A New Jersey town planned a dozen new affordable homes. They may never be built.

New Jersey state Sen. Owen Henry is angry.

Before he was elected to the Legislature last year, he’d negotiated as the mayor of Old Bridge to build 12 new affordably priced homes — many of them for veterans — on an empty lot not far from the beach, in the Laurence Harbor neighborhood on the town's east end.

Builders said they should have already broken ground. But the project is on an indefinite hold because Owen’s legislative colleagues decided in June to divert $125 million from a long-standing state trust fund for constructing affordable housing across the Garden State and spend it instead on other initiatives, including down payment assistance for first-time homebuyers. Gov. Phil Murphy supported shifting the funds, touting them as a way to provide New Jerseyans with immediate housing assistance.

“ I’m very upset. In my opinion, the diversion of those funds is totally asinine,” Henry, a Republican, told Gothamist.

The housing project in Old Bridge is part of a wider effort to build tens of thousands of affordable homes across the state. Analysis from housing experts shows that New Jersey is short more than 200,000 homes for low-income residents. To combat the problem, each municipality in the state is legally mandated to add its share of affordable housing.

This is what the people of Old Bridge wanted, and people in Trenton took it away from them.

New Jersey state Sen. Owen Henry

Habitat for Humanity, the nonprofit organization in charge of the development, hoped to use the state’s sizable Affordable Housing Trust Fund to fill a $4 million gap in financing for the project. The trust fund provides financial assistance for developers and towns to build more low-priced homes. But the Legislature’s diversion of money has left just $5 million dollars in the trust fund’s coffers — not enough for the Old Bridge plan or other projects.

Henry said he led the municipality’s effort to approve the project and donate the land to Habitat for Humanity, which he said could have been sold for a considerable profit instead. Henry said he also negotiated certain terms for the property, like a preference for veterans or local families still reeling financially from Hurricane Sandy to get first crack at the homes.

“This is what the people of Old Bridge wanted, and people in Trenton took it away from them,” he said.

When asked about the diversion of funds, and its effects on projects like the one in Old Bridge, Murphy administration spokesperson Kiran Sheth said the state budget made “record investments” into housing affordability while maintaining fiscal responsibility, citing more than $4 billion allocated for direct property tax relief for New Jersey homeowners included in the budget.

“The administration remains committed to supporting affordable housing efforts and working with municipalities to fulfill their obligations,” Sheth said.

Matthew Hersh, vice president of policy and advocacy at the nonprofit Housing and Community Development Network of New Jersey, said programs that received the diverted funds like down payment assistance are “incredibly important,” but he said the loss of trust fund money will “hamstring” affordable housing development.

”That really undercuts an entire community development sector's ability to acquire properties and build affordable homes,” Hersh said.

He estimated that the $5 million left in the fund would only be enough to “subsidize maybe four homes.”

“It’s a joke,” Hersh said.

Liz DeCoursey, CEO of Morris County Habitat for Humanity, the builder behind the Old Bridge project, said the plan was for families to move into the 12 homes in early 2026. Now, it’s one of dozens of projects she said she’ll be forced to put on hold due to the lack of state subsidies this year.

While DeCoursey said the funding diversion won’t cripple Habitat’s overall business, she said it’s possible that she’ll have to wait until next year’s budget is negotiated to move forward with projects like the one in Old Bridge. She hopes Affordable Housing Trust Fund dollars will be restored next year.

“We'll survive it. It is those people that are having a hard time making rent, making mortgage payments … couch surfing, living in basements, in overcrowded situations, they're not going to be able to hold on,” she said.

Henry has a different solution in mind. He wants leadership to call legislators back to Trenton this month for an emergency session to add the money back into the trust fund.

“I'd be there this afternoon if they called us down,” he said.

That looks unlikely. Senate leadership declined to comment on the idea. And the Murphy administration didn’t respond to WNYC’s questions about restoring the funds. Henry says he isn’t optimistic either — and that lawmakers may have to wait for New Jersey’s next governor to take office.

“Maybe after November, the election, then maybe we could act on this,” he said.

Democratic nominee for governor Mikie Sherrill has said she opposes future diversions from the trust fund. Gothamist asked Republican nominee Jack Ciattarelli’s campaign for his stance. It did not provide a response.