Under a combination of case, statutory and regulatory law, known as the Mount Laurel Doctrine, all New Jersey municipalities have a State Constitutional obligation to provide a realistic opportunity for meeting a calculated fair share of their region’s need for affordable housing. Municipalities meet this obligation in three ways: rehabilitation of existing substandard housing within the municipality, zoning for multifamily inclusionary housing projects, and zoning for and/or constructing 100 percent multifamily affordable housing projects. Each path to meeting a municipality’s obligation has had its challenges.

Rehabilitating substandard housing has several challenges. First, it creates a limited amount of affordable housing. In addition, it is hard to obtain sufficient control over the housing to conduct the rehabilitation. Finally, it is difficult to place the affordable housing deed restrictions on the rehabilitated properties that are required if the municipality is going to receive credit towards its affordable housing obligation.

Multifamily inclusionary housing projects are multifamily developments, often of a garden apartment or townhouse style, where the majority of dwelling units are market rate dwelling units and a percentage of the dwelling units, usually between 10 and twenty-five percent, are affordable dwelling units. These projects can be either rental or for-sale projects, though usually they are rental projects. The theory of inclusionary development is that the rent or sale prices from the market rate units subsidize the affordable units. These types of projects also have disadvantages in generating affordable housing. First, since these are projects constructed by private, for profit developers, the projects’ implementation is subject to market forces. Second, these projects create costs for the municipality in the form of providing for educational and public safety services, in return for the creation of only a modest number of affordable housing units. Third, because these are expensive, private projects, there are income and asset requirements to rent or purchase the affordable units, which make them unavailable to the very poor and to the homeless.

One hundred percent affordable housing projects can provide a good deal of affordable housing theoretically, but they are very hard to finance. If a municipality merely zones for 100 percent affordable housing projects, it is unlikely that they will ever be built, and courts have held that such zoning alone does not create a realistic opportunity for the creation of affordable housing. Accordingly, municipalities must be more proactive with 100 percent affordable housing projects. One approach is for the municipality to construct the project itself. However, most municipalities do not have the financial resources or expertise for such an undertaking. Another approach is to provide land for a non-profit organization to construct and own an affordable housing project. Again, there are limited financial resources available for such projects, and there are serious environmental concerns (and added remediation costs) associated with many urban properties. Finally, there are for profit developers who specialize in 100 percent affordable housing projects. This type of project is dependent on the developer’s ability to procure Federal Low Income Housing Tax Credits, which are distributed and administered by the New Jersey Housing and Mortgage Finance Agency. There are a very limited number of these credits available each year and they are very hard to obtain, thus limiting the number of 100 percent affordable housing projects that can be developed. Further, given the present state of the economy, there will likely not be a strong market for these tax credits, further limiting the number of 100 percent affordable housing projects that can be developed. Moreover, the 100 percent affordable housing projects consist of traditional multifamily buildings which are very costly to construct. Therefore, even in these projects, the residents must meet income and asset requirements, making them unavailable to the very poor and homeless populations. Tiny homes, on the other hand, bear fewer or none of these impediments. In short, they are inexpensive and easy to construct; many of them are assembled using modular components manufactured off-site. Tiny home communities also likely require less land due to the small footprint of these homes, further reducing costs and development impacts. As a result, a tiny home community could provide a very pleasant and low cost alternative to a traditional 100 percent affordable housing project. Indeed, due to the dramatically reduced construction costs, these tiny homes could be made available to the very poor and to the homeless. Moreover, an added benefit of tiny homes is that they use less energy and resources, keeping utility costs low and also providing a benefit to the environment by reducing one’s carbon footprint–not to mention the reduced resource consumption (i.e., building materials) generated in constructing a tiny home.

Tiny home communities could be owned by the municipality, a non-profit or a private developer, although the option also exists for homes to be sold to the occupant, thereby providing home ownership opportunities for low income individuals with a steady source of income. It should be noted that, because of the small size of a tiny home, tiny home communities would be best suited for providing affordable housing opportunities to individuals and couples, rather than families with children. While the law does not permit zoning prohibiting children, the size limitations of tiny homes could be addressed by restrictions on the number of people who can permanently occupy a tiny home.

In order to effectuate the creation of tiny home communities in New Jersey, municipalities and the State would have to take several steps. First, municipalities would have to amend their master plans, including the housing and fair share plan elements, to provide for tiny home communities. Second, the municipalities would need to revise their local zoning ordinances to permit tiny home communities. Third, the State would need to eliminate the required bedroom distribution requirements for affordable housing units set forth in N.J.A.C. 5:80-26.3 for tiny homes.

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At a time when the challenges of meeting a municipality’s affordable housing obligation are increasing and with the number of citizens living in poverty likely to increase in a post-pandemic economy, tiny homes have the potential to provide additional affordable housing units and, more importantly, at a price point that makes housing more available to people on the lower range of the low income scale and accessible even to homeless individuals. State and local officials should seriously consider taking the necessary steps to pave the way for tiny home communities to sprout up throughout the Garden State.