In Holmdel Builder's Association v. Holmdel Township, 121 N.J. 550
(1990), the New Jersey Supreme Court determined that mandatory development
fees are authorized by the Fair Housing Act of 1985 (the Act), N.J.S.A.
52:27d-301 et seq., and the State Constitution, subject to the Council
on Affordable Housing's (COAH's) adoption of rules.
Pursuant to P.L. 2008, c. 46, Section 8 (N.J.S.A. 52:27D-329.2) and
the Statewide Non-Residential Development Fee Act (N.J.S.A. 40:55D-8.1
through 40:55D-8.7), COAH is authorized to adopt and promulgate regulations
necessary for the establishment, implementation, review, monitoring
and enforcement of municipal affordable housing trust funds and corresponding
spending plans. Municipalities that are under the jurisdiction of
the Council or court of competent jurisdiction and have a COAH-approved
spending plan may retain fees collected from nonresidential development.
This article establishes standards for the collection, maintenance,
and expenditure of development fees pursuant to the Department's regulations
and in accordance P.L. 2008, c. 46, Sections 8 and 32-38. Fees collected
pursuant to this article shall be used for the sole purpose of providing
low- and moderate-income housing. This article shall be interpreted
within the framework of the Department's rules on development fees,
codified at N.J.A.C. 5:97-8.
Pemberton shall not spend development fees until the Department has
approved a plan for spending such fees in conformance with N.J.A.C.
5:97-8.10 and N.J.A.C. 5:96-5.3.
A development included in the Housing Element and Fair Share
Plan, and includes, but is not limited to, an inclusionary development,
a municipal construction project or a one-hundred-percent affordable
development.
The New Jersey Council on Affordable Housing established
under the Fair Housing Act, which previously had primary jurisdiction
for the administration of housing obligations in accordance with sound
regional planning consideration in the state.
The legal or beneficial owner or owners of a lot or of any
land proposed to be included in a proposed development, including
the holder of an option or contract to purchase, or other person having
an enforceable proprietary interest in such land.
The assessed value of a property divided by the current average
ratio of assessed to true value for the municipality in which the
property is situated, as determined in accordance with Sections 1,
5, and 6 of P.L. 1973, c. 123 (N.J.S.A. 54:1-35a through N.J.S.A.
54:1-35c).
Those strategies that minimize the impact of development
on the environment and enhance the health, safety and well-being of
residents by producing durable, low-maintenance, resource-efficient
housing while making optimum use of existing infrastructure and community
services.
All residential developers, except for developers of the types of
development specifically exempted below, shall pay a fee of 1.5% of
the equalized assessed value for residential development, provided
no increased density is permitted.
When an increase in residential density pursuant to N.J.S.A. 40:55D-70d(5)
(known as a "d" variance) has been permitted, developers may be required
to pay a development fee of 6% of the equalized assessed value for
each additional unit that may be realized. However, if the zoning
on a site has changed during the two-year period preceding the filing
of such a variance application, the base density for the purposes
of calculating the bonus development fee shall be the highest density
permitted by right during the two-year period preceding the filing
of the variance application.
Affordable housing developments, developments where the developer
is providing for the construction of affordable units elsewhere in
the municipality, and developments where the developer has made a
payment in lieu of on-site construction of affordable units shall
be exempt from development fees.
Developments that have received preliminary or final site plan approval
prior to the adoption of a municipal development fee ordinance shall
be exempt from development fees, unless the developer seeks a substantial
change in the approval. Where a site plan approval does not apply,
a zoning and/or building permit shall be synonymous with preliminary
or final site plan approval for this purpose. The fee percentage shall
be vested on the date that the building permit is issued.
Owner-occupied residential structures demolished and replaced as
a result of a fire, flood, or natural disaster shall be exempt from
paying a development fee.
Development fees shall be imposed and collected when an existing
structure undergoes a change to a more-intense use, is demolished
and replaced, or is expanded, if the expansion is not otherwise exempt
from the development fee requirement. The development fee shall be
calculated on the increase in the equalized assessed value of the
improved structure.
Within all zoning districts, nonresidential developers, except for
developers of the types of development specifically exempted, shall
pay a fee equal to 2.5% of the equalized assessed value of the land
and improvements, for all new nonresidential construction on an unimproved
lot or lots.
Nonresidential developers, except for developers of the types of
development specifically exempted, shall also pay a fee equal to 2.5%
of the increase in equalized assessed value resulting from any additions
to existing structures to be used for nonresidential purposes.
