COMMUNITY AFFAIRS PROPOSALS (a) Affordable Housing (and related cases), 390 N.J. Super. 1 (App. Div. 2007), the New Jersey Superior Court, Appellate Division affirmed in NEW JERSEY COUNCIL ON AFFORDABLE part, reversed in part, and remanded portions of the rules back to the HOUSING Council for rulemaking. In response, the Council adopted N.J.A.C. 5:96 and 5:97 effective June 2, 2008, and amended October 20, 2008. On Substantive Rules of the New Jersey Council on September 26, 2013, the Supreme Court of New Jersey issued its decision Affordable Housing for the Period Beginning on In the Matter of the Adoption of N.J.A.C. 5:96 and 5:97 by the New (the Effective Date of these Rules) Jersey Council on Affordable Housing, 215 N.J. 578 (2013) in which the Proposed New Rules: N.J.A.C. 5:99 Council was directed to use a methodology similar to that used in the first and second round affordable housing regulations rather than the growth- Proposed Repeal: N.J.A.C. 5:97 share approach used in previous iterations of the third round rules. Authorized By: New Jersey Council on Affordable Housing, Sean Summary of Proposed New Rules Thompson, Acting Executive Director. The proposed new rules and Third Round Methodology are the Authority: N.J.S.A. 52:27D-301 et seq. Council’s response to the Supreme Court decision. Calendar Reference: See Summary below for explanation of The proposed new rules include changes which will increase the exception to calendar requirement. efficiency and effectiveness of the substantive certification process and Proposal Number: PRN 2014-082. facilitate the production of affordable housing. Many sections of the rule A public hearing on the proposed new rules will be held at the have been clarified, reorganized, and updated. following date and time at the following location: N.J.A.C. 5:99-1 provides the purpose, scope and definitions for the Wednesday, July 2, 2014, at 9:30 A.M. chapter. The new rules change the municipal fair share obligation period New Jersey Housing and Mortgage Finance Agency governed by the rules from 1987 through 2018 to 1987 through 2024 so 637 South Clinton Avenue that the period can reflect an entire housing cycle and add and revise Trenton, NJ 08650 definitions where appropriate. Submit written comments by August 1, 2014, to: Proposed new N.J.A.C. 5:99-1.1 emphasizes that the core focus of the Sean Thompson, Acting Executive Director Mt. Laurel doctrine is that zoning available land is the preferred means of NJ Council on Affordable Housing meeting a municipality’s affordable housing obligation, allowing PO Box 813 alternate means where available land is insufficient. To ensure that the Trenton, NJ 08625-0813 sites selected for affordable housing are realistic from an economic All comments should be identified by the applicable N.J.A.C. citation perspective, the rules require an economic feasibility study. The rules and submitted in the following format: also establish a minimum affordable housing set-aside of 10 percent “5:99-1.2. Comment: The definition of household should be changed subject to appropriate adjustments. to delete the reference to persons under age 18.” This may be followed Definitions of the following words and terms are added in proposed with any supporting reasons, references, and any other additional new N.J.A.C. 5:99-1.2: adaptable, adjusted projected need, affordable information that the commenter wishes to provide. housing delivery techniques, Affordable Housing Obligation, approvable The Council encourages comments to be submitted in electronic form site, available land capacity, buildable limit, Census subregion, COAH, to [email protected] to enable an expeditious review and community capacity, developable site, development application, response. Such comments should include the words “Rule Comments” in development fee, disabled person, DOT, economic feasibility study, the subject box. The Council will also accept written comments sent via extension of expiring controls, Fair Share of Prospective Need, GIS, mail and or fax at (609) 633-6056, but requests a follow-up PC-formatted improvements necessary for the provision of low- and moderate-income disk in Microsoft Word to be delivered as soon as possible thereafter to housing, indigenous need, multiple index need, municipal land capacity, enable comments to be processed electronically. Fax copies shall also be new construction, non-residential development, non-residential followed by a mailed copy if a disk is not possible. The Council development fee, petition for substantive certification, phasing schedule, encourages all affected municipalities and counties to comment, and in present need, prior obligation, prospective need, Public Use Microdata particular would like to solicit comment from the municipalities and Areas (PUMAs), Public Use Microdata Sample (PUMS) region, regional counties impacted by Superstorm Sandy. household floor income, regional median income above the floor, second round, sewer capacity, site control, spending plan, total projected need, The agency proposal follows: townhouse, Treasurer, Unanswered Prior Obligation, vacant developable Summary land, water capacity, and Zoning District. N.J.A.C. 5:97, Substantive Rules of the New Jersey Council on Definitions of the following words and terms are deleted: affirmative Affordable Housing for the Period Beginning on June 2, 2008, are being marketing, affordable housing partnership program, assisted living proposed for repeal simultaneously with the proposal herein of new rules residence, assisted living services, calculated need, credits, designated N.J.A.C. 5:99, Substantive Rules of the New Jersey Council on center, durational adjustment, Fair Share Obligation, Fair Share round, Affordable Housing for the Period Beginning (the Effective Date of these family unit, farm labor housing, growth share, high poverty Census tract, Rules), as part of the Council on Affordable Housing’s (Council’s) major system, Medicaid waiver, middle income housing, mixed use zone, revision of its Third Round Methodology. The proposed repeal and new Office of Smart Growth (OSG), Plan Endorsement, planning area, post- rules are a necessary administrative action to establish the Statewide 1986 credits, preliminary approval, prior cycle credits, prior round affordable housing need for the period 1999 through 2024, assign each obligation, qualified non-profit, Realistic Development Potential (RDP), municipality its affordable housing obligation, and set forth the regional asset limit, residential health care facility, State Development affordable housing delivery techniques available to each municipality to and Redevelopment Plan, supportive/special needs housing, transitional address its obligation. housing, unmet need, and weatherization, because these terms are no As required by the Fair Housing Act (FHA) at N.J.S.A. 52:27D-307 longer used in the rules. and 308, the Council must adopt all rules necessary for effectively N.J.A.C. 5:99-2 outlines the methodology for estimating housing need, carrying out the provisions and purposes of the act. To that end, the sets forth the content of a Housing Element, and explains the procedures Council enacted N.J.A.C. 5:92 (first round rules), effective August 4, for projecting the municipal fair share of the prospective need. 1986, with subsequent amendments; N.J.A.C. 5:93 (second round rules), The new rules describe the rehabilitation share, unanswered prior effective June 6, 1994, with subsequent amendments; and N.J.A.C. 5:94 round obligation, and fair share of the prospective need as the three (third round rules), effective December 20, 2004, and amended May 15, components of the municipal affordable housing obligation. The previous 2006, and August 20, 2007. On January 25, 2007, In the Matter of the method for determining the growth share obligation has been replaced Adoption of N.J.A.C. 5:94 and 5:95 by the New Jersey Council on with a method that is similar to that used in the first and second rounds, (CITE 46 N.J.R. 924) NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 PROPOSALS COMMUNITY AFFAIRS as required by the Supreme Court. Municipalities are required to plan for Development Potential, unmet need, durational adjustments, and the fair share of the prospective need for the period of 2014 through adjustment of household and employment growth projections have been 2024. The procedures for projecting household and employment deleted. projections and the residential and nonresidential growth share N.J.A.C. 5:99-6 outlines the requirements of a municipal rehabilitation obligations have been deleted as the new rules are not based on growth program to address the municipal present need as determined in the share but rather are based on a methodology similar to that used in the methodology set forth in chapter Appendix B. The municipal first and second rounds. rehabilitation investment was changed from $10,000 to $8,000 for hard N.J.A.C. 5:99-3 outlines reductions, limits, and substantial costs which does not include administrative costs. The provision for the compliance. The 1,000-unit cap, buildable limit, and 20 percent cap inclusion of rehabilitation of rental units in the municipal rehabilitation reductions are included in the methodology. The substantial compliance program has been deleted. reduction is applied to the unanswered prior round based on the Council’s N.J.A.C. 5:99-7 outlines the various affordable housing delivery determination of municipal compliance with a prior grant of substantive techniques that may be used to address a municipality’s Fair Share of certification. The buildable limit reduction is the process described in Prospective Need obligation. Each section of this subchapter describes a proposed chapter Appendix E whereby a municipality’s development specific technique for providing low- and moderate-income housing capacity for new units is determined via a review of Statewide GIS parcel within the municipality and sets forth compliance requirements for the layers to net out total available and developable land. A municipality’s specified affordable housing approach. The techniques specified are affordable new construction obligation is thereby reduced to that which zoning/rezoning for inclusionary development, 100 percent affordable can be accommodated as determined by its land capacity per the table new construction via use/donation of municipally-owned land and/or use provided in chapter Appendix E. Municipalities with buildable limit of public/municipally funds, community residence for the reductions are