A.
The City of Summit Common Council finds and declares that the creation
and preservation of affordable housing in Summit serves the public
interest. Maintaining and improving a stock of 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 article is to create an Affordable Housing Trust Fund
from payment of development fees to assist in the marshaling of public
and private monies dedicated to affordable housing projects and programs.
B.
The New Jersey Supreme Court, in Holmdel Builder's Assn. v. Holmdel
Township, 121 N.J. 550 (1990), determined that mandatory development
fees are both statutorily and constitutionally permissible. The Court
further anticipated that the Council on Affordable Housing would promulgate
appropriate development fee rules specifying, among other things,
the standards for these development fees. The purpose of this article
is to provide municipal regulations that comport with the Fair Housing
Act, N.J.S.A. 52:27D-301, and New Jersey Council on Affordable Housing
Procedural and Substantive Regulations contained in N.J.A.C. 5:91,
5:92 and 5:93 et seq.
C.
The purpose of the mandatory affordable housing development fee regulations
is to provide revenues with which to fund rehabilitation of housing
units occupied by low- and moderate-income households, to construct
housing for low- and moderate-income families and/or to fund other
programs for low- and moderate-income housing in order for Summit
to meet its responsibility for providing affordable housing pursuant
to Mount Laurel II, the Fair Housing Act and other applicable laws.
The funds collected pursuant to this article shall be used exclusively
for the production of low- and moderate-income housing and to offset
municipal expenses in developing and administering the program(s)
under which low- and moderate-income housing will be produced to meet
Summit's fair share need of affordable housing. No funds shall be
expended except in accordance with a Spending Plan approved by the
New Jersey Council on Affordable Housing and as provided by N.J.A.C.
5:93-8.15.
A.
Affordable housing development fees shall be paid by all developers
other than developers of exempt developments. Such fees shall consist
of monies paid by an individual, person, partnership, association,
company or corporation for the improvement of property as permitted
in COAH's rules. Affordable housing development fees collected shall
be used for the sole purpose of providing low- and moderate-income
housing. This section shall be interpreted within the framework of
COAH's rules on development fees.
B.
Fees shall be based on the equalized assessed value of a property
determined by the City Tax Assessor through a process designed to
ensure that all property in the municipality 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 costs. Final equalized assessed value will
be determined at project completion construction by the City Tax Assessor.
C.
The following regulations shall determine the fees due for residential
and nonresidential development:
1.
Residential development fees.
a.
In the R-43, R-25, R-15, R-10, R-6, R-5, RAH-1, TH-1, TH-2,
MF, MFT, GW I and GW II Zones where a developer develops land for
residential purposes and receives no right to increased density, the
developer shall pay 1% of the equalized assessed value. In those same
zones, when a developer develops land for nonresidential purposes,
the developer shall pay a development fee as provided in Subsection
C2, Nonresidential development fees, below.
b.
In those circumstances where a developer secures the right to
increased density resulting from a variance granted pursuant to N.J.S.A.
40:55D-70d (a "d-5" or "use" variance), then the developer will incur
a bonus development fee for the additional residential units realized
(above what is permitted by right under the existing zoning). The
developer shall pay a fee of 1% of equalized assessed value for all
base units and 6% of equalized assessed value for all bonus units.
If there has been an ordinance adopted within two years prior to the
filing of the "d" variance application that decreases the density
permitted on the subject property, the base density, for the purpose
of calculating the 6% bonus, shall be the highest density permitted
by right during the two years preceding the filing of the "d" variance
application.
c.
The City may collect fees exceeding those permitted above, provided
that the City enters into an agreement with a developer that offers
a financial incentive for paying higher fees. No agreement may provide
for a voluntary fee without also providing for a comparable offsetting
incentive. All such agreements are subject to court approval.
2.
Nonresidential development fees.
a.
In the B, B-1, NB, CRBD, ORC, ORC-1, RO-60, PROD, PROD-2, LI,
PI, GW I and GW II Zones where a developer develops land for nonresidential
purposes and receives no right to increased development rights, the
developer shall pay 2% of the equalized assessed value. In those same
zones, when a developer develops land for residential purposes, fees
shall be calculated as in Subsection C1, Residential development fees,
above.
b.
