The New Jersey Supreme Court, in Holmdel Builders Association v. Holmdel Township, 121 N.J. 550 (1990), determined that mandatory development fees are both statutorily and constitutionally permissible. The Court further anticipated that the Council on Affordable Housing (COAH) would promulgate appropriate development fee rules specifying, among other things, the standards for these development fees. The purpose or this ordinance is to provide such rules pursuant to N.J.A.C. 5:93-8.1 et seq., which establishes standards for the collection, maintenance and expenditure of development fees. Fees collected pursuant to this ordinance shall be used for the sole purpose of providing low- and moderate-income housing.

COUNCIL OR COAH shall mean the New Jersey Council on Affordable Housing established under the Fair Housing Act of 1985.

DEVELOPMENT FEES shall mean money paid by an individual, person, partnership, association, company or corporation for the improvement of property as permitted in COAH's rules.

EQUALIZED ASSESSED VALUE shall mean the value of a property determined by the Township tax assessor through a process designed to insure that all property in the Township is assessed at the same assessment ratio or ratios required by law. Estimates at the time of building permit may be obtained by the tax assessor utilizing tax estimates for construction cost. Final equalized assessed value will be determined at project completion by the Township tax assessor.

SUBSTANTIVE CERTIFICATION shall mean a determination by the Council approving a municipality's housing element and fair share plan in accordance with the provisions of the Fair Housing ant and the rules and criteria as set forth herein. A grant of substantive certification shall be valid for a period of six (6) years in accordance with the terms and conditions contained therein.

(a) Residential development.

(i) Residential development fees shall be one percent (1.0%) of the equalized assessed value for residential development, provided that no increased density is permitted.

(ii) The Township may allow developers of sites zoned for inclusionary development to pay a fee in lieu of building low and moderate-income units provided the Council determines the Township's housing element and fair share plan provides a realistic opportunity for addressing the Township's fair share obligation. The fee may equal the cost of subsidizing' the low and moderate-income units that are replaced by the development fee. For example, an inclusionary development may include a twenty (20%) percent set-aside, no set aside and a fee that is the equivalent of a twenty (20%) percent set-aside or a combination of a fee and set-aside that is the equivalent of a twenty (20%) percent set-aside.

(iii) The Township may collect fees exceeding those permitted in this section provided the Township enters into agreements with developers that offer a financial incentive for paying higher fees. The financial incentive may be in the form of a tax abatement. No agreement may provide for a voluntary development .fee without also providing for a comparable offsetting incentive. All agreements are subject-to Council approval.

(iv) If a "d" variance is granted for an increase .in residential density pursuant to N.J.S.A. 40:55D-70d(5), then the additional residential units realized (above what is permitted by right under the existing zoning) will incur a bonus development fee of six (6%) percent rather than the development fee of one percent. However, if the zoning on a site has changed during the two year period preceding the filing of the "d" variance application, the base density for the purposes of calculating the bonus development fee shall be the highest density permitted by right during the two years preceding the filing of the "d" variance application.

(b) Non-residential development.

(i) Non-residential development fees shall be two percent (2.0%) of the equalized assessed value for non-residential development.

(ii) The Township may collect fees exceeding those permitted in this section provided they enter into agreements with developers that offer a financial incentive for paying higher fees. Such agreements may include, but are not limited to, a tax abatement, increased commercial/industrial square footage, increased commercial/industrial lot coverage and/or increased commercial/industrial impervious coverage in return for an increased development fee. The development fee negotiated must bear a reasonable relationship to the additional commercial/industrial consideration to be received. All agreements are subject to approval by the Council.

(iii) If A "d" variance is granted for an increase in-floor area pursuant to N.J.S.A. 40:55D-70d(4), then the additional floor area realized (above what is permitted by right under the existing zoning) will incur a bonus development fee of six (6) percent rather than the development fee of two (2) percent. However, if the zoning on a site has changed during the-two year period preceding the filing of the "d" variance application, the floor area for purposes of calculating the bonus development fee shall be the highest permitted by right during the two years preceding the filing of the "d" variance application.

**Webmasters Note: The previous section has been amended as per Ordinance No. 11-05.

(a) Except as provided for in Section 19-5.2603A above, developers of low- and moderate-income units shall be exempt from paying development fees. In addition, developers of houses of worship shall be exempt from paying development fees. All other forms of new construction are subject to development fees.

(b) Developers that expand .or increase the intensity of use of an existing residential structure shall not be required to pay 'a development fee.

(c) Developers that have received preliminary or final approval prior to December 19, 2000 shall be exempt from paying a development fee unless the developer seeks a major change in the approval. Examples of a major change in the approval include a substantial alteration in site layout, development density, or types of uses within the development.

