[Ord. No. 2005-2851]

A. Purpose.

1. Pursuant to the Fair Housing Act, N.J.S.A. 52:27D-301 et seq., the New Jersey Council on Affordable Housing ("COAH") Middletown Department of Planning and Community Development adopted substantive regulations, N.J.A.C. 5:93-1 et seq., setting forth requirements as to affordable units within a municipality's housing element and fair share plan. The purpose of this section of the Middletown Ordinance is to ensure that these affordable units comply with applicable COAH requirements so as to ensure their credit-worthiness.

B. Affordable Housing Requirements. Any applicant seeking to develop one or more affordable housing units shall submit an Application for Development, including a narrative description of the overall project and the affordable housing components of the project. All affordable housing units established or created shall be deed restricted so that affordability is maintained for at least thirty (30) years.

1. Affordable Housing Administrator.

a. The Director of the Department of Planning and Community Development shall serve as the Township's Affordable Housing Administrator. The Affordable Housing Administrator shall be responsible for the monitoring and administration of the Township's affordable housing activities, including the resale and or rerental of affordable housing units.

b. The role of Middletown Township Department of Planning and Community Development - To provide assurances that low and moderate income units are created with controls on affordability over time and that low and moderate income households occupy these units, Middletown Township will enter into an agreement with the Middletown Township Department of Planning and Community Development to be responsible for insuring affordability of sales and rental units over time. The Middletown Township Department of Planning and Community Development will be responsible for those activities detailed in N.J.A.C. 5:93-9.1(a).

c. In addition, the Middletown Township Department of Planning and Community Development will be responsible for utilizing the verification and certification procedures outlined in N.J.A.C. 5:93-9.1(b) in placing households in low and moderate income units.

d. Newly constructed low and moderate income sales units will remain affordable to low and moderate income households for at least thirty (30) years. The Middletown Township Department of Planning and Community Development will require all conveyances of newly constructed units to contain appropriate deed restriction and mortgage liens designed to ensure affordability and to preserve the units for low and moderate income households in the event of a foreclosure.

e. Housing units created through the conversion of a nonresidential structure will be considered a new housing unit and will be subject to thirty (30) year controls on affordability. The Middletown Township Department of Planning and Community Development will require an appropriate deed restriction and mortgage lien.

C. Inclusionary Development.

1. Affordable Housing Compliance. Middletown's Department of Planning and Community Development will serve as the administrative agent for all affordable housing units within the Township. The Department will therefore be responsible for all responsibilities delineated in the regulations, including but not limited to: affirmative marketing of affordable housing units; soliciting, scheduling, conducting and following up on interviews with interested households; obtaining financial information to determine eligibility; providing written notification to each applicant as to the determination of eligibility or noneligibility; creating and maintaining a referral list of eligible applicant households; furnishing attorneys or closing agents proper forms of deed restrictions and mortgages; creating and maintaining a file on each restricted unit for its control period; providing annual reports to COAH as required.

The developer of any project containing affordable housing shall pay a fee to the Township of one thousand ($1,000.00) dollars for each affordable housing unit. Said fee shall be paid in a lump sum, prior to the issuance of the first Certificate of Occupancy of an affordable unit. This fee can be waived where the developer is a nonprofit agency and where said agency will perform the eligibility procedures described above.

2. The Low/Moderate Split. Middletown's new construction or inclusionary, or growth share component will be divided equally between low and moderate income households as per N.J.A.C. 5:94 et seq.

3. Except for inclusionary developments constructed pursuant to low income tax credit regulations:

a. At least one-half (1/2) of all units within each inclusionary development will be affordable to low income households.

b. At least one-half (1/2) of all rental units will be affordable to low income households.

c. Pursuant to N.J.A.C. 5:93-7.2, with the exception of inclusionary developments constructed pursuant to the four (4%) percent low income tax credit regulations pursuant to the Internal Revenue Code Section 42h, at least one third (1/3) of all affordable units in each bedroom distribution (as delineated in N.J.A.C. 5:94 et seq.) shall be affordable to low income households.

