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 (the Act), N.J.S.A.
52:27D-301 et seq., and the State Constitution, subject to the Council
on Affordable Housing's (COAH's) adoption of rules.
B.
COAH was authorized by P.L. 2008, c. 46, Section 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) 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 COAH or a
court of competent jurisdiction and have a COAH- or court-approved
spending plan shall 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 chapter 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, Sections 8 and 32 through
38. [NOTE: See N.J.S.A. 52:27D-329.2 and N.J.S.A. 40:55D-8.1 through
40:55D-8.7, respectively.] Fees collected pursuant to this chapter
shall be used for the sole purpose of providing low- and moderate-income
housing. This chapter shall be interpreted within the framework of
COAH's rules on development fees, codified at N.J.A.C. 5:93-8.[1]
[1]
Editor's Note: Chapter 93, Substantive Rules of the New Jersey
Council on Affordable Housing for the Period Beginning June 6, 1994,
expired on October 16, 2016. See: 43 N.J.R. 1203(a).
A.
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]
Editor's Note: Chapter 93, Substantive Rules of the New Jersey
Council on Affordable Housing for the Period Beginning June 6, 1994,
expired on October 16, 2016. See: 43 N.J.R. 1203(a).
B.
The Borough shall adopt and obtain court approval of a spending plan
that shall be part of the Borough's amended third-round spending plan.
Highland Park shall not spend development fees until this fair share
plan is approved by the Court, in conformance with N.J.A.C. 5:93-8.[2]
[2]
Editor's Note: Chapter 93, Substantive Rules of the New Jersey
Council on Affordable Housing for the Period Beginning June 6, 1994,
expired on October 16, 2016. See: 43 N.J.R. 1203(a).
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 also 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 the 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)
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 Fee Certification/Exemption" form. Any exemption claimed
by a developer shall be substantiated by that developer.
(a)
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.
(b)
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 Highland Park as a lien against the real property
of the owner.
[1]
Editor's Note: See N.J.S.A. 40:55D-8.6.
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 Fee 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 nonresidential 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 Highland Park 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-8.6b).
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 issuance of building permit and that determined at issuance of
certificate of occupancy.
I.
Appeal of development fees.
(1)
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 Highland Park.
Appeals from a determination of the Director may be made to the Tax
Court in accordance with the provisions of the State Uniform Tax 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 housing trust
fund to be maintained by the Chief Financial Officer for the purpose
of depositing development fees collected from 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 Highland Park's affordable
housing program.
C.
The Borough of Highland Park has previously provided COAH with written
authorization, in the form of a three-party escrow agreement between
the municipality, [name of bank that originally held the trust fund],
and COAH, to permit COAH to direct the disbursement of the funds as
provided for in N.J.A.C. 5:93-8. The Superior Court shall now have
such jurisdiction to direct the disbursement of the Borough's
trust funds per N.J.A.C. 5:93-8.[1]
[Amended 12-21-2021 by Ord. No. 21-2039]
[1]
Editor's Note: N.J.A.C. 5:93-1.1 et seq., entitled "Substantive
Rules of the New Jersey Council on Affordable Housing for the Period
Beginning on June 6, 1994," which included the regulations cited in
this subsection, expired 10-16-2016.
D.
All interest accrued in the housing trust fund shall only be used
on 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[1] and specified in the approved spending plan.
[1]
Editor's Note: Chapter 93, Substantive Rules of the New Jersey
Council on Affordable Housing for the Period Beginning June 6, 1994,
expired on October 16, 2016. See: 43 N.J.R. 1203(a).
B.
Funds shall not be expended to reimburse Highland Park 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 municipal fair share plan to make them 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 shall be exempt
from the affordability assistance requirement.
D.
Highland Park 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.
5:93-8.16.[2]
[2]
Editor's Note: Chapter 93, Substantive Rules of the New Jersey
Council on Affordable Housing for the Period Beginning June 6, 1994,
expired on October 16, 2016. See: 43 N.J.R. 1203(a).
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 set forth in the Court-approved
December 22, 2017, executed settlement agreement with Fair Share Housing
Center. 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.
A.
On the anniversary of the Judgement of Compliance and Repose for
every year through 2025, Highland Park 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 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 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 Highland Park's housing
program, as well as to the expenditure of revenues and implementation
of the plan approved by the Court.
The ability for Highland Park to impose, collect and expend
development fees shall expire with its Court-issued Judgement of Compliance
unless Highland Park has filed an adopted Housing Element and Fair
Share Plan with the Court or other appropriate jurisdiction, has filed
a declaratory judgement action, and has received the Court's approval
of its development fee ordinance. If Highland Park 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).
