With the Council on Affordable Housing (COAH) recently voting to adopt the proposed third round regulations, the impact on all types of development will be dramatic.  For an excellent synopsis of the impact of the new rules on commercial development, see Ian Shern’s article from Sunday’s Star Ledger here. 

For a copy of the bill (S-1783) proposed by Senator Ray Lesniak which would reduce (but not eliminate) commercial development fees required by the new COAH rules, click here.

 The Ledger article provides a powerful example of the staggering costs imposed upon new commercial development:

New COAH rules aim to establish 115,000 units of affordable housing through 2018 (up from 52,000 in the previous rules). The rules demand fees to pay for one affordable house per five built, and fees for one affordable unit for every 16 jobs created by new commercial construction (previous ratios were one among nine and one for every 25 jobs).

For a hypothetical 100,000-square-foot office building, the COAH regs would play out like this:

280 jobs would be created, prompting fees to build 17.5 affordable houses, costing between $146,000 to $183,000 apiece, depending on the region of the state. That means a developer would pay an additional $2.6 million to $3.2 million for the office building.

For a same-sized warehouse, fees would range from $1.4 million to $1.7 million. For a same-sized retail project, they would be $1.6 million to $1.9 million.