If the Borough or the Borough Planning Board/Zoning Board permits the construction of multifamily or single-family attached residential development that is "approvable" and "developable," as defined at N.J.A.C. 5:93-1.3,[1] the Borough or the Borough's Planning Board/Zoning Board shall require that an appropriate percentage of the residential units be set aside for low- and moderate-income households. This requirement shall apply beginning with the effective date the ordinance creating this section was adopted to any multifamily or single-family attached residential development, including the residential portion of a mixed-use project, which consists of five or more new residential units, whether permitted by a zoning amendment, a variance granted by the Borough's Planning Board or Zoning Board. For any such development for which the Borough's land use ordinances already permitted residential development as of the effective the ordinance creating this section was adopted, this requirement shall only apply if the Borough or the Borough's Planning Board or Zoning Board permits an increase in approvable and developable gross residential density to at least twice the permitted approvable and developable gross residential density as of the effective date the ordinance created this section was adopted. Nothing in this subsection precludes the Borough or the Borough's Planning Board or Zoning Board from imposing an affordable housing set-aside in a development not required to have a set-aside pursuant to this subsection consistent with N.J.S.A. 52:27D-311(h) and other applicable law. For all inclusionary projects, the appropriate set-aside percentage will be 20%. This requirement does not create any entitlement for a property owner or applicant for a zoning amendment or variance, or for approval of any particular proposed project. This requirement does not apply to any sites or specific zones otherwise identified in the Borough's settlement agreement with FSHC, which was executed by the Borough on February 12, 2020, or in the Borough's adopted Housing Element and Fair Share Plan, for which density and set-aside standards shall be governed by the specific standards set forth therein.

Furthermore, this section shall not apply to developments containing four or less dwelling units. All subdivision and site plan approvals of qualifying residential developments shall be conditioned upon compliance with the provisions of this section. Where a developer demolishes existing dwelling units and builds new dwelling units on the same site, the provisions of this section shall apply only if the net number of dwelling units is five or more.