Township of Wayne, NJ Article III Controls on Affordability

§ 213-16 Applicability; restrictive covenant.

A. Sections 213-16B through and including 213-34 shall be applicable to all affordable housing developments that have received preliminary site plan approval prior to July 10, 1996, and to all affordable housing developments receiving preliminary site plan approval on or after July 10, 1996, except where inconsistent with §§ 213-35 through 213-39. Sections 213-35 through 213-39 shall be applicable, where inconsistent with §§ 213-16B through 213-34, to all affordable housing developments receiving preliminary site plan approval on or of after July 10, 1996.

B. To assure that newly constructed low- and moderate-income sales units remain affordable to low- and moderate-income households for not less than 20 years, the Township shall require all conveyances of newly constructed low- and moderate-income sales units subject to the Act to contain a restrictive covenant and mortgage lien adopted by COAH, attached hereto as Exhibit 1. (Exhibit 1 is on file in the Township offices.)

§ 213-17 Initial pricing.

A. The initial price of a low- and moderate-income owner-occupied single-family housing unit shall be established so that after a down payment of 10%, the monthly principal, interest, taxes, insurance and condominium fees (if any) do not exceed 28% of an eligible gross monthly income. The Township shall require that master deeds of inclusionary developments regulate condominium or homeowner association fees or special assessments of low- and moderate-income purchasers at a specific percentage of those paid by market purchasers. Once established within the master deed, the percentage shall not be amended without prior approval from COAH. In making these calculations, the following considerations shall govern:

(1) Mortgage payments shall be determined on the basis of a thirty-year fixed rate mortgage at the prevailing interest rates obtainable from at least two major lenders active in Passaic County.

(2) Property taxes shall be determined by applying the equalized property tax rate in Wayne Township currently in effect to the proposed selling price of the unit.

(3) The developer shall use the best available assumptions to determine the insurance and homeowner's association fees to be applied to the units, subject to the approval of the Administrator as to reasonableness only for use in this calculation.

(4) Homeowner's association fees shall be set at a specific percentage of those paid by market purchasers. This percentage must be included in the master deed of any inclusionary development.

B. The average price of low- and moderate-income units within an inclusionary development shall be, as best as practicable, affordable to households at 57.5% of median income as contained in N.J.A.C. 5:92-12.4.

C. Developers shall offer a pricing stratification which will, as best as practicable, provide the following distribution of prices for purchased housing for every 20 low- and moderate-income units:

Type of Units	Proposed Pricing Stratification
Low-income	1 at 40 through 42.5 percent 3 at 42.6 through 47.5 percent 6 at 47.6 through 50 percent
Moderate-income	1 at 50.1 through 57.5 percent 1 at 57.6 through 64.5 percent 1 at 64.6 through 68.5 percent 1 at 68.6 through 72.5 percent 2 at 72.6 through 77.5 percent 4 at 77.6 through 80 percent

D. If fewer than 20 low- and moderate-income units are required to be built as part of an inclusionary development of purchased housing, comparable distribution of prices as set forth in Subsection C above shall be achieved.

E. For initial occupancy, priority shall be given to households that fall within the median income categories delineated in Subsection C above.

F. The Township shall require that rents of low- and moderate-income rental units, including an allowance for utilities consistent with the personal benefit expense allowance for utilities defined by HUD or similar allowance approved by COAH shall be set so as not to exceed 30% of the gross monthly income of the appropriate household size. Maximum rent shall be calculated as a percentage of either the low- or moderate-income limit as adopted by COAH or other recognized standard adopted by COAH that applies to the rental housing unit. At least 50% of all rental units shall be affordable to low-income households.

G. The following criteria shall be considered in determining rents and sale prices:

(1) Efficiency units shall be affordable to one-person households.

(2) One-bedroom units shall be affordable to two-person households.

(3) Two-bedroom units shall be affordable to three-person households.

(4) Three-bedroom units shall be affordable to five-person households.

(5) Four-bedroom units shall be affordable to seven-person households.

H. Low- and moderate-income limits by household size shall be set in accordance with the standards adopted by COAH.

§ 213-18 Annual indexed increases while controls are in place.

The price of an owner-occupied housing unit and the rents of affordable housing units may increase annually based on the percentage increase in median income for the region as determined from the uncapped Section 8 income limits, published by HUD, as defined in N.J.A.C. 5:92-1.3 (Appendix D) or other recognized standard adopted by COAH.

§ 213-19 Procedures of resale prior to the expiration of controls.

