This chapter shall be known and may be cited as the "Affordable
Housing Ordinance of the Borough of Avon-by-the-Sea."
The purpose of this chapter is to establish a mechanism for
assuring that housing units designated for occupancy by low and moderate
income households remain affordable to and occupied by low and moderate
income households.
The following terms, wherever used or referenced to in this
chapter, shall have the following meanings unless a different meaning
clearly appears from the context:
AFFORDABLE HOUSING PLAN
An instrument to be recorded with the office of the Recorder,
Monmouth County, New Jersey, constituting restrictive covenants running
with the land with respect to the low and moderate income units described
and identified in such instrument. The instrument shall set forth
the terms, restrictions and provisions applicable to the low and moderate
income units and shall be consistent with this chapter concerning
use, occupancy, sale, resale, rental, rerental, sales price and rental
determination, duration of restrictions, exempt transactions, hardship
exemptions, foreclosure, violation, legal description of the specific
low and moderate income units governed by the instrument, determination
of eligible purchasers and owners, responsibilities of owners and
improvements and creating the liens and rights of AHMS upon such low
and moderate income units, authorizing AHMS or, in the alternative,
Avon Borough to enforce the restrictive covenants referred to herein,
all as such provisions of this chapter exist at the time that the
instrument is executed by AHMS. The terms, restrictions, and provisions
of the instrument shall bind all purchasers and owners of any low
and moderate income units, their heirs and assigns and all persons
claiming by, through or under their heirs, assigns and administrators.
If a single instrument is used to govern more than one (1) low and
moderate income unit, then the instrument must identify the location
of each low and moderate income unit governed by the instrument, and
the deed of each and every individual low and moderate income unit
so governed must contain the recording information of the instrument
applicable to such low and moderate income units. It is intended that
the terms of the Affordable Housing Plan be wholly consistent with
this chapter and the rules and regulations of AHMS, as such chapter
and rules and regulations of AHMS existed on the date the Affordable
Housing Plan is executed by AHMS; however, in the event of conflict
or inconsistency, this chapter and rules and regulations subsequent
to the date of an Affordable Housing Plan shall not affect, amend
or alter the Affordable Housing Plan, and such Affordable Housing
Plan shall continue to be interpreted and applied in accordance with
this chapter and rules and regulations as same existed on the date
of the particular Affordable Housing Plan. Such instrument shall be
executed by AHMS prior to recording of the Affordable Housing Plan,
and AHMS shall certify that current Affordable Housing Ordinance and
rules and regulations. The instrument shall also be executed by the
developer and/or the then current title holder of record of the property
upon which the low and moderate income units are to be constructed.
AHMS
The Department of Community Affairs' Affordable Housing Management
Service.
ASSESSMENTS
Taxes, levies, charges or assessments both public and private,
including those imposed by the association, as the applicable case
may be upon the low and moderate income units which are part of the
association.
COAH
The Council on Affordable Housing.
DEVELOPMENT FEES
Money paid by an individual, person, partnership, association,
company or corporation for the improvement of property as permitted
by N.J.A.C. 5:93-8 et seq.
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 building permit may be obtained by the Tax
Assessor utilizing estimates for construction cost. Final equalized
assessed value will be determined at project completion by the Municipal
Tax Assessor.
FIRST PURCHASE MONEY MORTGAGEE
The holder and/or assigns of the first purchase money mortgage
and which must also be an institutional lender or investor, licensed
or regulated by a state or federal government or an agency thereof.
Other lenders, investors or persons may be holders of a first purchase
money mortgage; however, for the purposes of this chapter, such other
lenders, investors, or persons shall not be "first purchase money
mortgagees."
FORECLOSURE
A termination of all rights of the mortgagor or the mortgagor's
assigns or grantees in a low and moderate income unit covered by a
recorded mortgage through legal processes, or through a deed in lieu
of foreclosure which has been executed and delivered prior to a judicially
regulated sale.
GROSS AGGREGATE HOUSEHOLD INCOME
The total annual income from all sources of all members of
the household or family, except income received by a family household
member (other than the family head, spouse or foster children) who
is under the age of eighteen (18) years or a full-time student of
any age. Income includes but is not limited to compensation for employment
services, interest, dividends, rent, pension benefits, government
benefits, unemployment compensation, welfare payments, disability
income, support payments and return-on-assets income as defined herein.
