Commissioner Constable’s Statement to
Assembly Budget Committee

TRENTON, N.J. – New Jersey Department of Community Affairs’ (DCA) Commissioner Richard E. Constable, III issued the following statement today to the Assembly Budget Committee during their hearing on the FY2014 state budget:

“Good morning Chairman Prieto, Vice Chairman Schaer, and members of the Assembly Budget Committee.  It is a pleasure to share with you the budgetary priorities of the Department of Community Affairs.  I am joined today by my Deputy Commissioner, Charles Richman, my Chief Financial Officer, Cindy McDowell, and my Assistant Commissioner in charge of housing programs, Ana Montero. 

Over the past year, the Department of Community Affairs has continued to serve its core mission of providing guidance and financial support to local governments, community development organizations, and our business community.  Like so much of New Jersey, however, Superstorm Sandy has changed the Department.  So in addition to our ongoing work, the Department is designing long-term recovery programs for New Jersey’s residents, businesses and communities, while ensuring that the thousands of families displaced by Sandy have immediate access to safe, decent and affordable housing.

Post-Sandy Housing

The DCA has taken a lead role, along with the Governor’s Office of Recovery and Rebuilding, in providing Sandy-displaced families with temporary and permanent housing solutions.

To this end, we have partnered with the New Jersey Housing and Mortgage Finance Agency (HMFA) to continuously update a housing portal where thousands of Sandy-displaced residents can find homes and apartments to rent.

For displaced families who are unable to find housing because of a lack of rental resources, the Christie Administration worked with FEMA and the Army Corps to make housing available at Fort Monmouth.  To date, 115 units have been renovated; and all are occupied.  Further, at the Administration’s request, FEMA has installed 80 mobile homes in many of the communities hardest hit by the storm.

We also took a hands-on approach to FEMA’s Transitional Sheltering Assistance (TSA) program.  Over six months, more than 5,500 families were helped by the TSA program, which provided temporary hotel and motel stays to Sandy-displaced families.  I am happy to report that as of May 1, we successfully transitioned every family that was in the TSA program into intermediate- or long-term housing solutions. 

Last, DCA has set aside 1,000 Section 8 vouchers specifically to help low-income families who were displaced by Sandy move into permanent housing.  To date we have issued more than 600 such vouchers.

CDBG-DR Action Plan

These initiatives, while important, are just starting points in New Jersey’s overall recovery.  New Jersey is now transitioning from the first phase of post-Sandy recovery, which focused on restoring a sense of normalcy, to the second phase which will focus on distributing much-needed resources for the rebuilding effort.

On the housing side, more than 40,500 owner-occupied primary residences and approximately 15,500 rental units sustained “severe” or “major” damage.  “Major damage” is defined by HUD as damage to a home or rental property exceeding $8,000, but less than $28,800; “severe damage” is defined by HUD as damage of $28,800 or above.  Additionally, floodplain managers have so far determined that approximately 7,000 homes have been “substantially damaged” as a result of Sandy.  A home is deemed “substantially damaged” if damage to the home exceeds 50 percent of a home’s pre-disaster value.  “Substantially damaged” homes must be elevated. 

Given the number of homes that will require repair and elevation post-Sandy, the costs of repairing owner-occupied primary residences and rental units will reach into the billions.  

In January, Congress passed a $60 billion Superstorm Sandy aid package which included $16 billion in Community Development Block Grant Disaster Recovery (CDBG-DR) funds to be shared between New Jersey and other impacted states.  So far, HUD has allocated $1.8 billion to New Jersey.  A second funding allocation is expected in the next five to seven months. 

On April 29, exactly six months after Sandy made landfall, HUD approved New Jersey’s Action Plan for administering these funds.  The Action Plan allocates funds in three main areas: housing, economic development, and community development.  Regarding housing, the State will implement a $600 million grant program that will provide grants of up to $150,000 to eligible homeowners for reconstruction, rehabilitation, elevation, and mitigation efforts. The $180 million Housing Resettlement Program will provide $10,000 grants to encourage Sandy-impacted homeowners not to sell or abandon their properties.  The Action Plan also allocates $380 million for programs that will significantly increase the stock of affordable rental housing in New Jersey.

To help New Jersey businesses, the State set aside $460 million for the New Jersey Economic Development Authority to administer community revitalization programs, a tourism marketing campaign, and grants and no-cost loans for storm-impacted small businesses.

While the housing and economic sectors are the central focus of this round of CDBG Disaster Recovery funding, the Action Plan also allocates $121 million to help state and local governments.