required to identify additional opportunities for the developmentally disabled, and redevelopment and rehabilitation per creation of affordable housing. N.J.S.A. 40A:12A-1 et seq. The subchapter permits the option of a Municipalities can request from the Council a substantial compliance municipally proposed delivery technique, not specifically specified in the reduction to reduce the Unanswered Prior Round Obligation, when that subchapter, for providing affordable housing units administered pursuant municipality has substantially complied with the terms of any prior round to the Uniform Housing Affordability Controls (UHAC), N.J.A.C. 5:80- substantive certification and has created a substantial percentage of its 26. The subchapter sets forth the minimum documentation requirements affordable new construction obligation during the 1987 through 1999 and for the housing delivery techniques, requires UHAC compliance, and, 1999 through 2014 periods as calculated in proposed chapter Appendix when applicable, notes any UHAC exemptions. D. A schedule for percentage of completed units to percentage of The section on inclusionary zoning has been revised to require reduction permitted is provided. municipalities to demonstrate realistic opportunity via an economic The 1,000-unit cap specifies that no municipality shall be required to feasibility study and if necessary, a plan for infrastructure expansion and address a fair share beyond 1,000 units within 10 years from the grant of rehabilitation. The presumptive affordable housing set-aside is ten substantive certification, unless the municipality has demonstrated percent and may be adjusted upward or downward based on the economic capacity for more. The 20 percent cap ensures that a municipality’s fair feasibility study’s determination. The section also describes the required share of prospective need obligation is not more than 20 percent of the components of the economic feasibility study, including among others total number of units located in the municipality as of the 2010 Census. densities and set-asides sufficient to address the total Fair Share of The formulas for the low-mod split, RCA cap, rental housing Prospective Need. Payments in lieu of producing affordable housing have requirement, family housing requirements, and criteria for rental bonuses been revised so that it is only permitted when a municipality has have been deleted from the rules as they are either no longer necessary or, demonstrated why the affordable units cannot be provided on site. In in the case of the low-mod split, are addressed in the Uniform Housing addition, the payment-in-lieu amount must be established by municipal Affordability Controls. The requirements of the content of a Fair Share ordinance and be based on the net cost of subsidizing affordable housing Plan have been moved to Subchapter 4 and the criteria for a suitable site within the municipality using the cost containment provisions in N.J.A.C. and accessible and adaptable affordable units has been moved to 5:43-2.4(a)1 through 6 as a guide. Payments in lieu amounts must bear a Subchapter 7. The age-restricted cap requirements have been moved to rational nexus to the affordable housing technique being funded. Subchapter 4. The sections on accessory apartment programs, market to affordable N.J.A.C. 5:99-4 sets forth the requirements associated with the programs, assisted living residence, regional contribution agreement, submission of a Housing Element and Fair Share Plan. The requirements affordable housing partnership, and extension of expiring controls, and for a Housing Element are based on the requirements set forth in the Fair the section on other innovative approaches, have been deleted as delivery Housing Act, N.J.S.A. 52:27D-301 et seq., and are focused on land use techniques for the Prospective Fair Share Need because these rules focus and zoning mechanisms that will foster municipal achievement of access on zoning as the appropriate technique for the production of affordable to affordable housing in addressing the municipal affordable housing housing. The section on previously zoned sites has been moved to obligations. The submission requirements associated with the Fair Share Subchapter 2. Plan include an explanation of the delivery techniques and funding The section on rehabilitation is now its own subchapter. The Regional sources that will be used to address the municipal affordable housing Contribution Agreement (RCA) is also its on subchapter and has been obligation and require the submission of an economic feasibility study for revised, since RCAs are no longer statutorily permitted, to provide all proposed zoning. The criteria for receiving credits from prior rounds guidance to receiving municipalities intending to do project plan have been deleted. amendments. N.J.A.C. 5:99-5 outlines the procedures for a municipality seeking a The section on supportive and special needs housing is now called vacant land adjustment to its unanswered prior round and/or prospective community residences for the developmentally disabled and has been fair share obligation. The rules set forth what lands a municipality should revised to delete references to permanent supportive housing. exclude from its vacant land inventory and explain the review process. The section on redevelopment has been renamed “Redevelopment and The new rules require that a municipality requesting a vacant land rehabilitation” pursuant to the Local Redevelopment and Housing Law, adjustment due to a lack of available land resources submit an economic N.J.S.A. 40A:12A-1 et seq. A copy of the final Request for Proposal has feasibility study in addition to a certification stating that zoned densities been deleted. and affordable housing set-asides are not capable of providing a realistic N.J.A.C. 5:99-8 sets forth conditions that the Council will evaluate in opportunity given the use of density bonuses and other devices and that determining whether substantive certification granted to a municipality no other suitable sites are available for construction of affordable should be revoked. The procedures for development fee ordinances, housing. The vacant land adjustment will reflect the obligation reduced affordable housing trust fund accounts, and spending plans are now by the number of units that can be provided either through inclusionary included in Subchapter 11. development with set-asides or other affordable housing delivery N.J.A.C. 5:99-9 provides rules relating to RCAs consistent with the techniques. The procedures for determining assignment of Realistic Fair Housing Act provision which disallows any RCAs to be entered into NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 (CITE 46 N.J.R. 925) COMMUNITY AFFAIRS PROPOSALS after July 18, 2008. The rules govern existing RCAs, project plan continue to benefit since the Council’s rules have been the basis for the amendments, and excess RCA funds. The minimum transfer amount, creation of additional housing affordable to low- and moderate-income submission requirements, terms and requirements of the sending and households. receiving municipalities, and the criteria for the county planning board The overriding objective of these proposed new rules is to review for an RCA have been deleted because municipalities may not substantially increase the number of affordable housing units that will enter into new RCAs as of July 18, 2008, due to amendments to the Fair actually be built over the next 10 years. By requiring economic feasibility Housing Act. studies to be done on proposed sites or zoning districts, the rules are N.J.A.C. 5:99-10 contains the rules that govern the proper designed to ensure that sites selected for inclusionary zoning are likely to administration of affordable units, affirming that all units addressing a attract private sector development thereby producing the needed municipal affordable housing obligation must be administered in affordable housing. Focusing on inclusionary zoning as the primary accordance with UHAC, unless there is a specific exemption in the means of producing affordable housing and eliminating unrealistic set Council’s rules. New exemptions have been added that relate to the asides and inappropriate sites from the municipalities’ Fair Share Plans foreclosure of affordable units, association fees, marketing, and waivers. through the use of the economic feasibility study should result in benefits Changes to UHAC appendices have been included to effectuate the not only for the municipalities but, more significantly, for the low- and changes to UHAC foreclosure language. moderate-income households in need of affordable housing. N.J.A.C. 5:99-11 establishes standards relating to the collection and Economic Impact use of municipal affordable housing trust funds. The maximum permitted The proposed new rules will have a positive economic impact on many residential development fee percentage remains unchanged at one and sectors of the affordable housing development community. The rules one-half percent of equalized assessed value. The new rules asses non- should result in a substantial increase in the affordable housing units residential development fees in accordance with the Non-Residential actually built due to its focus on the economic feasibility of proposed Development Fee Act, N.J.S.A. 40:55D-8.1 through 8.7, which requires a sites for inclusionary developments. This will result in a positive fee of two percent of equalized assessed value for all non-residential economic benefit to those households that will reside in the affordable development throughout the State. The two present fee represents a housing units produced. While the requirement of an economic feasibility decrease from the two and one-half percent fee previously permitted. study may involve some additional costs to municipalities in complying In order to further the production of affordable housing and expand with the Council’s rules, such additional costs are more than outweighed opportunities for affordability assistance, the rules continue to permit a by the benefits to low- and moderate-income households. Moreover, the municipality to spend affordable housing trust funds prior to substantive economic impact of participation in the Council’s process is significantly certification, provided the Council has approved the municipal spending less than the impact created by involvement in a builder’s remedy plan. In accordance with the Fair Housing Act, 30 percent of all lawsuit. These rules will allow a municipality to make proactive