A public hearing before the New Jersey Council on Affordable Housing (COAH) is scheduled July 2 on the third iteration of COAH's "Third Round" affordable housing regulations. COAH published its proposed new Third Round regulations earlier this month in the New Jersey Register after several long years of litigation and court orders concerning its growth share regulations. These published regulations differ slightly from the regulations released by COAH at its April 30 meeting. The public comment period on these regulations runs to August 1.
Whether these new regulations comply with the Supreme Court directive and the Mount Laurel doctrine is an analysis and discussion too lengthy for an update; however, it is important for residential and commercial developers to understand what the publication and likely adoption of these rules mean over the next year.
For nonresidential developers, it is important to understand that these proposed regulations have no impact on the Nonresidential Development Fee. The moratorium on the Nonresidential Development Fee expired in July 2013, which means that the fee remains in effect today for nonresidential projects that received approval after July 1, 2013. On June 23, 2014, the Assembly passed a bill to extend the moratorium to December 31, 2014. The bill is now before the Senate.
Thus, as it stands today, the Nonresidential Development Fee remains in effect and, when required, must be paid by nonresidential developers.
For residential developers, now is the time to assess strategy regarding identifying potential projects and how to approach municipalities about projects. The proposed new regulations, as in the past, break a town's affordable housing obligations into three components: (1) a rehabilitation obligation, (2) an unanswered prior obligation, and (3) prospective need. Notably, despite the Supreme Court striking down only COAH's growth share methodology (prospective need), COAH recalculated all three components again.
COAH in its appendices calculates each town's components of its fair-share obligation. The regulations, however, create certain caps and reductions to these obligations, such as the following:
Concerning zoning for affordable housing, the new regulations propose a concept of "Economic Feasibility Studies" to be submitted with fair-share plans to demonstrate that each site identified for affordable housing is realistic and would attract capital to construct the affordable housing. The proposed regulations provide that inclusionary zoning ordinances shall be premised on a 10 percent set-aside for affordable housing. However, the Economic Feasibility Study must draw a rational nexus between the density allowed and the affordable set-aside required (and any other compensatory benefits), and, if necessary, the percentage set-aside should be adjusted. Unlike the prior Third Round regulations, there are no presumptive minimum densities.
Rental bonus credits and similar types of bonus credits have been eliminated. There is still a cap of 25 percent of a town's obligation that can be satisfied through age-restricted housing, unless a town can demonstrate a need for a higher percentage.
Groups have come out in favor of and in opposition to these new regulations. Many have complained that these regulations are not mirrored after the First and Second Round regulations, as was directed by the Supreme Court. In many instances, municipal obligations are lower than they were under the prior Third Round regulations. The constitutionality of these regulations will obviously be the focus of many of the various groups involved.
COAH is scheduled to have a public hearing on July 2 in connection with these proposed regulations. Comments are required to be submitted to COAH by August 1. Both residential and nonresidential developers should be focused on strategy about how to deal with these regulations when they are adopted and the timing of proposed legislation impacting the Nonresidential Development Fee.
On June 2, at the CBIA's 2022 Energy & Environment Conference, Day Pitney Environmental and Land Use partner Harold Blinderman is moderating the panel, "A New Release-Based Clean-Up Program: Status, Process & Next Steps," and Elizabeth C. Barton, partner and Chair of the Environmental practice, is a panelist, along with speakers from CT DEEP's Environmental Quality Branch and Water Protection and Land Use division and BL Companies.
On May 18, Day Pitney New Jersey Real Estate Partner Peter Wolfson was a panelist on the "P3 Partnerships: A Path for Progressive Development," panel at a CoreNet NJ event.
Miami-based Real Estate Partner Sandra M. Ferrera is speaking on the University of Miami School of Law's Hispanic Law Students Association panel, "Legal Series Tournament: Practice Area Battle Royal: Team Litigation vs. Team Transactional."
On February 23, Partner Craig M. Gianetti spoke at the program, "Land Use Update 2022," about challenges to zoning ordinances and ethical issues in land use matters.
Day Pitney Alert
Day Pitney was included in Real Estate NJ's "Professional Spotlight 2022: Top Law Firms in New Jersey Commercial Real Estate."
Day Pitney Real Estate Partner Katharine Coffey was named PulteGroup's Land Consultant of the Year for the Northeast.
Sandra M. Ferrera was featured as a "Wonder Woman 2021" in the Boca Raton Observer. Ferrera advises clients on high-end residential and commercial real estate transactions, helping to make their assets work for them.
Day Pitney Press Release
Day Pitney Press Release