Development fees shall be imposed and collected when an existing
structure is demolished and replaced. The development fee of 2.5%
shall be calculated on the difference between the equalized assessed
value of the preexisting land and improvement and the equalized assessed
value of the newly improved structure, i.e., land and improvement,
at the time the final certificate of occupancy is issued. If the calculation
required under this section results in a negative number, the nonresidential
development fee shall be zero.
The nonresidential portion of a mixed-use inclusionary or market-rate
development shall be subject to the two-and-a-half-percent development
fee, unless otherwise exempted below.
The two-and-one-half-percent fee shall not apply to an increase in
equalized assessed value resulting from alterations, change in use
within existing footprint, reconstruction, renovations and repairs.
Nonresidential developments shall be exempt from the payment of nonresidential
development fees in accordance with the exemptions required pursuant
to P.L. 2008, c. 46, as specified in the Form N-RDF State of New Jersey
Non-Residential Development Certification/Exemption Form. Any exemption
claimed by a developer shall be substantiated by that developer.
A developer of a nonresidential development exempted from the nonresidential
development fee pursuant to P.L. 2008, c. 46, shall be subject to
it at such time the basis for the exemption no longer applies and
shall make the payment of the nonresidential development fee, in that
event, within three years after that event or after the issuance of
the final certificate of occupancy of the nonresidential development,
whichever is later.
If a property which was exempted from the collection of a nonresidential
development fee thereafter ceases to be exempt from property taxation,
the owner of the property shall remit the fees required pursuant to
this section within 45 days of the termination of the property tax
exemption. Unpaid nonresidential development fees under these circumstances
may be enforceable by Pemberton as a lien against the real property
of the owner.
Upon the granting of a preliminary, final or other applicable approval
for a development, the applicable approving authority shall direct
its staff to notify the person within the Borough responsible for
the issuance of a building permit.
For nonresidential developments only, the developer shall also be
provided with a copy of Form N-RDF, State of New Jersey Non-Residential
Development Certification/Exemption, to be completed as per the instructions
provided. The developer of a nonresidential development shall complete
Form N-RDF as per the instructions provided. The Construction Official
shall verify the information submitted by the nonresidential developer
as per the instructions provided in the Form N-RDF. The Tax Assessor
shall verify exemptions and prepare estimated and final assessments
as per the instructions provided in Form N-RDF.
The Construction Official responsible for the issuance of a building
permit shall notify the Local Tax Assessor of the issuance of the
first building permit for a development which is subject to a development
fee.
Within 90 days of receipt of that notice, the Municipal Tax Assessor,
based on the plans filed, shall provide an estimate of the equalized
assessed value of the development.
The Construction Official responsible for the issuance of a final
certificate of occupancy notifies the Local Assessor of any and all
requests for the scheduling of a final inspection on property which
is subject to a development fee.
Within 10 business days of a request for the scheduling of a final
inspection, the Municipal Assessor shall confirm or modify the previously
estimated equalized assessed value of the improvements of the development,
calculate the development fee, and thereafter notify the developer
of the amount of the fee.
Should Pemberton fail to determine or notify the developer of the
amount of the development fee within 10 business days of the request
for final inspection, the developer may estimate the amount due and
pay that estimated amount consistent with the dispute process set
forth in Subsection b of Section 37 of P.L. 2008, c. 46 (N.J.S.A.
40:55D-8.6).
Fifty percent of the development fee shall be collected at the time
of issuance of the building permit. The remaining portion shall be
collected at the issuance of the certificate of occupancy. The developer
shall be responsible for paying the difference between the fee calculated
at building permit and that determined at issuance of certificate
of occupancy.
A developer may challenge residential development fees imposed by
filing a challenge with the County Board of Taxation. Pending a review
and determination by the Board, collected fees shall be placed in
an interest-bearing escrow account by Pemberton. Appeals from a determination
of the Board may be made to the Tax Court in accordance with the provisions
of the State Tax Uniform Procedure Law, N.J.S.A. 54:48-1 et seq.,
within 90 days after the date of such determination. Interest earned
on amounts escrowed shall be credited to the prevailing party.
A developer may challenge nonresidential development fees imposed
by filing a challenge with the Director of the Division of Taxation.
Pending a review and determination by the Director, which shall be
made within 45 days of receipt of the challenge, collected fees shall
be placed in an interest-bearing escrow account by Pemberton. Appeals
from a determination of the Director may be made to the Tax Court
in accordance with the provisions of the State Tax Uniform Procedure
Law, N.J.S.A. 54:48-1 et seq., within 90 days after the date of such
determination. Interest earned on amounts escrowed shall be credited
to the prevailing party.
