News Flash

On Monday, the Senate Budget and Appropriations (SBA) Committee amended and approved the affordable housing bills, A-4 and S-50.  Both bills stand at 2nd reading and can be scheduled for a final vote, although the bills are NOT expected to be voted on at the next sessions, this Monday.   

The SBA amendments make significant changes, including language addressing the Highlands region, consistency with the State Plan, eliminating secondary sources from the obligation determination, and language providing municipalities flexibility to work with developers to fund infrastructure improvements associated with inclusionary development.    

The League is continuing to express concerns and work with the sponsors on remaining issues, including the methodology, vacant land analysis, environmental issues, and funding, among others.  

There were also amendments made to sections dealing with methodology that change the data to be used by the Department of Community Affairs (DCA) when calculating the present and prospective need.    We recommend bringing these changes to the attention of your municipal planners and professionals as to the impact on your municipality.   

Key Takeaways of A-4/S-50 

• The Council on Affordable Housing (COAH) would be abolished. Its duties and functions would be split between the DCA and the Administrative Office of Courts (AOC). DCA would run the numbers using the methodology within the bill and the newly established Affordable Housing Dispute Resolution Program (Program) within the AOC handles any dispute.  
• The DCA is tasked with calculating regional need and municipal present and prospective obligations in accordance with the methodology outlined in in legislation with reference to the methodologies and datasets within the March 8, 2015, unpublished decision from the Superior Court; In re Application of Municipality of Princeton, also known as the “Jacobson opinion.” 
• The number calculated by the DCA is advisory and each municipality must set its own obligation number using the DCA number as a basis using the same methodology. 
• Each municipality must adopt its Round 4 fair share obligation number through a binding resolution by January 31, 2025,.  
• The availability of bonus credits has been expanded compared to the bills introduced last legislative session but remain capped. The rental bonus credit would be eliminated.  

Key Changes and Additions from Committee Amendments 

• New language qualifies that a municipality with compliance certification would  benefit from presumptive validity, not immunity, if an interested party is to bring a challenge before the program alleging that, despite the issuance of compliance certification, a municipality’s fair share obligation, fair share plan, housing element, or ordinances implementing the fair share plan or housing element are in violation of the Mount Laurel doctrine. 
• Removes a requirement to provide that the Program would be responsible for defending its issuance of compliance certification in certain court actions. 
• Adds a requirement that the issuance of a compliance certification by the Program be accompanied by a written report providing for the basis of the certification’s issuance. 
• Adds additional requirements to a municipal housing element, providing for the inclusion of an analysis of consistency with the State Development and Redevelopment Plan, and requires certain municipalities in the Highlands Region to include an analysis of the housing element’s compliance with the Highlands Regional Master Plan. 
• Adds language to clarify that this bill does not require a municipality to fund infrastructure improvements for affordable housing projects beyond any commitments made in a fair share plan and housing element that has been provided with compliance certification. 
• Revises language concerning controls on the affordability of low- and moderate-income units and provide that a 100% affordable rental property would have a right to extinguish a deed restriction regardless of the original length, beginning 30 years following the start of the restriction, provided certain actions are taken for the purpose of affordability preservation, and a new deed restriction of at least 30 years is provided. 
• Adjusts restrictions on expenditures of municipal development fee trust funds and specify that the restrictions would not apply to qualified urban aid municipalities. 

The Process in a Nutshell  

1. DCA produces a report determining the regional need and municipal obligations for each region of the state. This is to happen within the earlier of seven months from the adoption of the legislation or December 1, 2024. Prior versions of the bill required DCA to make these determinations before August 1, 2024, but amendments changed to the timeline noted above.  
2. With consideration of these calculations, a municipality shall determine its present and prospective fair share obligation. This obligation shall be adopted through binding resolution no later than January 31, 2025. If a municipality does not meet this deadline, it loses immunity from builder’s remedy litigation.  
3. Interested parties have until February 28, 2025, to challenge the municipality’s adopted obligation number through the Program. If there are no challenges by this time, then on March 1, 2025, the municipality’s determination is established by default.  
4. New: Challenges to the municipal obligation determination are brought within the Program. Any challenge must state with particularity how the municipal calculation fails to comply with the methodology laid out within the legislation, and it must include the challenger’s own calculation of fair share obligations. The municipality’s calculation has a “presumption of validity” for any challenges brought within the Program. This presumption of validity language is new, based on committee amendments.  
5. Upon a challenge the Program can: 

1. Make a finding that the municipality’s determination of its present and prospective need obligation did not facially comply with the law and the immunity is revoked, 
2. Make an adjustment to the municipality’s determination to comply with the law without revoking immunity, or 
3. Reject the challenge and affirm the municipality’s determination.