A. Persons wishing to sell affordable units shall notify the Township of the intent to sell by certified mail. If no eligible buyer enters a contract of sale for the unit within 90 days of notification, the Township shall have the option to purchase the unit for the maximum price permitted based on the regional increase in median income as defined by HUD or other recognized standard adopted by COAH. If the Township does not purchase the unit, the seller may apply for permission to offer the unit to a non-income-eligible household at the maximum price permitted. The seller shall document efforts to sell the unit to an income-eligible household as part of this application. If the request is granted, the seller may offer low-income housing units to moderate-income households and moderate-income housing units to households earning in excess of 80% of median. In no case shall the seller be permitted to receive more than the maximum price permitted.

B. In no case shall a sale pursuant to this section eliminate the resale controls on the unit or permit any subsequent seller to convey the unit except in full compliance with terms of this chapter.

C. The resale price of an owner-occupied housing unit shall be the base price increased pursuant to the following formula. The price approved by the Board at which the seller acquired the property shall be the base price. The base price shall be multiplied by 100% plus the percentage increase in the HUD uncapped median income by family size for Passaic County from the time of acquisition of the property to the date that notice of intent to sell is given to the Board. For example, if the base price is $30,000 and the median income at the time of the initial acquisition is $32,000 and at the time of the resale transaction the median income has increased 25% to $40,000, then the resale price is as follows:

100/100 + 25/100 = 1.25

30,000 x 1.25 = 37,500

D. At resale, all items of property which are permanently affixed to the units and/or were included when the unit was initially restricted (e.g., refrigerator, freezer, washer and dryer) shall be included in the maximum allowable resale price. Items of personal property which are not permanently affixed to the unit 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 purchase 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.

§ 213-20 Eligible capital improvements prior to expiration of controls.

Property owners of single-family, owner-occupied housing may apply to the Affordable Housing Board for permission to increase the maximum price for eligible capital improvements. Eligible capital improvements shall only be those which, pursuant to N.J.A.C. 5:92-12.8, render the unit suitable for a larger household. In no event shall the maximum price of an improved housing unit exceed the limits of affordability for the larger household. Property owners shall apply to the Township if an increase in the maximum sales price is sought. Upon request of an owner of an affordable housing unit the Board shall consider within 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.

§ 213-21 Impact of foreclosure on resale while controls are in place.

A. Any mortgage for a low- or moderate-income unit shall contain a provision requiring the holder of a mortgage on the property to inform the Board at any time that the purchaser of a unit is 45 days or more in arrears on payment of his/her mortgage payments. The Board shall further be notified by the mortgagee in the event of institution of a foreclosure action. This notification provision does not apply to any mortgage which prohibits notice to a third party.

B. The Board shall at all times have the right to move to intervene in any foreclosure action. In addition, the Board shall have the right to advance and pay all sums necessary to cure any arrears, to cure any other default or exercise any right of redemption or pay and satisfy any first mortgage or other lien so that the unit may be preserved and retained as a low- or moderate-income unit. All sums advanced by the Board shall become a lien against the unit and shall have higher priority than any lien except that of a first mortgage and tax or other liens held by any government agencies.

C. A judgment of foreclosure or a deed in lieu of foreclosure by a financial institution regulated by state and/or federal law or by a lender on the secondary mortgage (including but not limited to the Federal National Mortgage Association, the Home Loan Mortgage Corporation, the Government National Mortgage Association or entities acting on their behalf) shall extinguish controls on affordable housing units, provided that there is compliance with § 213-19. Notice of foreclosure shall allow the Township, the Department of Community Affairs, the Agency or a qualified nonprofit to purchase the affordable housing unit at the maximum permitted sales price and maintain it as an affordable unit for the balance of the intended period of controls.

§ 213-22 Excess proceeds upon foreclosure.

In the event of a foreclosure sale, the owner of the affordable housing unit shall be personally obligated to pay to the Township any surplus funds, but only to the extent that such surplus funds exceed the difference between the maximum price permitted at the time of foreclosure and the amount necessary to redeem the debt to the financial institution, including costs of foreclosure.

§ 213-23 Exempt sales.

A. The following transactions shall be deemed nonsales for the purpose of this chapter. The owner of the affordable unit shall be entitled to a statement of exemption from the Board upon application.

(1) Transfer of an affordable housing unit between husband and wife.

(2) 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.

(3) Transfer of ownership of an affordable housing unit as a result of inheritance.

(4) Transfer of ownership of an affordable housing unit through an order of the Superior Court.

B. 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 this chapter.

§ 213-24 (Reserved)

§ 213-25 (Reserved)

§ 213-26 General provisions concerning uniform deed restriction liens and enforcement through certificates of occupancy or reoccupancy on sales/rental units.

