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League of Municipalities Provides Its Interpretation of COAH EO

Posted by Phil Morin on February 17, 2010

The New Jersey State League of Municipalities has issued an advisory on some of the questions they have received regarding the implications of Governor Chris Christie’s Executive Order No. 12 which relates to the 90 day review period of the Third Round rules during which the Council on Affordable Housing may not take action without authorization from the DCA Commissioner. 

According to League Executive Director William G. Dressel Jr.:

[The League has] received numerous inquiries and questions regarding the impact of the Executive Order, the status of COAH and affordable housing in general.   We note that the Executive Order prohibits COAH from acting on its regulations, unless authorized by DCA Commissioner-Designee Lori Grifa, but it does not prevent municipalities from submitting documentation to the agency.  

Below we address some of the questions that have arisen as a result of the Executive Order.   Specific questions related to individual components of your plan or the allocation of dollars are best directed to your attorneys and planners. 

  • A number of Highlands municipalities are/were operating under a deadline of June 8, 2010 to file a housing plan with COAH.      Even with the uncertainly surrounding the agency, it may still be in your best interests to continue that process.   The June 8 deadline is after the 90-day window of the Executive Order, so we cannot be certain what the landscape will be at the end of this window. 
  • A number of these Highlands communities have also asked if the June 8 deadline could or should be reconsidered in light of recent developments. We are considering making such a request to the Administration. 
  • Any municipality that was preparing to submit a petition for substantive certification to either COAH, through the Courts or preparing any additional documentation as part of your submitted petition may do so.
  • It is our opinion that the Executive Order freezes any mediation efforts on submitted petitions.
  • Residential development fees should be continued to be  collected.

    • For a link to the full advisory, click here.

    Posted in Affordable Housing | Leave a Comment »

    Governor Christie Issues EO Suspending COAH Rules, Creates Affordable Housing Task Force

    Posted by Phil Morin on February 9, 2010

    On February 9, Governor Chris Christie issued the 12th Executive Order of his new administration, this one taking aim at the heart of the affordable housing rules in the state.

    Executive Order 12 suspends COAH from taking action on applications for substantive certification or otherwise implementing the “Third Round” regulations for 90 days unless an applicant demonstrates to the Acting Commissioner, upon “good cause shown,” that inaction would result in the loss of “affordable housing opportunities. ” 

    The EO also establishes the “Housing Opportunity Task Force,” a five-member task force to evaluate and provide advice on determining affordable housing methodologies, development of workforce housing, strategies to spur rehabilitation and growth in urban centers and various other matters.  The task force will serve without compensation and will be comprised of experts in affordable housing, economic development, land use planning, environmental protection and related fields.

    EO 12 states that the “burdensome procedures . . . developed by COAH are “excessively complex and unworkable.”  The Governor’s pronouncement further states that “new thinking on statewide planning is necessary due to the failure of COAH to ensure that all constitutional obligations with respect to the provisions of affordable housing are satisfied in a manner that is both fair and reasonable to the already burdened municipalities of our state.”

    Shortly after Governor Christie’s announcement of the EO, the Fair Share Housing Center denounced the EO as “illegal” and threatened immediate action in court for expedited review of the constitutionality of the EO.

    Posted in Affordable Housing, New Jersey Government | Leave a Comment »

    Fair Share Housing Center Highlights Lack of Clarity of COAH Reform Bill

    Posted by Phil Morin on February 9, 2010

    Senator Ray Lesniak’s (D-Union) affordable housing reform bill (S-1) has received significant commentary from many interested parties during the first two public hearings on the bill.   Undoubtedly, S-1 will be the starting point for reform of the Fair Housing Act; it will be a question about how far the reform will ultimately go as the Governor’s Office and the legislative caucuses have yet to weigh in, which will undoubtedly occur at a critical time in the bill’s maturation.  

    Both the development community and municipal leaders alike favor major changes and there seems to be willingness within both political parties to make changes, the question is whether the changes will ultimately withstand the constitutional challenge that will surely be brought.  Those crafting legislation should be paying attention to the opponents of change and learning from their statements rather than simply shrugging them off, lest the bills just become change for change sake with the inevitable fist shaking and finger waiving when the New Jersey Supreme Court reminds the other two branches of government that our Constitution has been interpreted to require affordable housing in New Jersey communitities.