A determination from the Program must be made no later than March 31 of the year when the current round is expiring. That is, March 31, 2025, for the upcoming Fourth Round. 

1. A municipality must adopt a Housing Element and Fair Share Plan, along with drafts of the appropriate zoning and other ordinances and resolutions implementing its present and prospective obligation by June 30, 2025. These must be filed with the Program within 48 hours of adoption. Failure to meet these deadlines, including filing with the Program, will result in the loss of immunity from builder’s remedy litigation.  
2. An interested party has until August 31, 2025, to file an action within the Program challenging the municipality’s Fair Share Plan and Housing Element. If no challenge is made before August 31, then the Program reviews the Plan and Element for consistency with the FHA.  
3. A municipality has until December 31, 2025, to settle any challenge or provide an explanation why it will not make all or some of the requested changes. 
4. Amended: A municipality has until March 15, 2026, to amend its Housing Element and Fair Share Plane and to adopt the implementing ordinances to comport with the amended numbers. Upon adoption of any changes, the municipality must immediately file them with the Program using the Program’s website. Committee amendments have added language that reflects the possibility of a municipality being involved in an ongoing dispute concerning its obligation, Fair Share Plan, or Housing Element, making it impossible to adopt implementing ordinances and resolutions. Under these circumstances, the committee amendments require the municipality to adopt a binding resolution committing to adopting implementing ordinances and resolutions with necessary adjustments to reflect the resolution of the dispute.  
5. A municipality or other interested party may file an action through the program seeking a realistic opportunity review at the midpoint of the certification period. 

Affordable Housing Dispute Resolution Program (Section 5) 

• The purpose of the Affordable Housing Dispute Resolution Program (Program) is to “efficiently resolve disputes involving the ‘Fair Share Housing Act.’” 
• The Program is made up of an odd number of members, of at least three and no more than seven. 
• Amended: Members of the Program are to be appointed by the Administrative Director of the Courts within 60 days of the legislation’s adoption. Members must be current or former “Mount Laurel Judges” or other qualified experts if there are not enough judges. Prior to committee amendments, the Chief Justice of the Supreme Court was to make appointments within 40 days of the bill’s adoption. 
• When making appointments, the Administrative Director of Courts must consider the experience in the employment of alternative dispute resolution methods and relevant subjects.  
• The legislation from last session included a provision that limited the political make-up of the Program members. No such provision is in the current bill.  

County-Level Housing Judges 

• The Chief Justice of the Supreme Court is required to designate a Superior Court judge who sits within the vicinage, or a retired judge who served within the vicinage during their tenure, to serve as a county-level housing judge to resolve disputes over compliance of fair share affordable housing obligations and municipal fair share plans and housing elements of municipalities within their county, with the Fair Housing Act.  
• A judge shall be permitted to serve as a county-level housing judge for more than one county in the same vicinage.  

Bonus Credits  

• A municipality shall not receive more than one type of bonus credit for any unit. 
• A municipality shall not be permitted to satisfy more than 25% of its prospective need obligations using bonus credits. 
• Types of credits include: 

