Newark stands at a crossroads. For years, the city has worked to attract private investment in new housing, an effort that, despite persistent headwinds, has shown real progress. Mixed-income developments have risen in neighborhoods that spent decades waiting for reinvestment. Affordable units have been built alongside market-rate apartments, creating the kind of integrated, economically diverse communities that good housing policy is supposed to produce. None of it came easily, and none of it was inevitable.
Now, two simultaneous policy shifts threaten to undo all of it.
On July 23, 2026, the New Jersey Economic Development Authority (NJEDA) paused the Aspire Tax Credit Program, the state’s primary incentive for catalyzing mixed-use and residential development in cities like Newark. Weeks later, on August 5, 2026, the Newark Municipal Council voted 7–2 to refer a proposed amendment to the city’s Inclusionary Zoning Ordinance to the Central Planning Board for review. This week, the Central Planning Board voted to refer the proposed amendment back to the City Council with a recommendation that it be adopted. Taken together, these actions could freeze new residential development in Newark at precisely the moment the city needs it most.
Let me be clear: I support affordable housing. I have spent my entire career in New Jersey real estate law, and I understand the urgent need for housing that working families can actually afford. But good intentions do not build buildings. Capital does. And capital is rational. It flows to places where projects can be underwritten, financed, and built. When the math doesn’t work, the capital goes elsewhere, or it simply stays on the sidelines. That is not ideology. It is arithmetic.
The Aspire Program Made the Math Work.
Newark’s existing Inclusionary Zoning Ordinance, adopted in 2017 and amended several times since, requires that any new residential or mixed-use development of 15 or more units set aside 20% of its total units as income-restricted affordable housing. That is a meaningful obligation. For a 200-unit multifamily project, it means 40 units must be rented at below-market rates to households earning no more than 40%, 60%, or 80% of the Area Median Income.
The Aspire Tax Credit Program (and its predecessor program) helped bridge the gap between what developers could charge for those restricted units and what it actually costs to build them. The tax credits, awarded over a multi-year period, provided the financial cushion that made inclusionary projects pencil. Without Aspire, many of the projects currently in Newark’s pipeline would never have broken ground.
Aspire is on pause. The NJEDA has indicated it expects to begin accepting applications again in the fall, but no specific timeline has been set. Anyone who has worked with government programs knows that “fall” can easily become winter, and winter can become next year. In the meantime, developers who were counting on those credits to close financing gaps are scrambling. Projects in predevelopment are being shelved. Lenders are pulling back. The pipeline is drying up.
The Proposed Amendment Makes a Hard Problem Harder.
Into this vacuum, the City of Newark has proposed an amendment to its Inclusionary Zoning Ordinance that would fundamentally redefine how affordable housing obligations are calculated. The amendment does two things that should alarm anyone who actually wants to see affordable housing built in Newark.
First, it redefines “Median Income” from the regional median, the standard used across New Jersey’s affordable housing framework, to the Newark-specific median income, which the amendment pegs at just 42% of the regional figure, or approximately $58,490. This is not a technical adjustment. It is a seismic shift. Every income threshold in the ordinance is anchored to the median income definition. By resetting the benchmark to a figure that is less than half of the current standard, the amendment would require developers to price affordable units at income levels so low that the rents cannot come close to covering operating costs, let alone debt service.
Consider the numbers. Under the current ordinance, the largest tier of affordable units in a 200-unit project, 20 units at 80% of the regional AMI, can be rented to households earning roughly $111,000 per year, translating to rents of approximately $2,785 per month. Under the proposed amendment’s baseline option, those same 20 units would be restricted to households earning no more than 34% of the Newark Median Income, approximately $19,900 per year. The maximum permissible rent would be roughly $497 per month. That is an 82% reduction in the income a developer can underwrite against for a significant portion of the required affordable units.
No tax credit, density bonus, or parking waiver on earth can bridge a gap that wide.
Second, the amendment introduces a tiered structure offering developers the option of a higher set-aside, up to 31% or more of total units, in exchange for access to a “workforce housing” tier at 100% to 120% of the Newark Median Income. On its face, this looks like flexibility. In practice, it is a Hobson’s choice. Option 1, the baseline 20% set-aside, imposes income restrictions so severe that the units are essentially unfundable without deep subsidy. Options 2 and 3 require developers to designate 25% to 35% of their total units as affordable, far more than the current 20%, and even the most favorable income tier in those options (120% of Newark Median Income, or about $70,200) remains well below what was the 80%-of-AMI threshold under the existing ordinance.
The Consequences Are Predictable.
If both of these policy shifts take effect simultaneously, the Aspire pause and the amended IZO, the consequences are not just foreseeable, they are inevitable. Developers will not build projects they cannot finance. Lenders will not underwrite loans against rental income streams that cannot service debt. Equity investors will redirect capital to municipalities with clearer, more predictable regulatory frameworks. The result will not be more affordable housing in Newark. It will be less housing of every kind, affordable and market-rate alike.
This is not speculation. We are already seeing it. Higher interest rates driven by elevated bond yields have compressed returns across the industry. Construction costs remain stubbornly high. Insurance premiums have surged. In this environment, every additional dollar of regulatory cost or uncertainty tips the balance sheet from feasible to infeasible. Newark is competing for a finite pool of development capital against cities and suburbs across the region and the country. Making Newark’s regulatory environment more burdensome, at the very moment the state has pulled the rug out from under developers, sends exactly the wrong signal to the market. Capital has options. Newark needs to give it a reason to stay.
A Better Path Forward.
Newark deserves an affordable housing policy that actually produces affordable housing. That means crafting requirements that developers can realistically meet, not aspirational mandates that look impressive in a press release but produce zero units on the ground.
Earlier this week, the Central Planning Board voted to refer the proposed amendment back to the City Council with a recommendation that it be adopted. The Municipal Council will now vote on final adoption. Before it does, I urge the Council to consider the following:
- Do not decouple from the regional income standard. Newark’s affordable housing obligations should remain tied to the regional median income, consistent with the framework used across New Jersey. Adopting a city-specific median that is 42% of the regional figure will make Newark an outlier in ways that discourage investment without producing commensurate housing benefits.
- Coordinate with Trenton on Aspire. Before layering new affordability mandates on developers, the City should engage the NJEDA to understand the timeline for Aspire’s return. If the program remains unavailable or uncertain, the City must calibrate its own requirements accordingly.
- Model the financial impact. The City Council should commission an independent feasibility analysis of the proposed amendment’s impact on a representative set of development prototypes. If the numbers show that projects cannot be built under the new framework, the amendment should be revised before adoption, not after the damage is done.
- Preserve the existing framework while improving it. The current 20% set-aside at regional AMI thresholds, combined with the density bonus, parking reductions, and fee waivers already in the ordinance, represents a workable, if imperfect, framework. Incremental improvements to that structure will produce more affordable units than a wholesale rewrite that stops development altogether.
The goal of housing policy should be to produce housing. If this amendment passes, Newark will have chosen symbolism over substance, and the families who need affordable housing will pay the price.
Chris Murphy is a founding partner of Murphy Schiller and Wilkes LLP (MSW) and a member of the firm’s Executive Committee. He chairs both the Tax Credits and Incentives Practice and the Land Use, Zoning and Redevelopment Practice, overseeing two of the firm’s core statewide platforms.