    Affordable housing advocates have come out swinging and so far, have landed a few good punches.  The Fair Share Housing Center points out today in a blog entry that the two prime sponsors of the bill appear to have different views of what the bill will accomplish.

    Posted in Affordable Housing, Legislation | Leave a Comment »

    Highlands Council Proposes Reduction In COAH Obligations For Highlands Communities

    Posted by Phil Morin on October 22, 2009

    1408rentalThe Hunterdon County Democrat is reporting that the Highlands Council has calculated drastically reduced affordable housing obligations for communities which adopt the Highlands Council’s regional master plan (“RMP”).  The article contemplates that the substantial reductions relating to the affordable housing requirements in some communities may operate to encourage RMP adoption.

    According to the article:

    For municipalities fearful that state quotas for low-cost housing will cause overdevelopment, new numbers being circulated by the Highlands Council are enticing. For those willing to comply with the master plan drafted by the council, the quotas fall dramatically.

    There are 15 municipalities in Hunterdon that fall within the Highlands region. Of the 12 for which the Highlands Council has released its calculations, the “affordable” obligation total drops from 1,874 units under targets provided by the state Council on Affordable Housing to 410 — a reduction of more than 78%.

    Eileen Swan, the Lebanon Township resident who is the executive director of the Highlands Council, says her group has an agreement with COAH that COAH will accept the projections made by the Highlands Council.

    “This is not about avoiding the constitutional obligation” that every municipality must provide its fair share of affordable housing, she said. The difference lies in the Highlands Council judging a municipality’s total capacity for development, rather than just looking at the amount of vacant land. It considers the land’s physical limitations, including sewer and public water availability, ground water reserves and the capability of land to use septic systems without contaminating ground water.

    For the full article, click here.

    Posted in Affordable Housing, Environmental Issues, Highlands, Master Plan Review | Leave a Comment »

    Zoning Change Can Be Granted for Affordable Housing As “Inherently Beneficial Use” Even If COAH Obligation Met

    Posted by Phil Morin on August 24, 2009

    In a ruling that will send even the most COAH-sensitive municipalities running to their attorneys and planners for an explanation, the Appellate Division ruled on Monday, August 24, that existing zoning laws can be modified to allow affordable housing development even where the municipality has satisfied its COAH obligations. 

    More specificially, the Appellate Division in Homes of Hope, Inc. v. Easthampton Township Land Use Planning Board, A-551-07T2 (App. Div. Aug. 24, 2009) (approved for publication) held that “a municipality’s compliance with the [Fair Housing Act] by meeting its fair share obligation does not impact affordable housing’s inherently beneficial use status for purposes of obtaining a use variance.  Affordable housing continues to foster the general welfare and constitutes a special reason to support a use variance.”   

    According to an article posted at www.nj.com:

    Zoning laws in New Jersey towns can be altered to accommodate affordable housing even after the municipality has met its quota, a state appeals court ruled today.

    The case before the panel involved a non profit organization, called Homes of Hope, that was looking to build eight multi-family dwellings in an area of Eastampton only zoned for single-family homes. The town’s land use board denied their request for a variance to build the dwellings, citing that building the units was unnecessary because 100 units of affordable housing were already built and the proposed dwellings would exceed the number required by the state’s Fair Housing Act.

    The three-judge panel however upheld a trial court decision allowing the eight units, ruling that municipalities cannot reject such development solely based on a town meeting its affordable housing obligation.

    Judge Michael Winkelstein wrote that just because the municipality has met requirements set forth by the Council on Affordable Housing, it does not mean they have reached a limit on affordable housing.

    “The (Eastampton Land Use) Board claims that because the Township has met its fair share obligation, it no longer has a need for low or moderate income housing and, consequently, that type of housing is no longer inherently beneficial so as to qualify as a special reason to support a use variance. We reject that argument,” wrote Winkelstein.

