[Added 6-13-2005 by Ord. No. 19-2005; amended 12-11-2006 by Ord. No. 57-2006; 5-30-2007 by Ord. No. 36-2007; 9-10-2007 by Ord. No. 59-2007]
A. 
Purpose.
(1) 
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, 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. This article establishes standards for the collection, maintenance, and expenditure of development fees pursuant to COAH's rules. 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 COAH's rules on development fees.
B. 
Basic requirements. The Borough of Madison shall continue to collect development fees, and shall spend those development fees in accordance with any spending plan approved by COAH or approved in the court action.
[Amended 7-11-2016 by Ord. No. 52-2016]
C. 
Definitions. The following terms, as used in this article, shall have the following meanings:
AFFORDABLE HOUSING DEVELOPMENT
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.
COAH
The New Jersey Council on Affordable Housing.
DEVELOPMENT FEE
Funds paid by an individual, person, partnership, association, company or corporation for the improvement of property as permitted in COAH's rules.
EQUALIZED ASSESSED VALUE
The value of a property determined by the municipal tax assessor through a process designed to ensure that all property in the municipality is assessed at the same assessment ratio or ratios required by law. Estimates at the time of issuance of a building permit may be obtained utilizing estimates for construction cost. Final equalized assessed value will be determined at project completion by the municipal tax assessor.
D. 
Residential development fees.
(1) 
Within all zoning districts(s), developers of new residential housing, which shall include any residential development on an existing lot on which a former residential structure was located, within the Borough shall pay a fee of 1% of the equalized assessed value for residential development, provided no increased density is permitted.
(2) 
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.
(3) 
No fee shall be charged pursuant to this section for any addition or improvement to an existing residential structure, so long as such addition or improvement does not increase the equalized assessed value of the existing structure, as of the date hereof, by more than 50%.
E. 
Nonresidential development fees. Nonresidential development fees shall be collected in accordance with The New Jersey Non-Residential Development Fee Act, N.J.S.A. 40:55D-8.1 through 8.8.
[Amended 7-11-2016 by Ord. No. 52-2016]
F. 
Eligible exactions, ineligible exactions and exemptions.
(1) 
Affordable housing developments shall be exempt from development fees. All other forms of new construction shall be subject to development fees unless exempted below.
(2) 
Developments that have received preliminary or final approval prior to the imposition of a municipal development fee shall be exempt from development fees unless the developer seeks a substantial change in the approval.
(3) 
Subject to the provisions of § 195-46D(3), development fees shall be imposed and collected when an existing structure is expanded or undergoes a change to a more intense use. The development fee shall be calculated on the increase in the equalized assessed value of the improved structure.
(4) 
Developments that are providing for greater affordable housing pursuant to § 195-48 and are subject to § 195-48 shall not be subject to the development fee pursuant to this § 195-46.
[Amended 7-11-2016 by Ord. No. 52-2016]
G. 
Collection of fees. Fifty percent of the development fee will be collected at the time of issuance of the building permit. The remaining portion will 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.
H. 
Contested fees. Imposed and collected development fees that are challenged shall be placed in an interest-bearing escrow account by the Borough of Madison. If all or a portion of the contested fees are returned to the developer, the accrued interest on the returned amount shall also be returned.
I. 
Affordable housing trust fund.
(1) 
There is hereby created a separate, interest-bearing housing trust fund for the purpose of depositing development fees collected from residential and nonresidential developers and proceeds from the sale of units with extinguished controls. All development fees paid by developers pursuant to this article shall be deposited into this fund.
(2) 
(Reserved)[1]
[1]
Editor's Note: Former Subsection I(2), regarding disbursement of funds, was repealed 5-10-2021 by Ord. No. 19-2021.
(3) 
No funds shall be expended from the affordable housing trust fund unless the expenditure conforms to a spending plan approved by Superior Court. All interest accrued in the housing trust fund shall only be used on eligible affordable housing activities approved by COAH or Superior Court.
[Amended 5-10-2021 by Ord. No. 19-2021]
J. 
Use of funds.
(1) 
Funds deposited in the housing trust fund may be used for any activity approved by COAH to address the municipal fair share. Such activities include, but are not limited to: rehabilitation, new construction, ECHO housing, purchase of land for affordable housing, improvement of land to be used for affordable housing, purchase of housing, extensions or improvements of roads and infrastructure to affordable housing sites, financial assistance designed to increase affordability, or administration necessary for implementation of the housing element and fair share plan. The expenditure of all funds shall conform to a spending plan approved by COAH or a spending plan approved in the court action.
[Amended 7-11-2016 by Ord. No. 52-2016]
(2) 
Funds shall not be expended to reimburse the Borough of Madison for past housing activities.
(3) 
After subtracting development fees collected to finance a rehabilitation program or a new construction project that are necessary to address the Borough of Madison's affordable housing obligation, at least 30% of the balance remaining 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.
[Amended 7-11-2016 by Ord. No. 52-2016]
(a) 
Affordability assistance programs may include down payment assistance, security deposit assistance, low-interest loans, and rental assistance.
(b) 
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 third round municipal fair share plan to make them affordable to households earning 30% or less of median income.
[Amended 5-10-2021 by Ord. No. 19-2021]
(c) 
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.
(4) 
The Borough of Madison 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.
[Amended 5-10-2021 by Ord. No. 19-2021]
(5) 
No more than 20% of the revenues collected from development fees each year shall 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 unit, program and trust fund monitoring requirements. Development fee administrative costs are calculated and may be expended at the end of each year or upon receipt of the fees.
[Amended 7-11-2016 by Ord. No. 52-2016; 5-10-2021 by Ord. No. 19-2021]
K. 
Monitoring. The Borough of Madison shall complete and return an annual Mount Laurel Trust Fund accounting report to the New Jersey Department of Community Affairs, Council on Affordable Housing, Local Government Services, or other entity designated by the State of New Jersey, with a copy provided to FSHC and the service list in this matter and posted on the municipal website, using forms developed for this purpose by the New Jersey Department of Community Affairs, Council on Affordable Housing, or Local Government Services. The CTM system shall also be used for this purpose if possible.[2]
[2]
Editor's Note: Former Subsection L, regarding the ongoing collection of fees, which immediately followed this subsection, was repealed 7-11-2016 by Ord. No. 52-2016.