TRENTON, N.J. — Hackensack's court-approved affordable housing plan carries a funding fuse that burns out July 1. The Greater Bergen Community Action project at 251 West Railroad Avenue won a $3 million state award last November to build 24 apartments for low-income families. If the financing does not close by that date, the city will withdraw its support and the project dies. That deadline sits five weeks away as Governor Mikie Sherrill's administration and the legislature negotiate a budget that will determine whether the Affordable Housing Trust Fund (AHTF) builds homes or funds other programs.

The National Low Income Housing Coalition released "The Gap: A Shortage of Affordable Homes 2026" on March 5. The report shows New Jersey has 34 affordable homes for every 100 extremely low-income renter households. The state has 298,318 such households. Only 101,208 units exist that they can afford without paying more than 30 percent of their income. Eighty-five percent of those households are cost-burdened. Seventy-two percent pay more than half their income in rent.

Diversion emptied the trust fund for other purposes. The Department of Community Affairs spent $114.5 million from the AHTF in fiscal year 2026 on programs other than competitive production awards, according to the agency's response to Office of Legislative Services budget questions prepared during the current FY2027 cycle.

The DCA's pre-year Budget Analysis from April 2025 projected this expenditure pattern. Only $1.8 million of the $114.5 million total went to the line item labeled "Affordable Housing" for direct production. The rest funded rental assistance, homelessness prevention, down payment help, veterans housing and supportive services. Separately, DCA ran a $35 million competitive grant round and directed $10 million to Habitat for Humanity projects, creating roughly 230 units across 23 communities. Those awards came from a different budget pool than the $114.5 million expenditure total. Public documents do not explain the budgetary relationship between the two funding streams.

Sherrill's proposed fiscal year 2027 budget would reduce those diversions by more than $70 million and allocate $30 million for new AHTF construction. Housing advocates say that is not enough. Matthew Hersh, vice president of the Housing and Community Development Network of New Jersey, told the Senate Budget and Appropriations Committee on March 30 that the coalition wants $140 million in production dollars so that "all the funding is available for production, not diverted to other programs." The $110 million gap between the administration's offer and the coalition's demand is the central tension in the budget fight.

The legislature created the fund in 1985 as a dedicated production mechanism. It has a statutory revenue stream from realty transfer fees. The Office of Legislative Services Tax and Revenue Outlook for FY2026, prepared by the Legislative Budget and Finance Office in April 2025, shows the state collected $497.5 million in such fees in FY2025 and projects $512.4 million for FY2026.

Last June, New Jersey enacted P.L. 2025, c.69, which replaced the flat 1% "Mansion Tax" on residential and certain commercial sales over $1 million with a tiered Graduated Percent Fee ranging from 1% to 3.5%. It also shifted liability from buyer to seller. The OLS projects $523.4 million in FY2026 revenue from the assessment on real property sales over $1 million.

Advocates want half that new revenue stream dedicated to the AHTF. The Fair Share Housing Center lists S3103/A1737 as a priority bill that would dedicate 50 percent of the Graduated Percent Fee to the trust fund. State Senator Benjie Wimberly (D-35th) and Assemblywoman Verlina Reynolds-Jackson (D-15th) introduced the parallel bills on January 13. Senators Vin Gopal (D-11th), Troy Singleton (D-7th), Andrew Zwicker (D-16th), Brian Stack (D-33) and Gordon Johnson (D-37th) are Senate co-sponsors, and Assemblywoman Yvonne Lopez (D-19th) co-sponsors the Assembly bill. It sits in the Assembly Housing Committee with no vote scheduled.

While the administration diverted AHTF money in fiscal year 2026, the legislature made a $30 million supplemental cash appropriation to DCA for the Neighborhood Revitalization Tax Credit program. NRTC is an off-budget mechanism that gives business entities 100 percent credits against state taxes for projects in distressed areas. The current annual cap is $15 million.

Singleton, who chairs the Senate Community and Urban Affairs Committee, and Assemblywoman Shanique Speight (D-29th) have introduced legislation to raise that cap by $50 million. The committee advanced the measure on May 3. Housing advocates have called for a $65 million expansion; the $15 million gap between the sponsors' bill and the coalition's demand remains unresolved.

Singleton is also the architect of the landmark A4/S50 affordable housing reform law of 2024, signed under Sherrill’s predecessor Phil Murphy. That law created the Fourth Round obligations, the current cycle of court-mandated municipal affordable housing quotas, now pressuring municipalities. Approximately 380 municipalities have filed compliant Housing Element and Fair Share Plans under that round. The plans carry court-approved settlement obligations, but construction financing must materialize to meet them. Without AHTF dollars, those settlements become paper commitments.

