[First Reprint]



with committee amendments




DATED:  JUNE 5, 2008


      The Assembly Appropriations Committee reports favorably Assembly Bill No. 500 (1R), with committee amendments.

      Assembly Bill No. 500 (1R), as amended, reforms the laws concerning affordable housing.

      The bill requires accountability of funds being collected for affordable housing purposes and provides guidelines in the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.) (the “FHA”) for the Council on Affordable Housing (“COAH”) to follow in adopting its rules.

      The bill amends the FHA to provide guidelines for COAH in setting minimum developer incentives required in connection with charging those fees, in accordance with New Jersey court decisions.  The bill provides guidance on the manner in which municipal trust funds are to be maintained, and the purposes for which such funds are to be spent.  The bill requires that payments-in-lieu of constructing affordable housing be maintained separately from other municipal development fees authorized to be collected.

      The bill establishes a new State-wide non-residential development fee to be charged by all municipalities upon non-residential construction or improvements, at a rate of two and one-half percent of the equalized assessed value or land and improvements for all new non-residential construction on unimproved lots and at a rate of two and one-half percent of the increase in equalized assessed value for additions to existing structures to be used for non-residential purposes.

      The bill forbids a municipality from charging, in connection with non-residential construction, any other fee, notwithstanding the rules of COAH.  Those municipalities that have COAH’s authorization to collect residential development fees will be permitted to retain the non-residential development fees.  Developers of non-residential properties in a municipality that does not have either COAH's or the court’s authorization to charge development fees will be required to remit the non-residential development fees to the State Treasurer, to be used for affordable housing purposes under the "Fair Housing Act" and a program created under the bill to assist urban aid municipalities in creating units of affordable housing, in light of the bill's elimination of the regional contribution agreement from the Fair Housing Act.

      The bill eliminates the regional contribution agreement as a method to address affordable housing needs under the FHA, but permits those agreements entered into prior to the effective date of the act to be carried out.  The bill also establishes minimum numbers of housing units required to be set aside Statewide for very low income persons under the FHA.  The bill requires redevelopers of redevelopment projects to replace low and moderate income housing units which are subject to affordability controls which are eliminated as a result of such activities with comparable housing, on a one-for-one basis.

      The bill renames the “Neighborhood Preservation Nonlapsing Revolving Fund” as the “New Jersey Affordable Housing Trust Fund” and requires very specific accounting and reporting by the Department of Community Affairs on the fund’s activities.

      The bill creates the “Urban Housing Assistance Fund,” which will be funded by an annual $20 million appropriation from the State portion of the receipts of the Statewide non-residential development fees which are received directly by the State Treasurer.  The program will assist urban aid municipalities in the rehabilitation and production of housing.

      The bill requires State agencies, when promulgating rules, to include a housing affordability impact statement and a smart growth development impact statement with the rule publication.  These statements will describe how the proposed rule will affect the availability and price of housing, and impact on new construction in planning areas 1 and 2 and designated centers.

      The bill establishes a State Housing Commission that is directed to develop a strategic housing plan for New Jersey, as well as prepare an annual housing performance report to the Governor and the Joint Committee on Housing Affordability.  The commission will be comprised of 15 public members, of which 13 will be appointed by the Governor and two by the Legislature.  In addition, the commission will include several State department heads as non-voting members.  The bill creates an interdepartmental working group of select department heads to guide the commission in its duties.  The commission is to review sources of funding and programs in the State to produce affordable housing, including rental housing, and develop a strategic plan which will coordinate State efforts and consolidate and leverage all available resources for these activities.  The bill creates a new position in the Department of Community Affairs, known as the Senior Deputy Commissioner for Housing, who will chair the commission and the interdepartmental working group.





      The Office of Legislative Services (OLS) cannot determine the fiscal impact of this bill because it does not have complete information regarding the equalized assessed value of the land and improvements for all new non-residential construction and the increase of the equalized assessed value of additions to existing structures to be used for non-residential purposes.  These two values form the basis of the 2.5% fee that would deposited into the New Jersey Affordable Housing Trust Fund established by the bill.

      The OLS notes that 274 municipalities currently have affordable housing trust funds into which residential and non-residential development fees are deposited.  Municipalities that are currently authorized to collect residential development fees will be permitted to collect and retain the non-residential development fee established by this bill.  Developers of non-residential properties in a municipality that is not authorized to collect development fees are required to send the non-residential portion of the fee to the State Treasurer.  A portion of these fees will be used to assist municipalities that are eligible to receive Urban Aid in creating units of affordable housing through the creation of an Urban Housing Assistance Fund.  The bill requires an annual appropriation of $20 million from the State’s portion of the Statewide non-residential development fee established by the bill.

      This bill also establishes a 15-member State Housing Commission.  The OLS estimates the costs associated with this new entity to be minimal as its members are not salaried and its members are entitled only to reimbursement for all necessary expenses incurred in the performance of their duties.



      The amendments clarify the methodology to be used in calculating the fair share housing obligation under the “Fair Housing Act,” when replacing a unit of housing to forbid the replacement unit to be credited against the prospective fair share of a municipality.

      The amendments provide a new State target for very low income housing of 13 percent.

      The amendments provide that a municipality need not spend its development fees within four years, but rather must commit to spend them within four years.

      The amendments change the name of the “Housing Rehabilitation Assistance Fund” to be the “Urban Housing Assistance Fund,” and clarify that it may be used for new construction as well as rehabilitation of affordable housing.  The amendments permit COAH to review, upon the application of a municipality and a developer, and approve reduced affordable housing set-asides or increased densities to ensure the economic feasibility of an inclusionary development.

      The amendments clarify that no consideration will be given to any regional contribution agreement of which COAH did not complete its review, and approve, prior to the effective date of the bill.

      The amendments authorize the Department of Community Affairs to offset its administrative costs to administer the programs under the “Fair Housing Act,” from the fund created by the bill, up to a maximum of 7.5 percent annually.

      The amendments create a new methodology for planning to meet fair share obligations for municipalities under the jurisdiction of specified regional planning entities or districts, and allow such regional entities to allocate affordable housing units based on regional considerations.

      The amendments specify that the entirety of all continuing care facilities within a continuing care retirement community which is subject to the "Continuing Care Retirement Community Regulation and Financial Disclosure Act," P.L.1986, c.103 (C.52:27D-330 et seq.) are to be treated as non-residential construction for the purposes of the Statewide non-residential development fee.  The amendments also exempt non-residential construction from a relocation of, or an on-site improvement to, a nonprofit hospital or a nursing home.

      The amendments also make several technical corrections to language in the bill.