A. The Township shall not issue a certificate of occupancy for initial occupancy of a low- or moderate-income sales unit or building containing a low- or moderate-income rental unit(s) unless there is a written determination by the Township that the unit is to be controlled by a deed restriction and mortgage lien as adopted and approved by COAH. There is no provision in this chapter for the issuance of a temporary certificate of occupancy. The Township shall make such determination within 21 days of receipt of a proposed deed restriction and lien. A request to COAH for an amendment to the deed restriction and lien may be made by the Township, its designee or a developer.

B. The Township shall not permit the initial occupancy of a low-or moderate-income sales or rental unit(s) prior to issuance of a certificate of occupancy in accordance with Subsection A above.

C. A certificate of reoccupancy of a low- or moderate-income sales unit resulting from a resale is required and such certificate shall not be issued unless there is a written determination by the Township that the unit is to be controlled by the deed restriction and mortgage lien. The Township shall make such determination within 21 days of receipt of a proposed deed restriction and mortgage lien.

D. The certificate of reoccupancy shall not be required in sales for which controls are allowed to expire or in which the repayment option is being exercised pursuant to § 213-27.

E. The mortgage lien and the restrictive covenant shall be filed with the records office of Passaic County. The form of the lien and restrictive covenants shall be in accordance with N.J.A.C. 5:92-12, Appendix.

F. The restrictive covenant, including the repayment clause, and the mortgage lien shall have priority over all mortgages on the property except for a first mortgage placed on the property by the mortgagee prior to the expiration of resale controls.

§ 213-27 Option to buy sales units.

A. The restrictive covenant governing the deeds of low- and moderate-income units shall include an option permitting purchase of the affordable housing unit at the maximum allowable restricted sales price at the time of the first nonexempt sale after controls on affordability have been in effect on the unit for 20 years. The option to buy shall be available to the municipality, the Department of Community Affairs, the Agency or a qualified nonprofit agency as determined by COAH.

B. All restrictive covenants governing low- and moderate-income units shall require the owner to notify the Township by certified mail of any intent to sell the unit 90 days after controls have been in effect on the housing unit for 20 years.

C. Upon receipt of such notice, the option to buy the unit at the maximum allowable restricted sales price shall be available for 90 days. The Township shall notify the Department of Community Affairs, the Agency and COAH that the unit is for sale. If the Township exercises this option, it may enter into a contract of sale. If the Township fails to exercise this option within 90 days, the first of the other entities giving notice to the seller of its intent to purchase during the 90 day period shall be entitled to purchase the unit. If the option to purchase the unit at the maximum allowable restricted sales price is not exercised by a written offer to purchase the housing unit within 90 days of receipt of the intent to sell, the owner may proceed to sell the housing unit. If the owner does not sell the unit within one 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 90 days prior to any future proposed date of sale.

D. 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.

§ 213-28 Township option to purchase units.

The Township may elect to purchase a low- or moderate-income unit pursuant to § 213-27. Upon purchase the Township 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 20 years; or

B. Convey the unit at fair market value subject to the provisions listed below. The Township shall:

(1) Notify COAH of any proposed sale and sales price 90 days before closing;

(2) Notify COAH of the price differential as defined in N.J.A.C. 5:92-1.3;

(3) Deposit the price differential in the Wayne Township Affordable Housing Trust Fund; and

(4) Notify COAH by February 1 of each calendar year of the balance within the Affordable Housing Trust Fund.

C. Money deposited in the Affordable Housing Trust Fund from such sale may not be expended until the Township submits a repayment housing plan which provides a realistic opportunity for the creation, rehabilitation or maintenance of low- and moderate-income housing.

§ 213-29 State option to purchase units.

When the Department of Community Affairs or Agency elects to purchase a low- or moderate-income unit pursuant to N.J.A.C. 5:92-12.3, 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 allowable restricted sales prices or rental; or

B. 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 Bergen, Hudson, Passaic Counties Housing Region.

§ 213-30 Nonprofit option to purchase units.

A. Nonprofit agencies may apply to COAH at any time for the right to purchase low- or moderate-income units subsequent to the period of controls on affordability of up to 20 years.

B. Nonprofit agencies that have been designated by COAH shall be eligible to purchase low- or moderate-income units pursuant to § 213-27 for the sole purpose of conveying or renting the housing unit to a low- or moderate-income purchaser or tenant at a price or rent not to exceed the allowable restricted sales price or rental. Low-income units shall be made available to low-income purchasers or tenants, and the housing unit shall be regulated by the restrictive covenant and lien adopted by COAH. The term of the controls on affordability shall be for 20 years.

