[Ordinance No. 2009-2994]

On December 11, 2008, the Middletown Township Planning Board adopted an amended Master Plan Housing Element and Fair Share Plan.

On December 30, 2008, the Township Committee subsequently endorsed the action of the Planning Board and petitioned the New Jersey Council on Affordable Housing ("COAH") for Substantive Certification of said Fair Share Plan.

On October 14, 2009, COAH granted the Township Substantive Certification by COAH Resolution No. 42-09.

Pursuant to N.J.A.C. 5:96-6.3(e), COAH's grant of Substantive Certification is explicitly conditioned upon the Township's adoption of an ordinance implementing its Fair Share Plan within forty-five (45) days of receipt of substantive certification.

COAH's Resolution specifically provides that if "Middletown Township fails to timely adopt its Fair Share Ordinances, COAH's grant of substantive certification shall be void and of no force and effect. . ."

It is in the best interests of the taxpayers of the Township of Middletown to take these steps to ensure it is effectively protected from litigation by developers in the form of Builder's Remedy actions.

A. This Article is intended to assure that low- and moderate-income units ("affordable units") are created with controls on affordability over time and that low- and moderate-income households shall occupy these units. This Article shall apply except where inconsistent with applicable laws and regulations.

B. The Township of Middletown Planning Board has adopted a Housing Element and Fair Share Plan pursuant to the Municipal Land Use Law at N.J.S.A. 40:55D-1 et seq. The Fair Share Plan has been endorsed by the Governing Body. The Fair Share Plan describes the ways Township of Middletown shall address its fair share for low- and moderate-income housing as determined by the COAH and documented in the Housing Element.

C. This Ordinance implements and incorporates the Fair Share Plan and addresses the requirements of N.J.A.C. 5:97, as may be amended and supplemented.

D. The Township of Middletown shall file monitoring reports with COAH in accordance with N.J.A.C. 5:96, tracking the status of the implementation of the Housing Element and Fair Share Plan. Any plan evaluation report of the Housing Element and Fair Share Plan and monitoring prepared by COAH in accordance with N.J.A.C. 5:96 shall be available to the public at the Township of Middletown Municipal Building, Municipal Clerk's Office, 1 Kings Highway, Middletown, New Jersey, or from COAH at 101 South Broad Street, Trenton, New Jersey and on COAH's website, www.nj.gov/dca/affiliates/coah.

The following terms when used in this Article shall have the meanings given in this section:

ACCESSORY APARTMENT A self-contained residential dwelling unit with a kitchen, sanitary facilities, sleeping quarters and a private entrance, which is created within an existing home, or through the conversion of an existing accessory structure on the same site, or by an addition to an existing home or accessory building, or by the construction of a new accessory structure on the same site.

ACT The Fair Housing Act of 1985, P.L. 1985, c.222 (N.J.S.A. 52:27D-301 et seq.)

ADAPTABLE Constructed in compliance with the technical design standards of the Barrier Free Subcode, N.J.A.C. 5:23-7.

ADMINISTRATIVE AGENT The entity responsible for the administration of affordable units in accordance with this Article, N.J.A.C. 5:96, N.J.A.C. 5:97 and N.J.A.C. 5:80-26.1 et seq.

AFFIRMATIVE MARKETING A regional marketing strategy designed to attract buyers and/or renters of affordable units pursuant to N.J.A.C. 5:80-26.15.

AFFORDABILITY AVERAGE The average percentage of median income at which restricted units in an affordable housing development are affordable to low- and moderate-income households.

AFFORDABLE A sales price or rent within the means of a low- or moderate-income household as defined in N.J.A.C. 5:97-9; in the case of an ownership unit, that the sales price for the unit conforms to the standards set forth in N.J.A.C. 5:80-26.6, as may be amended and supplemented, and, in the case of a rental unit, that the rent for the unit conforms to the standards set forth in N.J.A.C. 5:80-26.12, as may be amended and supplemented.

AFFORDABLE DEVELOPMENT A housing development all or a portion of which consists of restricted units.

AFFORDABLE HOUSING DEVELOPMENT A development included in the Housing Element and Fair Share Plan, and includes, but is not limited to, an inclusionary development, a municipal construction project or a one hundred (100%) percent affordable development.

AFFORDABLE HOUSING PROGRAM(S) Any mechanism in a municipal Fair Share Plan prepared or implemented to address a municipality's fair share obligation.

