[Ord. No. OR:09/01 § 28-1101]
A. The New Jersey Supreme Court, in Holmdel Builders vs. Holmdel Township,
121 N.J. 550 (1990), determined that mandatory development fees are
both statutorily and constitutionally permissible. The court further
anticipated that COAH would promulgate appropriate development fee
rules specifying, among other things, the standards
for these development fees. The purpose of this section is to provide
such rules pursuant to N.J.A.C. 5:92-18 et seq.
B. The Mayor and Borough Council find and declare that the creation
and preservation of affordable housing in the Borough serves the public
interest. Maintaining and improving a stock at sound affordable housing
requires affirmative steps by local government working cooperatively
with public bodies at all levels and with the private sector. The
purpose of this section is to create in the Borough of Watchung trust
fund from payment or development fees to assist in the marshalling
of public and private monies dedicated to affordable housing projects
and programs.
[Ord. No. OR:09/01 § 28-1102]
AFFORDABLE HOUSING
Any housing unit with an acquisition price or rent level
not exceeding the maximum resale or rent level for low and moderate
income housing as set forth in N.J.A.C. 5:92-1.2.
COAH
The New Jersey Council on Affordable Housing; and shall also
refer to Superior Court, Law Division.
[Amended 5-16-2019 by Ord. No. 19/13]
DEVELOPMENT FEES
Money paid by an individual, person,
partnership, association, company, or corporation to the improvement
of property as permitted in N.J.A.C. 5:92-18 et seq.
EQUALIZED ASSESSED VALUE
The value of a property determined by the Borough Tax Assessor
through a process designed to ensure that all property in the Borough
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 Tax
Assessor.
[Ord. No. OR:09/01 § 12-1103; Ord. No. 14/12]
A. Residential Development.
1. Residential development fees shall be a maximum of one and one-half
(1 1/2%) percent of the equalized assessed value for residential
development which is not exempt from the provisions of this chapter
as set forth below, provided no increased density is permitted.
2. If a "d" variance is granted pursuant to N.J.S.A. 40:55D-70d(5),
then the additional residential units realized (above what is permitted
by right under the existing zoning) will incur a bonus development
fee of six percent (6%) rather than the development fee of one and
one-half (1 1/2%) percent. However, if the zoning on a site has
changed during the two-year period preceding the filing of the "d"
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 (2) years preceding the filing of the "d" variance
application.
3. The Borough may allow developers of sites zoned for inclusionary
development to pay a fee in lieu of building low and moderate income
units provided COAH determines the Borough's Housing Element and Fair
Share Plan provides a realistic opportunity for addressing the Borough's
fair share obligation. The fee may equal the cost of subsidizing the
low and moderate income units that are replaced by the development
fee. For example, an inclusionary development may include a twenty
percent (20%) set-aside, no set-aside and a fee that is the equivalent
of a twenty percent (20%) set-aside or a combination of a fee and
set-aside that is the equivalent of a twenty percent (20%) set-aside.
4. The Borough may collect fees exceeding those permitted in this section
provided the Borough enters into agreements with developers that offer
a financial incentive for paying higher fees. The financial incentive
may be in the form of a tax abatement. No agreement may provide for
a voluntary development fee without also providing for a comparable
off-setting incentive. All agreements are subject to COAH approval.
B. Nonresidential Development.
1. Nonresidential development fees shall be a maximum of two and one-half
(2 1/2%) percent of the equalized assessed value for nonresidential
development which is not exempt from the provisions of this chapter
as set forth below.
2. If a "d" variance is granted pursuant to N.J.S.A. 40:55D-70d(4),
then the additional floor area realized (above what is permitted by
right under the existing zoning) will incur a bonus development fee
of six percent (6%) rather than the development fee of two and one-half
(2 1/2%) percent. However, if the zoning on a site has changed
during the two (2) year period preceding the filing of the "d" variance
application, the base floor area for the purposes of calculating the
bonus development fee shall be the highest floor area permitted by
right during the two (2) years preceding the filing of the "d" variance
application.