development fee revenue must be spent on affordability assistance. At a economic and planning choices to its advantage rather than be subjected minimum, one third of the affordability assistance must be used for low- to protracted legal challenges that cost significantly more in time and income households to address the statutory requirement reserving 13 money. percent of low-income units for very low-income households. The rules now set forth the process, pursuant to a 2008 amendments to Federal Standards Statement the Fair Housing Act, by which funds may be transferred to the Statewide No Federal standards analysis is required because these rules are not affordable housing trust fund account in the event that a municipality has being proposed in order to implement, comply with, or participate in any not committed to expend or expended funds within four years from the program established under Federal law or under a State law that date of collection. incorporates or refers to Federal law, standards, or requirements. Appendix A contains an overview of the details and procedures Jobs Impact necessary for the Council’s determination of municipal rehabilitation The proposed new rules do not mandate an increase or decrease in share, fair share, and unanswered prior round obligation. employment opportunities since participation in the Council’s process is Appendix B contains the methodology for determining each voluntary. Nevertheless, it is anticipated that as growth, development, and municipality’s rehabilitation share and a calculation and resulting construction occur naturally, new jobs attributable to the production of obligation for each municipality. affordable housing will be added in those municipalities that voluntarily Appendix C contains an explanation of the methodology used to participate. determine each municipality’s 2014 through 2024 fair share of projected need. Agriculture Industry Impact Appendix D contains the methodology for a determination of each The Council does not anticipate that the proposed new rules will result municipality’s unanswered prior obligation, which spans from 1987 in any impact on the agriculture industry in New Jersey. through 2014, and reflects two separate time periods, from 1987 through Regulatory Flexibility Analysis 1999 and from 1999 through 2014. The primary purpose of these rules is to regulate and facilitate the Appendix E contains the buildable limit methodology which analyzes preparation of a municipal housing element and fair share plan, in the amount of developable land in New Jersey and estimates the capacity accordance with the Fair Housing Act. The proposed new rules are of that land to support future residential development. voluntary rather than mandatory. As such they impose no reporting, As the Council has provided a 60-day comment period for this notice recordkeeping, or other compliance requirements on small businesses as of proposal, this notice is excepted from the rulemaking calendar defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. requirements, pursuant to N.J.A.C. 1:30-3.3(a)5. The substantive certification process concerns the review of local Social Impact municipal plans as they relate to these rules. The decision of a small The Council’s rules have had an impact on a majority of the 565 business to participate as a member of the public in the process is municipalities in the State of New Jersey, either through direct voluntary. participation in the Council’s process or through application of the rules To the extent that small businesses may choose to participate in the in the judicial process. substantive certification process, they may, as all other participants, incur As a result of the Council’s programs, more than 64,000 affordable costs in the preparation and submission of written comments, reports, housing units have been built or are under construction. Approximately motions, and/or objections. The requirements established in these rules 16,000 deficient housing units with major systems in need of repair have for participation are the minimum necessary for careful and appropriate been rehabilitated to code standard for low- and moderate-income Council evaluation. Submission of such written comments will not incur households. The existence of a variety of housing types has increased any additional capital costs on small businesses choosing to participate, consumer choice. Hardship conditions due to high housing costs or although they may include costs for legal, planning, or engineering housing unavailability in some areas have been lessened. The public will services. These costs will presumably only be incurred once a decision is (CITE 46 N.J.R. 926) NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 PROPOSALS COMMUNITY AFFAIRS made that the incidence of such costs is warranted on a financial or other (e) These rules establish a set aside of 10 percent, subject to basis. Therefore, lesser requirements for or exemptions of small appropriate adjustments. Inclusionary developments with reasonable set businesses are not provided. asides and appropriate compensatory benefits, assessed for economic feasibility, should result in an increase in the production of affordable Housing Affordability Impact Analysis housing units to meet the needs of low- and moderate-income The proposed new rules will have a positive impact on housing households. affordability in this State. A primary reason that past rules have not resulted in the creation of more affordable housing is that the financial 5:99-1.2 Definitions viability of inclusionary zoning sites was not considered. While the The following words and terms, when used in this chapter, shall have private sector will produce affordable housing if developers receive a the following meanings unless the context clearly indicates otherwise: suitable return on investments, prior requirements, such as a 20 percent “Accessory apartment” means a self-contained residential dwelling mandatory set aside for low- and moderate-income units, have often unit with a kitchen, sanitary facilities, sleeping quarters, and a private failed to provide the necessary incentive to produce mixed income entrance, which is created within an existing home, or through the housing developments. By creating more flexibility through a 10 percent conversion of an existing accessory structure on the same site, or by an set aside that can be adjusted based on economic feasibility as well as a addition to an existing home or accessory building. municipality’s unanswered prior round and fair share of the prospective “Act” means the Fair Housing Act of 1985, N.J.S.A. 52:27D-301 et need obligations, the sites selected in the Fair Share Plans will provide a seq. realistic opportunity for actual construction, resulting in a substantial “Adaptable” means constructed in compliance with the technical increase in the number of affordable housing units that will actually be design standards of the Barrier Free Subcode, N.J.A.C. 5:23-7. built over the next 10 years. The proposed rules anticipate the “Adjusted projected need” means total projected need minus rehabilitation of over 62,000 substandard units and the creation of secondary sources of affordable housing supply as calculated in chapter approximately 41,874 affordable units over the next 10 years. Appendix C, incorporated herein by reference. “Affordability assistance” means the use of funds to render housing Smart Growth Development Impact Analysis units more affordable to low- and moderate-income households, pursuant The proposed new rules promote smart growth in the State as they to N.J.A.C. 5:99-11.10. require that the suitability of an affordable housing site be reviewed as “Affordable” means a sales price or rent within the means of a low or part of the economic feasibility analysis. There is no prescriptive moderate income household as defined in N.J.A.C. 5:99-10. affordable housing set-aside or density required by the rules, and, thus, “Affordable housing delivery techniques” means any of the methods municipalities are able to consider the environmental and economic of creating actual housing units available to low- and moderate-income realities of a site prior to designating it for affordable housing. As a households or creating a realistic opportunity for the construction of such result, the rules may result in an increase in housing units where units as permitted by the Act. economically realistic and environmentally appropriate. It is anticipated “Affordable housing development” means a development included in that the proposed rules will result in more affordable housing in Planning the Housing Element and Fair Share Plan, and includes, but is not limited Areas 1 and 2 or designated centers. It is anticipated that the affordable to, an inclusionary development, a municipal construction project or a housing resulting from Planning Areas 1 and 2 or designated centers will 100 percent affordable development. provide the vast percentage of the 41,874 affordable units over the next “Affordable Housing Obligation” means the total of the Rehabilitation 10 years. Share, the Unanswered Prior Obligation, and the Fair Share of Full text of the rules proposed for repeal may be found in the New Prospective Need. Jersey Administrative Code at N.J.A.C. 5:97. “Affordable unit” means an affordable housing unit proposed or created pursuant to the Act including units created with municipal Full text of the proposed new rules follows: affordable housing trust funds. “Agency” means the New Jersey Housing and Mortgage Finance CHAPTER 99 Agency established by P.L. 1983, c. 530 (N.J.S.A. 55:14K-1 et seq.). SUBSTANTIVE RULES OF “Age-restricted housing” means a housing unit that is designed to meet THE NEW JERSEY COUNCIL ON AFFORDABLE the needs of, and is exclusively for, an age-restricted segment of the HOUSING FOR THE PERIOD BEGINNING population such that: (THE EFFECTIVE DATE OF THESE RULES) 1. All the residents of the development where the unit is situated are 62 years or older; SUBCHAPTER 1. GENERAL PROVISIONS 2. At least 80 percent of the units are occupied by one person that is 55 5:99-1.1 Short title; purpose; scope years or older; or (a) The provisions of this chapter will be known as the “Substantive 3. The development has been designated by the Secretary of the U.S. Rules of the New Jersey Council on Affordable Housing for the Period Department of Housing and Urban Development (HUD) as “housing for Beginning on (the Effective Date of these Rules).” older persons” as defined in Section 807(b)(2) of the Fair Housing