COAH and the builders' tax

To help pay for their affordable housing dreams the regulations adopted by the state Council on Affordable Housing (COAH) call for an 8 to 10 percent "fee" to be assessed on any new commercial construction. The proceeds of this fee would be paid to the state, and doled out to subsidize construction of affordable housing.

Developers quickly realized that a fee of this magnitude, coupled with the region's already slow real estate market, would have an adverse impact on any new commercial development. Hartz Mountain president Emanuel Stern went so far as to say "Commercial real estate in New Jersey, as this state has known it for the last 30 years, has ceased to exist."

State Senator Raymond Lesniak, one of Governor Corzine's inner circle of "fixers", quickly adopted a pro-developer stance:

Senator Lesniak introduced legislation that would cap the commercial construction portion of the COAH fees at 2.5%. And in a stunning reversal, Department of Community Affairs Joseph Doria, whose job it is to oversee COAH, endorsed Lesniak's proposal. He said COAH would be "100 percent for it".

I smell a rat. The 8 to 10 percent fee was too outrageous, even by NJ standards, to be realistic. It was put out there simply so that the real fee of 2.5% would look paltry by comparison. If the state had started at 2.5% the developers would have issued many of the same complaints, since any new tax on development adds to the overall cost. Now they're breathing a sigh of relief because the new fee is "only" 2.5%.

I didn't think real estate moguls were that gullible.

Posted at 16:18 by Chris Wysocki   [/rants]   Comments | Perm Link |   |   Tweet