HOUSEHOLD
One (1) or more persons living as a single nonprofit housekeeping
unit, whether or not they are related by blood, marriage or otherwise.
HOUSING TRUST FUND
The interest bearing account in which all development fees
will be deposited pursuant to N.J.A.C. 5:93-8.15.
IMPROVEMENT
Additions within a low and moderate income unit, including
materials, supplies, appliances or fixtures which become a permanent
part of, or affixed to, such low and moderate income units.
INCLUSIONARY DEVELOPMENT
A development containing low and moderate income units, the
term includes, but is not necessarily limited to, new construction,
the conversion of a nonresidential structure to a residential structure,
and the creation of new low and moderate income units through the
substantial rehabilitation of a vacant residential structure.
INCOME CEILING
Eighty percent (80%) of the regional median income for moderate
income households and fifty percent (50%) of the regional median income
for low income households, with adjustments for household size.
JUDGMENT OF REPOSE
A judgment entered by the Superior Court approving a municipality's
plan to satisfy its fair share obligation.
LOW INCOME HOUSEHOLD
A household with a gross aggregate household income which
does not exceed fifty percent (50%) of the regional median income,
with adjustments for household size.
LOW INCOME PURCHASER
A low income household purchasing either a low income unit
or a moderate income unit, as the case may be.
MARKET UNIT
Any residential unit within a development which is not designated
as a low and moderate income unit.
MODERATE INCOME HOUSEHOLD
A household with a gross aggregate household income which
is greater than fifty percent (50%) of the regional median income,
but which does not exceed eighty percent (80%) of said regional median
income, with adjustments for household size.
NET FAMILY ASSETS
The value of equity in real property, including gains from
the sale of real property, savings and other forms of capital investment,
but not including equity in a business or farm operation where that
business or farm operation is the principal means of support of the
household, amounts in an irrevocable trust fund or the value of personal
property (e.g., car, furniture, etc.).
OWNER
The then current title holder of record of a low or moderate
income unit. "Owner" shall refer to and mean the title holder of record
as the same is reflected in the most recently dated and recorded deed
for the particular low and moderate income unit. For purposes of the
initial sale or rental of any low or moderate income unit, "owner"
shall include the developer/owner of the land upon which the low and
moderate income unit is to be constructed. Ownership of a low and
moderate income unit shall be deemed to be acceptance and ratification
of the provisions of this chapter and the Affordable Housing Plan.
Where appropriate, the term "owner" shall also mean and refer to a
person who owns a low and moderate income unit as a landlord or who
occupies a low and moderate income unit as a tenant. "Owner" shall
not include any cosigner or co-borrower on any purchase money mortgage
unless such cosigner or co-borrower is also a named title holder of
record of such low and moderate income unit.
QUALIFIED PURCHASER
A person who, pursuant to this chapter and the Affordable Housing Plan, submits an application for certification as a qualified purchaser to AHMS and whose gross aggregate household income at the time of proposed purchase of a low and moderate income unit is within low and moderate income levels, as these income levels are designated herein, and in the case of a development unit, the approval from a lending institution meeting the minimum qualifications set forth herein for issuance of a commitment for a mortgage to purchase a low and moderate income unit is within low and moderate income levels, as these income levels are designated herein, and in the case of a development unit, the approval from a lending institution meeting the minimum qualifications set forth herein for issuance of a commitment for a mortgage to purchase a low and moderate income unit and who obtains certification as a qualified purchaser of a low and moderate income unit from AHMS pursuant to the rules and regulations of AHMS. Once a "qualified purchaser" becomes an owner of a lower income unit in accordance with the provisions of this chapter, any increase or decrease in the gross aggregate household income of such owner shall not affect ownership rights, privileges or obligations of a person or family who occupies the low and moderate income unit subject to the qualifications and conditions stated above and elsewhere herein. Any person who submits false information in support of an application for certification and who subsequently received such certification and either title to a low and moderate income unit as owner or possession of a low and moderate income unit as tenant shall be deemed to have committed a substantial breach of the provisions of this chapter and the Affordable Housing Plan, and any right of ownership of such unit shall be subject to forfeiture pursuant to the provisions of Section
114-11C of this chapter. A "qualified purchaser" shall not be permitted to own more than one (1) low and moderate income unit at the same time.