1. Special Needs: One unit of credit and one bonus credit for each unit of low- or moderate-income housing for individuals with special needs or permanent supportive housing. 
2. Non-Profit Partnership: One unit of credit and one-half bonus credit for each unit of low- or moderate-income housing unit created in partnership with a non-profit housing developer. 
3. Proximity to Transit: One unit of credit and one-half bonus credit for each unit of low- or moderate-income housing located within a one-half mile radius (one-mile radius if located in a Garden State Growth Zone) surrounding a NJ Transit Port Authority Transit Corp., Port Authority Trans-Hudson Corp., rail, bus, or ferry station, including all light rail stations. 
4. Amended Age-Restricted: One unit of credit and one-half bonus credit for a unit of age-restricted housing. (Bonus credit only applicable to 10% of all age-restricted housing built that count towards affordable housing obligation) Committee amendments reduced the total number of applicable bonus credits from 15% to 10%. 
5. Amended Family Housing: One unit of credit and one-half bonus credit for each unit of low- or moderate-income family housing with at least three bedrooms above the minimum number required by the bedroom distribution. Committee amendments removed language limiting this to a given development. Committee amendments also limit this bonus credit to those family-housing units above the 50% minimum.  
6. Redevelopment: One unit of credit and one-half bonus credit for each unit of low- or moderate-income housing constructed on land that is or was previously developed and utilized for retail, office, or commercial space. 
7. Extension of Affordability Controls: One unit of credit and one-half bonus credit for each existing low- or moderate-income rental housing unit for which affordability controls are extended for a new term, and the municipality contributes funding towards the costs necessary for this preservation. 
8. Amended 100% Affordable with Municipal Contribution: One unit of credit and one bonus credit for each unit of low- or moderate-income housing in a 100% affordable housing project, which the municipality contributes to the cost of the project. This contribution can either be real property or contributions from the municipal affordable housing trust fund that covers no less than 3% of the project costs. Committee amendments increase this bonus credit from one-half a full bonus credit. Committee amendments also reduced the required contribution from 10% of the project’s cost to 3%. 
9. Very Low Income: One unit of credit and one-half bonus credit for each unit of very low-income housing for families above the13% of units required to be preserved for very low-income housing.  
10. Added Rental to Ownership Conversion: One unit of credit and one bonus credit for each unit of low- or moderate-income housing created by transforming an existing rental or ownership unit from market rate to affordable. This bonus credit was newly added as part of committee amendments.  

• Affordable Rental Units: Notably eliminated is the general bonus credit that has been historically provided for affordable rental units. Under previous rules, a municipality could obtain one credit and one bonus credit for each affordable rental unit.  

Housing Element & Fair Share Plan 

• Must include a spending plan for current funds in the municipal affordable housing trust fund and projected funds towards the round.  
• As part of the Housing Element and Fair Share Plan the municipality shall include an assessment of the degree to which the municipality has met its fair share obligation from the prior rounds of affordable housing obligations as established by prior approval and determine to what extent this obligation is unfulfilled or whether the municipality has credits in excess of prior round obligations. 
• If a prior round obligation remains unfulfilled, or a municipality never received an approval from the court or the council for any prior round, the municipality shall address such unfulfilled prior round obligation in its housing element and fair share plan. 
• Units included as part of the municipality’s unfulfilled prior round obligation shall not count towards the cap on units in the municipality’s prospective need obligation. 
• The legislation expands upon the techniques required to be considered in a housing element. Under current law the housing element must consider “A plan for infrastructure expansion and rehabilitation if necessary….”  

The legislation expands this to require a plan for “conversion or redevelopment of unused or underutilized property, including existing structures.” 

Vacant Land Adjustment and Need to Identify Parcels Likely to Redevelop  

• The legislation would require any municipality that receives an adjustment of its prospective need obligation for the fourth or any subsequent rounds based on a lack of vacant land, as part of its adopting and implementing its Housing Element and Fair Share Plan, to “identify sufficient parcels likely to redevelop during the current round of obligations to address at least 25% of the prospective need obligation that has been adjusted, and adopt realistic zoning that allows for such adjusted obligation, or demonstrate why the municipality is unable to do so.” 
• The Program, as part of providing Compliance Certification, must confirm that land was correctly excluded.  

Secondary Sources  

• Removed: The legislation as introduced included the requirement that secondary sources of supply and demand be adjusted for by calculating demolitions of low- and moderate-income housing, and housing creating through low- and moderate-income residential conversions. Committee amendments removed this language. 

Limits, Minimums, & Maximums: 

Amended Age Restricted Housing: A municipality may not satisfy more than 30% of the affordable housing units, exclusive of bonus credits, to address its prospective need obligation through the creation of age-restricted housing. This percentage has fluctuated between 25% and 30% from when the bill was introduced last legislative session and through committee amendments on the bill introduced in this legislative session. The bill in its current form after committee amendments allows up to 30%. 

Housing Available to Families with Children: A municipality must satisfy at least 50% of the actual affordable housing units, exclusive of bonus credits, created to address its prospective need obligation through the creation of housing available to families with children. This is a continuation of current requirements. 

Rental Housing: A municipality must satisfy at least 25% of the actual affordable housing units, exclusive of bonus credits, to address its prospective need obligation through rental units. At least half of that number must be available for families with children. This is a continuation of current requirements.  

Very Low Income: 13% of the housing units made available for low- and moderate-income households must be reserved for occupancy by very low-income households. (This is not new.) What is new is that at least half of that number must be made available to families with children. 

Transitional Housing: A municipality shall not credit transitional housing credits to more than 10% of the municipality’s fair share obligation. 

