A.
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.
B.
COAH was authorized by 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) 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 were under the jurisdiction of COAH or
a court of competent jurisdiction and had a COAH- or court-approved
spending plan were permitted to retain fees collected from nonresidential
developments.
[Amended 5-23-2019]
C.
In Re: Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council
on Affordable Housing, 221 N.J. 1 (2015), also known as the Mount
Laurel IV decision, the Supreme Court remanded COAH's duties
to the Superior Court. As a result, affordable housing development
fee collections and expenditures from the municipal affordable housing
trust funds to implement municipal Third Round Fair Share Plans through
July 1, 2025, are under the Court's jurisdiction and are subject
to approval by the Court.
D.
This chapter establishes standards for the collection, maintenance,
and expenditure of development fees pursuant to COAH's regulations
and in accordance with P.L. 2008, c. 46, Sections 8 and 32 through
38[1]. Fees collected pursuant to this chapter shall be used
for the sole purpose of providing low- and moderate-income housing.
This chapter shall be interpreted within the framework of COAH's
rules on development fees, codified at N.J.A.C. 5:93-8.[2]
A.
COAH had previously approved ordinances adopting and amending Article II of Chapter 2, which established the Borough's affordable housing trust fund. The Borough's development fee ordinance which has been further amended and relocated to Article IV of Chapter 81 remains effective pursuant to the Superior Court's jurisdiction in accordance with N.J.A.C. 5:93.8.[1]
[1]
Editor's Note: N.J.A.C. 5:93 et seq. expired 10-16-2016.
B.
COAH approved the Borough's initial Spending Plan in 1994 and
approved the Borough's Third Round Spending Plan in 2009, and
an amendment to the Spending Plan in 2010. Subsequently, the Superior
Court approved second and third amendments to the Borough's Third
Round Spending Plan on September 20, 2016, and January 5, 2017. At
such time that the Court approves the Borough's Amended Third
Round Housing Element and Fair Share Plan and the fourth amended Third
Round Spending Plan, the Borough may begin spending development fees
in conformance with N.J.A.C. 5:93-8[2] for the new 2018 Plan activities.
[2]
Editor's Note: N.J.A.C. 5:93 et seq. expired 10-16-2016.
A.
Imposed fees.
(1)
Within all Zoning Districts, 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.
(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. Example: If an approval allows four units
to be constructed on a site that was zoned for two units, the fees
could equal 1.5% of the equalized assessed value on the first two
units; and the specified higher percentage up to 6% of the equalized
assessed value for the two additional units, provided zoning on the
site has not changed during the two-year period preceding the filing
of such a variance application.
B.
Eligible exactions, ineligible exactions and exemptions for residential
development.
(1)
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.
(2)
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.
(3)
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.
(4)
Developers of residential structures demolished and replaced as a
result of a natural disaster shall be exempt from paying a development
fee.
A.
Imposed fees.
(1)
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.
(2)
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.
(3)
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 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.
B.
Eligible exactions, ineligible exactions and exemptions for nonresidential
development.
(1)
The nonresidential portion of a mixed-use inclusionary or market
rate development shall be subject to the 2 1/2% development fee,
unless otherwise exempted below.
(2)
The 2 1/2% fee shall not apply to an increase in equalized assessed
value resulting from alterations, change in use within existing footprint,
reconstruction, renovations and repairs.
(3)
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 Nonresidential Development Certification/Exemption" form. Any
exemption claimed by a developer shall be substantiated by that developer.
(4)
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.
(5)
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 the Borough as a lien against the real property
of the owner.
A.
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 Construction Official responsible for the
issuance of a building permit.
B.
For nonresidential developments only, the developer shall also be
provided with a copy of Form N-RDF, "State of New Jersey Nonresidential
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.
C.
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.
D.
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.
E.
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.
F.
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.
G.
Should Allendale 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).
H.
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.
I.
Appeal of development fees.
(1)
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 Allendale. Appeals from a determination
of the Board may be made to the Tax Court in accordance with the provisions
of the State Uniform Tax 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.
(2)
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 Allendale. Appeals
from a determination of the Director may be made to the Tax Court
in accordance with the provisions of the State Uniform Tax 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.
There shall be maintained a separate, interest-bearing housing trust
fund to be maintained by the Chief Financial Officer for the purpose
of depositing development fees collected from residential and nonresidential
developers and proceeds from the sale of units with extinguished controls.
[Amended 11-19-2018 by Ord. No. 18-22]
B.
The following additional funds shall be deposited in the affordable
housing trust fund and shall at all times be identifiable by source
and amount:
(1)
Payments in lieu of on-site construction of affordable units;
(2)
Developer-contributed funds to make 10% of the adaptable entrances
in a townhouse or other multistory attached development accessible;
(3)
Rental income from municipally operated units;
(4)
Repayments from affordable housing program loans;
(5)
Recapture funds;
(6)
Proceeds from the sale of affordable units; and
(7)
Any other funds collected in connection with Allendale's affordable
housing program.
C.
Allendale Borough previously provided COAH with written authorization,
in the form of three-party escrow agreements between the municipality,
Lakeland Bank, and COAH, to permit COAH to direct the disbursement
of the funds as provided for in N.J.A.C. 5:93-8. The Superior Court
shall now have such jurisdiction to direct the disbursement of the
Borough's trust funds per N.J.A.C. 5:93-8.[1]
[1]
Editor's Note: N.J.A.C. 5:93 et seq. expired 10-16-2016.
D.
All interest accrued in the housing trust fund shall only be used
on eligible affordable housing activities approved by the Court.
A.
The expenditure of all funds shall conform to a spending plan approved
by the Court. Funds deposited in the housing trust fund may be used
for any activity approved by the Court 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. 5:93-8.16[1] and specified in the approved spending plan.
[1]
Editor's Note: N.J.A.C. 5:93 et seq. expired 10-16-2016.
B.
Funds shall not be expended to reimburse Allendale for past housing
activities.
C.
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.
(1)
Affordability assistance programs may include down payment assistance,
security deposit assistance, low-interest loans, rental assistance,
assistance with homeowners' association or condominium fees and
special assessments, and assistance with emergency repairs.
(2)
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.
(3)
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.
E.
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 monitoring requirements set forth in the Court-approved
September 15, 2017, executed settlement agreement with Fair Share
Housing Center. 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.
[Amended 5-23-2019]
By September 15, or as otherwise required by the State of New
Jersey, of each year through 2025, Allendale shall provide annual
reporting of trust fund activity to the New Jersey Department of Community
Affairs (DCA), COAH, or Local Government Services (LGS), or other
entity designated by the State of New Jersey, with a copy provided
to Fair Share Housing Center and posted on the municipal website,
using forms developed for this purpose by the DCA, COAH, or LGS. This
reporting shall include an accounting of all housing trust fund activity,
including 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 Allendale's housing program, as well as to the expenditure
of revenues and implementation of the plan approved by the Court.
[Amended 11-19-2018 by Ord. No. 18-22]
The ability for Allendale to impose, collect and expend development
fees shall expire with its Court-issued Judgment of Compliance and
Repose unless Allendale has filed an adopted Housing Element and Fair
Share Plan with the Court or other appropriate jurisdiction, has filed
a declaratory judgment action, and has received the Court's approval
of its development fee ordinance. If Allendale fails to renew its
ability to impose and collect development fees prior to the expiration
of its 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). Allendale shall not impose a residential
development fee on a development that receives preliminary or final
site plan approval after the expiration of its Judgment Compliance
and Repose, nor shall Allendale retroactively impose a development
fee on such a development. Allendale shall not expend development
fees after the expiration of its Judgment of Compliance and Repose.