AFFORDABLE UNIT A housing unit proposed or created pursuant to the Act, credited pursuant to N.J.A.C. 5:97-4, and/or funded through an affordable housing trust fund.

AGENCY The New Jersey Housing and Mortgage Finance Agency established by P.L. 1983, c. 530 (N.J.S.A. 55:14K-1 et seq.).

AGE-RESTRICTED UNIT A housing unit designed to meet the needs of, and exclusively for, the residents of an age-restricted segment of the population such that: 1) all the residents of the development where the unit is situated are sixty-two (62) years or older; or 2) at least eighty (80%) percent of the units are occupied by one (1) person that is fifty-five (55) years or older; or 3) the development has been designated by the Secretary of the U.S. Department of Housing and Urban Development as "housing for older persons" as defined in Section 807(b)(2) of the Fair Housing Act, 42 U.S.C. § 3607.

ASSISTED LIVING RESIDENCE A facility licensed by the New Jersey Department of Health and Senior Services to provide apartment-style housing and congregate dining and to assure that assisted living services are available when needed for four (4) or more adult persons unrelated to the proprietor and that offers units containing, at a minimum, one (1) unfurnished room, a private bathroom, a kitchenette and a lockable door on the unit entrance.

CERTIFIED HOUSEHOLD A household that has been certified by an Administrative Agent as a low-income household or moderate-income household.

COAH The Council on Affordable Housing, which is in, but not of, the Department of Community Affairs of the State of New Jersey, that was established under the New Jersey Fair Housing Act (N.J.S.A. 52:27D-301 et seq.).

DCA The State of New Jersey Department of Community Affairs.

DEFICIENT HOUSING UNIT A housing unit with health and safety code violations that require the repair or replacement of a major system. A major system includes weatherization, roofing, plumbing (including wells), heating, electricity, sanitary plumbing (including septic systems), lead paint abatement and/or load bearing structural systems.

DEVELOPER Any person, partnership, association, company or corporation that is the legal or beneficial owner or owners of a lot or any land proposed to be included in a proposed development including the holder of an option to contract or purchase, or other person having an enforceable proprietary interest in such land.

DEVELOPMENT The division of a parcel of land into two (2) or more parcels, the construction, reconstruction, conversion, structural alteration, relocation, or enlargement of any use or change in the use of any building or other structure, or of any mining, excavation or landfill, and any use or change in the use of any building or other structure, or land or extension of use of land, for which permission may be required pursuant to N.J.S.A. 40:55D-1 et seq.

INCLUSIONARY DEVELOPMENT A development containing both affordable units and market rate units. This term includes, but is not necessarily limited to: new construction, the conversion of a nonresidential structure to residential and the creation of new affordable units through the reconstruction of a vacant residential structure.

LOW-INCOME HOUSEHOLD A household with a total gross annual household income equal to fifty (50%) percent or less of the median household income.

LOW-INCOME UNIT A restricted unit that is affordable to a low-income household.

MAJOR SYSTEM The primary structural, mechanical, plumbing, electrical, fire protection, or occupant service components of a building which include but are not limited to, weatherization, roofing, plumbing (including wells), heating, electricity, sanitary plumbing (including septic systems), lead paint abatement or load bearing structural systems.

MARKET-RATE UNITS Housing not restricted to low- and moderate-income households that may sell or rent at any price.

MEDIAN INCOME The median income by household size for the applicable county, as adopted annually by COAH.

MODERATE-INCOME HOUSEHOLD A household with a total gross annual household income in excess of fifty (50%) percent but less than eighty (80%) percent of the median household income.

MODERATE-INCOME UNIT A restricted unit that is affordable to a moderate-income household.

NON-EXEMPT SALE Any sale or transfer of ownership other than the transfer of ownership other than the transfer of ownership between husband and wife; the transfer of ownership between former spouses ordered as a result of a judicial decree of divorce or judicial separation, but not including sales to third parties; the transfer of ownership between family members as a result of inheritance; the transfer of ownership through an executor's deed to a Class A beneficiary and the transfer of ownership by court order.

RANDOM SELECTION PROCESS A process by which currently income-eligible households are selected for placement in affordable housing units such that no preference is given to one applicant over another except for purposes of matching household income and size with an appropriately priced and sized affordable unit (e.g., by lottery).

REGIONAL ASSET LIMIT The maximum housing value in each housing region affordable to a four-person household with an income at eighty (80%) percent of the regional median as defined by COAH's adopted Regional Income Limits published annually by COAH.

