SENATE, No. 1783

STATE OF NEW JERSEY

213th LEGISLATURE

 

INTRODUCED MAY 8, 2008

 


 

Sponsored by:

Senator RAYMOND J. LESNIAK

District 20 (Union)

 

 

 

 

SYNOPSIS

     Imposes non-residential development fees.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning non-residential development fees and supplementing chapter 55D of Title 40 of the Revised Statutes.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.  (New section)  This bill shall be known and may be cited as the “Statewide Non-residential Development Fee Act.”

 

     2.  (New section)  The Legislature finds and declares:

     a.  The collection of development fees from builders of residential and non-residential properties has been authorized by the court through the powers delegated to the Council on Affordable Housing established pursuant to the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.).

     b.  New Jersey’s land resources are becoming more scarce, while its redevelopment needs are increasing.  In order to balance the needs of developing and redeveloping communities, a reasonable method of providing for the housing needs of low and moderate income and middle income households, without mandating the inclusion of housing in every non-residential project, must be established.

     c.  A Statewide non-residential development fee program which permits municipalities under the council's jurisdiction to retain these fees for use in the municipality will provide a fair and balanced funding method to address the State’s affordable housing needs, while providing an incentive to all municipalities to seek substantive certification from the council.

 

     3.  (New section)  As used in this act:

     “Construction” means new construction and additions, but does not include alterations, reconstruction, renovations, and repairs as those terms are defined under the State Uniform Construction Code promulgated pursuant to the "State Uniform Construction Code Act," P.L.1975, c.217 (C.52:27D-119 et seq.).

     “Commissioner” means the Commissioner of Community Affairs.

     “Council” means the Council on Affordable Housing, established pursuant to P.L.1985, c.222 (C.52:27D-301 et al.).

     “Developer” means the legal or beneficial owner or owners of a lot or of any land proposed to be included in a proposed development, including the holder of an option or contract to purchase, or other person having an enforceable proprietary interest in such land.

     "Equalized assessed value" means the assessed value of a property divided by the current average ratio of assessed to true value for the municipality in which the property is situated, as determined in accordance with sections 1, 5, and 6 of P.L.1973, c.123 (C.54:1-35a through C.54:1-35c).

     “Mixed Use Development” means any development which includes both a non-residential development component and a residential development component, and shall include developments for which (1) there is a common developer for both the residential development component and the non-residential development component, provided that for purposes of this definition, multiple persons and entities may be considered a common developer if there is a contractual relationship among them obligating each entity to develop at least a portion of the residential or non-residential development, or both, or otherwise to contribute resources to the development; and (2) the residential and non-residential developments are located on the same lot or adjoining lots, including, but not limited to, lots separated by a street, a river, or another geographical feature.

     "Non-residential development" means:  (1) any building or structure, or portion thereof, including, but not limited to, any appurtenant improvements, which is designated to a use group other than a residential use group according to the State Uniform Construction Code promulgated to effectuate the "State Uniform Construction Code Act," P.L.1975, c.217 (C.52:27D-119 et seq.), including any subsequent amendments or revisions thereto; and (2) hotels, motels, vacation timeshares, and child-care facilities.

     “Non-residential development fee” means the fee authorized to be imposed pursuant to section 4 of P.L.         , c.      (C.       ) (pending before the Legislature as this bill).

     “Relating to the provision of housing” shall be liberally construed to include the construction, maintenance, or operations of housing, including, but not limited to, the provision of services to such housing and the funding of any of the above.

     “Spending plan” means a method of allocating funds collected and to be collected pursuant to an approved municipal development fee ordinance, or pursuant to P.L.       , c.   (C.             ) (pending before the Legislature as this bill) for the purpose of meeting the housing needs of low, moderate, and middle income individuals.

     “Treasurer” means the Treasurer of the State of New Jersey.

