The Statewide Non-Residential Development Fee Act (the “Act”) has been in full effect for the past three years. Yet, there remains confusion as to how the fee is calculated and when it is required to be paid. There shouldn’t be. Before the Act, both residential and non-residential development fees were governed by the Council on Affordable Housing’s (“COAH”) regulations, and municipalities adopted a form ordinance provided by COAH. COAH’s regulations, for instance, permitted all development fees to be collected with up to 50% due at the issuance of a building permit and 50% due at the issuance of a certificate of occupancy. The same regulations permitted municipalities to collect the full fee at the issuance of a certificate of occupancy. The current Act makes it crystal clear that “the payment of non-residential development fees … shall be made prior to the issuance of a certificate of occupancy for each development.” The Act also lays out a process for preliminary and final assessments of fees, including a notice required upon issuance of a construction permit to the tax assessor to conduct an initial evaluation of the fee. Thus, any requirement for the payment of a development fee as a condition of the issuance of a construction permit would be inconsistent with the Act. The Act provides...
The New Jersey Housing and Mortgage Finance Agency (HMFA) announced Tuesday that it is now accepting applications for federal low-income housing tax credits (“LIHTC”) for the development of family, senior, and supportive housing projects throughout New Jersey. This announcement relates to the competitive LIHTC, which provides a 9% tax credit as a mechanism of funding construction of affordable housing in New Jersey. HMFA has announced that there is a funding tranche of approximately $28 million dollars in LIHTC funding available. Applications for the family, senior, and supporting housing rounds are due July 24, 2018 at noon.
Appellate Division Holds UHAC Regulations Preempt Local Code Provisions on Affordability Controls for New Developments
In an unpublished decision entitled Avalon Princeton, LLC v. Princeton et al., the Appellate Division has affirmed that certain state affordable housing regulations preempt pre-existing municipal ordinances, setting a period of affordability controls for “at least 30 years” on new construction. Although not precedential, this decision provides insight on how courts may view some of the regulatory framework, particularly regarding municipal versus state regulation of newly constructed affordable units, and potentially forecasts much more flexibility for municipalities in controlling their current and future stock of affordable housing. In order to assure that affordable housing units remain affordable for a period of time, municipalities have long required that properties that are affordable to low- and moderate-income families be encumbered with some form of restrictive covenant running with the land for both rental and owner-occupied properties. The length of term of these restrictions have varied, based on the municipality and the nature of the units, but typically ran for 30 years from the date of first occupancy, and traditionally have automatically expired after that period. Following the introduction of the Fair Housing Act, these standards varied as COAH’s regulations were refined and developed over the course of the various iterations of the First, Second, and Third Round Rules. In 2004, however, the Housing and Mortgage Finance Agency...
New Jersey Future Report: Changes to Low Income Housing Tax Credit Selection Criteria Change Locations of Affordable Housing Development
In 2013, the New Jersey Housing and Mortgage Finance Agency made significant changes to the Qualified Allocation Plan (QAP), putting in place caps on development in areas with significant concentrations of poverty and adding additional criteria to encourage development in areas that would grant low- and moderate-income families a better chance at greater economic opportunity. Specifically, these changes encouraged development in transit oriented districts and areas with ready access to public transit, as well as encouraging development in areas with high-quality, well performing schools. In a recent study, New Jersey Future has found that these changes to the QAP have effectively implemented a policy shift in moving a significant amount of affordable housing construction out of poverty-stricken areas and reallocating such construction to more suburban areas of the State. Prior to 2013, roughly half the tax credits awarded were for economically distressed areas; after the changes to the QAP, that allocation is down to approximately 20%. More projects are being awarded tax credits in suburban areas with transit access and quality schools due to these changes in statewide policy as announced in the QAP, and this trend will likely make the limited number of tax credits allocated to urban areas more competitive as well. Click here to read New Jersey Future’s summary of their report.
Clarifying How New Jersey Counts Prospective Need and Evaluating Competing Proposals for Builder’s Remedies
Determining the municipal fair share housing obligation has been the subject of litigation for the better part of 18 years, since the last valid set of regulations for the New Jersey Council on Affordable Housing expired in 1999. As we have previously blogged, the Supreme Court’s recent decision in In re Declaratory Judgment Actions Filed by Various Municipalities, County of Ocean, – N.J. – (2017) established that the constitutional obligation to provide realistic opportunities for the construction of affordable housing is cumulative, leaving only the question of how to calculate the need during two periods: one from 1999 to 2015, and one from 2015 to 2025. The Appellate Division recently released for publication an edited version of Judge Wolfson’s trial court opinion in In the Matter of the Application of the Township of South Brunswick for a Judgment of Compliance and Repose and Temporary Immunity from Mount Laurel Lawsuits, in an effort to provide further clarity on how to calculate prospective need during the period from 2015 to 2025. The opinion addresses two fundamental questions: (1) how shall a municipality calculate its constitutional fair share housing obligation, and (2) how to evaluate competing claims for so-called “builder’s remedy” relief from intervening developers. The decision addresses how municipalities should determine their fair share housing obligation, and which methodology...
