Guidance Document Issued On Non-Residential Development Fee Act Suspension

The Division of Local Government Services issued guidance today regarding the application of the temporary suspension of the Statewide Non-Residential Development Fee Act contained within the NJ Economic Stimulus Act of 2009 (P.L. 2009, c. 90) signed by Governor Jon Corzine on Monday, July 27, 2009.

Projects that receive preliminary or final site plan approval prior to July 1, 2010, and for which a building permit is issued prior to January 1, 2013 will not be subject to any non-residential development fee.

Also, any developer that has paid a non-residential development fee since July 17, 2008 may claim a refund based on certain criteria in writing by November 30, 2009. A municipality, however, may seek reimbursement from the State for any development fee refunds issued, no later than March 30, 2010.

Legislature Moves Rapidly On Non-Residential Development Fee Act Suspension

The Legislature is rushing to pass omnibus economic stimulus legislation (A4048) that includes a tweaked version of the suspension of the Statewide Non-Residential Development Fee Act ("the Act") proposed earlier this year that was stalled in the Assembly. This legislation is being fast-tracked along with the State budget expected to be passed within the next week.

This new bill would suspend the 2.5% non-residential development fee for projects receiving preliminary or final site plan approvals by July 1, 2010, but adds the condition that building permits must also be issued by July 1, 2011.

Further, while this bill would relieve municipalities of the growth share generated by certain non-residential projects during the fee suspension, COAH will only be permitted to do so on the condition that there are “insufficient funds in the New Jersey Affordable Housing Trust Fund" or where "other State or federal housing subsidies" are not "available to a municipality to assist in the production of such housing units.” It is pretty clear that there are not sufficient monies in the State Affordable Housing Trust Fund, which has collected less than $1 million, compared to about $12 million in the aggregate by municipalities. This legislation does not, however, provide clear guidance regarding how such determinations will be made by COAH, especially in relation to the availability of other sources of funding that could keep a municipality on the hook for growth share while collecting no development fees.

Finally, this legislation also requires the refund of non-residential development fees collected under the Act to developers who file requests within 120 days, but the State will reimburse municipalities for refunds required to be made to developers if the funds are “already expended or legally committed by binding contract to spend.” The bill dedicates $15 million for this purpose.

Third Round Litigation Continues As COAH Begins To Grant Substantive Certifications

On April 9, 2009, the New Jersey League of Municipalities filed and has now posted its reply brief and an executive summary of the same as prepared by Edward J. Buzak, Esq. on behalf of the League.


On April 8, 2009, COAH granted substantive certification to the Lawrence Township and Pine Hill, the first municipalities to receive substantive certification under COAH's revised third round rules. That leaves more than 300 municipalities who have filed for protection from builder's remedy suits to go.

Details Emerge On Non-Residential Development Fee Act Suspension

In his annual State of the State speech, Governor Jon Corzine called for a one year suspension of New Jersey’s 2.5% non-residential development fee imposed under the Statewide Non Residential Development Fee Act (“the Act”) he signed into law just six months earlier on July 17, 2008.

This fee, imposed upon the calculated increase in assessed valuation at the time of issuance of a certificate of occupancy, was supposed to provide one of the few viable sources of financing for the development of affordable housing by municipalities. Due to current economic distress, however, not even $10 million of a projected $80 million was collected in the first six months of its imposition. Many argue, that this fee, in addition to other burdensome regulations, has contributed to New Jersey’s rapid economic decline.

Now, legislation (S2485) proposed by Senator Ray Lesniak (D-Union), would establish an 18 month suspension of the Act on any projects that receive preliminary or final site plan approval prior to July 1, 2010. This moratorium also applies to projects referred to a planning board by the state, a governing body, or other public agency for review.

Further, on January 26, 2009, the bill was amended by the Senate Economic Growth Committee to suspend affordable housing fair share obligations that are attributable to the non-residential development that would be exempted from imposition of the fee if this legislation is enacted. To effectuate such adjustments, municipalities may petition COAH, which will make adjustments pursuant to a methodology that is not defined in the legislation at this time.

The bill, however, provides that if the state supplies municipalities monies that would have been generated by the suspension of this fee, the fair share obligation attributable to development exempted under the bill would be restored. Accordingly, municipalities would only be obligated to provide for the housing generated by commercial development during the 18 month suspension period if the state provided the funding for its construction.

Finally, the bill provides a reimbursement mechanism for those developers who have paid the development fee, but would be exempted by these changes. This allows developers to request refunds of fees paid within 120 days of the bill’s effective date, which will be immediately upon its signing by the Governor.

This legislation should not require any new amendments to recently adopted development fee ordinances approved pursuant to the Act that will remain effective with respect to the non-residential component upon the sun setting of the proposed 18 month moratorium.

The moratorium as originally proposed by Governor Corzine is clearly supported by State Assembly Speaker Joseph Roberts (D-Camden) and Senate President Richard Codey (D-Essex). It is unclear, however, whether they have lent their full support to the amended, more expansive, version of this legislation, but there is little doubt that some form of it will receive final passage in the near future. This legislation has not yet been considered in the Assembly and is currently before the Senate Budget and Appropriations Committee for consideration while at second reading in the Senate.

No Extension of COAH Deadline

We are told that Governor Jon Corzine has declined ordering an extension of COAH's December 31, 2008 filing deadline for municipalities filing their third round Housing Element & Fair Share Plans.

With less than two weeks to go, the Star-Ledger is reporting that Governor Corzine is still considering ordering COAH to extend its December 31, 2008 deadline for municipalities to file their Housing Element & Fair Share Plans. . . .

The governor said today his aides are studying the legal ramifications of extending the deadline, something sought by legislators and many municipal officials.

"We're reviewing legislation that is in the Legislature to see what impact that would have in terms of legal responsibilities we have to fulfill," Corzine said.

Corzine was referring to a measure introduced by Sen. Christopher "Kip" Bateman (R-Somerset) that would extend the deadline to June 30. Bateman said an extension would "provide the Legislature with time to fix the substantive errors in the COAH regulations and laws."

The governor would have to ask the COAH board to hold a special meeting before the end of the month to approve an extension.

All Eyes On Trenton For An Extension

Today is the second to last legislative session day in Trenton prior to COAH's December 31 deadline for municipalities to file their Housing Element & Fair Share Plans. Word on West State Street is that an extension anywhere from 6 to 18 months will be forthcoming, possibly by executive order.

After COAH's meeting yesterday morning, DCA Commissioner Joe Doria said he could not act independently on a request from Speaker Roberts and other legislators to extend the filing deadline at least 90 days without formal action by the entire COAH board, which he chairs, or the legislature. According to the Star-Ledger:

Doria, who is also chairman of COAH, said he wanted to clarify a report that appeared on nj.com yesterday that stated he would not grant an extension of the Dec. 31 deadline, something sought by some legislators and local officials.

Doria said he does not have the power to grant an extension and that it would take a vote by the majority of the COAH board at a special meeting before the end of the month to do so. "I can't take action by myself," he said. "It has to be acted on by the board." At present, no meeting is planned.

Doria said extension requests by Assembly Speaker Joseph Roberts (D-Camden) and Sens. Raymond Lesniak (D-Union) and Christopher "Kip" Bateman (R- Somerset) are under consideration. The lawmakers are seeking three- to six-month extensions. They argue that the towns need more time to present solid plans.

Asked if he would support an extension, Doria said the board could be forced to consider one if legislation were introduced calling for one.