How Jersey City Built More Housing Than Almost Anywhere in America

Jersey City Mayor Steven Fulop reveals the specific policy tools and political strategies that helped his city increase housing stock by 25% over 10 years, becoming a model for addressing America's housing crisis.

Key Takeaways

• Jersey City increased housing production from 2% to 10% of New Jersey's total building permits over 12 years under Mayor Fulop
• Eliminated political favoritism in tax abatement programs by mapping incentives to census tracts based on income levels
• Implemented 20% inclusionary zoning requirements and density bonuses that developers actively utilize for affordable housing
• Created transparency and certainty in development processes to attract new developers beyond traditional political insiders
• Recognized that market-rate housing and affordable housing must work together rather than being treated as opposing forces
• New Jersey faces a 200,000 unit housing shortage with only 3,000 affordable units built annually, requiring 70 years to clear backlog
• Municipal fragmentation creates barriers, with 564 municipalities in New Jersey, 75% having fewer than 20,000 residents
• Proposed municipal consolidation and shared services to reduce costs and increase efficiency in government operations
• Supports congestion pricing as a tool to fund mass transit improvements and reduce suburban sprawl patterns

Timeline Overview

• Pre-2012 — Jersey City development process was highly political with uncertain tax abatement approvals creating barriers to investment
• 2012-2024 — Mayor Fulop's tenure implementing systematic reforms including census tract-based incentives and inclusionary zoning requirements
• Policy Evolution — Transition from political discretion to objective criteria for development approvals and tax abatements
• Current Crisis — New Jersey housing shortage requiring massive production increases while overcoming NIMBY resistance
• Future Plans — Gubernatorial campaign proposing statewide reforms including municipal consolidation and transit-oriented development

The Political Economy of Housing Development

• Jersey City's housing boom began when Mayor Fulop eliminated the political favoritism that previously characterized tax abatement programs, where approvals depended on having the right connections rather than objective criteria.
• The previous system created uncertainty for developers unfamiliar with local politics, effectively limiting participation to a small cadre of politically connected insiders who could navigate the opaque approval process.
• Fulop's reform mapped tax incentives to census tracts based on poverty levels, providing automatic entitlements for steeper incentives in lower-income areas while creating certainty that attracted new developers to the market.
• This systematic approach moved development away from the waterfront toward previously underinvested areas, spreading economic benefits more broadly while reducing the political risk associated with development projects.
• The transparency reforms specifically addressed New Jersey's reputation for political corruption, creating a business climate where success depended on project merit rather than political relationships or legal connections.
• New Jersey's broader housing crisis stems partly from this same political dysfunction, where 564 municipalities maintain individual approval processes that can be manipulated by local political considerations rather than regional housing needs.

Market-Rate and Affordable Housing as Complementary Forces

• Mayor Fulop explicitly rejects the false choice between market-rate and affordable housing, arguing that both are necessary components of a functioning housing ecosystem that must work together rather than in opposition.
• Jersey City's inclusionary zoning ordinance requires approximately 20% of new developments to include affordable components, typically mixing workforce housing with lower-income units to maintain project financial viability.
• The city introduced density bonuses allowing developers to add units within existing building envelopes in exchange for additional affordable housing commitments, creating a market-driven mechanism for increasing supply.
• These density bonuses trade at approximately $100,000 per additional unit approval in downtown areas, providing significant value to developers while generating affordable housing without changing neighborhood aesthetics.
• The approach recognizes that restricting market-rate housing through rent control or excessive regulations reduces overall supply, which ultimately harms affordability by creating artificial scarcity in desirable locations.
• Jersey City's experience demonstrates that when overall housing supply expands rapidly, rent increases moderate even in highly desirable locations, supporting the "filtering" theory of housing economics.

Overcoming NIMBY Resistance Through Institutional Design

• New Jersey's fair share housing requirements have been litigated for 30-40 years, with municipalities routinely challenging their obligations in court while NIMBY groups control planning board conversations through lack of public information.
• Mayor Fulop proposes creating transparency around municipal compliance with housing mandates, arguing that currently there's no public way to track whether cities like Westfield are cooperating or obstructing state housing goals.
• The "carrot and stick" approach would tie state funding and resources to municipal cooperation on housing production, creating financial incentives for mayors and council members to support rather than obstruct development.
• Municipal fragmentation exacerbates NIMBY power, with 75% of New Jersey's 564 municipalities having fewer than 20,000 residents, giving small groups outsized influence over regional housing policy through home rule authority.
• Fulop's proposed municipal consolidation would start with shared services like health departments and animal control before moving toward full consolidation, using referendum processes and state leverage to force cooperation.
• The League of Municipalities' opposition to these reforms "probably tells you that I'm right about it," according to Fulop, as entrenched interests resist changes that would reduce their control over development processes.