To be better prepared for the administration of the federal CDBG allocation, I have established the new Sandy Recovery Division to administer and provide oversight of the funds.  The Division will ensure that homeowners, renters, businesses and local governments suffering from the ravages of Superstorm Sandy will benefit quickly from the programs we have designed.  The Division staff and consultants, numbering more than 100, will primarily be made up of subject matter experts in the fields of housing and disaster recovery operations.  The Division will also have sufficient compliance, auditing and monitoring staff to ensure the funds are not subject to waste, fraud and abuse.

In order to assist municipalities in the rebuilding effort, we are opening three regional construction code field offices.  The offices will be staffed with dozens of code officials.  At the request of any of municipality in the nine most impacted counties, DCA staff will provide support to ensure reconstruction efforts are not slowed by delays in the administration of construction codes.  Last, we have earmarked $5 million to provide planning assistance to impacted municipalities. 

With this first CDBG Disaster Recovery allocation, the Christie Administration anticipates we will help 18,000 homeowners, 6,300 renters, as well 10,000 businesses and dozens and dozens of local governments.

Other programs

Obviously we have much work to do because of Superstorm Sandy.  However, our disaster recovery efforts should not completely overshadow DCA’s accomplishments during FY 2013, and plans for FY 2014.

The Department posted exceptional results for the final year of the four-year, federally-backed $119 million Weatherization Assistance Program.  In total, over the course of the program, DCA weatherized 22,300 housing units across the state, nearly 10,000 more than the previous administration’s stated goal.

The New Jersey HomeKeeper program, which is administered by HMFA, provides loans to unemployed and underemployed families at risk of losing their homes to foreclosure.  HMFA closed a record 330 loans last month, and since the fourth quarter of 2012 closed an average of 250 loans monthly.  In calendar year 2013 it is expected that the HomeKeeper program will help 3,000 New Jersey families stave off foreclosure.

The FY2014 budget maintains the State’s ability to assist nearly 4,000 families with rental assistance through our State Rental Assistance Program (SRAP).  Further, during FY2014, SRAP will provide support for the construction of over 100 new units of affordable rental housing. 

On the federal level, the Section 8 rental voucher program is not without its challenges.  Sequestration will reduce funding for the program; however, we have taken steps to prevent existing voucher-holders from being impacted.  Each month a limited number of vouchers become available as households exit the program.  By not recirculating the vouchers, we are able to maintain existing levels.  Accordingly, we expect to help at least 20,000 families, and no one currently receiving Section 8 in New Jersey will lose their voucher because of sequestration.

Properly administered, initiatives like HomeKeeper, Weatherization, SRAP, Section 8 and the myriad of programs we run at DCA can make a real difference in the welfare of New Jersey families and communities.  I am proud to lead a staff of dedicated public servants, at DCA, who work hard to help families and communities in need. 

Property tax relief

Before I conclude, I want to emphasize the Department’s continued progress in working with municipalities to implement the Governor’s reform agenda and bring real property tax relief to New Jersey communities.

Middle-class New Jerseyans will save $120 billion over the next 30 years because of historic pension and benefits reform.  Indeed, if Governor Christie’s reforms weren’t in place, pension costs would be $543 million higher this year than they are today.

By any measure the property tax reforms have been a resounding success.  We’ve now had two consecutive years of the smallest property tax increases in more than 20 years.  In 2011, New Jersey homeowners saw a statewide average rise of 2.4 percent in property taxes.  In 2012, we did even better, with a statewide average increase of just 1.6 percent.  This success is measured against a cumulative average increase of 70 percent in the 10 years before Governor Christie took office. 

And municipalities are learning to live within the 2 percent property tax cap, as evidenced by the fact that only one municipality out of 565 is seeking voter approval to exceed the 2 percent cap this year.  While local governments are living up to their commitment by finding ways to reduce costs and continuing to provide basic services, the State has kept municipal aid stable this year, at just over $1.4 billion. 

Governor Christie and I look forward to working with the Legislature to make it easier for municipalities to consolidate and share services, and to enact the remaining items of the Governor’s Property Tax Toolkit.  One of our top priorities is ending sick leave payouts, which have forced some local governments to take out bonds to cover these excessive obligations.  The current accumulated sick and vacation payout liability for municipalities statewide is almost $900 million.  We must also work to prevent municipalities from increasing user fees as a way of circumventing the 2 percent property tax cap. 

By achieving these and other meaningful reforms, we will realize even greater savings for New Jersey taxpayers.

Thank you for the opportunity to come before you today.  I am happy to answer your questions.”