 

     4.  (New section)  a.  Beginning on the effective date of                    P.L.         , c.      (C.       ) (pending before the Legislature as this bill), a fee is imposed on all applications for development for non-residential development, and for construction permits affecting non-residential property, as follows:

     (1)  A fee equal to two and one-half percent (2.5%) of the equalized assessed value of the land and proposed improvements, for all new non-residential construction on an unimproved lot or lots; or

     (2)  A fee equal to two and one-half percent (2.5%) of the increase in equalized assessed value, of the reconstruction of or additions to existing structures to be used for non-residential purposes.

     b.  All non-residential construction of buildings or structures on property used by churches, synagogues, mosques, and other houses of worship, and property used for educational purposes, which is tax-exempt pursuant to R.S.54:4-3.6, shall be exempt from the imposition of a non-residential development fee pursuant to this section, provided that the property continues to maintain its tax exempt status under that statute for a period of at least three years from the date of issuance of the certificate of occupancy.  In addition, the following shall be exempt from the imposition of a non-residential development fee:  parking lots and parking structures, regardless of whether the parking lot or parking structure is constructed in conjunction with a non-residential development, such as an office building, or whether the parking lot is developed as an independent non-residential development; and any non-residential development which is an amenity to be made available to the public, including, but not limited to, recreational facilities, community centers, and senior centers, which are developed in conjunction with or funded by a non-residential developer.  A developer of a non-residential development exempted from the non-residential development fee pursuant to this section shall be subject to it at such time the basis for the exemption set forth in this subsection no longer applies, and shall make the payment of the non-residential development fee, in that event, within three years after that event or after the issuance of the final certificate of occupancy of the non-residential development, whichever is later.

     For purposes of this subsection, “recreational facilities and community center” means any indoor or outdoor buildings, spaces, structures, or improvements intended for active or passive recreation, including, but not limited to, ball fields, meeting halls, and classrooms, accommodating either organized or informal activity; and “senior center” means any recreational facility or community center with activities and services oriented towards serving senior citizens.

     If a property which was exempted from the collection of a non-residential 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 non-residential development fees under these circumstances may be enforceable by the municipality as a lien against the real property of the owner.

     c.  (1)  Developers shall pay non-residential development fees imposed pursuant to P.L.       , c.   (C.             ) (pending before the Legislature as this bill)  to the Commissioner of Community Affairs to be held for deposit into the New Jersey Affordable Housing Trust Fund established pursuant to section 20 of P.L. 1985, c.222 (C.52:27D-320), in a manner and on such forms as required by the commissioner, provided that a certified proof concerning the payment shall be furnished by the commissioner to the municipality.

     (2)  The commissioner shall forward to a municipality, within 15 days of the collection thereof, the non-residential development fees collected pursuant to P.L.         , c.      (C.       ) (pending before the Legislature as this bill) if that municipality has a confirmed status of compliance with the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.), which compliance shall include a spending plan authorized by the council for all other development fees collected.

     d.  The payment of non-residential development fees required pursuant to this section shall be made prior to the issuance of a certificate of occupancy.

     e.  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 development which may be subject to a non-residential development fee.  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 non-residential development.  The construction official responsible for the issuance of a final certificate of occupancy shall notify the local assessor of any and all requests for the scheduling of a final inspection on property which may be subject to a non-residential development fee.  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 non-residential development in accordance with the regulations adopted by the Director of the Division of Taxation in the Department of the Treasury pursuant to P.L.1971, c.424 (C.54:1-35.35); calculate the non-residential development fee; and thereafter notify the developer of the amount of the non-residential development fee.  Should the municipality fail to determine or notify the developer of the amount of the non-residential 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 6 of P.L.       , c.   (C.             ) (pending before the Legislature as this bill).  Upon tender of the estimated non-residential development fee, provided the developer is in full compliance with all other applicable laws, the municipality shall issue a final certificate of occupancy for the subject property.  Failure of the municipality to comply with the timeframes or procedures set forth in this subsection may subject it to penalties to be imposed by the commissioner;  any penalties so imposed shall be deposited into the New Jersey Affordable Housing Trust Fund established pursuant to section 20 of P.L.1985, c.222 (C.52:27D-320).

     f.  Any municipality that is not in compliance with the requirements established pursuant to P.L.       , c.   (C.             ) (pending before the Legislature as this bill), or regulations of the council adopted thereto, may be subject to forfeiture of any or all funds remaining within its municipal development 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 (C.52:27D-320).

     g.  Notwithstanding any provision of P.L.         , c.      (C.       ) (pending before the Legislature as this bill), or rules of the council to the contrary, a municipality that qualifies for State aid pursuant to P.L.1978, c.14 (C.52:27D-178 et seq.) may impose, collect, or spend development and non-residential development fees by filing a development fee ordinance and spending plan, and requesting approval by the council.  Such municipalities shall be permitted to develop separate spending plans, which plans may provide for housing rehabilitation, new construction of housing or schools, repair or enhancement of infrastructure, grants to redevelopment projects, job training, construction of day care centers, or any activity which the governing body of the municipality believes will provide economic stability and sustainable neighborhoods.