Act, (b) The purpose of this chapter will be the provision of criteria to be 42 U.S.C. §§ 3607. used by municipalities in addressing their constitutional obligation to “Approvable site” means a site that may be developed for low- and provide a realistic opportunity for the construction of their fair share of moderate-income housing in a manner consistent with the rules and affordable housing for low- and moderate-income households. regulations of all agencies with jurisdiction over the site. A site may be (c) These rules emphasis the core focus of the Mt. Laurel doctrine by approvable although not currently zoned for low- and moderate-income requiring zoning to be the preferred means of meeting a municipality’s housing. fair share obligation, eliminating bonuses that have diluted that “Available land capacity” means a GIS-layered determination of a obligation, and permitting alternate means of achieving municipality’s municipality’s developable land. obligation only where available land capacity is insufficient. “Barrier free escrow” means the holding of funds collected to adapt (d) Given that production of affordable housing relies primarily on the affordable unit entrances to be accessible in accordance with N.J.S.A. private sector, these rules are designed to ensure that the sites selected by 52:27D-311a et seq. Such funds must be held in a municipal affordable a municipality to meet its affordable housing obligation are realistic from housing trust fund pursuant to N.J.A.C. 5:99-11.7. an economic perspective through an Economic Feasibility Study. In the “Buildable Limit” means a methodological constraint applied to the past, unreasonably high mandatory set asides and unrealistic site determination of municipal affordable housing need that identifies selections have created barriers to the actual production of affordable developable land and the ability to accommodate its Fair Share of housing. Prospective Need and/or Unanswered Prior Obligation. NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 (CITE 46 N.J.R. 927) COMMUNITY AFFAIRS PROPOSALS “Census subregion” means any geographic segment of the state, as “Extension of expiring controls” means the process of increasing the defined by the U.S. Bureau of the Census. number of years a deed restriction will apply to a unit. This can be done “COAH” means the New Jersey Council on Affordable Housing. in several ways, most often through a voluntary extension by the owner “Community capacity” means an estimate based on 20 percent of a with a monetary incentive, or through a municipal resolution according to municipality’s existing housing stock at the time it request a 20 percent the original deed restriction documents. cap. “Fair Share Plan” means the plan that describes the affordable housing “Conversion” means the creation of a new affordable housing unit delivery techniques and the funding sources, if applicable, by which a through the alteration of existing structures. municipality proposes to address its affordable housing obligation as “Council” means the New Jersey Council on Affordable Housing established in the Housing Element. It includes the draft ordinances established under the Act, which has primary jurisdiction for the necessary to implement that plan, and addresses the requirements of administration of housing obligations in accordance with sound regional N.J.A.C. 5:99-4. planning considerations in the State. “Fair Share of Prospective Need” or “Fair Share” means a projection “DCA” means the New Jersey Department of Community Affairs. of affordable housing needs based on development and growth that is “Deficient housing unit” means a housing unit with health and/or reasonably likely to occur in the region or municipality during the period safety code violations that require the repair or replacement of a major of 2014 through 2024. system. A major system includes weatherization, roofing, plumbing “Final approval” means the official action of the planning board taken (including wells), heating, electricity, sanitary plumbing (including septic on a preliminary approved major subdivision or site plan after all systems), lead paint abatement, and/or load bearing structural systems. conditions, engineering plans, and other requirements have been “DEP” means the New Jersey Department of Environmental completed or fulfilled and the required improvements have been installed Protection. or guarantees properly posted for their completion, or approval “Developer” means any person, partnership, association, company, or conditioned upon the posting of such guarantees. corporation that is the legal or beneficial owner or owners of a lot or any “GIS” means geographic information systems designed to capture, land proposed to be included in a proposed development including the store, manipulate, analyze, manage, and present all types of geographical holder of an option to contract or purchase, or other person having an data. enforceable proprietary interest in such land. “Gut rehabilitation” means the same as “reconstruction.” “Developable site” means a site that has access to appropriate water “Household” means the person or persons occupying a housing unit. and sewer infrastructure, and is consistent with the applicable areawide “Household growth projection” means an estimate of the household water quality management plan (including the wastewater management growth anticipated in each region between 2014 and 2024. plan) or is included in an amendment to the areawide water quality “Housing Element” means the portion of a municipality’s master plan, management plan submitted to and under review by DEP. required by the Municipal Land Use Law (MLUL) at N.J.S.A. 40:55D- “Development” means the division of a parcel of land into two or 28.b(3) and the Act, that includes all information required by N.J.A.C. more parcels, the construction, reconstruction, conversion, structural 5:99-4.2 and establishes the municipality’s affordable housing obligation. alteration, relocation, or enlargement of any use or change in the use of “Housing region” means a geographic area, determined by the any building or other structure, or of any mining, excavation or landfill, Council, of no less than two and no more than four contiguous, whole and any use or change in the use of any building or other structure, or counties, which exhibits significant social, economic, and income land or extension of use of land, for which permission may be required similarities and which constitutes, to the greatest extent practicable, a pursuant to N.J.S.A. 40:55D-1 et seq. Primary Metropolitan Statistical Area (PMSA) as last defined by the “Development application” means the application form and all United States Census Bureau. accompanying documents required by ordinance for approval of a “Improvements necessary for the provision of low- and moderate- subdivision plat, a site plan, planned development, conditional use, income housing” means alteration, reconstruction, conversion, zoning variance, or direction of the issuance of a permit pursuant to rehabilitation, change in use, additions, or other improvements that N.J.S.A. 40:55D-34 or 36. results in the creation of an affordable housing unit. “Development fee” means money paid by a developer for the “Inclusionary development” means a development containing both improvement of property as permitted in N.J.A.C. 5:99-11.3. affordable units and market- rate units. This term includes, but is not “Disabled person” means a person with a physical disability, infirmity, necessarily limited to: new construction, the conversion of a non- malformation, or disfigurement which is caused by bodily injury, birth residential structure to residential, and the creation of new affordable defect, aging, or illness including epilepsy and any other seizure units through the reconstruction of a vacant residential structure. disorders, and which shall include, but not be limited to, any degree of Affordable units shall constitute at least 10 percent of the units to be paralysis, amputation, lack of physical coordination, blindness or visual produced unless adjusted based on an economic feasibility study. impediment, deafness or hearing impediment, muteness or speech “Indigenous need” means local present need, or rehabilitation need or impediment, or physical reliance on a service or guide dog, wheelchair, rehabilitation share. or other remedial appliance or device (N.J.S.A. 52:27D-304.k). “Individuals with special needs” means individuals with mental “DOT” means the New Jersey Department of Transportation. illness, individuals with physical or developmental disabilities, and “Economic feasibility study” means an analysis completed by an individuals in other emerging special needs groups identified by State individual or group of individuals with demonstrated professional agencies that are at least 18 years of age if not part of a household. knowledge and experience in real estate finance, real estate costs of Special needs populations also include victims of domestic violence; ex- development and construction, and the market valuation of rental and for offenders; youth aging out of foster care; individuals and households who sale real estate products in New Jersey. Such analysis shall assess, are homeless; and individuals with AIDS/HIV. consistent with the requirements of N.J.A.C. 5:99-7.2(b), all sites zoned “Judgment of compliance” means a determination issued by the for inclusionary development in a municipality’s Housing Element and Superior Court approving a municipality’s plan to satisfy its affordable Fair Share Plan designated for the production of low- and moderate- housing obligation. income housing to determine if the site is likely to provide a realistic “Low income” means 50 percent or less of the median gross household opportunity to attract the capital needed to construct the low- and income for households of the same size within the housing region in moderate-income units proposed on a site during the period set forth in which the household is located, based upon the U.S. Department of the municipal Fair Share Plan. Housing and Urban Development’s (HUD) Section 8 Family Income “Equalized assessed value” means the assessed value of a property Limits (uncapped) averaged across counties for the housing region. divided by the current equalization ratio for the municipality. Estimates at “Low-income housing” means housing affordable according to U.S. the time of building permit may be obtained by the tax assessor utilizing Department of Housing and Urban Development or other recognized estimates for construction cost. Final equalized assessed value shall be standards for home ownership and rental costs and occupied or reserved determined at project completion by the municipal assessor. for occupancy by households with a gross household income equal to 50 (CITE 46 N.J.R. 928) NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 PROPOSALS COMMUNITY AFFAIRS percent or less of the median gross household income for households of “Present need” is indigenous need, or rehabilitation need, or the same size within the housing region in which the housing is located. rehabilitation share. “Market-rate units” means housing not restricted to low- and “Prior Obligation” means the sum of the 1987 through 1999 and the moderate-income households that may sell or rent at any price. 