Non-Residential Development COAH Fee Exemption Expires

This article is to advise developers of non-residential projects that the 2.5% affordable housing fee (“2.5% fee”) is back in effect. Developers that received preliminary or final site plan approval prior to July 1, 2010 are exempt from that fee. To date, the legislature has failed to enact legislation that would exempt non-residential projects that receive site plan approval for the first time on or after July 1, 2010 from paying the fee. The Statewide Non-Residential Development Fee Act which took effect on July 17, 2008, imposed a 2.5% affordable housing fee on non-residential development, with limited exceptions. The New Jersey Economic Stimulus Act (“the Stimulus Act”), signed into law July 28, 2009, exempted non-residential developments projects that received preliminary or final site plan approval prior to July 1, 2010 from paying the 2.5% fee. The Stimulus Act requires that the developer obtain a construction permit prior to January 1, 2013 in order to maintain that fee exemption. Legislative efforts to eliminate the fee or to extend the deadline by which site plan approval must be obtained have been unsuccessful to date. Senate Bill S-1, which proposes major revisions to the existing affordable housing legislation including elimination of the Council on Affordable Housing, passed the State Senate. Among the proposed changes is the elimination of the 2.5 % fee for non-residential developments. However, the Assembly, wanting more time to examine the proposed changes in S-1, passed Assembly Bill A-3055 instead. A-3055 would extend the time by which site plan approval must be obtained in order to be exempt from the fee until October 30, 2010. On June 28, 2010, a spokesman for Governor Christie said the Governor would veto A-3055 if it was approved by the Senate. Both the Governor and the Senate leadership want the Assembly to adopt comprehensive affordable housing legislation comparable to S-1. Until new affordable housing legislation is approved by both houses of the legislature and signed into law by Governor Christie, any non-residential development that didn’t obtain site plan approval by July 1, 2010 will have to pay the 2.5% fee. It is likely that any legislation that is passed will negate any fees imposed on or after July 1, 2010. However, this result cannot be guaranteed. Developers whose non-residential development projects did not receive preliminary or final site plan approval prior to July 1, 2010 are advised to monitor the status of affordable housing legislation in determining when to submit site applications. For additional information, please contact William F. Harrison.