S2485 - RELIEF FROM THE 2.5% FEE IMMINENT?

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.

The Committee Substitute clarifies that its provisions are applicable only to developments for which a Fee Act fee was or could be imposed. A developer, however, must apply for a refund within 120 days of its effective date. A refund must be issued by a municipality within 30 days of the filing of the application.

This legislation seeks to buffer the impact to municipalities that have been in compliance with affordable housing laws and COAH regulations. A municipality’s fair share will not be increased when the 2.5% fee is not collected; further, there will be no increase of the fair share attributable to a particular development if the 2.5% fee was not imposed or there are insufficient funds available to a municipality. Finally, the Commissioner shall “target the award of any grant or loan” to a municipality that has lost funding by virtue of this legislation. Municipalities that committed affordable housing funds but were required to make refunds shall be reimbursed from the affordable housing fund.

 

Stripped from the Committee Substitute are some of the original bill’s more far-reaching provisions. For example, the initial version directed the State Housing Commission to review the Fee Act program to determine whether it was effective and to make recommendations about the modification or repeal of A500. Its policy statement challenged the existing regulatory scheme by declaring that, instead of fostering opportunities for “an appropriate variety” and choice of housing, the Fee Act actually impeded the development of both non-residential projects and affordable housing. The Committee Substitute speaks to a similar concern but declares that there will only be a temporary delay in the collection of the 2.5% fee.

 

The Legislature is currently in its budget recess but passage in some form is still anticipated.