§ 213-31 Seller option.

A. An eligible seller of a low- or moderate-income unit which has been controlled for the period 20 years and who has provided notice of an intent to sell may proceed with the sale if no eligible entity as outlined in §§ 213-27 and 213-30 exercises its option to purchase within 90 days.

B. Subject to § 213-32, the seller may elect to:

(1) Sell to a qualified low- or moderate-income household at the controlled unit sales price in accordance with existing COAH rules, provided that the unit is regulated by the restrictive covenant and lien as per § 213-26 for a period of 20 years; or

(2) Exercise the repayment option and sell to any purchaser at market price, provided that 95% of the price differential is paid to the Township at closing.

C. If the sale will be to a qualified low- or moderate-income household, the Township shall certify the income qualifications of the purchaser and shall ensure the housing unit is regulated by the restrictive covenant and lien required by COAH.

D. The Township shall examine any control 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, the Township may rely on comparable sales data or an appraisal. The Township shall not approve any contract of sale where there is a determination that the sales price does not hear a reasonable relationship to fair market value. The Township shall make a determination within 20 days of receipt of the contract of sale and shall calculate the repayment option payment.

E. The Township shall adopt an appeal procedure from the finding of fair market value whereby the seller may submit written documentation requesting the Township to recompute the repayment obligation if the seller believes an error has been made or to reconsider a determination that a 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 the Township.

F. The repayment shall occur at the date of closing and transfer of title for the first nonexempt transaction after the expiration of controls on affordability.

G. Repayment proceeds shall be deposited in the Affordable Housing Trust Fund and is to be devoted solely to the creation, rehabilitation or maintenance of low- and moderate-income housing.

§ 213-32 Township rejection of repayment option.

A. The Township shall have the right to determine that the most desirable means of promoting on 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 within the municipality beyond the period required by § 213-34. Such determination shall be made by resolution of the Township Council and shall be effective upon filing with the Court or its designee. The resolution shall specify the time period for which the repayment option shall not be applicable. During such period, no seller in the Township may utilize the repayment option permitted by § 213-31.

B. Should the Township exercise the option outlined in Subsection A above, it shall:

(1) Provide public notice in a newspaper of general circulation; and

(2) Notify the Court or its designee of its governing body's action. The Township shall ensure that the deed restriction on all affected housing units reflect the extended period of controls.

§ 213-33 Continued application of options to create, rehabilitate or maintain low- and moderate-income units.

When a housing unit has been maintained as a low- or moderate-income unit after controls have been in effect for 20 years, the restrictive covenant governing the housing units shall allow municipalities, the state, nonprofit agencies and sellers of low- and moderate-income units to again exercise all the same options as provided in this chapter.

§ 213-34 Length of controls; rehabilitation, rentals, conversion of nonresidential structure.

A. Rehabilitated owner-occupied single-family housing units that are improved to code standard shall be subject to affordability controls for at least six years.

B. Rehabilitated renter-occupied housing units that are improved to code standard shall be subject to affordability controls for 10 years.

C. To assure that low- and moderate-income rental units remain affordable to low- and moderate-income households for a period of not less than 20 years, the Township shall require the owner of the unit to rent the unit in accordance with the zoning established for the sites pursuant to the Fair Share Plan.

D. Housing unit(s) created through conversion of a nonresidential structure shall be considered a new housing unit and shall be subject to these controls on affordability.

§ 213-35 Applicable provisions for development approvals on or after July 10, 1996.

For all affordable housing developments receiving preliminary site plan approval on or after July 10, 1996, the provisions of §§ 213-16B through and including 213-34 shall be applicable, except as hereinafter set forth in §§ 213-36 through 213-39.

§ 213-36 Restrictive covenants applicable to development approvals on or after July 10, 1996.

To assure that newly constructed low- and moderate-income sales units remain affordable to low- and moderate-income households for not less than 30 years, the Township shall require all conveyances of newly constructed low- and moderate-income sales units subject to the Act to contain a restrictive covenant and mortgage lien adopted by COAH, attached hereto as Exhibit 1. (Exhibit 1 is on file in the Township offices.)

§ 213-37 Initial pricing applicable to development approvals on or after July 10, 1996.

A. The initial price of a low- and moderate-income owner-occupied single-family housing unit shall be established so that after a down payment of 5%, the monthly principal, interest, taxes, insurance and condominium fees (if any) do not exceed 28% of an eligible gross monthly income. The Township shall require that master deeds of inclusionary developments regulate condominium or homeowner association fees or special assessments of low- and moderate-income purchasers at a specific percentage of those paid by market purchasers. Once established within the master deed, the percentage shall not be amended without prior approval from COAH. In making these calculations, the following considerations shall govern:

(1) Mortgage payments shall be determined on the basis of a thirty-year fixed rate mortgage at the prevailing interest rates obtainable from at least two major lenders active in Passaic County.