RETURN-ON-ASSETS INCOME
When the household's total net family assets exceed five
thousand dollars ($5,000), the gross aggregate household income shall
include the dollar amount resulting from multiplying the value of
the household's total net family assets by ten percent (10%) after
excluding the first five thousand dollars ($5,000) in assets.
Unless otherwise permitted by court order, the affordable housing
units provided through inclusionary development shall be divided equally
between low and moderate income households.
Low and moderate income units created on Block 4.02, Lots 2.02
and 2.03 shall consist of efficiency, one (1) bedroom and two (2)
bedroom units. At a minimum, the number of bedrooms shall equal the
number of senior citizen low and moderate income units within the
inclusionary development. The standard can be met by creating all
one (1) bedroom units or by creating a two (2) bedroom unit for each
efficiency unit.
Rental charges shall remain in effect for a period of at least
one (1) year, except that the landlord may request a modification
of these charges by applying to AHMS for recalculation of the rents
based on changes in the index for rentals adopted by COAH.
Affordable housing units shall be situated on the development
tract in locations no less desirable than market priced dwelling units
within the development, and shall be equally accessible to common
open space, community facilities and shopping facilities.
Final site plan approval shall be contingent upon the development,
whether if developed in one (1) stage or in two (2) or more stages,
meeting the following phasing scheduled:
Minimum Percentage of Low Moderate Income Units Completed
|
Percentage of Market Housing Units Completed
|
---|
0
|
25
|
10
|
25 + 1 unit
|
50
|
50
|
75
|
75
|
100
|
90
|
The resale price of the affordable housing unit shall be the
base price increased pursuant to Subsections A and B herein.
A. Percentage increase in household income. The price approved by AHMS
at which the seller acquired the property shall be the base price.
The base price shall be multiplied by one hundred percent (100%) plus
the percentage increase in the HUD uncapped median income by family
size for Monmouth County from the time of acquisition of the property
to the date that notice of intent to sell is given to AHMS. For example,
if the base price is thirty thousand dollars ($30,000), the median
income at the time of the initial acquisition is thirty-two thousand
dollars ($32,000) and the median income at the time of the resale
transaction the median income has increased twenty-five percent (25%)
to forty thousand dollars ($40,000), then the resale price is as follows:
$30,000 x 1.25 = $37,500
B. Improvements. In addition, the seller shall be entitled to add to
the selling price of the unit, the cost of an eligible capital improvement,
which pursuant to N.J.A.C. 5:93-9:11 renders the unit suitable for
a larger household. (For example, the addition of a bedroom would
render a unit suitable for a larger household). Upon the request of
an owner of an affordable housing unit, AHMS shall consider within
thirty (30) days whether to grant prior approval of an improvement
and to approve a specific dollar amount up to the amount actually
expended for that improvement.
The following transactions shall be deemed non-sales for the
purpose of this ordinance. The owner of the affordable unit shall
be entitled to a Statement of Exemption from AHMS upon application.
A. Transfer of an affordable housing unit between husband and wife;
B. Transfer of ownership of an affordable housing unit between former
spouses as a result of a judicial decree, judgment or order of divorce,
but not including sales to third parties;
C. Transfer of ownership of an affordable housing unit as a result of
inheritance;
D. Transfer of ownership of an affordable housing unit through an order
of the Superior Court. A grant of exemption shall not eliminate the
resale control restriction set forth in these regulations. Any subsequent
sale shall be subject to all of the terms of these regulations.
No owner of an affordable housing sales unit may lease the unit
to a tenant without prior written approval of AHMS. Such approval
shall not be granted except when justified by particular and unusual
circumstances. An owner seeking such approval shall submit a written
request to AHMS setting forth the particular circumstances of the
case including the reasons for the request to rent, the proposed duration
of the tenancy and certification that the proposed tenant is a qualified
low or moderate income household. In the event AHMS approves the request,
it shall notify the owner of the unit. The owner shall rent the unit
only to a qualified low or moderate income tenant for the period approved
by the AHMS at a rent affordable to a low or moderate income tenant,
whichever is applicable.
Except as otherwise provided in these regulations, all low and
moderate income units subject to the provisions of this Article shall
be subject to resale controls for a period of thirty (30) years from
the date of acquisition of the unit by the initial purchaser. Accessory
apartments shall be subject to controls on affordability for a period
of at least ten (10) years from the date of the initial occupancy.
