PARSIPPANY — New Jersey lawmakers are sending a clear message to municipalities across the state: fulfill your affordable housing obligations—or risk losing out on state economic funding.
A newly enacted law, approved as P.L.2025, c.142, prioritizes state grants and financial assistance for municipalities that actively comply with affordable housing requirements. The legislation, sponsored as Assembly Bill No. 2390, was advanced by the Assembly Housing Committee and ties municipal housing compliance directly to valuable economic incentives.
Under this new law, the Department of Community Affairs (DCA) and the New Jersey Economic Development Authority (EDA) are required to give priority consideration to towns meeting their affordable housing commitments when awarding competitive grants or financial support. This includes programs such as the Main Street New Jersey Program and the Neighborhood Preservation Program.
Importantly, the law does not affect state funding that is already intended to help towns meet their affordable housing quotas. Instead, it focuses on rewarding municipalities that have already demonstrated good-faith compliance.
For the first five years of any new housing cycle, DCA will assess each municipality’s standing based on several factors, including:
- History of builder’s remedy lawsuits
- Previous affordable housing settlements
- Percentage of obligation already met
- Other relevant indicators of compliance
The legislation, pre-filed at the start of the 2024–2025 session, underwent a technical review and was updated before advancing. Legislators emphasized that the aim is to reward towns that act responsibly—those making measurable efforts to ensure housing affordability—with preferred access to state-backed economic development funding.
Key Takeaways:
- Towns that meet affordable housing requirements will be prioritized for select state grants.
- DCA and EDA will apply a compliance test before awarding economic aid.
- Grants helping municipalities meet their affordable housing obligations are not affected.
With this new law in place, municipalities that follow the rules on housing now gain a competitive edge in the race for economic development dollars.