    The town is 11 miles north of Mount Laurel, where the state’s decades-long battle over affordable housing began. “It is beyond question that even if a municipality meets its Mount Laurel obligation, substandard housing will continue to exist,” wrote Winkelstein.

    For a link to the article, click here.

    For a link to the Appellate Division decision, click here.

    For a discussion of the political ramifications of the decision on the 2009 New Jersey Governor and Assembly races at www.politickernj.com, click here.

    For an NJ.com article discussing politician’s reactions to the decision, click here.

    Posted in Affordable Housing, D Variances, Legislation | Leave a Comment »

    NJ Economic Stimulus Bill Provides New Incentives for Development

    Posted by Phil Morin on July 17, 2009

    The New Jersey Economic Stimulus Act of 2009 recently passed both houses of the Legislature and was signed into law by Governor Jon Corzine on Monday, July 27th.  The Act is an amalgamation of initiatives designed to reinvigorate New Jersey’s economy and includes several incentives to jump start commercial real estate development. 

    According to the Assembly Budget Committee statement in support of the Act, the Act includes the following: (1) an Economic Redevelopment and Growth Grant Program; (2) authorization for certain municipalities to impose special taxes and surcharges to fund redevelopment activities and certain programs; (3) expansion of transferability of tax credits under the New Jersey Emerging Technology and Biotechnology Financial Assistance Program and changes to the “Urban Transit Hub Tax Credit Act”; (4) relief to certain developers otherwise subject to the “Statewide Non-Residential Fee Act”; (5) grants to municipalities for affordable housing; (6) changes to improve the financing of higher education facilities in New Jersey; and (7) relief to certain manufacturing companies taxes and surcharges on energy and utility services.

    Below, I have highlighted the portions of the Act with the most impact on the commercial development community: the Economic Redevelopment and Growth Grant progam; the amendments to the Urban Transit Hub Tax Credit Act; and the relief to developers from the Statewide Non-Residential Fee Act which requires a 2.5 percent contribution of the equalized assessed value of new non-residential construction to a state or municipal affordable housing trust fund.

    Economic Redevelopment and Growth Grant program

    The Act authorizes State and local incentive grants to developers in “qualifying economic redevelopment and growth grant incentive areas,” which includes the Metropolitan and Suburban planning areas (Planning Areas 1 and 2), centers designated under the State Development and Redevelopment Plan and federal land approved for military base closure.  Projects in transit villages are not eligible for State incentive grants but are eligible for municipal incentive grants.  This program replaces the revenue allocation district (“RAD”) financing program which was seen as too complicated and was sparingly considered as an option by developers and local governments.

    Incentive grants are intended to help fill project financing gaps in a difficult financial climate.  To qualify, a developer must contribute its own capital for at least 20 percent of the total project cost and must certify that additional capital is not available from other sources.

    Project revenues will fund the grants.  For State grants, the Economic Development Authority and the developer will enter into a redevelopment agreement, which would also require local approval by municipal ordinance.  Such agreements would provide that up to 75 percent of State revenues realized from a project would be pledged toward a grant.  For municipal grants, municipalities may pledge their revenues from payments in lieu of taxes, lease payments to the municipality, property taxes and any additional taxes authorized by law (motor vehicle rental taxes, payroll taxes, parking taxes).

    An incentive grant can extend up to 20 years and cannot exceed 20 percent of the total cost of the project.  A determination must be made that the revenues will exceed the grant funds.

    Urban Transit Hub Tax Credit Act Amendments

    Current law allows a business with a certain level of capital investment in a qualified business facility within an urban transit hub and that employs at least 250 people at the facility to qualify for a tax credit equal to the qualified capital investment, which must be taken over a 10-year period against the corporate business tax or insurance premiums tax liability.  Certain tenants were also able to take advantage of a tax credit, provided they met certain thresholds.

