A5895

An Act concerning enforcing agency fees under the “State Uniform Construction Code Act,” P.L.1975, c.217 (C.52:27D-119 et. seq.), and amending P.L.1979, c.121.

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

1. Section 3 of P.L.1979, c.121 (C.52:27D-126a) is amended to read as follows:

3. a. Where the appointing authority of any municipality shall appoint an enforcing agency and construction board of appeals pursuant to section 8 of P.L.1975, c.217 (C.52:27D-126), the municipal governing body by ordinance, in accordance with standards established by the commissioner, shall set enforcing agency fees for plan review, construction permit, certificate of occupancy, demolition permit, moving of building permit, elevator permit and sign permit, provided, however, that such fees shall not exceed the annual costs for the operation of the enforcing agency.

For the three year period commencing with an enforcing agency’s initial participation in the “Electronic Permit Processing Review System,” developed and implemented pursuant to section 1 of P.L.2021, c.70 (C.52:27D-124.4 et al), the municipal governing body may impose, and the enforcing agency may collect, construction permit surcharge fees to defray the enforcing agency’s startup costs related to offering electronic plan review and scheduling. Surcharge fees shall be established in accordance with standards established by the commissioner.

b. In any fiscal year in which the total amount of fees collected by an enforcing agency exceeds, by 12 percent or more, the costs of operating the enforcing agency, as described in subsection (c) of N.J.A.C.5:23-4.17 on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and as appropriated in the adopted municipal budget, the amount of fees collected in excess of 112 percent of the total cost shall lapse to the municipality’s current fund balance, provided that all enforcing agency fees, and all enforcing agency operations, procedures, and inspections, fully comply with all of the provisions of P.L.1975, c.217 (C.52:27D-119 et seq.).

(cf: P.L.2021, c.70, s.3)

2. This act shall take effect immediately.

STATEMENT

This bill would amend the “State Uniform Construction Code
Act,” P.L.1975, c.217 (C.52:27D-119 et seq.) to require the transfer of excess municipal enforcing agency fees from the municipal enforcing agency to the municipality’s surplus.

The bill would require that in any fiscal year in which the total amount of fees collected by an enforcing agency exceeds, by 12 percent or more, the total cost to the municipality of operating the enforcing agency, as appropriated in the adopted municipal budget, the amount of fees collected in excess of 112 percent of the total cost would lapse to the municipality’s current fund balance, provided that all enforcing agency fees, and all enforcing agency operations, procedures, and inspections, fully comply with all of the provisions of P.L.1975, c.217 (C.52:27D-119 et seq.).

The provisions of the bill address an issue that often occurs when large-scale development projects are undertaken in municipalities.

Municipalities often generate fee revenue under the “State Uniform Construction Code Act” that exceeds the amount budgeted to operate the municipal code enforcement office when large scale construction occurs in association with the redevelopment of blighted properties, and the development of affordable housing developments, mass transit, government facilities, or transformations of former retail malls and corporate headquarters. In these circumstances, the amounts generated through these fees reflect the large scale volume of a project, and the individual fees should not be characterized as excessive. The municipal code enforcement office is able to fully operate, perform its functions, and meet all the statutory requirements of the “State Uniform Construction Code Act” by utilizing a portion of the excess funds to compensate existing staff for increased hours worked, as well as to hire additional staff or third-party inspection professionals. These excess fee revenues are essentially “one-time,” non-recurring revenues that disappear once the project generating them is completed.

Allowing a significant portion of those excess revenues to be transferred to the municipal fund balance would allow those revenues to be used for broader municipal purposes that would benefit municipal residents and construction permit applicants alike, including applicants for large-scale development projects from which the excess fee revenue is derived.