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.
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.
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 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.
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 1½% 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.
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%.
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.
Affordable housing developments shall be exempt from development
fees. All other forms of new construction shall be subject to development
fees unless exempted below.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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]
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]
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.