Pending Legislation Abolishes Council on Affordable Housing and Nonresidential Development fees

May 7th, 2010 | Posted by: Christopher DeGrezia 0| comments:

COAHIf adopted, a bill before the New Jersey Senate (S-1) will abolish COAH and reform the Fair Housing Act.  The bill stands at second reading and can be voted upon at the next voting session in May 2010.  If it is not amended, the bill will change the entire landscape of how affordable housing requirements are calculated and applied.  With regard to nonresidential development, it will essentially eliminate affordable housing requirements.  Here is the story:     

On July 17, 2008, the Statewide Non-Residential Development Fee Act (N.J.S.A. 40:55D-8.1-8.7) was enacted to provide a continuous source of funding for the creation and development of affordable housing.   The Development Fee Act  imposes a 2.5 percent  development fee on all new nonresidential development throughout the state, with a few specific exemptions (i.e. nonprofit, public education buildings, houses of worship, public amenities, parking lots and structures, government buildings, nursing homes, nonprofit hospitals, transit hubs, villages and light rail hubs, commercial farms and developments with approvals and executed developer’s agreements (with a 1 percent or more affordable housing fee) prior to July 17, 2008).  The 2.5 percent development fee, which must be paid in full prior to obtaining a certificate of occupancy, is calculated utilizing the project’s determined equalized assessed value, as provided by a municipality’s tax assessor.  
On July 27, 2009, Gov. Jon S. Corzine signed the New Jersey Economic Stimulus Act of 2009, which temporarily suspended the nonresidential development fee under certain circumstances.  Under the Stimulus Act,  nonresidential development is exempted from all fee collection provided the development meets both of the following stipulations: (1) the project has received preliminary or final site plan approval prior to July 1, 2010; and (2) building permits are issued prior to January 1, 2013.  Any money paid pursuant to the Development Fee Act prior to July 27, 2009, is returnable to the paying developer, although requests must be made in writing by November 20, 2009.  A municipality may seek reimbursement from the state for any development fee refunds issued, by submitting a request to COAH by March 30, 2010.  The Stimulus Bill appropriated $15 million for fee reimbursement.

The Stimulus Act also provides that the municipality’s affordable housing obligation generated by an exempted project may be “eliminated or reduced” unless replacement revenues “available to the municipality” are identified by COAH.   In other words, the Stimulus Act removes the municipality’s affordable housing obligation while the fees are suspended if the Department of Community Affairs determines that the New Jersey Affordable Housing Trust Fund is insufficiently funded to assist in the production of such units. For instance, if 0 percent  is available to the municipality, the obligation is eliminated.   Proof of request for reimbursement is necessary for municipalities that seek to have their affordable housing obligations reduced or eliminated. COAH has two years from the effective date of the Economic Stimulus Act to make this determination, or by July 28, 2011. 

On January 19, 2010, S-1 was introduced and referred to the Senate Economic Growth Committee.  S-1 (sponsored by Sens. Ray Lesniak, Christopher Bateman and Jeff Van Drew) is intended to reform the Fair Housing Act and abolish the Council on Affordable Housing.  All powers, function and duties not repealed by the new law are transferred to the State Planning Commission (SPC.)   The bill stands at Second Reading in the Senate and will likely be voted on at the next Senate voting session in May.  If adopted, S-1 will completely change the requirements for nonresidential development by no longer triggering an affordable housing requirement.  Under the current version:

  • The 2.5 percent fee applicable to nonresidential development is repealed. Section 27(g); and 
  • Municipalities are prohibited from imposing a fee on nonresidential development or construction for the provision of affordable housing. Section 28(a).

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