In Holmdel Builders Association v. Holmdel Township, 121 N.J. 550 (1990), the New Jersey Supreme Court determined that mandatory development fees are authorized by the Fair Housing Act of 1985 (the Act), N.J.S.A. 52:27d-301 et seq., and the State Constitution, subject to adoption of rules by the Council on Affordable Housing (COAH).

Livingston Township initially adopted an affordable housing development fee ordinance on May 17, 1997 (Ordinance No. 17-97), which was approved by the Superior Court by order entered on September 22, 1997, as reconfirmed by a final judgment of compliance entered by the Court on February 7, 2000. The development fee ordinance subsequently was codified as Article XV of Chapter 170 of the Township Code.

Pursuant to P.L. 2008, c. 46, Section 8 (N.J.S.A. 52:27D-329.2) and the Statewide Nonresidential Development Fee Act (N.J.S.A. 40:55D-8.1 through 40:55D-8.7), COAH is authorized to adopt and promulgate regulations necessary for the establishment, implementation, review, monitoring and enforcement of municipal affordable housing trust funds and corresponding spending plans. Municipalities that are under the jurisdiction of COAH or a court of competent jurisdiction and have a COAH-approved spending plan may retain fees collected from nonresidential development.

Article XV was readopted by Ordinance No. 22-2011 on May 16, 2011, to provide updated standards for the collection, maintenance and expenditure of development fees pursuant to COAH's prior regulations and in accordance P.L. 2008, c. 46, Sections 8 and 32 through 38.[1]

Current Article XV has been adopted in connection with proceedings in a declaratory judgment action for approval of Livingston's affordable housing plan to reconfirm the standards for the collection, maintenance and expenditure of development fees pursuant to COAH's prior regulations and in accordance with P.L. 2008, c. 46, Sections 8 and 32 through 38.[2]

Imposed fees.

Imposed fees.

Eligible exactions, ineligible exactions and exemptions for nonresidential development.

Upon the granting of a preliminary, final or other applicable approval for a development, the applicable approving authority shall direct its staff to notify the construction official responsible for issuance of a building permit.

For nonresidential developments only, the developer shall also be provided with a copy of Form N-RDF, State of New Jersey Nonresidential Development Certification/Exemption, to be completed as per the instructions provided. The construction official shall verify the information submitted by the nonresidential developer as per the instructions provided in Form N-RDF. The Tax Assessor shall verify exemptions and prepare estimated and final assessments as per the instructions provided in Form N-RDF.

The construction official responsible for the issuance of a building permit shall notify the Tax Assessor of the issuance of the first building permit for a development which is subject to a development fee.

Within 90 days of receipt of that notice, the Tax Assessor, based on the plans filed, shall provide an estimate of the equalized assessed value of the development.

The construction official responsible for issuance of a final certificate of occupancy shall notify the Tax Assessor of any and all requests for the scheduling of a final inspection on property which is subject to a development fee.

Within 10 business days of a request for the scheduling of a final inspection, the Tax Assessor shall confirm or modify the previously estimated equalized assessed value of the improvements of the development, calculate the development fee, and thereafter notify the developer of the amount of the fee.

Should the Township of Livingston fail to determine or notify the developer of the amount of the development fee within 10 business days of the request for final inspection, the developer may estimate the amount due and pay that estimated amount consistent with the dispute process set forth in Subsection b of Section 37 of P.L. 2008, c. 46 (N.J.S.A. 40:55D-8.6).

Fifty percent of the estimated development fee shall be collected at the time of issuance of the building permit. The remaining portion shall be collected at the issuance of the certificate of occupancy. The developer shall be responsible for paying the difference between the fee calculated at building permit issuance and that determined at issuance of a certificate of occupancy.

Appeal of development fees.

There is hereby created a separate, interest-bearing Affordable Housing Trust Fund to be maintained by the Chief Financial Officer for the purpose of depositing development fees collected from residential and nonresidential developers and proceeds from the sale of units with extinguished controls.