1999 through 2014 prior obligation as determined in chapter Appendix D, “Market to affordable program” means a program to pay down the cost incorporated herein by reference. It includes secondary sources but not of market-rate units and offer them in sound condition, for sale or rent, at credits for the provision of affordable units and publicly subsidized affordable prices to low- and moderate-income households to address all housing. or a portion of the affordable housing obligation. “Prospective need” means a projection of low- and moderate-income “Moderate income” means more than 50 percent but less than 80 housing needs based on development or growth likely to occur in a region percent of the median gross household income for households of the same or municipality. It does not include secondary sources of supply. size within the housing region in which the household is located, based “Public Use Microdata Areas (PUMAs)” are geographic contiguous upon the U.S. Department of Housing and Urban Development’s areas of population 100,000 or more which are used by the Census to (HUD’s) Section 8 Family Income Limits (uncapped) averaged across collect detailed information. counties for the housing region. “Public Use Microdata Sample (PUMS)” means a Census sample of “Moderate-income housing” means housing affordable according to individuals used to acquire detailed information about their personal U.S. Department of Housing and Urban Development or other recognized characteristics, households, and housing. PUMS data provides detailed standards for home ownership and rental costs and occupied or reserved information that is very malleable for areas whose population exceeds for occupancy by households with a gross household income equal to 100,000. more than 50 percent but less than 80 percent of the median gross “RCA Project Plan” means a past application, submitted by a receiving household income for households of the same size within the housing municipality in an RCA, delineating the manner in which the receiving region in which the housing is located. municipality intended to create or rehabilitate low- and moderate-income “Multiple index need” means housing need estimates made at the housing. regional level, usually including low- and moderate-income estimations, “Realistic opportunity” means a consideration of facts and conditions not available at the local level. resulting in a determination that there is a reasonable likelihood that the “Municipal land capacity” means an estimate of developable land affordable housing in a municipality’s Housing Element and Fair Share based on GIS data, zoning, and/or special area designations which Plan will actually be constructed or provided during the 10- year period determine the municipality’s relative ability to absorb new development, of certification based upon a careful analysis of the elements in the including affordable housing. municipality’s plan, including the financial feasibility of each proposed “New construction” means the creation of a new housing unit under affordable housing technique, and the suitability of specific sites as set regulation by a code enforcement official regardless of the means by forth in N.J.A.C. 5:99-7. which the unit is created. Newly constructed units are evidenced by the “Recapture funds” means funds collected by the municipality upon the issuance of a certificate of occupancy and may include new residences first non-exempt sale of an affordable unit after the expiration of the created through additions and alterations, adaptive reuse, subdivision or control period or repayment of loan funds pursuant to the terms of a lien conversion of existing space, and moving a structure from one location to or mortgage note. another. “Receiving municipality” means, for the purposes of an RCA, a “Non-residential development” means: municipality that contractually agrees to assume a portion of another 1. Any building or structure, or portion thereof, including, but not municipality’s fair share obligation. limited to, any appurtenant improvements, which is designated to a use “Reconstruction” means any project where the extent and nature of the group other than a residential use group according to the State Uniform work is such that the work area cannot be occupied while the work is in Construction Code, N.J.A.C. 5:23, promulgated to effectuate the State progress and where a new certificate of occupancy is required before the Uniform Construction Code Act, N.J.S.A. 52:27D-119 et seq., including work area can be reoccupied, pursuant to the Rehabilitation Subcode, any subsequent amendments or revisions thereto; N.J.A.C. 5:23-6. Reconstruction shall not include projects comprised only 2. Hotels, motels, vacation timeshares, and child-care facilities; and of floor finish replacement, painting or wallpapering, or the replacement 3. The entirety of all continuing care facilities within a continuing care of equipment or furnishings. Asbestos hazard abatement and lead hazard retirement community which is subject to the Continuing Care abatement projects shall not be classified as reconstruction solely because Retirement Community Regulation and Financial Disclosure Act, P.L. occupancy of the work area is not permitted. 1986, c. 103 (N.J.S.A. 52:27D-330 et seq.). “Redevelopment” means planning and construction activities designed “Non-residential development fee” means the fee authorized to be to build, conserve, or rehabilitate structures, sites, and improvements in imposed pursuant to sections 32 through 38 of P.L. 2008, c. 46 (N.J.S.A. accordance with a redevelopment plan pursuant to N.J.S.A. 40A:12A-3 of 40:55D-8.1 through 40:55D-8.7). the Local Redevelopment and Housing Law. “1,000-unit limitation” means a cap of the fair share of prospective “Redevelopment agency” means a municipal redevelopment agency need, where pursuant to N.J.S.A. 52:27D-307.e, no municipality shall be created pursuant to N.J.S.A. 40A:12A-11 of the Local Redevelopment required to address its new construction obligation beyond 1,000 units and Housing Law. within 10 years from the grant of substantive certification. “Redevelopment area” or “area in need of redevelopment” means an “Order for repose” means the protection a municipality has from area determined to be an area in need of redevelopment pursuant to builder’s remedy lawsuit for a period of time from the entry of a N.J.S.A. 40A:12A-5 and 6 of the Local Redevelopment and Housing judgment of compliance by the Superior Court. A judgment of Law. compliance often results in an order for repose. “Redevelopment plan” means a plan adopted by the governing body of “Payment in lieu of constructing affordable units” means the payment a municipality for the redevelopment or rehabilitation of all or any part of of funds to the municipality by a developer when affordable units are not a redevelopment area or rehabilitation area pursuant to N.J.S.A. produced on a site zoned for an inclusionary development. 40A:12A-7 of the Local Redevelopment and Housing Law. “Petition for substantive certification” means a request made by “Region” See “Housing Region.” municipal resolution which a municipality files, or is deemed to have “Regional household floor income” means $100.00 less than the filed in accordance with N.J.A.C. 5:98, which engages the Council’s lowest municipal median household income in the housing region. review process seeking a determination as to whether the Housing “Regional median household income above the floor” means the Element and Fair Share Plan of the municipality are consistent with the average median household income above the floor for each municipality Act and compliant with rules promulgated by the Council. in the housing region. “Phasing schedule” means a schedule setting forth the timeframes by “Regional Contribution Agreement (RCA)” means a contractual which an affordable housing site or zone will produce affordable housing agreement, pursuant to the Act, into which two municipalities voluntarily in accordance with N.J.S.A. 52:27D-311.b. NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 (CITE 46 N.J.R. 929) COMMUNITY AFFAIRS PROPOSALS entered to transfer a portion of a municipality’s affordable housing pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. 5:93. Reductions for a obligation to another municipality within its housing region. sending municipality’s completed RCA units are not included in the “Rehabilitation” means the repair, renovation, alteration, or Unanswered Prior Obligation numbers. reconstruction of any building or structure, pursuant to the Rehabilitation “UHAC” means the Uniform Housing Affordability Controls, as set Subcode, N.J.A.C. 5:23-6. forth in N.J.A.C. 5:80-26. “Rehabilitation area” or “area in need of rehabilitation” means an area “Vacant developable land” means municipal land development determined to be in need of rehabilitation pursuant to N.J.S.A. 40A:12A- capacity. 