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Towns prepare legal action in case state seizes affordable housing funds

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The Gov. Chris Christie administration could today begin transferring up to $161 million from towns' affordable housing trust funds to the state's general budget, though an appellate court ruling last week prevents the administration from seizing funds without giving written notice to local officials and providing a forum to argue the state's claim that their dollars were not committed to projects.

However, a local government representative said, the 221 municipalities with trust accounts have not yet been given notice, and are preparing to immediately launch litigation if funds are taken.

"Towns have been getting mixed messages on what would meet the (Department of Community Affair's) standards in order to gain approval to use these funds. South Brunswick went through a whole process that we believe met the requirements to be approved by (the Council on Affordable Housing), but it was not," said Bill Dressel, executive director of the New Jersey State League of Municipalities. "If these dollars are taken and if the towns aren't satisfied with the hearing that COAH is supposed to provide, they can still sue. I think we'll see an avalanche of litigation by the towns, in addition to individual suits against the state for taking these dollars."

A builders' group and several developers of affordable housing in the state declined to comment for this story. But Dressel said many affordable housing developments have been stalled as builders await the state's decision on the future of the towns' trusts. Dressel said even if the administration effectively provides due process, if funds that had been allotted to projects are seized, it will have "tremendous adverse implications for much needed housing development in this state."

"The developer paid the money to the town to be held in trust to build affordable housing. They did not pay the money in trust to go into the state's general treasury," Dressel said. "If (the administration) sweeps these dollars into the state budget, the towns' obligation to provide affordable housing still remains, so taxpayers are on the hook to pay for that obligation. It's in the best interest of the state to resolve this stalemate, avoid litigation and start building affordable housing, because everything has come to a stop."

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