4. Bedroom Distribution. Inclusionary developments that are not restricted to senior citizens will be structured so that:

a. The combination of efficiency and one (1) bedroom units is at least ten (10%) percent and no greater than twenty (20%) percent of the total low and moderate income units.

b. At least thirty (30%) percent of all low and moderate income units are two (2) bedroom units.

c. At least twenty (20%) percent of all low and moderate income units are three (3) bedroom units.

d. Low and moderate income units restricted to senior citizens may utilize a modified bedroom distribution. At a minimum, the number of bedrooms will equal the number of senior citizen low and moderate income units within the inclusionary development.

5. Establishing Affordable Sale and Rental Prices for Affordable Units. The following criteria will be used in determining maximum rents and sale prices:

a. Efficiency units will be affordable to one (1) person households.

b. One (1) bedroom units will be affordable to 1.5 person households.

c. Two (2) bedroom units will be affordable to three (3) person households.

d. Three (3) bedroom units will be affordable to 4.5 person households.

e. Four (4) bedroom units shall be affordable to six (6) person households.

f. Median income by household size will be established by a regional weighted average of the uncapped Section 8 income limits published by HUD, as per N.J.A.C. 5:94 et seq.

g. The maximum rents of low and moderate income units within each inclusionary development shall be affordable to households earning no more than sixty (60%) percent of median income. Developments shall have an overall affordability range of fifty-two (52%) percent for rental units.

h. In averaging an affordability range of fifty-two (52%) percent for rental units, developers and/or municipal sponsors of rental units may establish one (1) rent for a low income unit and one (1) rent for a moderate income unit for each bedroom distribution.

i. For both owner-occupied and rental units, the low and moderate income units will utilize the same heating source as market units within an inclusionary development.

j. Low income housing units shall be reserved for households with a gross household income less than or equal to fifty (50%) percent of the median income approved by the Council. Moderate income housing units shall be reserved for households with a gross household income less than eighty (80%) percent of the median income approved by the Council. For example, a household earning forty-eight (48%) percent of median income may be placed in any low income unit; however, a household earning fifty-three (53%) percent may not quality for a low income unit. A household earning sixty-seven (67%) percent of median may be placed in any moderate income housing unit. A household earning less than fifty (50%) percent of median may be placed in a moderate income housing unit. Low and moderate income units shall not be offered to households that are not income eligible without Council approval pursuant to N.J.A.C. 5:94 et seq.

k. The regulations outlined in N.J.A.C. 5:94 et seq., and 9.16 will be applicable for purchased and rental units.

6. Additional Criteria for Rental Units. For rental units, developers and/or municipal sponsors may:

a. Establish one (1) rent for a low income unit and one (1) for a moderate income unit for each bedroom distribution.

b. Gross rents, including an allowance for utilities, shall be established so as not to exceed thirty (30%) percent of the gross monthly income of the appropriate household size referenced in paragraph C,5(a)-(e) above. Those tenant-paid utilities that are included in the utility allowance shall be so stated in the lease. The allowance for utilities shall be consistent with the utility allowance approved by HUD for use in New Jersey.

7. Additional Criteria for Sale Units.

a. The initial price of a low and moderate income owner-occupied single family housing unit will be established so that after a down payment of five (5%) percent, the monthly principal, interest, homeowner's insurance, property taxes (based on the restricted value of the low and moderate income unit) and condominium or homeowner fee does not exceed twenty-eight (28%) percent of the eligible gross monthly income.

b. The initial price of a low and moderate income owner-occupied single family housing unit shall be established so that after a down payment of five (5%) percent, the monthly principal, interest, homeowner and private mortgage insurances, property taxes (property taxes shall be based on the restricted value of low and moderate income units) and condominium or homeowner fees do not exceed twenty-eight (28%) percent of the eligible gross monthly income.

c. Pursuant to N.J.A.C. 5:94 et seq., Middletown shall utilize the uniform deed restriction found at N.J.A.C. 5:80-26 for all affordable units. Pursuant also to N.J.A.C. 5:80-26, a judgment of foreclosure on any of these units will not extinguish this deed restriction.