14 of the Local Redevelopment and Housing Law. “Vacant land adjustment” or “adjustment” means an adjustment to the “Rehabilitation share” means the number of deficient housing units unanswered prior obligation or the prospective fair share due to lack of occupied by low- and moderate-income households within a suitable sites pursuant to N.J.A.C. 5:99-5. municipality, established in chapter Appendix B, incorporated herein by “Very low income” means 30 percent or less of the median gross reference, that must be addressed in a Fair Share Plan. household income for households of the same size within the housing “Second round” means the affordable housing obligations for the region in which the household is located, based upon the U.S. period of 1993 through 1999 as set forth in N.J.A.C. 5:93. Second round Department of Housing and Urban Development’s (HUD) Section 8 includes the prior round obligation from 1987 through 1993. Income Limits (uncapped) averaged across counties for the housing “Section 8 income limits” means a schedule of income limits region. according to U.S. Department of Housing and Urban Development “Very low income housing” means housing affordable according to standards that define 50 percent and 80 percent of median family income U.S. Department of Housing and Urban Development or other recognized by household size. When used in this chapter, Section 8 income limits standards for home ownership and rental costs and occupied or reserved shall refer to the “uncapped” schedule as published by the Council, in for occupancy by households with a gross household income equal to 30 accordance with its rules. percent or less of the median gross household income for households of “Sending municipality” means, for purposes of a past RCA, a the same size within the housing region in which the housing is located. municipality that has contractually agreed to transfer a portion of its fair “Water capacity” means the ability to provide adequate potable water share obligation to another willing municipality. to a site from a public or private, off-site or on-site source of supply, in a “Set-aside” means the percentage of housing units devoted to low- and manner consistent with all applicable regulations. moderate-income households within an inclusionary development, which “Zoning District” means an area within a municipality in which shall be a minimum of 10 percent subject to adjustment through an buildings and structures are regulated by ordinance according to the type, economic feasibility study. nature, and extent of use pursuant to N.J.S.A. 40:55D-65. “Sewer capacity” means the ability to treat and dispose of all sewage generated from a site by means of public or private, off-site or on-site SUBCHAPTER 2. MUNICIPAL DETERMINATION OF facilities that are consistent with the area-wide water quality management AFFORDABLE HOUSING OBLIGATION plan (including the wastewater management plan), or with an amendment 5:99-2.1 General to the area-wide water quality management plan submitted to and under (a) The Affordable Housing Obligation for each municipality shall be review by DEP, as applicable. comprised of the following: “Site control” means the demonstration that a developer or 1. Rehabilitation Share; municipality maintains outright ownership of a site, a contract to 2. Unanswered Prior Obligation; and purchase, or an option on the property. 3. Fair Share of Prospective Need. “Spending plan” means a method of allocating funds contained in a (b) An overview of the methodology for determining municipal affordable housing trust fund account, which includes, but is not limited Affordable Housing Obligations is described in chapter Appendix A, to, development fees collected and to be collected pursuant to an incorporated herein by reference. approved municipal development fee ordinance, or pursuant to N.J.S.A. 52:27D-329.1 et seq. for the purpose of meeting the housing needs of 5:99-2.2 Rehabilitation Share low- and moderate-income individuals. (a) The Rehabilitation Share is the number of existing housing units as “Substantive certification” means a determination by the Council of July 1, 2014, that are both deficient and occupied by low- and approving a municipality’s Housing Element and Fair Share Plan in moderate-income households. Each municipality’s share is determined accordance with the provisions of the Act, this chapter. and N.J.A.C. through the methodology provided in chapter Appendix B, incorporated 5:98. A grant of substantive certification may run for a period of 10 years herein by reference. beginning on the date that a municipality files its Housing Element and (b) A municipality’s rehabilitation share will be met if the deficient Fair Share Plan with the Council in accordance with N.J.S.A. 52:27D- housing units occupied by low- and moderate-income households are 313, but shall not extend beyond December 31, 2024. rehabilitated to code standard or replaced with new construction of “Suitable site” means a site that has clear title and is free of affordable housing to low- and moderate-income households. encumbrances which preclude development of affordable housing; is (c) In lieu of using the Total Rehabilitation Share calculated for a adjacent to compatible land uses; has access to appropriate streets, water, municipality in Appendix B, a municipality may conduct a municipal and sewer infrastructure; can be developed consistent with the Residential survey. COAH has devised a survey for any party in COAH’s process to Site Improvement Standards, N.J.A.C. 5:21, and the rules or regulations present data to COAH that may be used to alter the rehabilitation share. of all agencies with jurisdiction over the site; and is consistent with the The survey requires an exterior inspection to determine if the unit is site suitability criteria delineated in N.J.A.C. 5:99-7.1(b). A site may be substandard. The exterior survey evaluates the condition of a structure’s: deemed suitable although not currently zoned for affordable housing. foundation; weatherization; roof and chimney; eaves, soffits, gutters, and “Total projected need” means the estimated number of housing units leaders; rails, steps, stairs, and porch; and fire escape. If two or more needed to house newly formed low and moderate-income households for minor systems are determined to be in need of repair, the structure and all the period 2014 through 2024 as calculated in chapter Appendix C. the units within the structure are considered substandard. The exterior “Townhouse” means a single-family attached dwelling unit as defined housing survey is available on the Council’s website. The Council shall in the Barrier Free Subcode of the Uniform Construction Code, N.J.A.C. review the results of the data collected and shall modify the rehabilitation 5:23-7. share if it determines a modification is warranted. “Treasurer” means the Treasurer of the State of New Jersey. 5:99-2.3 Unanswered Prior Obligation “20 percent cap” means a cap of the affordable housing obligation. (a) Unanswered Prior Obligation includes the sum of the new “Unanswered Prior Obligation” means the sum of the 1987 through construction obligation for the 1987 through 1999 period and the prior 1999 and the 1999 through 2014 prior obligations as determined in need for 1999 through 2014 as determined through the methodology set chapter Appendix D reduced by past affordable housing completions and forth in chapter Appendix D. The prior obligations are reduced by past publicly subsidized affordable housing that is eligible for crediting (CITE 46 N.J.R. 930) NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 PROPOSALS COMMUNITY AFFAIRS affordable housing completed and publicly subsidized affordable housing 5:99-3.4 20 percent cap limit eligible for crediting pursuant to N.J.S.A. 52:27D-307.c(1) and N.J.A.C. (a) The 20 percent cap ensures that a community will not have to 5:93. rebuild itself and change the essential character of the community to meet (b) Municipalities shall be governed by the standards in N.J.A.C. 5:93 its 10-year future housing obligation. to address Unanswered Prior Obligations but shall not be required to (b) An adjustment based on the 20 percent cap which was granted as address more than 50 percent of the Unanswered Prior Obligation, except part of a second round certification or judgment of compliance shall as constrained by the Positive Prior Cycle Buildable Limit column in continue to be valid. chapter Appendix D. (c) To determine the 20 percentage cap for a municipality, the fair (c) Any site or zoning district zoned for affordable housing to meet the share of prospective need obligation is multiplied by five and compared Unanswered Prior Obligation in a municipality’s Housing Element and to the number of total housing units from 2010. The difference is the Fair Share Plan, including sites zoned as part of a prior round plan, must number of units reduced from the municipality’s affordable housing be reviewed as part of the economic feasibility study required pursuant to obligation. N.J.A.C. 5:99-7.2(b) unless the site is/was the subject of a court order. 1. If the community capacity is larger than the municipal prior round (d) In lieu of using the Unanswered Prior Obligation calculated in affordable housing obligation, the 20 percent cap is zero. chapter Appendix D for a particular municipality, the municipality may 2. If community capacity is smaller than the municipal prior round submit information of past affordable housing completions and publicly affordable housing obligation, the difference between community subsidized housing, in the form prescribed in N.J.A.C. 5:98-11, to use in capacity and the municipal prior round affordable housing obligation is the calculation of its Unanswered Prior Obligation, subject to verification the adjustment based on the 20 percent cap. by the Council. The Council shall review the information provided and 5:99-3.5 Substantial compliance reduction shall modify the Unanswered Prior Obligation if it determines a (a) A reduction of the Unanswered Prior Obligation as calculated in modification is warranted. The Council shall also make appropriate chapter Appendix D shall be granted according to the following schedule adjustments to the Unanswered Prior Obligation and Past Affordable when the Council determines that a municipality has substantially Housing Completions due to completed RCAs or based on the actual complied with the terms of any prior round substantive certification and number of units constructed. has actually created a substantial percentage of the new units that were 5:99-2.4 Fair Share of Prospective Need part of the municipal 1987 through 1999 housing obligation. (a) The Fair Share of Prospective Need is a projection of low- and Percentage of Units Completed Reduction moderate-housing needs in a municipality based on development and growth that is reasonably likely to occur in the region or municipality for 80 or more 20 percent the period of 2014 through 2024 as determined through the methodology 75-79 15 percent provided in chapter Appendix C and includes the reductions and limits set forth at N.J.A.C. 5:99-3.2, 3.3, and 3.4. This projection includes 70-75 10 percent reductions for caps and Buildable Limit as set forth in N.J.A.C. 5:99-3. 