New Jersey Supreme Court Decides “Gap Period” Affordable Housing Need is to be Included in Present Need, Returns Cases to Trial Courts
The Supreme Court of New Jersey today issued its opinion in In re Declaratory Judgment Actions Filed by Various Municipalities partially affirming the decision of the Appellate Division, but expanding the definition of “present need” to include affordable housing need as it arose during the period from 1999 through the present. This decision recognized that the constitutional obligation to provide realistic opportunities for the construction of affordable housing did not stop in 1999, but has continued ever since, and provides some guidance for trial courts in how to determine the scope of that need. In effect, this decision modifies the decision of the Appellate Division by requiring trial courts to take the gap period need into consideration.
N.J.’s Proposed Changes to Low Income Housing Tax Credit Qualified Allocation Plan Limit Projects per Developer and Encourage Development in Smart Growth Areas
The N.J. Housing and Mortgage Finance Agency (“HMFA”) recently proposed changes to the Low Income Housing Tax Credit (“LIHTC”) Qualified Allocation Plan (“QAP”). State housing credit agencies, like HMFA, are required to create plans which outline the selection criteria for awarding tax credits for the development of low- and moderate-income housing. The proposed amendments update the QAP to reflect procedural changes to the way in which affordable housing is constructed, but also include some substantive changes to both the allocation of tax credits among developers and the scoring system for awarding tax credits.
Following the Expiration of the Permit Extension Act, Keep in Mind the Impact of Statewide Non-Residential Development Fees
With an improving economy, developers who have weathered the storms of economic recession and have projects approved prior to July 17, 2008, the effective date of the Statewide Non-Residential Development Fee Act, N.J.S.A. 40:55D-8.1 et seq. (the “Act”), may finally be in a position to construct many of these projects. However, with changes in the market and demand for certain types of commercial space outpacing those approved in the 1990s and early 2000s, approvals that have been tolled since 2007 by the Permit Extension Act (N.J.S.A. 40:55D-136.1 et seq.) may need to be altered to accommodate new marketplace demands. In seeking amendments of those approvals, developers should be aware of, and consider the potential application of, the affordable housing development fee to those projects.
N.J. Appellate Division Holds that Municipalities are not Obligated to Satisfy “Separate and Discrete” Gap Period Need for Affordable Housing
On July 11, 2016, in an interlocutory appeal, the Appellate Division reversed Judge Mark A. Troncone’s February 18, 2016 order, which had found, as a matter of law, that municipalities were obligated to provide realistic opportunities for the construction of affordable housing for the need that accumulated during the period from 1999-2016 (the “gap period”). In an opinion by Judge Fasciale, the Appellate Division held that municipalities were not required to discretely calculate or satisfy the housing obligations that accumulated during the gap period as part of a municipality’s “prospective need.” In the Appellate Division’s view, those who are living in dilapidated, overcrowded, or cost-burdened housing would be adequately reflected in present need calculations, and any further alterations to municipal obligations would require legislative or executive action. The opinion highlights what appears to be a distinction between the constitutional fair share housing obligation, which had been understood to accrue year after year according the Court’s decision in Mt. Laurel II, and the compliance obligations arising under the Fair Housing Act, which are limited only to satisfying the statutorily prescribed need.
Appellate Division Grants Leave to Appeal to Affordable Housing Decision, While Trial Courts Continue Towards Trial and Compliance Hearings
On April 11, 2016, the Appellate Division issued an order granting a motion by the Township of Barnegat for leave to appeal a decision by the Hon. Mark A. Troncone, J.S.C., designated Mt. Laurel judge for Ocean County, and also granted a number of motions for other municipalities from outside of Ocean County to appear as amici curiae in the case. The order returns the question of methodology – a hotly contested issue – to the Appellate Division. The counties comprising Region 4 (Mercer, Monmouth, and Ocean counties) of the Council on Affordable Housing (“COAH”) were set to be among the first to hold trials regarding the methodology for determining the municipal fair share housing obligations of municipalities. The grant of leave to appeal in the Ocean County case will necessarily delay any trial in that vicinage until the resolution of the appeal. This post briefly reviews the trial court’s decision, and the potential impact the decision to grant leave to appeal may have on pending declaratory judgment cases.