[Amended 2-18-2020 by Ord. No. 910-2020]
A.
In Holmdel Builders 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) adoption of rules.
B.
Pursuant to P.L. 2008, c. 46, § 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), COAH is authorized 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 are under the jurisdiction of
the Council or court of competent jurisdiction and have a COAH-approved
spending plan may retain fees collected from nonresidential development.
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 article 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, §§ 8 and 32
through 38.[1] 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, codified at N.J.A.C. § 5:93-8.[2]
This section shall become effective at such time that the Superior
Court approves the Borough's development fee ordinance in accordance
with N.J.A.C. 5:93-8.[1]
[1]
New Jersey Administrative Code Title 5, Chapter 93, Substantive
Rules of the New Jersey Council on Affordable Housing for the Period
Beginning June 6, 1994, expired 10-16-2016.
The following terms, as used in this article, shall have the
following meanings:
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 100% affordable development.
The New Jersey Council on Affordable Housing, established
under the Fair Housing Act,[1] which previously had primary jurisdiction for the administration
of housing obligations in accordance with sound regional planning
consideration in the state. Pursuant to the opinion and order of the
New Jersey Supreme Court dated March 10, 2015, in the matter of In
Re: Adoption of N.J.A.C. 5:96 and 5:97 by the New Jersey Council on
Affordable Housing (M-392-14) 067126, any reference to COAH or the
Council shall be understood to refer to the Superior Court of New
Jersey, Law Division-Morris County.
Any person, partnership, association, company or corporation
that is the legal or beneficial owner or owners of a lot or any land
proposed to be included in a proposed development, including the holder
of an option to contract or purchase, or other person having an enforceable
proprietary interest in such land.
Funds paid by a developer for the improvement of property
as permitted in N.J.A.C. 5:93-8.[2]
The assessed value of a property divided by the current average
ratio of assessed to true value for the municipality in which the
property is situated, as determined in accordance with §§ 1,
5, and 6 of P.L. 1973, c. 123 (N.J.S.A. 54:1-35a through 54:1-35c).
Those strategies that minimize the impact of development
on the environment, and enhance the health, safety and well-being
of residents by producing durable, low-maintenance, resource-efficient
housing while making optimum use of existing infrastructure and community
services.
A.
Imposed fees.
(1)
Within all zone 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 shall 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.
B.
Eligible exactions, ineligible exactions and exemptions for residential
development.
(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)
Developers of low- and moderate-income units shall be exempt from
paying development fees.
(3)
Developments that have received preliminary or final approval prior
to the effective date of the Borough's amended development fee
ordinance shall be subject to the law in effect at the time of such
approval, unless the developer seeks a substantial change in the approval.
(4)
All single-family residential additions, renovations and accessory
structures shall be exempt; however, all new residential dwelling
units shall be subject to a development fee.
(5)
All multifamily additions, renovations and accessory structures not
requiring site plan approval shall be exempt; however, all new residential
dwelling units shall be subject to a development fee.
(6)
Homes replaced as a result of a natural disaster (such as fire or
flood) shall be exempt from the payment of 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 2.5% development fee, unless
otherwise exempted below.
(2)
The 2.5% 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)
The 2.5% fee shall not apply to developers of any not-for-profit
use; federal, state and municipal government uses; churches and other
places of worship; and public schools.
(4)
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,[1] as specified in the Form N-RDF "State of New Jersey Non-Residential
Development Certification/Exemption" form. Any exemption claimed by
a developer shall be substantiated by that developer.
[1]
Editor's Note: See N.J.S.A. 52:27D-329.1 et seq.
(5)
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.
(6)
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 Non-Residential
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 the Borough 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 § 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 the time of issuance of the building permit and that determined
at issuance of the 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 the Borough. Appeals from a
determination of the Board may be made to the tax court in accordance
with the provisions of the State Tax Uniform 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 the Borough. Appeals
from a determination of the Director may be made to the tax court
in accordance with the provisions of the State Tax Uniform 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 is hereby created a separate, interest-bearing Affordable 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.
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 the Borough's affordable
housing program.
C.
In the event of a failure by the Borough of Milford to comply with
trust fund monitoring and reporting requirements or to submit accurate
monitoring reports; or a failure to comply with the conditions of
the judgment of compliance or a revocation of the judgment of compliance;
or a failure to implement the approved Spending Plan and to expend
funds within the applicable required time period as set forth in In
re Tp. of Monroe, 442 N.J. Super. 565 (Law Div. 2015) (aff'd
442 N.J. Super. 563); or the expenditure of funds on activities not
approved by the Court; or for other good cause demonstrating the unapproved
use(s) of funds, the Court may authorize the State of New Jersey,
Department of Community Affairs, Division of Local Government Services
(LGS), to direct the manner in which the funds in the Affordable Housing
Trust Fund shall be expended, provided that all such funds shall,
to the extent practicable, be utilized for affordable housing programs
within the Borough of Milford, or, if not practicable, then within
the county or the housing region.
(1)
Any party may bring a motion before the Superior Court presenting
evidence of such condition(s), and the Court may, after considering
the evidence and providing the municipality a reasonable opportunity
to respond and/or to remedy the noncompliant condition(s), and upon
a finding of continuing and deliberate noncompliance, determine to
authorize LGS to direct the expenditure of funds in the Trust Fund.
The Court may also impose such other remedies as may be reasonable
and appropriate to the circumstances.
D.
Interest accrued in the Affordable Housing Trust Fund shall only
be used to fund 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 and specified
in the approved spending plan.
B.
Development fee revenues shall not be expended to reimburse the Borough
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 third-round Municipal Fair Share Plan to make them affordable
to households earning 30% or less of median income. The use of development
fees in this manner shall entitle the Borough to bonus credits pursuant
to N.J.A.C. 5:94-4.22.
(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.
D.
The Borough 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, in accordance with N.J.A.C.
5:94-7.
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 for the affordable housing
in in compliance with the Housing Element and Fair Share Plan. 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.
On or about December 15 of each year through 2025, the Borough
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 the 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 the Borough's housing program, as
well as to the expenditure of revenues and implementation of the plan
approved by the Court.
The ability for the Borough to impose, collect and expend development
fees shall expire with its judgment of compliance unless the Borough
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 court approval of its development fee ordinance.
If the Borough 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). The Borough
shall not impose a residential development fee on a development that
receives preliminary or final site plan approval after the expiration
of its judgment of compliance and repose, nor shall the Borough retroactively
impose a development fee on such a development. The Borough shall
not expend development fees after the expiration of its substantive
certification or judgment of compliance and repose.