The City may secure a higher fee than set forth in Subsection
C2a above. The increased development rights that may warrant a higher
fee include, but are not limited to, the following: a tax abatement;
increased commercial, industrial or other nonresidential square footage;
increased commercial, industrial or other nonresidential lot coverage;
increased commercial, industrial or other nonresidential impervious
coverage; and/or a change in the nonresidential use of the property
that enhances the value of the property. The right to collect a higher
fee shall be subject to the City and the developer entering into an
agreement with respect to the increased fee/increased development
right(s); the increased fee bearing a reasonable relationship to the
increased development right(s); and the agreement being approved by
a court.
c.
In those circumstances where a developer secures the right to
an increase in development rights pursuant through the granting of
a variance granted pursuant to N.J.S.A. 40:55D-70d ("d-4" or "use"
variance), then the additional floor area ratio (FAR) realized (above
what is permitted by right under existing zoning) the developer will
incur a bonus development fee. However, if the zoning on a site has
changed during the two-year period preceding the filing of the "d"
variance application, the base floor area ratio (FAR) for the purpose
of calculating the 6% bonus development fee shall be the highest floor
area ratio (FAR) permitted by right during the two years preceding
the filing of the "d" variance application. The base floor area ratio
(FAR) shall be subject to the 2% fee pursuant to Subsection C2a above.
d.
The City may collect fees exceeding those permitted above, provided
that the City enters into an agreement with a developer that offers
a financial incentive for paying higher fees. No agreement may provide
for a voluntary fee without also providing for a comparable offsetting
incentive. All such agreements are subject to the court's approval.
A.
Development fees shall be collected for any development which requires
major or minor site plan and/or major or minor subdivision approval
and/or planned research office development approval from either the
Planning Board or Zoning Board of Adjustment. Development fees shall
also be collected from any new single-family or two-family dwelling
construction eligible for new home warranty otherwise exempt from
site plan or subdivision approval.
B.
The City shall not reduce densities from preexisting levels and then
require developers to pay development fees in exchange for an increased
density.
C.
Developments that have received preliminary or final approval prior
to the effective date of this article shall be exempt from development
fees unless the developer seeks a substantial change in the approval;
for example, a substantial alteration in site layout, development
density or types of uses within the development.
D.
Developers that convert any portion of an existing residential structure
to a nonresidential use shall pay a development fee. The development
fee shall be based on the increase in the equalized assessed value
of the converted structure.
E.
The City exempts the following types of development from the imposition
of development fees:
1.
Nonprofit organizations which have received tax-exempt status pursuant
to Section 501(c)(3) of the Internal Revenue Code, providing current
evidence of that status is submitted to the City Clerk, together with
a certification that services of the organization are provided at
reduced rates to those who establish an inability to pay existing
charges.
2.
Federal, state, county and local governments.
3.
Public utilities under the jurisdiction of the New Jersey Board of
Public Utilities to the extent that the construction for which approval
is sought is of a facility which shall house equipment only and not
to be occupied by any employees.
4.
Developers of low- and moderate-income housing units, provided that
the required minimum percentage of residential units in the development
are affordable units, in accordance with all applicable COAH regulations,
including but not limited to those establishing minimum set-asides
for low and moderate sales and rental housing. Where affordable housing
units are required to be constructed and where the developer has been
authorized to pay a development fee in lieu of building the affordable
housing units, developers shall pay a fee related to the internal
rate of subsidization. For purposes of this chapter, the internal
rate of subsidization shall be not less than $20,000 for each affordable
unit not built.
5.
Public uses, including public educational and cultural facilities
and outdoor and indoor recreational facilities.
All fees due pursuant to the formulas set forth above shall
be payable as follows: 50% upon receipt of a building permit and 50%
upon issuance of the first certificate of occupancy.
A.
All development fees shall be deposited with the Chief Financial Officer 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, Summit shall provide whatever express written authorization may be required by the bank utilized by the City in order to permit COAH to direct the disbursement of development fees pursuant to § 35-17.9B of this chapter. No money shall be expended from the housing trust fund unless the expenditure conforms to a spending plan approved by the court.
B.
If the court determines that Summit is not in conformance with the
court's grant of a Judgment of Repose, the court is authorized to
direct the manner in which all development fees collected pursuant
to this article shall be expended. The City shall enter into an escrow
agreement with the bank in which the fees are to be deposited to enable
the court to enforce the spending plan approved by the court or take
such other measures as the court deems appropriate.
