New Jersey State Real Estate Laws & Regulations : New Jersey Real Estate Lawyer & Attorney : Fox Rothschild Law Firm : Zoning, Commercial Leasing : Atlantic City, Princeton NJ

     Following the Fair Housing Act (FHA) and the regulations enacted by COAH under the Act, many municipalities believed that they could prevent developers from locating affordable housing in areas not specifically zoned for affordable housing by complying with the FHA and COAH regulations. And that may be true, in part. Municipalities that meet their fair share obligation under the FHA and COAH regulations are immune from builder’s remedy suits. But what about good old fashioned prerogative writ claims? Apparently not.

     In the recent decision of Homes of Hope, Inc. v. Eastampton Township Land Use Planning Board, the appellate court held that affordable housing constitutes an “inherently beneficial use” for the purposes of obtaining a use variance. This is true whether or not the municipality has met its fair share obligation under the FHA and COAH regulations, or not. 

     For practical purposes, if your affordable housing development requires a use variance, you must show that the proposed development satisfies both negative and positive criteria.  The decision in Homes of Hope means that the “positive criteria" requirement for granting a use variance is automatically satisfied, by the very fact that the proposed development is affordable housing. Developers will, of course, still need to satisfy the "negative criteria" requirement, or show that the proposed development would not be detrimental to the municipality in general or to the future residents of the development.

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The New Jersey Council on Affordable Housing recently published a “NRDF Moratorium FAQ” sheet (available here), advising municipalities that “if a preliminary or final site plan approval was granted prior to July 17, 2008, and said approval includes a requirement for a non-residential development fee under a COAH or Court approved development fee ordinance, that fee can still be collected (i.e. 1% or 2%), provided building permits are issued for the development prior to January 1, 2013.”

At least one municipality is acting on such advice, and refusing to release building permits and/or certificates of occupancy until the previously required ordinance fee is paid. 

But is COAH’s advice consistent with the Stimulus Act? Probably not.

While the statute has yet to be interpreted by the courts, Section 36 (e) of the Stimulus Act states as follows: “The [NRDF Act] prohibits municipalities from imposing their own fees to fund affordable housing on non-residential development, and [the Stimulus Act] is not intended to alter this underlying policy.” (emphasis added).

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S2485 and A3738, a companion bill, were the Legislature’s response to Governor Corzine’s call for a modification on the 2.5% developers fee in his January State of the State address. Starting out as far-reaching legislation, S2485 emerged from the Senate Budget and Appropriations Committee in February modified significantly and reduced in scope. When introduced by Senator Lesniak in January, S2485 proposed a moratorium on the collection of the 2.5% fee under the A500, Non-Residential Fee Act (“Fee Act”), for 18 months with lost revenue to be replaced by appropriation from an existing housing fund. The bill proposed to exempt projects that received site plan approval prior to July 17, 2008 and to refund to developers fees paid under the Fee Act. For a summary of S2485 as initially proposed, see “S2485 - Immediate Relief for Developers. Is New Jersey Finally Waking Up?”, In The Zone, January 2009.

The Committee Substitute was passed by the Senate on March 16 by a 36 to 0 vote. It will temporarily exempt the following non-residential development from the Fee Act:

1. non-residential property which has received preliminary or final site plan approval prior to July 1, 2010;
2. non-residential planned development for a general development plan or non-residential development for which a developer has entered into a developer’s agreement or for which a redeveloper has entered into a redeveloper’s agreement;
3. a project referred pursuant to Section 31 of the Municipal Land Use Law by a governmental agency prior to July 11, 2010; and
4. a non-residential property for which a site plan application has received approval prior to July 1, 2010.

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