69-70 5 percent (b) A municipality that has an Unanswered Prior Obligation of less (b) The reduction, and/or the units associated herewith, in (a) above than zero and did not receive a vacant land adjustment for the 1987 shall only be applied to the Unanswered Prior Obligation component of through 1999 or 1999 through 2014 period may use the surplus units to the Affordable Housing Obligation. This reduction shall be applied after reduce its Fair Share of Prospective Need obligation. the Council has accepted all other reductions. In no event shall the substantial compliance reduction be used to reduce a municipality’s Fair SUBCHAPTER 3. REDUCTIONS, LIMITS, AND SUBSTANTIAL Share of Prospective Need. COMPLIANCE SUBCHAPTER 4. MUNICIPAL SUBMISSION REQUIREMENTS 5:99-3.1 General AND FAIR SHARE PLAN PREPARATION (a) A municipality’s Affordable Housing Obligation may be reduced by the following: 5:99-4.1 General 1. 1,000-unit cap reduction; The municipal Housing Element and Fair Share Plan and 2. Buildable Limit; implementing ordinances shall be filed with the Council in accordance 3. 20 percent cap limit; and with N.J.A.C. 5:98-2 (if filing only) or with N.J.A.C. 5:98-3 (if seeking 4. Substantial compliance reduction. substantive certification.) 5:99-3.2 1,000-unit cap reduction 5:99-4.2 Housing Element No municipality shall be required to address a fair share beyond 1,000 (a) A municipal Housing Element shall be designed to achieve the goal units within 10 years from the grant of substantive certification, unless it of access to affordable housing to meet present, prior, and prospective is demonstrated, following an objection and an evidentiary hearing, based housing needs, with particular attention to low- and moderate-income upon the facts and circumstances of the affected municipality that it is housing, and shall contain at least: likely that the municipality through its zoning powers could create a 1. An inventory of the municipality’s housing stock by age, condition, realistic opportunity for more than 1,000 low- and moderate-income units purchase or rental value, occupancy characteristics, and type, including within the 10-year period. The facts and circumstances which shall the number of units affordable to low- and moderate-income households determine whether a municipality’s fair share shall exceed 1,000 units and substandard housing capable of being rehabilitated; shall be a finding that the municipality has issued more than 5,000 2. A projection of the municipality’s housing stock, including the certificates of occupancy for residential units in the 10-year period probable future construction of low- and moderate-income housing, for preceding the petition for substantive certification. the next 10 years, taking into account, but not necessarily limited to, construction permits issued, approvals of applications for development, 5:99-3.3 Buildable Limit and probable residential development of lands; (a) Development capacity in new units is determined via a GIS- 3. An analysis of the municipality’s demographic characteristics, layering parcel data process, as described in chapter Appendix E, including. but not necessarily limited to, household size, income level. incorporated herein by reference, that determines developable land and and age; the ability to accommodate affordable units. 4. An analysis of the existing and probable future employment (b) A municipality’s Fair Share of Prospective Need and/or characteristics of the municipality; Unanswered Prior Obligations shall be adjusted to that which can be 5. A determination of the municipality’s affordable housing obligation accommodated as determined by land capacity as set forth in chapter for low- and moderate-income housing and its capacity to accommodate Appendix E. NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 (CITE 46 N.J.R. 931) COMMUNITY AFFAIRS PROPOSALS its present and prospective housing needs, including its obligation for 9. A demonstration of existing or planned water and sewer capacity low- and moderate-income housing; sufficient to accommodate all proposed techniques; and 6. A consideration of the lands that are most appropriate for 10. A spending plan pursuant to N.J.A.C. 5:99-11.12, if the construction of low- and moderate-income housing and of the existing municipality maintains or intends to establish an affordable housing trust structures most appropriate for conversion to, or rehabilitation for, low- fund pursuant to N.J.A.C. 5:99-11. and moderate-income housing, including a consideration of lands of (b) If a municipality intends to collect development fees, it shall developers who have expressed a commitment to provide low- and prepare a plan to spend development fees that includes the following: moderate-income housing; 1. A projection of revenues anticipated from imposing fees on 7. A map of all sites designated by the municipality for the production development, based on historic development activity; of low- and moderate-income housing and a listing of each site that 2. A copy of the draft municipal development fee ordinance consistent includes its owner, acreage, lot, and block; with N.J.A.C. 5:99-11.3; 8. The location and capacities of existing and proposed water and 3. A description of the anticipated use of all development fees; sewer lines and facilities relevant to the designated sites; 4. A schedule for the creation or rehabilitation of housing units; 9. Copies of necessary applications for amendments to, or consistency 5. If the municipality envisions being responsible for public sector or determinations regarding, applicable area-wide water quality non-profit construction of housing, a pro-forma statement of the management plans (including wastewater management plans); anticipated costs and revenues associated with the development; and 10. A copy of the most recently adopted municipal master plan; 6. The manner through which the municipality will address any 11. For each designated site, a copy of the New Jersey Freshwater expected or unexpected shortfall if the anticipated revenues from Wetlands maps where available. When such maps are not available, development fees are not sufficient to implement the plan. municipalities shall provide appropriate copies of the National Wetlands (c) To the extent applicable, the Fair Share Plan shall demonstrate Inventory maps provided by the U.S. Fish and Wildlife Service; and compliance with the regional planning provisions of N.J.S.A. 52:27D- 12. Any other documentation pertaining to the review of the municipal 329.9. housing element as may be required by the Council. SUBCHAPTER 5. VACANT LAND ADJUSTMENTS 5:99-4.3 Fair Share Plan (a) The Fair Share Plan shall describe the completed or proposed 5:99-5.1 Purpose and background affordable housing delivery techniques and funding sources, if applicable, Where a municipality can demonstrate a lack of suitable sites able to that will be used to address a municipality’s Affordable Housing provide a realistic opportunity for addressing the needs for low- and Obligation and shall include at least the following: moderate-income housing as determined by the Council, it may request a 1. A description of how the municipality intends to address its vacant land adjustment pursuant to the procedure set forth in this Affordable Housing Obligation. In addressing its obligation, a subchapter. municipality must address its Fair Share of Prospective Need prior to 5:99-5.2 Submission requirements for vacant land adjustment addressing the required 50 percent of the Unanswered Prior Obligation, (a) Municipalities that request an adjustment due to lack of available and may address its rehabilitation share either through a rehabilitation land capacity shall submit an existing land use map at an appropriate program, as set forth in N.J.A.C. 5:99-6, or through new construction; scale to display the land uses of each parcel within the municipality. Such 2. A description for reserving at least 13 percent of the housing units a map shall display the following land uses: single family, two-to-four made available for low- and moderate-income households for occupancy family, other multi-family, commercial, industrial, agricultural, parkland, by very low-income households as part of its statutory obligations historically or important architecture and sites, environmentally sensitive pursuant to N.J.S.A. 52:27D-329.1; lands, other public uses, semipublic uses, and vacant land. 3. A determination of the total residential zoning necessary to assure (b) Municipalities that request an adjustment due to lack of available that the municipality’s Affordable Housing Obligation is achieved based land capacity shall submit an inventory of vacant parcels by lot and block on inclusionary zoning with a 10 percent affordable housing set-aside that includes the acreage and owner of each lot. unless higher set-asides are required pursuant to N.J.A.C. 5:99-5.2; (c) Municipalities that request a vacant land adjustment due to lack of 4. An economic feasibility study for each site or zoning district zoned available land capacity shall submit, as part of its economic feasibility for inclusionary development shall be included in the municipal Fair study, an assessment of each vacant site identified in the inventory to Share Plan submitted for certification. The study shall conform with determine the maximum set asides that would be economically feasible N.J.A.C. 5:99-7.2(b) and include a certification by the individual or group given the use of density bonuses and other effective affirmative planning that conducted the Study that the set-asides, densities, and financial and zoning devices, including financial incentives. In addition, the incentives associated with the zoned affordable housing sites included in municipality shall provide an analysis of the feasibility of providing the Fair Share Plan provide a realistic opportunity for the construction of affordable housing through other delivery techniques, including, but not affordable housing. Such analysis shall also confirm that, based upon limited to, 100 percent affordable construction, redevelopment, gut reasonable investigation, each of the proposed sites are available, rehabilitation, accessory apartments, market to affordable, and extension developable (including availability of essential services to such sites as of expiring controls. wastewater treatment, potable water and transportation access), (d) All vacant sites identified in the studies called for in (c) above approvable, and buildable within the 10-year certification period; where an affordable housing set-aside would result in a minimum of two 5. An analysis of how the housing delivery techniques identified in the affordable units shall be