The Economics of Tax Abatements and Development Incentives

• New Jersey's current system provides short-term tax abatements (5 years) as a matter of right through simple paperwork, while long-term abatements (20-30 years) require political approval that creates uncertainty and potential corruption.
• Fulop proposes making long-term abatements more systematic by having municipal councils approve ordinances specifying criteria (census tracts, affordability requirements, community benefits, union labor) that would then receive state approval.
• Once approved at both levels, qualifying projects would receive abatements by right, eliminating political discretion while ensuring public input through the initial ordinance approval process that establishes community priorities.
• These programs generate "found money" rather than true tax losses, as most developments occur on previously vacant or underutilized land that generated minimal tax revenue before development.
• The tax revenue structure divides payments between school districts, municipalities, and counties, with county-level government representing an additional layer that Fulop considers redundant and suitable for consolidation over time.
• Payment-in-lieu-of-taxes (PILOT) programs provide steady revenue streams to municipalities while offering developers certainty about long-term carrying costs that enable project financing and investment decisions.

Transit-Oriented Development and Infrastructure Coordination

• Massive inefficiencies exist around train stations where New Jersey Transit owns valuable land but leaves it as parking lots rather than developing transit-oriented housing that could serve thousands of residents.
• The disconnect between local zoning controlled by municipalities and land ownership by New Jersey Transit creates institutional barriers where neither entity can unilaterally unlock development potential.
• Fulop proposes using executive orders to override these institutional barriers and force transit-oriented development that would provide both housing and improved transit ridership supporting system sustainability.
• New Jersey Transit's poor service quality stems from lack of dedicated revenue sources, privatized bus systems, and administrations that haven't prioritized infrastructure investment over multiple decades.
• The state's $12 billion turnpike widening project feeding into the two-lane Holland Tunnel represents massive misallocation of resources that could instead fund light rail expansion in South Jersey and Bergen County.
• Fixing the corporate business tax to provide permanent rather than 5-year revenue streams would enable bonding for capital improvements to train and bus stations, making them clean, modern, and safe.

Regional Coordination and Congestion Pricing Politics

• Fulop supports congestion pricing despite its political unpopularity in New Jersey, arguing that the policy primarily affects wealthy individuals who drive personal vehicles to Manhattan rather than working-class people who use mass transit.
• The regional nature of the transportation system requires cooperation between New York and New Jersey, as New York relies on New Jersey Transit while New Jersey residents depend on MTA services once they reach Manhattan.
• Current political tensions prevent productive regional planning, but Fulop suggests that New Jersey could use leverage through similar taxes on New Yorkers to force genuine regional transportation coordination.
• The failure to develop mass transit in southern New Jersey directly constrains economic development and housing construction in those areas, creating a self-reinforcing cycle of car dependence and sprawl.
• Investment in mass transit enables higher-density development patterns that support both economic growth and environmental sustainability while reducing per-capita infrastructure costs for municipalities.
• Breaking the cycle requires state-level leadership with municipal experience who understands the leverage points for motivating local officials to support regional rather than parochial interests.

Addressing Gentrification While Maintaining Growth

• Critics of Jersey City's development boom point to gentrification and displacement, but Fulop argues that data doesn't support widespread displacement claims while the city's diversity has remained relatively constant.
• Most new high-rise development occurs on previously vacant lots, parking lots, or underutilized properties near transit hubs rather than replacing existing housing that would displace current residents.
• Rent increases in Jersey City reflect regional pressures from New York's lack of housing construction rather than local gentrification, making it a victim of its own success in providing housing alternatives.
• The city has slowed rent increase rates through expanded supply even though absolute rents remain high, demonstrating that supply-side responses can moderate affordability pressures over time.
• Change creates discomfort for longtime residents who remember "grittier" neighborhoods, but public safety and economic opportunities have improved dramatically, as evidenced by Fulop's election as the first three-term mayor in 70 years.
• Regional solutions require Manhattan and other high-demand areas to "carry their weight" in housing production rather than exporting demand pressure to neighboring communities like Jersey City.

Jersey City's housing success demonstrates that local political leadership can overcome institutional barriers to development through systematic policy reforms, transparent processes, and recognition that market-rate and affordable housing must work together to address regional housing shortages.