REHABILITATION The repair, renovation, alteration or reconstruction of any building or structure, pursuant to the Rehabilitation Subcode, N.J.A.C. 5:23-6.

RENT The gross monthly cost of a rental unit to the tenant, including the rent paid to the landlord, as well as an allowance for tenant-paid utilities computed in accordance with allowances published by DCA for its Section 8 program. In assisted living residences, rend does not include charges for food and services.

RESTRICTED UNIT A dwelling unit, whether a rental unit or ownership unit, that is subject to the affordability controls of N.J.A.C. 5:80-26.1, as may be amended and supplemented, but does not include a market-rate financed under UHORP or MONI.

UHAC The Uniform Housing Affordability Controls set forth in N.J.A.C. 5:80-26.1 et seq.

VERY LOW-INCOME HOUSEHOLD A household with a total gross annual household income equal to thirty (30%) percent or less of the median household income.

WEATHERIZATION Building insulation (for attic, exterior walls and crawl space), siding to improve energy efficiency, replacement storm windows, replacement storm doors, replacement windows and replacement doors, and is considered a major system for rehabilitation.

Township of Middletown has determined that it will use the following mechanisms to satisfy its affordable housing obligations:

A. Rehabilitation Program.

1. Township of Middletown's rehabilitation program shall be designed to renovate deficient housing units occupied by low- and moderate-income households such that, after rehabilitation, these units will comply with the New Jersey State Housing Code pursuant to N.J.A.C. 5:28.

2. Both owner occupied and renter occupied units shall be eligible for rehabilitation funds.

3. All rehabilitated units shall remain affordable to low- and moderate-income households for a period of ten (10) years (the control period). For owner-occupied units the control period will be enforced with a lien and for renter-occupied units the control period will be enforced with a deed restriction.

4. The Township of Middletown shall dedicate a minimum of ten thousand ($10,000.00) dollars for each unit to be rehabilitated through this program, reflecting the minimum hard cost of rehabilitation of each unit.

5. The Township of Middletown shall adopt a Resolution committing to fund any shortfall in the rehabilitation program for the Township of Middletown.

6. The Township of Middletown shall designate, subject to the approval of COAH, one (1) or more Administrative Agents to administer the rehabilitation program in accordance with N.J.A.C. 5:96 and N.J.A.C. 5:97. The Administrative Agent(s) shall provide a rehabilitation manual for the owner occupancy rehabilitation program and a rehabilitation manual for the rental occupancy rehabilitation program to be adopted by resolution of the Governing Body an subject to approval of COAH. Both rehabilitation manuals shall be available for public inspection in the Office of the Municipal Clerk and in the office(s) of the Administrative Agent(s).

7. Units in a rehabilitation program shall be exempt from N.J.A.C. 5:97-9 and UHAC, but shall be administered in accordance with the following:

a. If a unit is vacant, upon initial rental subsequent to rehabilitation, or if a renter-occupied unit is re-rented prior to the end of controls on affordability, the deed restriction shall require the unit to be rented to a low- or moderate-income household at an affordable rent and affirmatively marketed pursuant to N.J.A.C. 5:97-9 and UHAC.

b. If a unit is renter-occupied, upon completion of the rehabilitation, the maximum rate of rent shall be the lesser of the current rent or the maximum permitted rent pursuant to N.J.A.C. 5:97-9 and UHAC.

c. Rents in rehabilitated units may increase annually based on the standards in N.J.A.C. 5:97-9.

d. Applicant and/or tenant households shall be certified as income-eligible in accordance with N.J.A.C. 5:97-9 and UHAC, except that households in owner-occupied units shall be exempt from the regional asset limit.

B. An Accessory Apartment Program.

1. All accessory apartments shall meet the following conditions:

a. Accessory apartments are permitted by the Zoning Ordinance for various zoning districts, provided the units are affordable to low- and moderate-income households. Accessory apartments may be developed as low-income or moderate-income units (accessory apartments may be limited to only low- or only moderate-income units as determined in the Fair Share Plan).

b. Accessory apartments shall comply with all applicable statutes and regulations of the State of New Jersey in addition to all building codes.

c. At the time of initial occupancy of the unit and for at least ten (10) years thereafter, the accessory apartment shall be rented only to a household which is either a low- or moderate-income household.

d. Rents of accessory apartments shall be affordable to low- or moderate-income households as per COAH and UHAC regulations.