1,000 Unit Maximum: A municipality may lower its prospective need obligation to the extent necessary to prevent establishing a prospective need obligation of more than 1,000 housing units, after application of credits, or to prevent a prospective need obligation that exceeds 20% of the total number of households in a municipality. If subject to both, the reduction resulting in the lower obligation number is to be applied.  

Affordability Controls:  

• Under current law the HMFA may provide grants and loans to affordable housing programs provided the housing created through the assistance is restricted as low- and moderate-income housing for a period of 20 years. This 20-year period was required for both rentals and for-sale units.  
• Amended: The legislation increases the minimum period requiring affordability controls to 40 years for rental units and maintains a 30-year period for for-sale units. Prior versions of the bill required a 20-year period for for-sale units but committee amendments adjusted this to 30 years.  
• New language: There is a minimum of 30 years of affordability controls for housing units that have their controls extended, provided the minimum extension term may be limited to no less than 20 years as long as the original and extended term combined total at least 60 years. This is new language added through committee amendments.  
• New language: Any 100% affordable rental property shall have the right to extinguish a deed restriction regardless of original length, beginning 30 years followings the start of the restriction provided a refinancing or rehabilitation, or both, for the purposes of preservation is commenced and new deed restriction of at least 30 years is provided. This is new language added through committee amendments. 

Municipal Housing Liaisons  

• The DCA is tasked with promulgating processes and standards for the certification of administrative agents and municipal housing liaisons. 

Development Fees 

• Amended: Within 180 days following enactment, any municipality that is or has been authorized to impose and collect development fees from developers of residential property or payments in lieu of constructing affordable housing, shall provide the DCA with a detailed accounting of such fees that have been collected and expended since the inception of the municipal authorization of such fees. Prior to committee amendments, this reporting was due within 90 days. 
• Amended: A detailed accounting is then due by February 15 each year. Prior to committee amendments, this reporting was due January 15 of each year. 
• Must include within housing element a spending plan for current funds in the municipal affordable housing trust fund and projected funds towards the round.  
• DCA is to establish new rules related to the funds including rules that establish an expedited process for approving a spending plan for emergent opportunities to create affordable housing.  
• A municipality is prohibited from expending any development trust funds unless they have immunity from builder’s remedy litigation at the time of the expenditure.  

Limitation on Use of Funds:  

• Development fees cannot be used to pay for: (i) administrative costs, attorney fees or court costs to obtain a judgement of repose (ii) to contest a determination of the municipality’s fair share obligation, (iii) on costs of any challenger in connection to a challenge to the municipality’s obligations, housing element, or fair share plan. 
• There remains a 20% cap on the use of funds for administrative purposes but what constitutes administrative purposes has been clarified and limited to: (i) actions and efforts reasonably related to the determination of a municipal obligation and development of its housing element and fair share plan, and (ii) expenses that are reasonably necessary for compliance with the process of the program, including but not limited to, the costs to the municipality of resolving a challenge under the program.  
• Bottom line – Development fees cannot be used to pay for the administrative costs associated with a judgement of repose, but they can be used (capped at 20%) for the administrative costs within the Program. 

Timeline:  

The earlier of seven months from the adoption of the legislation or December 1, 2024: Deadline for the DCA to complete and publish a report on the calculation of regional needs and municipal obligations for each region. A new report is due August 1 of the year prior to the start of each 10-year round.    

January 31, 2025: Deadline for a municipality to adopt their numbers via “Binding Resolution” with or without using the DCA’s numbers. 

February 28, 2025: Deadline to challenge a municipality’s adopted numbers. 

March 1, 2025: If no challenges, the municipality’s numbers are established by default, immunity remains in effect. 

April 1, 2025: Deadline for the Affordable Housing Dispute Resolution Program (AHDRP) to settle the number challenge(s). 

June 30, 2025: Deadline to adopt and endorse a Housing Element and Fair Share Plan and file with the Program to maintain immunity. 

August 31, 2025: Deadline to challenge the validity of a municipality’s Housing Element and Fair Share Plan. 

December 31, 2025: Deadline for the municipality to settle the challenge or provide an explanation as to why it will not make all or some of the requested changes. 

March 15, 2026: Deadline for a municipality to amend its Housing Element and Fair Share Plans and to adopt the implementing ordinances to comport with the amended numbers. 

Contacts: Mike Cerra, Executive Director, mcerra@njlm.org, 609-695-3481, x120 and Frank Marshall, Esq., Associate General Counsel, fmarshall@njlm.org, 609-695-3481, x137.