"There are fears from towns that, if they go ahead and spend the money on things everyone agrees is legitimate, then COAH can come and ask for the money back later," said Kevin Walsh, associate director for the Fair Share Housing Center, an advocacy group in Cherry Hill.
COAH was disbanded by Gov. Christie in July 2011 by executive order. Housing advocates sued, and the appellate court ordered that the governor reinstate the housing council on the grounds that it could not be eliminated by executive order. The matter is now before the state Supreme Court, one of two cases concerning COAH. The council has not met since March 22, 2011, and currently has six active members, according to the Department of Community Affairs (DCA).
As the battle over COAH has worked its way to the Supreme Court, the Christie administration invoked a law that required that local trust-fund money be spent within four years of its being collected.
In June, the DCA sent letters to municipalities ordering them to remit the money to the state, over the objections of towns and housing advocates. About $141 million was to be returned to the state and, while the law called for it to be placed in the state affordable-housing trust fund, the Christie administration earmarked it as revenue in the 2012-2013 state budget.
An appellate panel issued an injunction in August, pending resolution of COAH's status by the Supreme Court.
State officials, however, say that COAH and the DCA are reviewing plans and that towns can spend trust-fund money. The state is still seeking court approval to force towns to forfeit unspent trust-fund balances.
Walsh said that COAH was the only agency with authority to write rules for the trust funds and that it was the only agency with the authority to approve individual trust-fund plans. That leaves municipalities in limbo, he said.
Michael Cerra, senior legislative analyst for the state League of Municipalities, agrees. He said the attempt by the governor to seize the trust funds and use them in the general budget violated the reasons they were authorized in the first place.
"We want to see towns be able to comply with the law," he said. "Those trust funds - these are not state dollars. They are dollars collected locally to help subsidize housing."
Frank Gambatese, mayor of South Brunswick, said the Middlesex County town has accelerated its use of the trust-fund money because it feared that the state would seize the money.
"We're trying like mad to provide as much housing as we can," he said. "We're saying, 'When are they going to grab that money?' We want to do it as carefully as we can, but it makes it difficult when you put on that kind of pressure."
Gambatese said the trust fund was a key component of the township's approach to affordable housing. The township has been using its trust-fund money as part of a buy-down program, in which it purchases existing houses for up to $250,000, deed-restricts them for affordable housing, and then sells them to low- and moderate-income buyers for about $100,000. The township has bought 18 houses so far, he said, with a goal of 42. The money also is used to repair and upgrade existing affordable housing, he said.
"We were more than careful in past because we didn't want to just spend the trust fund down," he said. "We wanted to make sure the money had a good purpose."
Other towns are facing similar quandaries. Burlington Township, for instance, has been using its trust-fund money to extend the deed restrictions on its affordable units. Burlington Mayor Brian Carlin joined Gambatese and Mayor William Kochersperger of Pemberton Borough in August in testifying before the Assembly Housing and Local Government Committee. Other towns are using the money to buy land and build housing.
Towns still have access to their trust funds, Cerra said, but the funds' questionable status and the questionable status of COAH is making it more difficult for towns to address housing needs.
While there are towns like South Brunswick and Burlington Township that are attempting to move forward with housing plans, Walsh said, another, larger group of towns is using COAH's unsettled status "as an excuse" to do nothing. These towns - which he wouldn't name - want to preserve the trust funds without having to spend the money on housing.
That has helped create the standoff between the governor and the towns, Walsh said.
"What the governor did is bad, in not saying what the standard was for the trust funds and then trying to do it retroactively," he said. "But what those municipalities were doing at the same time wasn't right."
In the end, he said, the issues of executive power and home rule are secondary to what really matters.
"The losers all around on this," Walsh said, "are the lower-income households for whom this money was collected."