 

     5.  (New section)  a.  The commissioner, in consultation with the council, shall promulgate, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such regulations as are necessary for the prompt and effective implementation of the provisions and purposes of P.L.   , c.   (C.     ) (pending before the Legislature as this bill).

     b.  Notwithstanding the authority granted to the commissioner herein, the council shall adopt and promulgate, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such regulations as are necessary to effectuate the provisions of P.L.         , c.      (C.       ) (pending before the Legislature as this bill), including, but not limited to, regulations necessary for the establishment, implementation, review, monitoring, and enforcement of a municipal affordable housing trust fund and spending plan.

 

     6.  (New section)  a.  The provisions of P.L.         , c.      (C.       ) (pending before the Legislature as this bill) shall not apply to:

     (1)  A development application which has been deemed complete pursuant to section 5 of P.L.1984, c.20 (C.40:55D-10.3) prior to the effective date of P.L.         , c.      (C.       ) (pending before the Legislature as this bill); or

     (2)  Non-residential property for which a construction permit has been issued prior to the effective date of P.L.         , c.      (C.       ) (pending before the Legislature as this bill).

     b.  A developer may challenge non-residential development fees imposed pursuant to P.L.         , c.      (C.       ) (pending before the Legislature as this bill) by filing a challenge with the Commissioner of Community Affairs.  Pending a review and determination by the commissioner, which shall be made within 45 days of receipt of the challenge, collected fees shall be placed in an interest bearing escrow account by the municipality or by the State, as the case may be.  Appeals from a determination of the commissioner may be made to the Office of Administrative Law, within 45 days of the commissioner’s determination.  Interest earned on amounts escrowed shall be credited to the prevailing party.

     c.  Whenever non-residential development is situated on real property that has been previously developed with a building, structure, or other improvement, the non-residential development fee shall be equal to two and one-half percent (2.5%) of the equalized assessed value of the land and improvements on the property where the non-residential development is situated at the time the final certificate of occupancy is issued, less the equalized assessed value of the land and improvements on the property where the non-residential development is situated, as determined by the tax assessor of the municipality at the time the developer or owner first sought approval for a construction permit pursuant to the State Uniform Construction Code, or approval under the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.).   If the calculation required under this section results in a negative number, the non-residential development fee shall be zero.

     Whenever a developer of non-residential development has made or committed itself to make a financial or other contribution relating to the provision of housing affordable to low and moderate income and middle income households prior to the enactment of P.L.     , c.     (C.     ) (pending before the Legislature as this bill), the non-residential development fee shall be reduced by the amount of the financial contribution and the fair market value of any other contribution made by or committed to be made by the developer.  For purposes of this section, a developer is considered to have made or committed itself to make a financial or other contribution, if and only if:  (1) the contribution has been transferred, including, but not limited to, when the funds have already been received by the municipality; (2) the developer has obligated itself to make a contribution as set forth in a written agreement with the municipality, such as a developer’s agreement; or (3) the developer’s obligation to make a contribution is set forth as a condition in a land use approval issued by a municipal land use agency pursuant to the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.)

     d.  Unless otherwise provided for by law, no municipality shall be required to return a financial or any other contribution made by or committed to be made by a developer of a non-residential development prior to the enactment of P.L.     , c.     (C.     ) (pending before the Legislature as this bill) relating to the provision of housing affordable to low and moderate income and middle income households, provided that the developer does not obtain an amended, modified, or new municipal land use approval with a substantial change in the non-residential development.  If the developer obtains an amended, modified, or new land use approval for non-residential development, the municipality, person, or entity shall be required to return to the developer any funds or other contribution provided by the developer for the provision of housing affordable to low and moderate income and middle income households and the developer shall not be entitled to a reduction in the affordable housing development fee based upon that contribution.

     e.  The provisions of P.L.         , c.      (C.       ) (pending before the Legislature as this bill)  shall not be construed in any manner as affecting the method or timing of assessing real property for property taxation purposes.  The payment of a non-residential development fee shall not increase the equalized assessed value of any property.

 

     7.  (New section)  Except as expressly provided in P.L.         , c.      (C.       ) (pending before the Legislature as this bill), any provision of a local ordinance which imposes a fee for the development of affordable housing upon a developer of non-residential property, including any and all development fee ordinances adopted in accordance with N.J.A.C.5:93-8.1 et seq., or N.J.A.C.5:94-6.1 et seq., or any provision of an ordinance which imposes an obligation relating to the provision of housing affordable to low and moderate income households, or payment in-lieu of building as a condition of non-residential development, shall be void and of no effect.  A provision of an ordinance which imposes a development fee which is not prohibited by any provision of P.L.         , c.      (C.       ) (pending before the Legislature as this bill) shall not be invalidated by this section.

