With the New Jersey Assembly passing A500 last week and the New Jersey Senate passing S1783 yesterday, the most significant legislative reforms in New Jersey affordable housing policy since the adoption of the Fair Housing Act in 1985 are waiting for Governor Corzine’s signature. If signed into law, the legislation will impact many development and municipalities across the state, and the legislation may prompt the Council on Affordable Housing to adopt even more amendments to its third round regulations.
Here are ten things to know about the pending legislation:
1. The affordable housing contribution for non-residential development will be limited to 2.5% of the equalized assessed value (EAV). Additions and redevelopment will pay 2.5% of the difference of the EAV resulting from the development, i.e. the EAV after the development minus the EAV before the development. This is a substantial reduction from the amounts COAH’s Round Three regulations would permit municipalities to impose on non-residential development, which, for example, could be as high as $32.00 per square foot of office space.
The 2.5% development fee will be applied statewide subject to a a few exemptions, such as urban transit hub projects, certain projects within ½ mile of a platform area for a light rail station, and transit village projects. Projects that have received a general development plan approval or have entered into a developer’s agreement or a redevelopment agreement providing for an affordable housing contribution of at least 1% of the EAV are also exempt from paying the 2.5% development fee.
2. Regional Contribution Agreements (“RCAs”) are no longer permitted and any RCA agreement, which has not already been approved by COAH is void. By using RCAs, municipalities have historically been able to transfer up to 50% of their affordable housing obligation to other municipalities by making a financial contribution to the receiving municipality.
3. There is a new rehabilitation fund, the Urban Housing Assistance Program, to provide for the rehabilition of urban areas. This fund will receive the first $20 million collected by the statewide 2.5% non-residential development fee and will replace the funding that was previously provided to urban municipalities by sending municipalities in RCAs.
4. The Fair Housing Act will be amended to explicitly require municipalities to provide incentives, “which shall include increased densities and reduced costs,” to developers of inclusionary developments. COAH has discretion to reduce the affordable housing set aside “to ensure the economic feasibility of an inclusionary development.”
5. Redevelopment plans shall be required to provide comparable an affordable housing unit for each household in an affordable unit, which is displaced as a result of the implementation of a redevelopment plan. The affordable unit must have been subject to affordability controls.
6. COAH shall ensure that 13% of a municipality’s affordable housing obligation is addressed through the provision of housing affordable to very low income households, i.e. 30% or less of the region’s median income. According to its terms, the bill shall does not require that each development contain very low income households, but it appears likely that municipalities will require developers to provide very low income units onsite. Municipalities will not be entitled to bonus credits for providing housing for very low income households unless the 13% target has been achieved.
7. Municipalities may forfeit the funds collected under municipal development fee ordinances, the new Statewide non-residential development fee and the payment-in-lieu requirements, if they have not committed to spend the funds within four years of collecting them.
8. Any residential development within a regional planning entity, including the New Jersey Meadowlands Commission, the Pinelands Commission, and the Highlands Water Protection and Planning Council and the Fort Monmouth Economic Revitalization Planning Authority shall include a 20% set aside for affordable housing to the extent it is economically feasible. These planning agencies are also authorized to work with municipalities to transfer up to 50% of the municipal affordable housing obligation to other municipalities within the same planning region.
9. Any residential development in a transit village, on State-owned property or urban transit hubs shall provide a 20% set aside for affordable housing to the extent it is economically feasible. Such a set aside is not required if the municipality has already received substantive certification or a Judgment of Repose and the set aside is not necessary under the approved plan.
10. There is a new State agency, the State Housing Commission, in but not of the Department of Community Affairs. The State Housing Commission shall provide guidance on state housing policy and adopt the Annual Strategic Housing Plan.