**Webmasters Note: The previous section has been amended as per Ordinance No. 20-05.

(a) The Township shall collect fifty percent (50%) of the calculated development fee at the time of issuance of the building permit. The development fee shall be estimated by the tax assessor prior to the issuance of building permit.

(b) The Township shall collect the remaining portion of the fee at the time of issuance of the Certificate Occupancy. At the issuance of a Certificate of Occupancy, the tax assessor shall calculate the equalized assessed value and the appropriate development fee. The developer shall be responsible for paying the difference between the fee calculated at the issuance of the Certificate of Occupancy and the amount paid at the issuance of the building permit.

All development fees shall be deposited in a separate, interest-bearing Housing Trust Fund. In establishing the Housing Trust Fund, the Township shall provide whatever express, written authorization that may be required by the bank utilized by the Township in order to permit the Council to direct the disbursement of development fees pursuant to section 19-5.2609A. No money shall be expended from the Housing Trust Fund unless the expenditure conforms to a spending plan approved by COAH.

(a) The Township shall use revenues collected from development fees for any activity approved by the Council for addressing the Township's fair share obligation. Such activities include, but are not limited to: Rehabilitation, new construction, regional contribution agreements, purchase of land for low- and moderate-income housing, improvement of land to be used 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 units to be more affordable, and administrative costs necessary to implement the Township's housing element. The expenditure of all money shall conform to a spending plan approved by the Council.

(b) Funds shall not be expended to reimburse the Township for housing activities that preceded substantive certification.

(c) At least thirty percent (30%) of the revenue collected from development fees other than those collected pursuant to Section 19-5.2603A(a)(iii) for inclusionary developments shall be devoted to render units more affordable. Examples of such activities include, but are not limited to: downpayment assistance, low interest loans, and rental assistance. This requirement may be waived in whole or in part when the Township demonstrates the ability to address the requirement of affordability assistance from another source.

(d) The Township may contract with a private or public entity to administer the implementation of any part of its housing element, including the requirement for affordability assistance.

(e) No more than twenty percent (20%) of the revenues collected from development fees shall be expended on administration, including, but not limited to, salaries and benefits for municipal employees, or consultant fees necessary to develop or implement: A rehabilitation program; a new construction program; a regional contribution agreement; a housing element; and an affirmative marketing program. Administrative funds may be used for income qualification of households, monitoring the turnover of sale and rental units, and compliance with the Councils monitoring requirements.

Development fees may not be used to defray the costs of existing staff, except that the Council shall consider permitting fees to defray the cost of staff whose sole responsibility is to implement a housing element.

The Township shall complete and return all monitoring forms related to the collection of expenditure 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.

(a) In the event that any of the conditions set forth in section 19-5.2609A(b) below occur, the Council shall be authorized, on behalf of the Township, to direct the manner in which all development fees collected pursuant to this ordinance shall be expended. Such fees shall be used only for the Township's affordable housing program, and an accounting shall be provided therefore. Should any such condition occur, such revenues shall immediately become available for expenditure at the direction of the Council upon the Township Clerk's receipt of written notification from the Council that such a condition has occurred. In furtherance of the foregoing, the Township shall, in establishing a bank account pursuant to section 19-5.2606A of this ordinance ensure that the Township has provided whatever express written authorization which may be required by the bank to permit the Council to direct the disbursement of such revenues from the account following the delivery to the bank of the aforementioned written notification provided by the Council to the Township Clerk and the Township's Chief Financial Officer.

(b) Occurrence of the following may result in the Council taking an action pursuant to section 19-5.2609A(a) above:

(1) Failure to submit a spending plan pursuant to section 19-5.2607A above within the time limits imposed by the Council;

(2) Failure to meet deadlines for information required by the Council in its review of this ordinance, the Township's housing element, or spending plan;

(3) Failure to proceed through the Council's administrative process toward substantive certification in a timely manner;

(4) Failure to address the Council's conditions for approval of a plan to spend development fees within the deadlines imposed by the Council;

(5) Failure to address the Council's conditions for substantive certification within deadlines imposed by the Council.

(6) Failure to submit accurate monitoring reports within the time limits imposed by the Council.

(7) Failure to implement the spending plan for development fees within the time limits imposed by the Council, or within reasonable extensions granted by the Council;

(8) Expenditure of development fees on activities not permitted by the Council.

(g) Revocation of the Township's substantive certification; or

(10) Other good cause demonstrating that the revenues are not being used for their intended purpose.

This ordinance shall expire if:

(a) COAH dismisses or denies the Township's petition for substantive certification;

(b) COAH revokes substantive certification or its certification of this ordinance.

(c) Substantive certification expires prior to the Township's filing of an adopted housing element with COAH, petitioning for substantive certification and receiving COAHs approval of this ordinance.

**Webmasters Note: The previous section, 19-5.26A, has been amended as per Ordinance No. 17-2000.