership ready renters. We did a study and essentially these are people who have the credit score and the mortgage to support a mortgage, but because their income level doesn't support rent plus saving for a down payment, they can't get over that hurdle.
Now, that's a problem for them as a potential home buyer, but it's also a problem for the rental market because you have a hundred thousand households that don't need to be renting, who still are. So we're looking at ways to break up those different market components and address more holistically the entire spectrum of housing, which is why we're starting with family and moving through senior supportive housing, retirement communities with supportive services attached, and really looking at ways that we can address each facet of need in each community.
Building up
Q: Given all of that, everything that we talked about, what are the main challenges for your organization? What are your priorities?
A: We know that we need to be responsive to community needs and make sure that housing is not one size fits all. You can't build the same cookie cutter in every community, and you need to make sure there are supportive services and resources to help families and communities thrive. We want affordable housing to bring additive elements and support to a community, not to be something that is taking away from that community. We know that there's a legacy and a tradition of fear of affordable housing because it was cited in ways and built in ways that isolated. So it's all about inclusivity and constructing units that are something that you are proud to have in your community and that elevate the standard of housing across the board. We have the most aggressive green guide in the country, meaning that we set standards for environmental and health standards in our buildings in New Jersey that are above what you see anywhere else in the country.
Q: Before I let you go, what would you say to someone who's struggling right now with trying to find the kind of housing they want, living arrangement that they want? Can you be optimistic? What would you tell someone like that?
A: People care more about affordable housing today than they ever have in history. People see their kids living in their basements, their parents and grandparents moving into their spare bedrooms and see a need that they didn't understand in the past. So that makes me optimistic because when people care things get done.
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