    The Act makes numerous changes to the Urban Transit Hub Tax Credit program, including the following: 

    • The “urban transit hub” definition is expanded to include in “eligible municipalities”: (1) property located within a half-mile radius surrounding the mid point of one of up-to-two underground light rail stations’ platform areas that are most proximate to an interstate rail station; (2) property adjacent to, or connected by rail spur to, a freight rail line if the business utilizes that freight line for loading and unloading freight cars on trains; and (3) within a half-mile of all light rail stations (and within a mile of the Camden rail station).  “Eligible municipalities” are defined pursuant to the criteria set forth in N.J.S.A. 34:1B-209 as Camden, East Orange, Elizabeth, Hoboken, Jersey City, Newark, New Brunswick, Paterson and Trenton.
    • Adds a mixed use component to definition of “qualified residential project” for purpose of receiving a credit.
    • Lowers the capital investment threshold from $75,000,000 to $50,000,000 for an owner of a “qualified business facility”, and from $50,000,000 to $17,500,000 for a tenant that occupies a leased area of the qualified business.
    • Provides that for a business applying before January 1, 2010, its credit shall not be reduced if it relocates to an urban transit hub from another location or locations in the same municipality.
    • Allows the full-time employee requirement to be met by certain types of contract workers who perform work at the qualified business facility for at least 35 hours a week and allows out-of-State residents working in New Jersey to be counted as “full time employees.”
    • Allows a business to use an affiliate to satisfy the employment or capital investment requirements of the program.
    • Clarifies how tenant investment will be included in the capital investment calculation for the qualified business facility, by providing that the capital investment made by a tenant will be included in the owner’s capital investment to the extent necessary to meet the minimum capital investment threshold. Any capital investment made by a tenant above this amount will be added to the amount of tax credit the tenant is otherwise entitled to receive based on its portion of the net leasable area in the qualified business facility.
    • Allows up to three tenants to meet the 250 employee requirement in the aggregate.
    • Relaxes the 10 percent Statewide full-time workforce reduction trigger before the business suffers a mandatory forfeiture of an annual tax credit by setting the trigger at 20 percent.
    • Expands the urban transit hub credit zones to include business headquarters property that can become a qualified investment facility within a one-mile-wide zone in a qualified municipality.
    • Clarifies that S-corporations and limited liability corporations are included as businesses that may be eligible to participate in the program and clarifies that a tax credit is not to be applied against individual New Jersey gross income tax liability.  An individual who is a holder of a credit may sell their credit, covering one or more years, under the tax credit transfer certificate program for consideration received by the business of not less than 75 percent of the transferred credit amount.
    • Removes the provision that casino licensees cannot qualify for the program.
    • Allows reduction of the credit by 20 percent if less than 200 employees are employed, even if a business relocates to an urban transit hub from another location in the same municipality.
    • Changes the timing of the trigger for forfeiture of the credit so that a business cannot reduce its workforce by more than 20 percent in the last tax accounting or privilege period prior to approval, rather than the greater of the two following periods: in the period prior to approval or in the period prior to the enactment of the original 2007 legislation.

    Note that the Act also eliminates any “as of right” qualification and adds subjective criteria for the eligibility for a tax credit, namely that a business shall demonstrate to the EDA at the time of application, that the State’s financial support will yield a “net positive benefit” to the State and the eligible municipality.  Also, a business will not qualify for a credit if the capital investment was the basis for a grant under the InvestNJ Business Grant Program Act.

    Additionally, the Act provides for a new credit for “qualified residential projects” under the Urban Transit Hub legislation.  “Qualified residential projects” are defined as a building or buildings, including a mixed use project, consisting predominately of residential units, located in an urban transit hub.  The definition of “residential units” includes rental units, hotel rooms or dormatory rooms.

    A developer may receive a credit up to 20 percent of its capital investment for a “qualified residential project.”  To be eligible, a developer shall demonstrate, through a project pro forma analysis, that the project “is likely to be realized with the provision of tax credits . . . but not likely to be accomplished by private enterprise without the tax credits.”

    A developer must make or acquire capital investments totalling at least $50,000,000 in a qualified residential project to be eligible for a credit.

    Non Residential Development Fee and Affordable Housing

    The Act will exempt certain property from the 2.5 percent development fee imposed by the “Statewide Non-Residential Fee Act,” N.J.S.A. 40:55D-8.1 to -8.7 (“SNRF” or “A-500″). 