e. There shall be a recorded deed or declaration of covenants and restrictions applied to the property upon which the accessory apartment is located running with the land and limiting its subsequent rental or sale of the unit and the accessory apartment.

f. The appropriate utility authority must certify that there is water and sewer infrastructure with sufficient capacity to serve the proposed accessory apartment. Where the proposed location is served by an individual well and/or septic system, the additional capacity necessitated by the new unit must meet the appropriate NJDEP standards.

g. The Township of Middletown accessory apartment program shall not restrict the number of bedrooms in any accessory apartment.

h. No accessory apartment created as a result of this Article or these regulations shall exceed the gross floor area of the existing principal dwelling on the lot.

2. The maximum number of creditable accessory apartments shall be equal to no more than twenty-three (23), which is equal to ten (10%) percent of the Township of Middletown's Third Round fair share obligation.

3. The Township of Middletown shall designate an administrative entity to administer the accessory apartment program that shall have the following responsibilities:

a. The Administrative Agent shall administer the accessory apartment program, including advertising, income qualifying prospective renters, setting rents and annual rent increases, maintaining a waiting list, distributing the subsidy, securing certificates of occupancy, qualifying properties, handling application forms, filing deed restrictions and monitoring reports and affirmatively marketing the affordable accessory apartment program in accordance with UHAC.

b. The administrative entity shall only deny an application for an accessory apartment if the project is not in conformance with COAH's requirements and/or the provisions of this section/Article. All denials shall be in writing with the reasons clearly stated.

c. In accordance with COAH requirements, Township of Middletown shall provide at least twenty-five thousand ($25,000.00) dollars per unit to subsidize the creation of each low-income accessory apartment or twenty thousand ($20,000.00) dollars per unit to subsidize the creation of each moderate-income accessory apartment. Subsidy may be used to fund actual construction costs and/or to provide compensation for reduced rental rates.

4. Property owners wishing to apply to create an accessory apartment shall submit to the administrative entity:

a. A sketch of floor plan(s) showing the location, size and relationship of both the accessory apartment and the primary dwelling within the building or in another structure;

b. Rough elevations showing the modifications of any exterior building facade to which changes are proposed; and

c. A site development sketch showing the location of the existing dwelling and other existing buildings; all property lines; proposed addition, if any, along with the minimum building setback lines; the required parking spaces for both dwelling units; and any manmade conditions which might affect construction.

C. Market to Affordable Program.

1. A market to affordable program is established to permit with purchase or subsidization of units through a written agreement with the property owner and sold or rented to low- and moderate-income households. Subject to the provisions of 2c. below, the market to affordable programs may produce both low- and moderate-income units (the program may be limited to only low- or moderate-income units as per the Fair Share Plan).

2. The following provisions shall apply to market to affordable programs:

a. At the time they are offered for sale or rental, eligible units may be new, pre-owned or vacant.

b. The units shall be certified to be in sound condition as a result of an inspection performed by a licensed building inspector.

c. The municipality will provide a minimum of twenty-five thousand ($25,000.00) dollars per unit to subsidize each moderate-income unit and/or $30,000 per unit to subsidize the each low-income unit, with additional subsidy depending on the market prices or rents in a municipality.

d. The maximum number of creditable market to affordable units shall be equal to no more than ten (10) for sale units and ten (10) rental units or a combined total of ten (10%) percent of the fair share obligation, whichever is greater. (Additional units may be approved by COAH if the municipality demonstrates the successful completion of its initial market to affordable program.)

3. The units shall comply with N.J.A.C. 5:97-9 and UHAC with the following exceptions:

a. Bedroom distribution (N.J.A.C. 5:80-26.3(b) and (c));

b. Low/moderate income split (N.J.A.C. 5:80-26.3(a)); and

c. Affordability average (N.J.A.C. 5:80-26.3(d) and (e)); however:

(1) The maximum rent for a moderate-income unit shall be affordable to households earning no more than sixty (60%) percent of median income and the maximum rent for a low-income unit shall be affordable to households earning no more than forty-four (44%) percent of median income; and

(2) The maximum sales price for a moderate-income unit shall be affordable to households earning no more than seventy (70%) percent of median income and the maximum sales price for a low-income unit shall be affordable to households earning no more than forty (40%) percent of median income.

D. A Residential Over Commercial Program. Consistent with Section 16-943 of the Middletown Township Planning and Development Regulations.