A.
The City shall use revenues collected from development fees for any
activity approved by the court for addressing the City's fair share
obligation. The expenditures of all money shall conform to a spending
plan approved by the court.
B.
Funds shall not be expended to reimburse Summit for housing activities
that preceded the entry of a Judgment of Repose for the current housing
cycle by a court.
C.
At least 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 Summit demonstrates to the court the ability to address
the requirement of affordability assistance from another source. Development
fees collected to finance indigenous need rehabilitation or new construction
of deed restricted affordable units shall be exempt from this requirement.
D.
No more than 20% of the revenues collected from development fees
shall be expended on administration costs necessary to develop, revise
or implement the housing plan element, including, but not limited
to, salaries and benefits for City employees or consultant fees necessary
to develop or implement a rehabilitation program, a new construction
program, 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, except that COAH may consider
permitting fees to defray the cost of staff whose sole responsibility
is to implement the housing element.
The City shall collect information on each applicant for low-
and moderate-income housing on forms approved by COAH. Such report
shall include:
A.
Monitoring forms approved by COAH;
B.
An evaluation of the income and demographic characteristics of each
applicant of low- and moderate-income housing, as well as the occupants
of the units; and
C.
An evaluation of any necessary adjustments in the affirmative marketing
program as a result of the evaluation in Subsection B above.
The City shall submit to the court a spending plan for the development
fees the City anticipates it will collect pursuant to this chapter.
Plans to spend development fees shall consist of the following information:
A.
A projection of revenues anticipated from imposing fees on development
based on historic activity;
B.
A description of the administrative mechanism that the City will
use to collect and distribute revenues;
C.
A description of the anticipated use of all development fees;
D.
A schedule for the creation or rehabilitation of housing units;
E.
In the event the City 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; and
F.
The manner through which the City will address any expected or unexpected
shortfall if the anticipated revenues from development fees are not
sufficient to implement the plan.
A.
In the event that any of the conditions set forth in Subsection B
below occur, the court or its designee shall be authorized, on behalf
of the City, to direct the manner in which all development fees collected
pursuant to this article shall be expended. Should any such condition
occur, such revenues shall immediately become available for expenditure
at the direction of the court or its designee upon receipt by the
City Clerk and Chief Financial Officer of written notification from
the court or its designee that such a condition has occurred. In furtherance
of the foregoing, the City shall, in establishing a bank account pursuant
to N.J.A.C. 5:93-8.15[1] and Subsection F of this section, ensure that Summit has
provided whatever express written authorization which may be required
by the bank to permit the court or its designee to direct disbursement
of such revenues from the account following the delivery to the bank
of the aforementioned written notification provided by the court or
its designee upon receipt by the City Clerk and Chief Financial Officer.
[1]
Editor's Note: N.J.A.C. 5:93-8.15 expired 10-16-2016.
B.
Occurrence of the following may result in the court or its designee
taking an action pursuant to the subsection above:
2.
Failure to meet deadlines for information required by the court in
its review of a housing element, development fee ordinance, or plan
for spending fees;
3.
Failure to proceed through the court processes toward a Judgment
of Repose in a timely manner;
4.
Failure to address any conditions the court may impose for approval
of a plan to spend development fees within the deadlines imposed by
the court;
5.
Failure to address the any conditions the court may impose for a
Judgment of Repose within deadlines imposed by the court;
6.
Failure to submit accurate monitoring reports within the time limits
imposed by the court;
7.
Failure to implement the spending plan for development fees within
the time limits imposed by the court, or within reasonable extensions
granted by the court;
8.
Expenditure of development fees on activities not permitted by the
court;
9.
Revocation of the Judgment of Repose by the court; or
10.
Other good cause demonstrating that the revenues are not being
used for the intended purpose.
The regulations in Article XVII shall expire if:
A.
The court revokes the Judgment of Repose the City anticipates that
the court will enter in the ongoing affordable housing litigation.
B.
The Judgment of Repose expires prior to the City filing an adopted
Housing Plan Element with COAH or the court and seeking COAH's or
the court's approval of the Housing Plan Element.
C.
The court denies the City's efforts to secure approval of its Housing
Plan Element and Fair Share Plan in its current form or in a form
acceptable to the City and the court.