3. The Borough may collect fees exceeding those permitted in this section
provided they enter into agreements with developers that offer a financial
incentive for paying higher fees. Such agreements may include, but
are not limited to, a tax abatement, increased commercial/industrial
square footage, increased commercial/industrial lot coverage and/or
increased commercial or industrial impervious coverage, in return
for an increased development fee. The development fee negotiated must
bear a reasonable relationship to the additional commercial/industrial
consideration to be received. All agreements are subject to approval
by COAH.
[Ord. No. OR:09/01 § 28-1104]
A. Except as provided in §
28-1103 above, inclusionary developments shall be exempt from development fees.
B. Development fees may only be collected for any residential structure
which requires the installation of a new foundation (excluding foundations
required for an addition to or renovation of an existing residential
structure or a foundation required for an accessory structure to an
existing residential structure).
C. All forms of new nonresidential construction shall be subject to
development fees provided, however, that development fees may only
be collected for improvements that add usable or rentable footage
to an existing nonresidential structure. In the event that a development
fee is collected for a nonresidential structure and thereafter usable
or rentable footage is obtained through modification of the said structure,
a development fee may be collected for the additional unable or rentable
footage based upon the increase in the equalized assessed value of
the improved structure.
D. The Borough shall not reduce densities from preexisting levels and
then require developers to pay development fees in exchange for an
increased density.
E. Developments that have received preliminary or final approval prior
to the imposition of a development fee shall be exempt from development
fees unless the developer seeks a substantial change in the approval.
F. The Borough exempts the following types of development from the imposition
of development fees:
1. Development by the Borough or any of its instrumentalities.
2. Development by charitable or not-for-profit entities formed and legally
established in accordance with the laws of the State of New Jersey.
[Ord. No. OR:09/01 § 28-1105]
The Borough shall collect fifty percent (50%) of the fee on
any specific development prior to and as a condition of the issuance
of the building permit therefor. The remaining portion shall be collected
prior to and as a condition of the issuance of the certificate of
occupancy. Once the final equalized assessed value of a particular
development has been determined by the Tax Assessor, and such final
equalized assessed value is greater than the estimated equalized assessed
value, the developer shall, within ten (10) business days from receipt
of notification from the Borough, pay to the Borough the difference
between the development fees required to be paid by the developer
once such final equalized assessed value has been determined and the
estimated development fees actually paid by the developer. The failure
of the developer to make timely payments of the aforesaid deficiency
shall entitle the Borough to file, without notice to the developer,
a lien against the subject development. In the event the Borough shall
file such lien, the Borough may add to the aforesaid deficiency amount,
reasonable attorney fees to file and discharge such lien, together
with any and all costs incurred to file and discharge said lien. In
the event that the estimated equalized assessed value proves to have
been too high, the Borough shall promptly refund the difference between
the estimated development fees actually paid by the developer and
the development fees required to be paid by the developer once such
final equalized assessed value has been determined.
[Ord. No. OR:09/01 § 28-1106]
All development fees shall be deposited with the Chief Financial
Officer of the Borough in a separate designated interest-bearing housing
trust fund. The development fees placed in the housing trust fund
shall be deemed "dedicated revenues" as such term is defined in N.J.S.A.
40A:4-36. In establishing the housing trust fund, the Borough shall
provide whatever express written authorization that may be required
by the bank utilized by the Borough in order to permit COAH to direct
the disbursement of development fees pursuant to this chapter.
[Ord. No. OR:09/01 § 28-1107]
A. The Borough shall use revenues collected from development fees for
any activity approved by COAH for addressing the Borough's fair share
obligation. Such activities include, but are not limited to, rehabilitation,
new construction, regional contribution agreements, the purchase of
land for low and moderate income housing, the improvement of land
to be used for low and moderate income housing, the extension and/or
improvements of roads and infrastructure to low and moderate income
housing sites, assistance designed to render units more affordable
and the administration or implementation of the housing element.
