SENATE, No. 2364







Sponsored by:


District 25 (Morris and Somerset)






     Prohibits residential development fees on reconstruction after natural disasters.



     As introduced.


An Act concerning residential development fees on reconstruction following natural disasters and amending P.L.2008, c.46.


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


     1.    Section 8 of P.L.2008, c.46 (C.52:27D-329.2) is amended to read as follows:

     8.    a. The council may authorize a municipality that has petitioned for substantive certification, or that has been so authorized by a court of competent jurisdiction, and which has adopted a municipal development fee ordinance to impose and collect development fees from developers of residential property, in accordance with rules promulgated by the council.  Each amount collected shall be deposited and shall be accounted for separately, by payer and date of deposit.

     A municipality may not spend or commit to spend any affordable housing development fees, including Statewide non-residential fees collected and deposited into the municipal affordable housing trust fund, without first obtaining the council's approval of the expenditure.  The council shall promulgate regulations regarding the establishment, administration and enforcement of the expenditure of affordable housing development fees by municipalities.  The council shall have exclusive jurisdiction regarding the enforcement of these regulations, provided that any municipality which is not in compliance with the regulations adopted by the council 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 (C.52:27D-320).

     b.    A municipality shall deposit all fees collected, whether or not such collections were derived from fees imposed upon non-residential or residential construction into a trust fund dedicated to those purposes as required under this section, and such additional purposes as may be approved by the council.

     c.     (1)  A municipality may only spend development fees for an activity approved by the council to address the municipal fair share obligation.

     (2)   Municipal development trust funds shall not be expended to reimburse municipalities for activities which occurred prior to the authorization of a municipality to collect development fees.

     (3)   A municipality shall set aside a portion of its development fee trust fund for the purpose of providing affordability assistance to low and moderate income households in affordable units included in a municipal fair share plan, in accordance with rules of the council.

     (a)   Affordability assistance programs may include down payment assistance, security deposit assistance, low interest loans, common maintenance expenses for units located in condominiums, rental assistance, and any other program authorized by the council.

     (b)   Affordability assistance to households earning 30 percent or less of median income may include buying down the cost of low income units in a municipal fair share plan to make them affordable to households earning 30 percent or less of median income. The use of development fees in this manner shall not entitle a municipality to bonus credits except as may be provided by the rules of the council.

     (4)   A municipality 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, or any program or activity for which the municipality expends development fee proceeds, in accordance with rules of the council.

     (5)   Not more than 20 percent of the revenues collected from development fees shall be expended on administration, in accordance with rules of the council.

     d.    The council shall establish a time by which all development fees collected within a calendar year shall be expended; provided, however, that all fees shall be committed for expenditure within four years from the date of collection.  A municipality that fails to commit to expend the balance required in the development fee trust fund by the time set forth in this section shall be required by the council to transfer the remaining unspent balance at the end of the four-year period to the "New Jersey Affordable Housing Trust Fund," established pursuant to section 20 of P.L.1985, c.222 (C.52:27D-320), as amended by P.L.2008, c.46 (C.52:27D-329.1 et al.), to be used in the housing region of the transferring municipality for the authorized purposes of that fund.

     e.     Notwithstanding any provision of this section, or regulations of the council, a municipality shall not collect a development fee from a developer whenever that developer is providing for the construction of affordable units, either on-site or elsewhere within the municipality.

     f.     Notwithstanding subsection a. of this section, a development fee shall not be imposed on a residential property for reconstruction resulting from a fire, flood, or other natural disaster or force majeure event unless the reconstruction increases the property’s market value to a level above 200 percent of its pre-disaster market value.  If such reconstruction does increase value to that extent, then a development fee may be charged only on all value that exceeds the 200 percent level.  This development fee restriction shall apply even if the reconstruction does not physically resemble the previous structure.

     This section shall not apply to the collection of a Statewide development fee imposed upon non-residential development pursuant to sections 32 through 38 of P.L.2008, c.46 (C.40:55D-8.1 et seq.) by the State Treasurer, when such collection is not authorized to be retained by a municipality.

(cf: P.L.2008, c.46, s.8)


     2.    This act shall take effect immediately.





     This bill prevents municipalities from imposing residential development fees on homes being reconstructed after natural disasters or other force majeure events. 

     To avoid a development fee, the reconstruction would not have to physically resemble the previous structure.  Due to changes in zoning and construction norms, reconstructing a building to match its predecessor is sometimes impossible.  However, if reconstruction makes the redevelopment so much more substantial than the previous structure that the property’s value increases to a level beyond 200 percent of its pre-disaster value, then a municipality may place a development fee on all value added above the 200 percent level.  This bill also does not prohibit municipalities from placing a development fee on an entire reconstruction project that increases the number of dwelling units on a property.