A Republican-sponsored bill would delay that pressure. Senator Anthony Bucco (R-25th) introduced S3841 on March 10. The measure would delay all Fourth Round affordable housing obligations and related litigation until July 1, 2028. It sits in the Senate Environment and Energy Committee with no vote scheduled. If enacted, it would push the municipal deadline two years out and deflate the urgency behind the AHTF funding fight. His co-sponsors are Senators Kristin Corrado (R-40th) and Doug Steinhardt (R-23rd).

The administration has opened a parallel track that does not require legislative appropriation. On April 27, Sherrill signed Executive Order 17, which creates a Housing Affordability Action Team across DCA, Treasury, the Department of Environmental Protection and other agencies. The order directs the team to inventory state surplus property for housing development, streamline permitting and track production. Singleton praised the move. Fair Share Housing Center Executive Director Adam Gordon called it "practical solutions that can make a real difference quickly." The coalition's March 30 testimony to the budget committee did not mention the executive order.

Some projects are moving. The Veterans Center of Hoboken filed a Notice of Intent with HUD on April 29 seeking release of federal funds for Phase II of its $7.3 million development. That project relies on $3 million in AHTF neighborhood partnership funding from the fiscal year 2026 round. Other award recipients face harder deadlines. Hackensack's municipal plan requires the GBCA project to secure funding by July 1 or lose city support. That condition is specific to one municipality, not a statewide pattern.

The budget deadline is June 30. The legislature must adopt an appropriations act by then or the state shuts down. The AHTF line is one of thousands under negotiation. But it carries a specific weight: municipalities across all 21 counties have legal obligations to build affordable units under the Fourth Round. The fund is the primary state mechanism that turns those obligations into construction. At $30 million, the administration is offering less than one-third of what advocates say is necessary. At $140 million, the coalition is asking for an amount that would require either a major general fund reallocation or a new dedicated revenue stream that the legislature has not yet created.

Twenty-nine municipalities have joined the Local Leaders for Responsible Planning coalition to challenge the Fourth Round framework in court. They argue that the framework exempts urban aid municipalities, shifting growth burden to 517 non-urban towns. The Supreme Court rejected their challenge in February. For now, those towns must still build. The question is who pays for it.

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Sources

• Department of Community Affairs, "Response to Office of Legislative Services Budget Questions FY2027" (2026)

• Department of Community Affairs, "FY2026 Budget Analysis" (April 2025)

• Department of Community Affairs, "FY2026 AHTF Awards Announcement" (November 26, 2025)

• Governor's Office, "Governor Sherrill FY2027 Budget Address" (March 10, 2026)

• Governor's Office, "Executive Order 17: Housing Affordability Action Team" (April 27, 2026)

• Matthew Hersh, Housing and Community Development Network of New Jersey, Senate Budget and Appropriations Committee testimony (March 30, 2026)

• National Low Income Housing Coalition, "The Gap: A Shortage of Affordable Homes 2026" (March 5, 2026)

• Office of Legislative Services, "Tax and Revenue Outlook FY2026" (April 2025)

• New Jersey Legislature, P.L. 2025, c.69, "Modifies Payer of Fees and Taxes on Certain Real Property Transfers" (June 30, 2025)

• New Jersey Legislature, S3841, "Extends Affordable Housing Obligation Deadline" (March 10, 2026)

• New Jersey Legislature, S1799, "Increases Neighborhood Revitalization Tax Credit Cap" (2026)

• New Jersey Legislature, A4697, "Supplemental Appropriation to DCA for NRTC" (March 16, 2026)

• New Jersey Legislature, S3103/A1737, "Dedicates Mansion Tax Revenue to AHTF" (January 13, 2026)

• Senate Democrats, press release (May 2026)

• City of Hackensack, "Housing Element and Fair Share Plan" (June 13, 2025)

• City of Hoboken, "Notice of Intent to Release Funds" (April 29, 2026)

• Troy Singleton, NJ.com, "NJ Needs 200,000 Affordable Homes. Here's How We Build Them" (April 6, 2026)

• Fair Share Housing Center, "2026 Policy Agenda" (March 10, 2026)

• NJ.com, "Supreme Court Rejects Municipal Challenge to NJ Affordable Housing Rules" (February 24, 2026)