B. Funds shall not be expended to reimburse the Borough for past housing
activities.
C. At least thirty percent (30%) of the revenues collected from development
fees shall be devoted to render units more affordable. Examples of
such activities include, but are not limited to, down payment assistance,
low interest loans, and rental assistance. This requirement may be
waived in whole or in part when the Borough demonstrates to COAH the
ability to address the requirement of affordability assistance from
another source.
D. No more than twenty percent (20%) of the revenues collected from
development fees shall be expended on administration, including but
not limited to, salaries and benefits for Borough employees or consultant
fees necessary to develop or implement a rehabilitation program, a
new construction program, a regional contribution agreement, a housing
element, and an affirmative marketing program. Administrative funds
may be used for income qualification of households, monitoring the
turnover of sale and rental units, and compliance with COAH's monitoring
requirements. Development fees shall not be used to defray the costs
of existing staff.
[Ord. No. OR:09/01 § 28-1108; 5-16-2019 by Ord. No. 19/13]
The Borough shall provide annual reporting of trust fund activity
to the New Jersey Department of Community Affairs, Council on Affordable
Housing, or Local Government Services, or other entity designated
by the State of New Jersey, with a copy provided to Fair Share Housing
Center, Inc., 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 reporting
shall include an accounting of all housing trust fund activity, including
the source and amount of funds collected and the amount and purpose
for which any funds have been expended.
[Ord. No. OR:09/01 § 28-1109]
A. The Borough shall submit to COAH a spending plan for the development
fees collected by it prior to the expiration of its substantive certification
period. Plans to spend development fees shall consist of the following
information:
1. A projection at revenues anticipated from imposing fees on development
based on historic activity.
2. A description of the administrative mechanism that the Borough will
use to collect and distribute revenues.
3. A description of the anticipated use or all development fees.
4. A schedule for the creation or rehabilitation of housing units.
5. In the event the Borough envisions being responsible for public sector
or nonprofit construction of housing, a pro-forma statement of the
anticipated costs and revenues associated with the development.
6. The manner through which the Borough will address any shortfall if
the anticipated revenues from development fees are not sufficient
to implement the plan.
[Ord. No. OR:09/01 § 28-1110]
A. In the event that any of the conditions set forth below occur, COAH
shall be authorized, on behalf of the Borough, to direct the manner
in which all development fees collected pursuant to this chapter shall
be expended. Should any such condition occur, such revenues shall
immediately become available for expenditure at the direction of COAH
upon the Borough Clerk's receipt of written notification from COAH
that such a condition has occurred. In furtherance of the foregoing,
the Borough shall, in establishing a bank account pursuant to this
chapter, ensure that the Borough has provided whatever express written
authorization which may be required by the bank to permit COAH to
direct disbursement of such revenues from the account following the
delivery to the bank of the aforementioned written notification provided
by COAH to the Borough Clerk.
B. Occurrence of the following may result in COAH taking an action pursuant
to paragraph A above:
1. Failure to submit a spending plan within the time limits imposed
by COAH.
2. Failure to meet deadlines for information required by COAH in its
review of this chapter, the Borough's housing element, or spending
plan.
3. Failure to address COAH's conditions for approval of a plan to spend
development fees within the deadlines imposed by COAH.
4. Failure to address COAH's conditions for substantive certification
within the deadlines imposed by COAH.
5. Failure to submit accurate monitoring reports within the time limits
imposed by COAH.
6. Failure to implement the spending plan for development fees within
the time limits imposed by COAH or within reasonable extensions granted
by COAH.
7. Expenditure of development fees on activities not permitted by COAH.
8. Revocation of the Borough's substantive certification.
9. Other good cause demonstrating that the revenues are not being used
for the intended purpose.
[Ord. No. OR:09/01 § 28-1111]
The Borough's ability to collect development fees shall expire
with substantive certification unless the Borough has filed an adopted
housing element with COAH, petitioned for substantive certification,
and received COAH's approval of its development fee ordinance.