All lower income dwelling units shall be covered by covenants
to ensure that in all initial sales and in all subsequent resales,
the units will continue to remain available and affordable to the
lower income households for which they were intended for the period
specified in this subsection in accordance with the requirements and
standards established by COAH.
The restrictive covenant governing the deeds of low and moderate
income sales units shall include an option permitting purchase of
the affordable unit at the maximum allowable restricted sales price
at the time of the first non-exempt sale after controls on affordability
have been in effect on the unit for the period specified in this chapter.
The option to buy shall be available to the Borough of Avon, the New
Jersey Housing and Mortgage Finance Agency (HMFA), or a qualified
non-profit as determined by the New Jersey Council on Affordable Housing
(COAH).
All restrictive covenants governing low and moderate income
sales units shall require the owner to notify AHMS by certified mail
of any intent to sell the unit ninety (90) days prior to entering
into an agreement for the first non-exempt sale after controls have
been in effect on the housing units for the period specified in this
chapter.
Upon receipt of such notice, the option to buy the unit at the
maximum allowable restricted sales price shall be available for ninety
(90) days. AHMS shall notify the Borough of Avon, DCA, HMFA and COAH
that the unit is for sale. If the Borough of Avon exercises this option,
it may enter into a contract of sale. If the Borough of Avon fails
to exercise this option within ninety (90) days, the first of the
other entities giving notice to the seller of its intent to purchase
during the ninety (90) day period shall be entitled to purchase the
unit. If the option to purchase the unit at the maximum allowable
restricted sales is not exercised by a written intent to purchase,
the owner may proceed to sell the housing unit.
If the owner does not sell the unit within one (1) year of the
date of the delivery of notice of intent to sell, the option to buy
the unit shall be restored and the owner shall be required to submit
a new notice of intent to sell ninety (90) days prior to any future
proposed date of sale. Any option to buy a housing unit at the maximum
allowable restricted sales price shall be exercised by certified mail
and shall be deemed exercised upon mailing.
A. Borough of Avon Option.
(1) If the Borough elects to purchase a low or moderate income unit pursuant
to this Article, it may:
(a)
Convey or rent the housing unit to a low or moderate income
purchaser or tenant at a price or rent not to exceed the maximum allowable
restricted sales price or rental for a period of up to thirty (30)
years.
(b)
Convey the unit at fair market value subject to the deposit
of the price differential in a trust account devoted solely to the
creation, rehabilitation or maintenance of low and moderate income
housing. Price differential is defined as the difference between the
maximum restricted sales price and fair market value as determined
at the date of a proposed contract of sale after reasonable real estate
broker fees have been paid.
(2) In the event the Borough of Avon purchases low income housing units,
the Borough shall maintain them as low income housing units. In the
event the Borough of Avon purchases moderate income housing units,
the Borough may maintain them as either low or moderate income housing
units.
(3) In the event the Borough of Avon purchases low or moderate income
housing units and conveys them at fair market value, the Borough shall:
(a)
Notify the court or COAH (whichever has jurisdiction) of any
proposed sale and resales price ninety (90) days before closing.
(b)
Notify the court or COAH (whichever has jurisdiction) of the
price differential.
(c)
Deposit the price differential in a trust account devoted solely
to the creation, rehabilitation or maintenance of low and moderate
income housing; and
(4) Money deposited in trust accounts may not be expended until the municipality
submits and the court or COAH (whichever has jurisdiction) approves
a spending plan.
(5) The Borough of Avon shall have the right to determine that the most
desirable means of promoting an adequate supply of low and moderate
income housing is to prohibit the exercise of the repayment option
and maintain controls on lower income housing units sold within the
municipality beyond the period required by this chapter. Such determination
shall be made by resolution of the municipal governing body. The resolution
shall specify the time period for which the repayment option shall
not be applicable. During such period, no seller in the municipality
may utilize the repayment option.
If the Borough of Avon exercises the option outlined above,
it shall:
(a)
Provide public notice in a newspaper of general circulation;
and
(b)
Notify AHMS of its governing body's action. AHMS shall ensure
that the deed restriction on all affected housing units reflects the
extended period of controls.
B. State Option. When the DCA or HMFA elects to purchase a low or moderate
income unit pursuant to this section it may:
(1) Convey or rent the housing unit to a low or moderate income purchaser
at a price not to exceed the allowable restricted sales price; or
(2) Convey the unit at fair market value and utilize the price differential
to subsidize the construction, rehabilitation or maintenance of low
and moderate income housing within the appropriate housing region.