d. Middletown will require a Certificate of Reoccupancy for any occupancy of a low or moderate income sales unit resulting from a resale as per N.J.A.C. 5:93-9.3(c).

e. Municipal, state, nonprofit and seller options regarding sale units will be consistent with N.J.A.C. 5:94 et seq. Municipal rejection of repayment options for sale units will be consistent with N.J.A.C. 5:94.

f. The continued application of options to create, rehabilitate or maintain low and moderate income sale units will be consistent with N.J.A.C. 5:94.

g. Eligible capital improvements prior to the expiration of controls on sale units will be consistent with N.J.A.C. 5:94.

h. The regulations detailed in N.J.A.C. 5:94 will be applicable to low and moderate income units that are for sale units.

8. In zoning for inclusionary developments the following is required:

a. Low and moderate income units will be built in accordance with the schedule included in N.J.A.C. 5:94:

A.newly constructed unit is considered complete when the Certificate of Occupancy is issued.

b. A design of inclusionary developments that integrates low and moderate income units with market units is encouraged as per N.J.A.C. 5:94.

9. For Growth Share Projects where there are fewer than six (6) affordable housing units being created, Certificates of Occupancy shall be issued for the affordable units shall be issued prior to the issuance of a Certificate of Occupancy for the last market rate unit. For projects involving more than six (6) units the schedule for completion of the affordable units shall be established as a condition of either Planning or Zoning Board approval.

10. Rehabilitated Units.

a. Rehabilitated owner-occupied single-family housing units that are improved to code standard will be subject to affordability controls for at least ten (10) years and all other COAH requirements.

b. Rehabilitated renter-occupied housing units that are improved to code standard will be subject to affordability controls for at least ten (10) years and all other COAH requirements.

11. Rental Units.

a. Newly constructed low and moderate income rental units will remain affordable to low and moderate income households for at least thirty (30) years. The Middletown Township Department of Planning and Community Development will require an appropriate deed restriction and mortgage lien subject to the Court's approval.

b. Controls on affordability on accessory apartments shall remain in effect for at least ten (10) years. To be eligible for a rental bonus pursuant to N.J.A.C. 5:93-5.15, controls on affordability shall remain in effect for a least thirty (30) years.

c. Controls on affordability on alternative living arrangements shall remain in effect for at least ten (10) years. To be eligible for a rental bonus (pursuant to N.J.A.C. 5:93-5.15), controls on affordability shall remain in effect for at least thirty (30) years.

12. Section 14(b) of the Fair Housing Act N.J.A.C. 52:27D-301 et seq. incorporates the need to eliminate unnecessary cost generating features from Middletown's land use ordinances. To further this end, Middletown shall ensure that all inclusionary projects are held in conformance with the Residential Site Improvement Standards and that the Planning Board expeditiously processes applications for development of inclusionary projects. Nothing herein shall prevent Middletown from seeking to demonstrate that more stringent standards may be appropriate. The Township will cooperate with developers of inclusionary projects to grant such reasonable variances necessary to construct inclusionary development.

13. Tenant and Occupancy Selection.

a. For those seeking housing, an Application for Affordable Housing shall be submitted in a form approved by the Township, to the Department of Planning and Community Development. Said application will contain basic information requests in order to determine eligibility and needs of the applicant. The information will be then placed into a data base, maintained by the Township. This data base shall provide the basis for tenant and purchaser selection, in accordance with the rules of COAH.

b. Additional information may be required by the Township in accordance with the Uniform Housing Affordability Controls (UHAC), pursuant to N.J.A.C. 5:80-26.1 et seq.

c. Knowingly or intentionally filing false or misleading information in order to obtain an affordable housing unit shall be grounds for disqualification, even if the applicant is otherwise qualified.

d. Any developer, property owner or applicant who knowingly or intentionally violates the rules of the Township and or the New Jersey Council on Affordable Housing, shall be subject to penalty.

14. Household Size Priorities.

a. A household of the size provided shall have priority over households with a lesser number of persons.

One Bedroom Unit 2 persons

Two Bedroom Unit 3 persons

Four Bedroom Unit 4 or more persons

All applicants shall be classified by the Administrator in one of the priority categories set forth above on the basis of the information provided in the initial application.