counted toward the municipal capacity to Fair Share Plan serve the demographics and affordable housing needs set address the fair share of the prospective need. forth in the Housing Element; (e) If the municipality is seeking an adjustment pursuant due to lack of 6. If the municipal Fair Share Plan proposes a number of age-restricted available land capacity, the certification that accompanies the economic low- or moderate-income units that exceeds 25 percent of the feasibility study required pursuant to N.J.A.C. 5:99-7.2(b) shall include municipality’s total affordable housing obligation, the municipality must language that the densities and affordable housing set-asides proposed in demonstrate that the regional need for age-restricted housing supports the the municipality’s plan are capable of providing a realistic opportunity percentage proposed; given the use of density bonuses and other effective affirmative planning 7. A municipality with insufficient vacant land that is seeking a vacant and zoning devices and that no other suitable sites in the municipality are land adjustment pursuant to N.J.A.C. 5:99-5 shall also submit all available for the construction of affordable housing that could provide a information and documentation required N.J.A.C. 5:99-5.2 unless it realistic opportunity. demonstrates that the Fair Share Plan does not rely upon the availability of vacant land or it takes measures to reserve scarce resources; 5:99-5.3 Vacant land inventory 8. Draft and/or adopted ordinances necessary for the implementation (a) Municipalities shall exclude from the vacant land inventory: of the techniques designed to satisfy the Affordable Housing Obligation; (CITE 46 N.J.R. 932) NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 PROPOSALS COMMUNITY AFFAIRS 1. Any land that is owned by a local government entity that, as of the Council shall include such resources in its criteria and guidelines for January 1, 1997, has adopted, prior to the filing of a petition for municipal adjustment; substantive certification, a resolution authorizing the execution of an 10. Individual sites that the municipality determines are not suitable agreement that such land shall be utilized for a public purpose other than for low- and moderate-income housing may also be eliminated from the housing; inventory described in this subchapter upon submission of a detailed 2. Any land listed on a master plan of a municipality as being explanation for the exclusion attested to by a New Jersey-licensed dedicated, by easement or otherwise, for purposes of conservation, park Professional Planner; and lands, or open space and which is owned, leased, licensed, or in any 11. Municipalities shall also exclude from this calculation of total manner operated by a county, municipality or tax-exempt, nonprofit vacant and undeveloped lands, those owned by nonprofit organizations, organization including a local board of education, or by more than one counties, and the State or Federal government when such lands are municipality by joint agreement pursuant to P.L. 1964, c. 185 (N.J.S.A. precluded from development at the time of substantive certification. 40:61-35.1 et seq.), for so long as the entity maintains such ownership, (b) No municipality shall be required to utilize for affordable housing lease, license, or operational control of such land; purposes land that is excluded from being designated as vacant land. 3. Any vacant contiguous parcels of land in private ownership of a size 5:99-5.4 Vacant land adjustment review which would accommodate less than two affordable units resulting from (a) The Council shall review the existing land use map and inventory a 20 percent set-aside where the municipality has provided an economic to determine which sites are most likely to develop for low- and feasibility study indicating that the existing zoning cannot be amended to moderate-income housing. All vacant sites shall initially be presumed to provide a realistic opportunity for the construction of at least two fall into this category. In addition, the Council may determine that other affordable units; sites devoted to a specific use which involves relatively low-density 4. Lands excluded due to historical significance or important development would create an opportunity for affordable housing if architecture including historic and architecturally important sites listed on inclusionary zoning was in place. The Council may request a letter from the State Register of Historic Places or National Register of Historic the owner of sites that are not vacant indicating the site’s availability for Places prior to the submission of the petition of substantive certification; inclusionary development. 5. Sites and their environs or environmentally sensitive lands that may 1. Municipalities may present documentation that the Council shall use be jeopardized by development; to eliminate a site or part of a site from the inventory of sites described in 6. Lands where development of such would significantly alter the N.J.A.C. 5:99-5.3(a). Partial elimination of a site shall not necessarily established pattern of development in the community; eliminate an entire site as unsuitable. 7. Agricultural lands when the development rights to these lands have (b) The Council shall consider sites, or parts thereof, not specifically been purchased or restricted by covenant; eliminated from the inventory described in N.J.A.C. 5:99-5.3(a), for 8. Sites designated for active recreation or recreational purposes in the inclusionary development. The Council shall consider the character of the municipal master plan. Municipalities may reserve three percent of their area surrounding each site and the need to provide housing for low- and total developed and developable acreage for active municipal recreation moderate-income households in establishing densities and set-asides for and exclude this acreage from consideration as potential sites for low- each site, or part thereof, remaining in the inventory. and moderate-income housing. All sites designated for active recreation (c) The municipality’s vacant land adjustment will reflect its must be designated for active recreational purposes in the municipal affordable housing obligation reduced by the number of units that can be master plan. Sites designated for active recreation must be purchased and provided in the municipality either through an economically feasible limited to active recreational purposes within one year of substantive inclusionary development with set asides as determined pursuant to certification; N.J.A.C. 5:99-5.2(c) and/or other affordable housing delivery techniques. 9. Environmentally sensitive lands where development is prohibited by any State or Federal agency. SUBCHAPTER 6. REHABILATION PROGRAM i. Within the areas of the State regulated by the Pinelands Commission, Division of Coastal Resources of the DEP, and the New 5:99-6.1 Rehabilitation obligation Jersey Meadowlands Commission, the Council shall adhere to the (a) The purpose of a rehabilitation program is to renovate deficient policies delineated in the Pinelands Comprehensive Management Plan, housing units that are occupied by low- and moderate-income N.J.A.C. 7:50; the Coastal Permit Program Rules, N.J.A.C. 7:7; Coastal households. The estimate of each municipality’s deficient units occupied Zone Management rules, N.J.A.C. 7:7E; and the Zoning Regulations of by low- and moderate-income households is determined through the the Hackensack Meadowlands District (N.J.A.C. 19:4). methodology provided in chapter Appendix B. This rehabilitation number ii. In areas of the State not regulated by the Pinelands Commission, the may also be provided through a survey of the municipal housing stock Division of Coastal Resources, and the New Jersey Meadowlands conducted in accordance with the exterior housing survey available on Commission, municipalities may exclude as potential sites for low- and the Council’s website. Where the municipality or objector performs the moderate-income housing: inland wetlands as delineated on the New exterior housing survey, the Council shall review the results of the data Jersey Freshwater Wetlands Maps, or when unavailable, the U.S. Fish collected and shall modify the rehabilitation share number if it determines and Wildlife Service National Wetlands Inventory; or as delineated on- a modification is warranted. site by the U.S. Army Corps of Engineers or DEP, whichever agency has (b) The following provisions shall apply to a rehabilitation program: jurisdiction; when on-site delineation is required by the Council; flood 1. Housing deficiencies shall be corrected and the unit shall comply hazard areas as defined in N.J.A.C. 7:13; and sites with slopes in excess with the New Jersey State Housing Code, N.J.A.C. 5:28, or with the of 15 percent which render a site unsuitable for low- and moderate- requirements of the Rehabilitation Subcode, N.J.A.C. 5:23-6, as income housing. In cases where part of a site is unsuitable for low- and applicable. For projects that require construction permits, the moderate-income housing because of flood hazard areas or inland rehabilitated unit shall be considered complete at the date of final wetlands, the Council shall not permit low- and moderate-income approval pursuant to the Uniform Construction Code. housing to be constructed on that unsuitable part of the site; provided, 2. Municipal rehabilitation investment for hard costs shall average at however, that this rule shall not prohibit construction of low- and least $8,000 per unit, and include improvements necessary for the moderate-income housing on the remainder of the site. In the case of provision of low- and moderate-income housing. slopes in excess of 15 percent, a municipality may regulate inclusionary 3. If an owner-occupied housing unit is sold prior to the end of the development through a steep slope ordinance, provided the ordinance controls on affordability, at least part of the loan shall be recaptured and also regulates non-inclusionary developments in a consistent manner. The used to rehabilitate another housing unit, unless the unit is sold to a low- Council reserves the right to exclude sites in whole or in part when or moderate-income household at an affordable price pursuant to excessive slopes threaten the viability of an inclusionary development. N.J.A.C. 5:99-10. iii. Where the Legislature adopts legislation that requires the mapping of other natural resources and provides a mechanism for their regulation, NEW JERSEY REGISTER, MONDAY, JUNE 2, 2014 (CITE 46 N.J.R. 933)