 

     8.  Section 20 of P.L.1985, c.222 (C.52:27D-320) is amended to read as follows:

     20.  [The Neighborhood Preservation Program within the Department of Community Affairs' Division of Housing and Development, established pursuant to the Commissioner of Community Affairs' authority under section 8 of P.L.1975, c.248 (C.52:27D-149), shall establish a separate Neighborhood Preservation Nonlapsing Revolving Fund for monies appropriated by section 33 of P.L.1985, c.222, or other monies as may be appropriated by the Legislature for the purposes of the fund.]

   There is established in the Department of Community Affairs a separate trust fund, to be used for the exclusive purposes as provided in this section, and which shall be known as the “New Jersey Affordable Housing Trust Fund.”  The fund shall be a non-lapsing, revolving trust fund, and all monies deposited or received for purposes of the fund shall be accounted for separately, by source and amount, and remain in the fund until appropriated for such purposes.  The fund shall be the repository of all State funds appropriated for affordable housing purposes, including the proceeds from the receipts of the additional fee collected pursuant to paragraph (2) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7), proceeds from available receipts of the Statewide non-residential development fees collected pursuant to section 36 of P.L.         , c.      (C.       ) (pending before the Legislature as this bill), monies lapsing or reverting from municipal development trust funds, or other monies as may be dedicated, earmarked, or appropriated by the Legislature for the purposes of the fund.  All references in any law, order, rule, regulation, contract, loan, document, or otherwise, to the “Neighborhood Preservation Nonlapsing Revolving Fund” shall mean the “New Jersey Affordable Housing Trust Fund.”

     a.  Except as permitted pursuant to subsection g. of this section, the commissioner shall award grants or loans from this fund for housing projects and programs in municipalities whose housing elements have received substantive certification from the council, in municipalities receiving State aid pursuant to P.L.1978, c.14 (C.52:27D-178 et seq.), in municipalities subject to builder's remedy as defined in section 28 of P.L.1985, c.222 (C.52:27D-328) or in receiving municipalities in cases where the council has approved a regional contribution agreement and a project plan developed by the receiving municipality.  Programs and projects in any municipality shall be funded only after receipt by the commissioner of a written statement in support of the program or project from the municipal governing body.

     b.  The commissioner shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding grants and loans and the standards for establishing the amount, terms and conditions of each grant or loan.

     c.  [During the first 12 months from the effective date of P.L.1985, c.222 (C.52:27D-301 et al.) and for] For any [additional] period which the council may approve, the commissioner may assist affordable housing programs which are not located in municipalities whose housing elements have been granted substantive certification or which are not in furtherance of a regional contribution agreement; provided that the affordable housing program will meet all or part of a municipal low and moderate income housing obligation.

     d.  Amounts deposited in the [Neighborhood Preservation] New Jersey Affordable Housing Trust Fund shall be targeted to regions based on the region's percentage of the State's low and moderate income housing need as determined by the council. Amounts in the fund shall be applied for the following purposes in designated neighborhoods;

     (1)  Rehabilitation of substandard housing units occupied or to be occupied by low and moderate income households;

     (2)  Creation of accessory apartments to be occupied by low and moderate income households;

     (3)  Conversion of non-residential space to residential purposes; provided a substantial percentage of the resulting housing units are to be occupied by low and moderate income households;

     (4)  Acquisition of real property, demolition and removal of buildings, or construction of new housing that will be occupied by low and moderate income households, or any combination thereof;

     (5)  Grants of assistance to eligible municipalities for costs of necessary studies, surveys, plans and permits; engineering, architectural and other technical services; costs of land acquisition and any buildings thereon; and costs of site preparation, demolition and infrastructure development for projects undertaken pursuant to an approved regional contribution agreement;

     (6)  Assistance to a local housing authority, nonprofit or limited dividend housing corporation or association or a qualified entity acting as a receiver under P.L.2003, c.295 (C.2A:42-114 et al.) for rehabilitation or restoration of housing units which it administers which: (a) are unusable or in a serious state of disrepair; (b) can be restored in an economically feasible and sound manner; and (c) can be retained in a safe, decent and sanitary manner, upon completion of rehabilitation or restoration; and