15. Calculation of resale and rerental prices shall be performed by the Township Planning Department upon application by the property owner or landlord. Landlords shall pay a fee of fifty ($50.00) dollars to the Township when requesting rerental calculation and new tenant selection. All calculations shall be in accordance with COAH rules.

16. The requirements of the Uniform Housing Affordability Controls (UHAC). N.J.A.C. 5-80.26.1 et seq. shall be utilized and adhered to for the purposes of:

Limitations on Indebtedness Secured by Ownership Unit/Subordination 5:80-26.8

Capital Improvements to Ownership Units 5:80-26.9

Affirmative Marketing Procedures 5:80-26.15

Household Certification and Referral 5:80-26.16

Procedures for Changing Administrative Agent 5:80-26.17

Enforcement 5:80-26.18

Appeals 5:80-26.19

Expiration of Controls Procedures 5:80-26.20-26

17. Waiver.

In the event of a special hardship or in the event that a minor technical modification of these regulations is necessary to effectively implement the policy of this section, the Board may waive or modify those regulations relating to occupancy selection, sale or resale prices, or income eligibility standards provided that such waiver of modification is (a) consistent with the intent of these regulations and the Land Development Regulations: and (b) does not violate COAH policy, regulations or statute.

18. Permitted Modifications and Exceptions for Affordable Housing.

a. Undersized Lots. Any parcel of land owned by the Township or by a nonprofit corporation which has entered into a contract with the Township to construct affordable detached single family dwellings and which is located in a zoning district which district permits single family dwellings and which parcel has an area or frontage less than that prescribed for a lot in the zone in which said lot is located, may be used as a lot for the construction of a single family dwelling and permitted accessory structures provided that the lot area and width is greater than thirty-three (33%) percent of the required area and frontage in the zoning district in which said lot is located and further provided that no interior lot of less than five thousand (5,000) square feet in area of having a frontage less than fifty (50') feet shall be so used; and provided that no corner lot having less than six thousand (6,000) square feet in area or less than seventy-five (75') feet of frontage along each facing road shall be so used and provided moreover that all other regulations provided for the zone district in this Chapter with respect to coverage, setback, and side yard requirements as stipulated in the regulations are complied with, with the following exceptions:

(1) The combined total side yard requirements maybe reduced by six (6") inches for each foot a lot is less than the required frontage prescribed for the zone in which said lot is located, where necessary to permit construction thereon of a building having a minimum gross floor area prescribed under this section, and provided that no principal building or accessory building shall be placed any nearer than five (5') feet to any property line except where specifically permitted by this Chapter; and

(2) The maximum percent of lot coverage may be increased provided the resultant lot coverage complies with the most restrictive single family residence zone to which the area of the undersized lot conforms provided that in no case shall the coverage exceed thirty-five (35%) percent.

(3) Lots owned by the Township or a nonprofit agency which has entered into a contract with the Township to construct affordable housing may be developed with a duplex where the lot meets or exceeds the minimum lot size to the zone, provided that such a structure shall be architecturally compatible with the area in which it is being constructed.

b. Relaxation of Design Standards. The approving authority when acting upon a site plan or subdivision application which includes provision for lower income housing in accordance with Section 16-531, and Affordable Housing Zone may relax standards as follows if the relaxation does not create health and safety concerns for either the Township or the future residents of a development.

(1) A maximum of twenty (20%) percent of the curbing required within parking areas (16-826.F.) may be eliminated. Curbing will be required, however, where drainage control is needed and where erosion potential cannot adequately be addressed by alternate methods.

(2) The minimum sizes, spacing, and quantities of landscape material required pursuant to Sections 16-826.Q. Off-street Parking, 16-821 Landscaping and Shade Trees, 16-844 Street Trees, and 16-806 Buffer may be reduced by a maximum of twenty (20%) percent, however, there shall be no reduction in the buffering requirement between a tract which is the subject of an application which includes provisions for lower income housing and abutting tracts which are zoned for detached single family dwellings.