C. Non-Profit Option. Non-profit agencies that have been designated
by COAH shall be eligible to purchase low or moderate income units
pursuant to this section for the sole purpose of conveying or renting
the housing unit to a low or moderate income purchaser at a price
not to exceed the allowable restricted sales price. Low income units
shall be made available to low income purchasers and the housing unit
shall be regulated by the restrictive covenant and lien adopted by
COAH. The terms of the controls on affordability shall be the same
as those required by this chapter.
D. Seller Option. An eligible seller of a low or moderate income unit
which has been controlled for the period established in this plan
who has provided notice of an intent to sell may proceed with the
sale if no eligible entity as outlined in this section exercises its
option to purchase within ninety (90) days.
(1) The seller may elect to:
(a)
Sell to a qualified low and moderate income household at the
controlled unit sales price, providing the unit is regulated by the
restrictive covenant and lien adopted by COAH for a period of up to
thirty (30) years; or
(b)
Exercise the repayment option and sell to any purchaser at market
price, providing that ninety-five percent (95%) of the price differential
is paid to AHMS, as instrument of the municipality, at closing.
(2) If the sale will be to a qualified low and moderate income household,
AHMS shall certify the income qualifications of the purchaser and
shall ensure the housing unit is regulated by the restrictive covenant
and lien required by AHMS.
(3) AHMS shall examine any contract of sale containing a repayment option
to determine if the proposed sales price bears a reasonable relationship
to the housing unit's fair market value. In making this determination,
AHMS may rely on comparable sales data or an appraisal. AHMS shall
not approve any contract of sale where there is a determination that
the sales price does not bear a reasonable relationship to fair market
value. AHMS shall make a determination within twenty (20) days of
receipt of the contract of sale and shall calculate the repayment
option payment.
(4) There shall be an appeal procedure by which a seller may submit written
documentation requesting AHMS to (i) recompute the repayment obligation
if the seller believes an error has been made or to (ii) reconsider
a determination that the sales price does not bear a reasonable relationship
to fair market value. A repayment obligation determination made as
a result of an owner's appeal shall be a final administrative determination
of AHMS.
(5) The repayment shall occur at the date of closing and transfer of
title for the first non-exempt transaction after the expiration of
controls on affordability. Repayment proceeds shall be deposited in
a trust account devoted solely to the creation, rehabilitation, or
maintenance of low and moderate income housing. Money deposited in
trust accounts may not be expended until Avon develops and obtains
COAH's approval of a spending plan for its use.
E. Continued application of options. When a housing unit has been maintained
as a low and moderate income unit after controls have been in effect
for thirty (30) years, the restrictive covenant governing the housing
units shall allow the Borough, the state, nonprofit agencies and sellers
of low and moderate income units to again exercise all the same options
as provided in this Article.
No second mortgage shall be placed upon the property without
the prior written approval of AHMS. In determining whether to grant
an approval for the second mortgage, AHMS shall consider the need
for the second mortgage and the impact that the second mortgage shall
have upon the ability of AHMS to maintain this unit as a low and moderate
income unit. Under no circumstances shall a foreclosure of a second
mortgage constitute grounds for eliminating the resale controls provided
for in this regulation. Prior written approval shall be denied unless
second mortgages are specifically authorized by COAH regulations and
the application is consistent with those regulations.
Items of personal property which are not permanently affixed
to the unit (e.g. refrigerator, freezer, washer, dryer) and which
were not included when the affordable housing unit was purchased may
be the subject of separate negotiations between the parties subsequent
to the signing of the contract for the purchaser of the house. Any
agreed price for the purchase of any item or items of personal property
shall be reasonable considering the original cost, nature, age and
condition of the item. The price to be paid for items of personal
property shall not be used as a mechanism to avoid or circumvent the
limitations on the resale price of the unit itself. In no event shall
the right to purchase the unit be conditioned upon the buyer's willingness
to agree to purchase any item or items of personal properties of the
seller.
If any section, paragraph, subdivision, clause or provision
of this chapter shall be adjudged invalid, such adjudication shall
apply only to the section, paragraph, subdivision, clause or provision
so adjudged and the remainder of the chapter shall remain in full
force and effect.