There is hereby created a separate, interest-bearing housing trust
fund to be maintained by the Borough Administrator for the purpose
of depositing development fees collected from residential and nonresidential
developers and proceeds from the sale of units with extinguished controls.
Within seven days from the opening of the trust fund account, Pemberton
shall provide the Department with written authorization, in the form
of a three-party escrow agreement between the municipality, the bank,
and the Department, to permit the Department to direct the disbursement
of the funds as provided for in N.J.A.C. 5:97-8.13(b).
The expenditure of all funds shall conform to a spending plan approved
by the Department. Funds deposited in the Housing Trust Fund may be
used for any activity approved by the Department to address the Borough's
fair share obligation and may be set up as a grant or revolving loan
program. Such activities include, but are not limited to: preservation
or purchase of housing for the purpose of maintaining or implementing
affordability controls, rehabilitation, new construction of affordable
housing units and related costs, accessory apartment, market to affordable,
or regional housing partnership programs, conversion of existing nonresidential
buildings to create new affordable units, green building strategies
designed to be cost-saving and in accordance with accepted national
or state standards, purchase of land for affordable housing, improvement
of land to be used for affordable housing, extensions or improvements
of roads and infrastructure to affordable housing sites, financial
assistance designed to increase affordability, administration necessary
for implementation of the Housing Element and Fair Share Plan, or
any other activity as permitted pursuant to N.J.A.C. 5:97-8.7 through
5:97-8.9 and specified in the approved spending plan.
At least 30% of all development fees collected and interest earned
shall be used to provide affordability assistance to low- and moderate-income
households in affordable units included in the Municipal Fair Share
Plan. One-third of the affordability assistance portion of development
fees collected shall be used to provide affordability assistance to
those households earning 30% or less of median income by region.
Affordability assistance programs may include downpayment assistance,
security deposit assistance, low-interest loans, rental assistance,
assistance with homeowners' association or condominium fees and special
assessments, and assistance with emergency repairs.
Affordability assistance to households earning 30% or less of median
income may include buying down the cost of low- or moderate-income
units in the Municipal Fair Share Plan to make them affordable to
households earning 30% or less of median income.
Payments in lieu of constructing affordable units on site and funds
from the sale of units with extinguished controls shall be exempt
from the affordability assistance requirement.
Pemberton may contract with a private or public entity to administer
any part of its Housing Element and Fair Share Plan, including the
requirement for affordability assistance, in accordance with N.J.A.C.
5:96-18.
No more than 20% of all revenues collected from development fees
may be expended on administration, including, but not limited to,
salaries and benefits for municipal employees or consultant fees necessary
to develop or implement a new construction program, a Housing Element
and Fair Share Plan, and/or an affirmative marketing program. In the
case of a rehabilitation program, no more than 20% of the revenues
collected from development fees shall be expended for such administrative
expenses. Administrative funds may be used for income qualification
of households, monitoring the turnover of sale and rental units, and
compliance with the Department's monitoring requirements. Legal or
other fees related to litigation opposing affordable housing sites
or objecting to the Council's regulations and/or action are not eligible
uses of the Affordable Housing Trust Fund.
Pemberton shall complete and return to the Department all monitoring
forms included in monitoring requirements related to the collection
of development fees from residential and nonresidential developers,
payments in lieu of constructing affordable units on site, funds from
the sale of units with extinguished controls, barrier-free escrow
funds, rental income, repayments from affordable housing program loans,
and any other funds collected in connection with Pemberton's housing
program, as well as to the expenditure of revenues and implementation
of the plan approved by the court or COAH. All monitoring reports
shall be completed on forms designed by the Department.
The ability for Pemberton to impose, collect and expend development
fees shall expire with its judgment of compliance and repose unless
Pemberton has filed an adopted Housing Element and Fair Share Plan
with the Department, has petitioned for substantive certification,
and has received the Department's approval of its Development Fee
Ordinance. If Pemberton fails to renew its ability to impose and collect
development fees prior to the expiration of judgment of compliance
and repose, it may be subject to forfeiture of any or all funds remaining
within its Municipal Trust Fund. Any funds so forfeited shall be deposited
into the New Jersey Affordable Housing Trust Fund established pursuant
to Section 20 of P.L. 1985, c. 222 (N.J.S.A. 52:27D-320). Pemberton
shall not impose a residential development fee on a development that
receives preliminary or final site plan approval after the expiration
of its substantive certification or judgment of compliance, nor shall
Pemberton retroactively impose a development fee on such a development.
Pemberton shall not expend development fees after the expiration of
its substantive certification or judgment of compliance.