[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
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 rules promulgated by the Council on Affordable Housing (COAH).
b. 
Pursuant to P.L. 2008, c. 46, Section 8,[1] and the Statewide Nonresidential Development Fee Act (Sections 32 through 38 of P.L. 2008, c. 46),[2] 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. To provide an incentive for municipalities to seek substantive certification from COAH, municipalities that are under the jurisdiction of the Council may retain fees collected from nonresidential development.
[1]
Editor's Note: See N.J.S.A. 52-27D-329.2.
[2]
Editor's Note: See N.J.S.A. 40-55D-8.1 et seq.
c. 
This article establishes standards for the collection, maintenance, and expenditure of development fees pursuant to the COAH's regulations. Fees collected pursuant to this section shall be used for the sole purpose of providing low- and moderate-income housing. This article shall be interpreted within the framework of the COAH's rules on development fees.
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
a. 
The ability to impose, collect and spend development fees is predicated on the Town of Morristown's participation in the COAH's substantive certification process or, subject to COAH monitoring, through authorization by the New Jersey Superior Court resulting from a comprehensive review designed to achieve a judgment of compliance.
b. 
The Town of Morristown shall obtain COAH approval of a plan for spending development fees in conformance with N.J.A.C. 5:97-8.10 and N.J.A.C. 6:96-5.3.
c. 
This article shall not be effective until the COAH has approved and Morristown has adopted the ordinance pursuant to N.J.A.C. 5:96-5.1.
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
a. 
Imposed fees.
1. 
Within all zoning districts in the Town of Morristown, residential developers, except for developers of the types of development specifically exempted, shall pay to the Town of Morristown Affordable Housing Trust Fund a fee of 1.5% of the equalized assessed value for residential development of new construction, provided that no increase in density is permitted. Developments on which the fee shall be imposed include the demolition and replacement of a housing unit and the creation of new housing units through the modification of an existing structure (e.g., the alteration of a single-family home into a duplex), in which case the development fee shall be calculated on the increase in the equalized assessed value of the improved structure.
2. 
When an increase in residential density pursuant to N.J.S.A. 40:55D70.d.(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.
3. 
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 6% of the equalized assessed value for the two additional units. However, if the zoning on a site has changed during the two-year period preceding the filing of such a variance application, the 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. 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 shall be exempt from development fees. All other forms of new construction shall be subject to development fees, unless specifically exempted by this article.
1. 
Residential developments that have received preliminary or final approval prior to the adoption of this Municipal Development Fee Ordinance (adopted April 9, 2013) 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.
2. 
Residential development fees shall not be imposed and collected when an existing structure is expanded.
3. 
The owner of a single-family detached housing unit who replaces a housing unit destroyed by flood, fire or natural disaster shall be exempt from paying a development fee.
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
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 the 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 NRDF, 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 as 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 Town of Morristown as a lien against the real property of the owner.
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
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 NRDF, 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 NRDF 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 NRDF.
c. 
The Tax Assessor shall verify exemptions and prepare estimated and final assessments as per the instructions provided in Form NRDF.
d. 
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.
e. 
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.
f. 
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.
g. 
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.
h. 
Should the Town of Morristown 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).
i. 
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 the certificate of occupancy.
j. 
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, the Town of Morristown shall place collected fees in an interest-bearing escrow account. 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, the Town of Morristown shall place collected fees in an interest-bearing escrow account. 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.
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
a. 
There is hereby created a separate, interest-bearing housing trust fund, the Morristown 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. All development fees paid by developers pursuant to this section shall be deposited into this fund.
b. 
Additionally, the following sources of funding shall be deposited in Morristown's 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 housing 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 housing units;
4. 
Repayments from affordable housing program loans; and
5. 
Any other funds collected in connection with Morristown's affordable housing program.
c. 
Within seven days from the opening of the trust fund account, the Town of Morristown shall provide COAH with written authorization, in the form of a three-party escrow agreement between the municipality, the bank, and COAH to permit COAH to direct the disbursement of the funds as provided for in COAH's rules at N.J.A.C. 5:97-8.13(b).
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
a. 
The expenditure of funds from the Morristown Affordable Housing Trust Fund shall conform to a spending plan approved by COAH. All interest accrued in the housing trust fund shall only be used on eligible affordable housing activities approved by COAH. Funds deposited in the housing trust fund may be set up as a grant or revolving loan program and may be used for any activity approved by COAH to address Morristown's affordable housing need. Such activities include, but are not limited to: preservation or purchase of housing for the purpose of maintaining or implementing affordability controls, rehabilitation for affordable housing, new construction of affordable housing units and related costs, conversion of existing nonresidential buildings to create new affordable units, green building strategies in accordance with accepted national or state standards for affordable housing, 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, or administration necessary for implementation of the Housing Element and Fair Share Plan.
b. 
Funds shall not be expended to reimburse the Town of Morristown for past housing activities.
c. 
At least 30% of all development fees and interest earned shall be used to provide affordability assistance to low- and moderate-income households in affordable units included in the Morristown Housing Element and 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, i.e., very-low-income households.
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 (very-low income) may include buying down the cost of low- or moderate-income units in the third round Morristown Housing Element and Fair Share Plan, by offering a subsidy to developers of inclusionary or 100% affordable housing developments, to make the housing 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 are exempt from the affordability assistance requirement.
d. 
The Town of Morristown 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. 5:96-18.
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 COAH's monitoring requirements. Legal or other fees related to litigation opposing affordable housing sites or objecting to COAH's regulations and/or action are not eligible uses of the Affordable Housing Trust Fund.
[Ord. No. O-25-2018, 7-12-2018; amended 8-8-2023 by Ord. No. O-11-2023]
The ability for the Town of Morristown to impose, collect and expend development fees shall expire with its substantive certification from COAH, or its Superior Court judgment of compliance, unless the Town of Morristown has filed an adopted Housing Element and Fair Share Plan with, has petitioned with COAH for substantive certification, or has moved for Superior Court approval of its adopted Housing Element and Fair Share Plan, and has received COAH's approval of its Development Fee Ordinance. If the Town of Morristown fails to renew its ability to impose and collect development fees prior to the date of expiration of its substantive certification from COAH or its Superior Court judgment of compliance, it may be subject to forfeiture of any or all funds remaining within its municipal Affordable Housing 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 Town of Morristown shall not impose a residential development fee on a development that receives preliminary or final approval after the expiration of its substantive certification, nor may the Town of Morristown retroactively impose a development fee on such a development. The Town of Morristown shall not expend development fees after the expiration of its substantive certification or judgment of compliance.