(3) Combination curbs and sidewalks may be permitted on all streets within a development. The approving authority may recommend use of funds collected by the Township from other developers as a result of sidewalk waivers for the construction of a maximum of twenty (20%) percent of the combination curbs and sidewalks.

19. Affordable Housing Fund. A contribution to the Township fund for the production of affordable housing for low and moderate income households shall be required.

a. Purpose. In Holmdel Builder's Association vs. Holmdel Township, 121 N.J. 550 (1990), the New Jersey Supreme Court determined that mandatory development fees are authorized by the Fair Housing Act of 1985, N.J.S.A. 52:27D-301 et seq., and the State Constitution subject to COAH's developing rules. The purpose of this Ordinance is to establish standards for the collection, maintenance and expenditure of development fees pursuant to COAH's rules. Fees collected pursuant to this Ordinance shall be used for the sole purpose of providing low and moderate income housing. This Ordinance shall be interpreted within the framework of COAH's rules on development fees.

b. Retention of Fees. Any Affordable Housing Development fees collected by the Township of Middletown prior to December 13, 1990 shall be retained pursuant to COAH's rules regarding the retention of development fees.

c. Calculation and Collection of Required Development Fees.

(1) For any residential development, the applicant shall be required to pay a fee of one (1%) percent of the equalized assessed value of any eligible residential activity pursuant to paragraph d,1 of this Ordinance. [Ord. No. 2005-2808]

(2) When the Municipal Agency approves an increase in residential density pursuant to N.J.S.A. 40:55D-70d(5)(a "d" variance), the Board may impose a development fee of up to six (6%) percent of the equalized assessed value for each additional unit that may be realized, the coverage amount on the Home Owner Warranty document for each additional for-sale unit, or the appraised value on the document utilized for construction financing for each additional rental unit. (Example: If an approval allows four (4) units to be constructed on a site that was zoned for two (2) units, the fees could equal one (1%) percent of either the equalized assessed value, the coverage amount on the Home Owner Warranty document, or the appraised value on the document utilized for construction financing on the first two (2) units; and six (6%) percent of either the equalized assessed value, the coverage amount on the Home Owner Warranty document, or the appraised value on the document utilized for construction financing for the two (2) additional units.)

However, if the zoning on a site has changed during the two (2) year period preceding the filing of such a variance application, the density for the purposes of calculating the bonus development fee shall be the highest density permitted by right during the two (2) year period preceding the filing of the variance application. [Ord. No. 2005-2808]

(3) For any nonresidential development, the applicant shall be required to pay a fee of two (2%) percent of the equalized assessed value of any eligible nonresidential activity pursuant to paragraph d, 1 of this Ordinance. [Ord. No. 2005-2808]

(4) When the Municipal Agency approves an increase in floor area pursuant to N.J.S.A. 40:55D-70d(4) (a "d" variance), the Board may impose a development fee of up to six (6%) percent on the additional floor area realized. However, if the zoning on a site has changed during the two (2) year period preceding the filing of such a variance application, the base floor area for the purposes of calculating the bonus development fee shall be the highest floor area permitted by right during the two (2) year period preceding the filing of the variance application. [Ord. No. 2005-2808]

(5) Where the Municipal Agency approves any "d" variance, other than as already specified herein, the Board may impose a development fee of up to six (6%) percent of the additional value added to the property due to the granting of said variance. Where it is determined that there is no increase in value, or where a use variance is required simply for a change in use involving less than five thousand (5,000) square feet of gross floor area and where no new construction is proposed, no fee shall be imposed. [Ord. No. 2005-2825]

(6) In the case of any mixed use development containing both residential and nonresidential uses the required fee shall be based upon a separate calculation for each use utilizing the cost factors specified in items (1) and (2) of this paragraph. [Ord. No. 2005-2825]

d. Collection of Fees.