    Development Fee Moratorium: Property which received preliminary or final site plan approval from a municipality or from the New Jersey Meadowlands Commission before July 1, 2010 will be exempt from the fee imposed by the SNRF/A-500, provided that a local building permit is issued prior to January 1, 2013.

    Ban on Local Non-Residential Fee Ordinances Remains: The Act does not abolish the section of the SNRF/A-500 which prohibits municipalities through local action from imposing their own obligations on non-residential development.

    Refunds: The Act requires that, in most cases, any funds deposited under the SNRF/A-500 with the State or a municipality be refunded to the developer.  The exception is where a developer received preliminary or final site plan approval prior to the effective date of SNRF/A-500 (July 17, 2008) and agreed to pay a fee based upon a local development fee ordinance.  In that instance, only the difference between the local fee and the 2.5 percent statewide fee will be eligible for a refund.

    Municipal Obligation: Furthermore, the Act provides that the portion of a municipal fair share affordable housing obligation created as a result of the non-residential development will be reduced or eliminated if the collection of fees are suspended and if there are insufficient funds in the State affordable housing trust fund or other State or federal sources of funding within the next two years following enactment.

    For an example of the practical implications of the Act on actual “in the pipeline” development projects, read the text of Senator Raymond Lesniak’s (D-Union) speech to the New Jersey Business and Industry’s Economic Development Forum at NJ Voices here.

    Posted in Affordable Housing, Environmental Issues, Ft. Monmouth Redevelopment, Green Legislation, Legislation, Redevelopment, Transportation | Leave a Comment »

    NJBIZ Article Highlights Praise and Concerns With “Builder-Friendly” Legislative Enactments

    Posted by Phil Morin on July 13, 2009

    An NJBIZ.com article written by Evelyn Lee contains an excellent synopsis of “developer-friendlier” legislation authored by the New Jersey Legislature and (mostly) signed into law by Governor Corzine over the last year.  The legislation was intended to extend permit approvals, expedite site cleanups and spur development in down economic times. 

    However, the article notes that many industry leaders still have concerns about the practical application and limitations of several of these new laws:

    [T]he Permit Extension Act has some limitations, said Tim Touhey, chief executive of the New Jersey Builders Association in Hamilton. The Highlands region has determined that it won’t allow any permits to be extended, although some of the more developed municipalities in the region — such as Dover and Rockaway — have been designated as growth areas by the state, he said.

    The Site Remediation Reform Act also has many unknowns, particularly with regard to presumptive remedies that the Department of Environmental Protection will develop for sensitive sites, said David Fisher, vice president of governmental affairs at Matzel & Mumford Organization, an Edison-based homebuilder. Presumptive remedies are expected to be finalized within a year of the law’s enactment, according to DEP.

    “If we don’t know how to clean up a site, then we don’t know how costly it’s going to be,” he said. “What value do you place on land when you don’t know how much it’s going to cost to clean it up?”

    Others said that legislative changes fell short in terms of addressing flaws in the state’s affordable housing funding methodology and directing new projects to redevelopment areas.

    For the full article, click here.

    Posted in Affordable Housing, Environmental Issues, Highlands, Legislation, Redevelopment, Transportation | Leave a Comment »

    Governor Signs Age-Restricted Housing Bill

    Posted by Phil Morin on July 3, 2009

    On July 2, Governor Corzine signed into law the controversial bill which allows applicants who received land use approval for an age-restricted development to reapply to land use boards for relief from the age-restrictions. 

    The law now includes several additional hurdles for developers to lift age-restrictions and reduces the time for an appeal of a denial of a conversion to 30 days from the board’s resolution as opposed to 45 days from publication of notice of the decision.

    A press release from Assemblyman Louis Greenwald (D-Camden) details the highlights of the new law:

    Greenwald stressed that no 55-and-over development will be eligible for conversion if even one individual has already purchased or put down a deposit on a unit. Age-restricted developments where residents have already moved into homes similarly will be prohibited from conversion.