(2) Property taxes shall be determined by applying the equalized property tax rate in Wayne Township currently in effect to the proposed selling price of the unit.

(3) The developer shall use the best available assumptions to determine the insurance and homeowners' association fees to be applied to the units, subject to the approval of the Administrator as to reasonableness only for use in this calculation.

(4) Homeowners' association fees shall be set at a specific percentage of those paid by market purchasers. This percentage must be included in the master deed of any inclusionary development and shall not be less than 33.3% of the market purchaser's association fees.

B. Bedroom distribution.

(1) Inclusionary developments that are not restricted to senior citizens shall be structured in conjunction with realistic market demands so that:

(a) The combination of efficiency and one-bedroom units is at least 10% and no greater than 20% of the low- and moderate-income units.

(b) At least 30% of all low- and moderate-income units are two-bedroom units.

(c) At least 20% of all low- and moderate-income units are three-bedroom units.

(2) Low- and moderate-income units restricted to senior citizens may utilize a modified bedroom distribution. 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-bedroom units or by creating a two-bedroom unit for each efficiency unit. Applications to waive this standard shall be made in accordance with N.J.A.C. 5:93 and shall be referred by the Council to the DCA Division on Aging for review and recommendations.

C. The following criteria, in conjunction with realistic market information, shall be used in determining maximum rents and sale prices:

(1) Efficiency units shall be affordable to one-person households.

(2) All one-bedroom units shall be affordable to one-and-one-half-person households.

(3) All two-bedroom units shall be affordable to three-person households.

(4) All three-bedroom units shall be affordable to four-and-one-half-person households.

D. All affordable owner-occupied and rental units shall be required to utilize the same heating source as market units within the inclusionary development.

§ 213-38 Annual indexed increases while controls are in place; sales and rentals on or after July 10, 1996.

A. The price of an owner-occupied housing unit and the rents of affordable housing units may increase annually based on the Percentage increase in the regional median income limit for each housing region. In no event shall the maximum resale price established by the authority be lower than the last recorded purchase price.

B. With the exception of rentals constructed pursuant to low-income tax credit regulations, the rent of a low- or moderate-income housing unit may be increased annually based on the percentage increase in the Housing Consumer Price Index for the United States. This increase shall not exceed 9% in any one year. Rents for units constructed pursuant to low income tax credit regulations shall be indexed pursuant to the regulations governing low income tax credits.

§ 213-39 Initial sales; resale prior to expiration of controls; rentals on or after July 10, 1996.

A. Low- and moderate-income sales units shall not be offered to non-income-eligible households at initial sale without Council approval. Parties that petition the Council for such approval shall document efforts to sell housing units to income-eligible households and shall adhere to the procedures outlined in N.J.A.C. 5:91-12.

B. Persons wishing to sell affordable units shall notify the Township of the intent to sell. If no eligible buyer enters a contract of sale for the unit within 90 days of notification, the Township shall have the option to purchase the unit for a negotiated price that shall not exceed the maximum price permitted based on the regional increase in the median income as defined by HUD or other recognized standard adopted by the Council. If the Township does not purchase the unit, the seller may apply for permission to offer the unit to a non-income-eligible household at the maximum price permitted. The seller shall document efforts to sell the unit to an income-eligible household as part of this application. In reviewing the request, the Township shall consider the specific reasons for any delay in selling the housing unit and the hardship to the seller in continuing to offer the affordable unit to an income-eligible applicant. The inability to sell a unit for the maximum permitted resale price shall not, in itself, be considered an appropriate reason for allowing a housing unit to be sold to a non-income-eligible household. If the request is granted, the seller may offer a low-income housing unit to a moderate-income household and a moderate-income housing unit to a household earning in excess of 80% of the median. In no case shall the seller be permitted to receive more than the maximum price permitted. In no case shall a sale pursuant to this section eliminate the resale controls on the unit or permit any subsequent seller to convey the unit except in full compliance with the terms of this subsection.

C. Owners of low- and moderate-income rental units shall not offer rental units to non-income-eligible households without prior approval of the Council. Parties that petition for such approval shall document all efforts to rent to income-eligible households and demonstrate to the satisfaction of the Council that alternatives, such as a reduction in rent, is not feasible. Parties that petition the Council shall adhere to the procedures outlined in N.J.A.C. 5:91-12.

§ 213-40 (Reserved)