(1) The applicant shall pay the fee at the time of issuance of Certificates of Occupancy. At the issuance of Certificates of Occupancy, the Tax Assessor shall calculate the equalized assessed value and the appropriate development fee. Where multiple Certificates of Occupancy will be required an adjusted assessed value will be established for each unit of occupancy and the appropriate fee shall be collected for each Certificate of Occupancy. [Ord. No. 2005-2825]

e. Eligible Exaction, Ineligible Exactions and Exemptions. [Ord. No. 2005-2825]

(1) Developers of low and moderate income units shall be exempt from paying development fees, except that in a mixed use development where the residential component will contain a percentage of affordable housing units and where the nonresidential development is in one (1) or more completely detached structures, a development fee of one-half (1/2) of the standard fee for nonresidential development shall be imposed.

(2) Developers that expand an existing structure shall pay a development fee. The development fee shall be calculated based on the increase in the equalized assessed value of the improved structure.

(3) Developers of places of worship, group homes, child care centers, and nonprofit and/or tax exempt corporations, are exempt from development fees. This shall not apply to developments on land sold by such an entity to be developed by a nonexempt entity. Alterations or expansion to any residential structure which does not result in an additional dwelling unit shall be exempt. Minor subdivisions where more than one (1) new dwelling will be constructed or where more than one (1) new Certificate of Occupancy will be required shall not be exempt. [Ord. No. 2005-2825].

(4) Developments that received approval between December 13, 1990 and effective date of the Ordinance shall be exempt from paying a development fee unless an amended approval is required due to a substantial change in the application, or unless otherwise approved by the Council on Affordable Housing.

f. Housing Trust Fund and Use of Funds.

(1) There is hereby created an interest bearing Housing Trust Fund in United Counties Trust Company and/or in such other official depository as may be from time to time approved by the governing body in accordance with law for the purpose of receiving development fees from residential and nonresidential developers. All development fees paid by developers pursuant to this Ordinance shall be deposited in this fund. No money shall be expended from the Housing Trust Fund unless the expenditure conforms to a spending plan approved by COAH.

(2) If COAH determines that Middletown Township is not in conformance with COAH's rules on development fees, COAH is authorized to direct the manner in which all development fees collected pursuant to this Ordinance shall be expended. Such authorization is pursuant to: this Ordinance; COAH's rules on development fees; and the written authorization from the governing body to United Counties Trust Company and/or such other official depository as may be from time to time approved by the governing body in accordance with law.

(3) Money deposited in a housing trust fund may be used for any activity approved by COAH for addressing low and moderate income housing obligation of the Township. Such activities may include, but are not necessarily limited to: housing rehabilitation; new construction; regional contribution agreements; the purchase of land for low and moderate income housing; extensions and/or improvements of roads and infrastructure to low and moderate income housing sites; assistance designed to render unit to be more affordable to low and moderate income people; and administrative costs necessary to implement the housing element. The expenditure of all money shall conform to a spending plan approved by COAH.

(4) At least thirty (30%) percent of the revenues collected shall be devoted to render unit more affordable. Examples of such activities include, but are not limited for; down payment assistance; low interest loans; and rental assistance.

(5) No more than twenty (20%) percent of the revenues shall be expended on administrative costs necessary to develop, revise or implement the housing element. Examples of eligible administrative activities include: personnel; consultant services; space costs; consumable supplies; and rental or purchase of equipment.

(6) Development fee revenues shall not be expended to reimburse the Township for housing activities that preceded substantive certification.

g. Expiration of section.

This section shall expire if:

(1) COAH dismisses or denies Middletown Township's petition for substantive certification.

(2) COAH revokes substantive certification or its certification of this section.

(3) Substantive certification/judgment of repose expires prior to (the Township) filing an adopted housing element with COAH, petitioning for substantive certification or receiving COAH's approval of this section.

h. Monitoring. The Township shall complete and return all monitoring forms related to the collection of fees, expenditure of revenues and implementation of the plan certified by the Council or approved by the Court. Quarterly financial reports, and annual program implementation and auditing reports shall be completed on forms designed by the Council.

i. The Township's ability to collect fees and the Council's approval of this Ordinance and spending plan shall be in compliance with the requirement of N.J.A.C. 5:92-18.17.

j. Should this section or any provision of this section be declared illegal or unconstitutional by a Court of competent jurisdiction, the remainder of the section shall remain in full force and effect.