RCA’s: More Harm Than Good?

January 31st, 2007 by Tim Evans

Since 1988, more than 10,000 units of affordable housing obligations have been transferred from “sending” municipalities to “receiving” municipalities under the Regional Contribution Agreements (RCAs) allowed by Council on Affordable Housing (COAH) regulations.
RCAs allow the sending municipality to pay the receiving municipality to satisfy part of the sender’s affordable housing obligation, usually through the rehabilitation of existing units. To date, COAH has allowed a total of $210 million in such payments, for a per-unit average of about $20,500.
To the 53 cities and older suburban towns that have acted as RCA receivers over the 19 years of the program, this represents an infusion of much-needed rehabilitation money of about $11 million per year.
The 120 sending municipalities together gained 133,000 private-sector jobs between 1990 and 2003. In contrast, the 53 receiving municipalities collectively lost 3,600 jobs over the same time period.

NJ’s Urban Poor Gain Housing, But No Jobs
New Jersey Future has long called for the abolition of Regional Contribution Agreements because they serve to perpetuate the concentration of poverty in the state’s cities and older suburbs, thereby making it more difficult for already-distressed communities to turn themselves around. Median household income among the 120 sending municipalities averaged $85,439 as of the 2000 Census, almost exactly double the average household income of $43,164 among the 53 receivers. The transfer of housing obligations from wealthier towns to poorer ones only exacerbates New Jersey’s economic segregation. (According to David Rusk, a nationally respected expert on metropolitan issues, New Jersey’s elementary schools are the most economically segregated in the nation.) Because affordable housing is being steered away from places where jobs are growing, RCAs tend to further isolate lower-income residents from the very opportunities they need to improve their lives.

The Fair Share Housing Center, an affordable housing advocacy group and another longtime opponent of RCAs, describes them as “the worst enemy of inner cities.” The FSHC and three other plaintiffs last week won an appeals court decision that threw out COAH’s regulations on several grounds, although the decision upheld the use of RCAs because they are explicitly authorized by the Fair Housing Act. Abolishing RCAs will require legislative action.

A growing chorus of government decision-makers are also realizing that RCAs may be doing more harm than good. Assembly Speaker Joseph Roberts has introduced a bill that would ban future RCAs, referring to the payments as “blood money” that excludes lower-income residents from communities where opportunities for advancement are more plentiful. A companion bill has been introduced in the Senate, where it has the support of Senate President Codey. Governor Corzine has also spoken out against RCAs, telling The Asbury Park Press in August 2005 that RCAs allow wealthier municipalities to “circumvent the spirit and intent” of the NJ Supreme Court’s so-called Mount Laurel decisions, which originally established municipalities’ obligations to provide their “fair share” of the regional need for affordable housing.

The state has previously acknowledged, however implicitly, that RCAs perpetuate the concentration of poverty. When the state assumed direct control of Camden’s city government in 2002, it prohibited Camden, one of the nation’s poorest cities, from participating in any further RCAs, recognizing that this urban center was already saddled with a disproportionate share of lower-income households.

But many urban mayors have defended RCAs. They insist this steady source of revenue is vital in helping to rehabilitate housing units occupied by lower-income households, even while they decry the system as being inherently unfair. New Jersey Future understands the plight of urban communities and agrees that funding to rehabilitate urban housing is necessary. We support the provision in the Roberts bill that calls for the state to provide $15 million in housing funding annually, more than the annual average of $11 million generated by RCAs.

For more information about this edition of Future Facts, contact Tim Evans, Research Director.