The following additional funds shall be deposited in the Affordable Housing Trust Fund and shall at all times be identifiable by source and amount:

The Township of Livingston previously provided COAH with written authorization, in the form of a three-party escrow agreement between the Township, the bank and COAH to permit COAH to direct the disbursement of the funds as provided for in N.J.A.C. 5:97-8.13(b).

All interest accrued in the housing trust fund shall only be used on eligible affordable housing activities in accordance with § 170-136.

The expenditure of all funds shall conform to a spending plan approved by COAH, other authorized state administrative agency, the Superior Court of New Jersey or other court of competent jurisdiction. Funds deposited in the housing trust fund may be used for any activity approved by COAH, other authorized state administrative agency, the Superior Court of New Jersey or other court of competent jurisdiction to address the Township of Livingston's fair share obligation and may be set up as a grant or revolving loan program. Such activities include, but are not limited to: preservation or purchase of housing for the purpose of maintaining or implementing affordability controls, rehabilitation, new construction of affordable housing units and related costs, accessory apartment, market to affordable, regional housing partnership programs, conversion of existing nonresidential buildings to create new affordable units, green building strategies designed to be cost saving and in accordance with accepted national or state standards, purchase of land for affordable housing, improvement of land to be used for affordable housing, extensions or improvements of roads and infrastructure to affordable housing sites, financial assistance designed to increase affordability, administration necessary for implementation of the Housing Element and Fair Share Plan, or any other activity as permitted pursuant to N.J.A.C. 5:97-8.7 through 5:97-8.9 and specified in the approved spending plan.

Funds shall not be expended to reimburse the Township of Livingston for past housing activities.

At least 30% of all development fees collected and interest earned shall be used to provide affordability assistance to low- and moderate-income households in affordable units included in the Housing Element and Fair Share Plan. One-third of the affordability assistance portion of development fees collected shall be used to provide affordability assistance to those households earning 30% or less of median income by region.

The Township of Livingston may contract with a private or public entity to administer any part of its Housing Element and Fair Share Plan, including the requirement for affordability assistance, in accordance with N.J.A.C. 5:96-18.

No more than 20% of all revenues collected from development fees may be expended on administration, including, but not limited to, salaries and benefits for municipal employees or consultant fees necessary to develop or implement a new construction program, a Housing Element and Fair Share Plan, and/or an affirmative marketing program. In the case of a rehabilitation program, no more than 20% of the revenues collected from development fees shall be expended for such administrative expenses. Administrative funds may be used for income qualification of households, monitoring the turnover of sale and rental units, and compliance with COAH's monitoring requirements. Legal or other fees related to litigation opposing affordable housing sites or objecting to the Council's regulations and/or action are not eligible uses of the Affordable Housing Trust Fund.

The ability of Township of Livingston to impose, collect and expend development fees shall expire with its judgment of compliance from the Superior Court in consolidated litigation entitled "Joseph Kushner Hebrew Academy, Inc. and TMB Partners, LLC v. Township of Livingston, et al." (Docket No. ESX-L-9126-07), unless the Township of Livingston has filed another adopted Housing Element and Fair Share Plan with the Court, has petitioned for substantive certification and/or has received further court approval of the development fee ordinance. If the Township of Livingston fails to renew its ability to impose and collect development fees prior to the expiration of the judgment of compliance, it may be subject to forfeiture of any or all funds remaining within its municipal trust fund. Any funds so forfeited shall be deposited into the New Jersey Affordable Housing Trust Fund established pursuant to Section 20 of P.L. 1985, c. 222 (N.J.S.A. 52:27D-320). The Township of Livingston shall not impose a residential development fee on a development that receives preliminary or final site plan approval after the expiration of the judgment of compliance, nor shall the Township of Livingston retroactively impose a development fee on such a development. The Township of Livingston shall not expend development fees after the expiration of the judgment of compliance unless authorized by the Court or COAH.