     (7) Other housing programs for low and moderate income housing, including, without limitation, (a) infrastructure projects directly facilitating the construction of low and moderate income housing not to exceed a reasonable percentage of the construction costs of the low and moderate income housing to be provided and (b) alteration of dwelling units occupied or to be occupied by households of low or moderate income and the common areas of the premises in which they are located in order to make them accessible to handicapped persons.

     e.  Any grant or loan agreement entered into pursuant to this section shall incorporate contractual guarantees and procedures by which the division will ensure that any unit of housing provided for low and moderate income households shall continue to be occupied by low and moderate income households for at least 20 years following the award of the loan or grant, except that the division may approve a guarantee for a period of less than 20 years where necessary to ensure project feasibility.

     f.  Notwithstanding the provisions of any other law, rule or regulation to the contrary, in making grants or loans under this section, the department shall not require that tenants be certified as low or moderate income or that contractual guarantees or deed restrictions be in place to ensure continued low and moderate income occupancy as a condition of providing housing assistance from any program administered by the department, when that assistance is provided for a project of moderate rehabilitation if the project (1) contains 30 or fewer rental units and (2) is located in a census tract in which the median household income is 60 percent or less of the median income for the housing region in which the census tract is located, as determined for a three person household by the council in accordance with the latest federal decennial census. A list of eligible census tracts shall be maintained by the department and shall be adjusted upon publication of median income figures by census tract after each federal decennial census.

     g.  In addition to other grants or loans awarded pursuant to this section, and without regard to any limitations on such grants or loans for any other purposes herein imposed, the commissioner shall annually allocate such amounts as may be necessary in the commissioner's discretion, and in accordance with section 3 of P.L.2004, c.140 (C.52:27D-287.3), to fund rental assistance grants under the program created pursuant to P.L.2004, c.140 (C.52:27D-287.1 et al.).  Such rental assistance grants shall be deemed necessary and authorized pursuant to P.L.1985, c.222 (C.52:27D-301 et al.), in order to meet the housing needs of certain low income households who may not be eligible to occupy other housing produced pursuant to P.L.1985, c.222 (C.52:27D-301 et al.).

     h.  The department and Treasurer shall submit the fund for an audit annually by the State Auditor or State Comptroller, at the discretion of the Treasurer.  In addition, the department shall prepare an annual report for each fiscal year, and submit it by November 30th of each year to the Governor and the Legislature, and the Joint Committee on Housing Affordability, or its successor, and post the information to its web site, of all activity of the fund, including details of the grants and loans by number of units, number and income ranges of recipients of grants or loans, location of the housing renovated or constructed using monies from the fund, the number of units upon which affordability controls were placed, and the length of those controls.  The report shall also list the activity of the funds set-aside for use for the State rental assistance program from the fund, pursuant to P.L.2004, c.140 (C.52:27D-187.1 et al.) and subsection g. of this section.

(cf: P.L.2004, c.140, s.4)

 

     9.  This act shall take effect immediately.

STATEMENT

 

     This bill requires development fees to be charged on non-residential construction or improvements, by all municipalities, to fund affordable housing.

     The bill requires the imposition of a fee on all applications for non-residential development, and for construction permits affecting non-residential property, in the amount of 2.5% of the equalized assessed value of the land and proposed improvements, for all new non-residential construction on an unimproved lot or lots; or in the amount of 2.5% of the increase in equalized assessed value of the reconstruction of or additions to existing structures to be used for non-residential purposes.  The bill requires that the non-residential development fee must be paid prior to the issuance of a certificate of occupancy for the property.  The bill prohibits a municipality from charging a payment in lieu of tax in connection with non-residential construction, and also prohibits the required construction of housing units as a result of any non-residential construction or redevelopment.

     Under the provisions of the bill, municipalities having COAH’s authorization to collect residential development fees will be permitted to retain the non-residential development fees collected pursuant to the bill.  Those municipalities that do not have either COAH's or the court’s authorization to charge development fees will be required to send the non-residential development fees collected pursuant to the provisions of the bill to the State Treasurer, to be used for affordable housing purposes under the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.).

     The bill exempts the following types of non-residential development from the payment of non-residential development fees:  non-residential construction of buildings or structures on property used by churches, synagogues, mosques, and other houses of worship; property used for educational purposes; parking lots and parking structures; and any non-residential development which is an amenity to be made available to the public, including, but not limited to, recreational facilities, community centers, and senior centers, which are developed in conjunction with or funded by a non-residential developer.