    As reported by the Star-Ledger on Feb. 15, 2009, New Jersey’s municipalities have approved an overabundance of 55-and-older age-restricted housing developments. Estimates suggest the oversupply of such age-restricted homes is between 15 to 20 years into the future, far outweighing current demand.

    “Because of the supply glut in the age-restricted housing market, projects have stopped. Yet many young professionals – teachers, police officers and firefighters among them – are finding themselves increasingly unable to afford homes in the very communities they serve,” said Greenwald. “We must provide a limited and responsible avenue to build homes for the middle-class residents who need them while putting New Jerseyans back to work.”

    Under the law, a developer seeking to convert an age-restricted community will be required to file an application with the local planning board or zoning board of adjustment that granted the initial approval of the development. Prior to issuing an amended approval for the conversion, the local board will be required to have received documentation from the developer demonstrating that the stringent site improvements and infrastructure requirements have been satisfied.

    For the complete press release, click here.

    Posted in Affordable Housing, Legislation, Rezoning | Leave a Comment »

    Assembly Passes Bill To Allow Removal of Age-Restrictions From Approved Development

    Posted by Phil Morin on June 26, 2009

    On Thursday, the Assembly passed A-3772, a bill which allows developers to apply to local land use boards to remove age-restrictions on previously approved developments.  This bill encorporates the changes suggested in Governor Corzine’s conditional veto of an earlier version of the bill, including a mandatory 20 percent affordable housing requirement and a requirement that an applicant demonstrate that the conversion can be granted “without substantial detriment to the public good and will not substantially impare the intent and purpose of the zone plan and zoning ordinance.”  

    The revised bill also provides a shorter than normal timeframe for appeals.  An appeal of a denial of a conversion must be filed within 30 days of receipt of the resolution of memorialization.  This differs from typical prerogative writ actions which require an appeal of a land use decision to be filed within 45 days of publication of the determination in an official newspaper of the municipality.

    According to the Star Ledger:

    Developers seeking the conversion would apply to the an local planning or zoning board that granted the initial approval.

    Amendments recommended by Gov. Jon Corzine and approved by the Senate last week and the Assembly Thursday, give local officials more latitude to deny an application for conversion, require developers to dedicate 20 percent of homes for low- and moderate-income residents, and allow the courts to review local board decisions.

    Having cleared both houses, the bill now moves to the Governor’s desk for approval.   For the full Star Ledger article, click here.

    Posted in Affordable Housing, Legislation | Leave a Comment »

    Senate Passes Revised Bill To Allow Developers To Request Relief From Age-Restrictions on Stagnant 55+ Development Projects

    Posted by Phil Morin on June 19, 2009

    The state Senate has passed a new version of a bill that allows developers to challenge age restrictions on pending developments.  This bill is in response to Governor Corzine’s veto of an earlier version.  The new bill incorporates the changes expressed in the statement accompanying the Governor’s veto.

    According to the Star Ledger:

    The bill (S-2577), which passed 21-13, allows developers to ask municipalities to reconsider projects that had been approved as senior housing. If the towns don’t open up the buyer pool, developers can take their case to court.

    The bill only applies to projects that have not started construction nor sold a unit.  Supporters say this is strictly an economic issue – it’s a type of stimulus to help builders, who have been hit hard by the recession and housing crash, to start working again.  Builders are reluctant to break ground on further senior housing projects because the market has become so overbuilt.

    Using statistics from Otteau Valuation Group, builders say there is a 16-year supply in senior housing. That means it will take 16 years to get to a healthy market level of a six-month supply, taking into account all the houses on the market now and all those that are in the pipeline.

    The bill had faced opposition from towns that feared losing control over the process and senators who felt it was unfair to allow courts to reverse communities’ decisions.

    “This is like a back-door grab for power,” said Sen. Shirley Turner (D-Mercer).

    The state’s largest builder, K. Hovnanian, is considering taking some of its planned senior communities in central and southern New Jersey back to towns and trying to get restrictions lifted.

    Posted in Affordable Housing, Legislation | Leave a Comment »

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