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New Jersey is an extremely expensive state, and even those with good, full-time jobs struggle to find an affordable place to live. Responses to this week’s poll indicate that their struggle may continue. Nearly half (45%) of the responses say that their communities have adopted a ‘Not in My Back Yard’ stance when it comes to affordable housing. An almost equal number (41%) say that education has helped, but affordable housing is not yet widely accepted by residents in their area. A mere 14% say their community embraces it. Lori Grifa, a partner in the law firm Wolff & Samson in West Orange discusses how the community of non-residential developers views affordable housing:

“Generally, the non-residential developers I represent don’t object to participating in the process of providing affordable housing in some respect. However, the new regulations that have been proposed threaten to derail non-residential development in New Jersey because they are so burdensome.

“The legislation is helpful in some ways. In this round, the Third Round, a new formula was developed to calculate how much affordable housing should go up. This formula, known as the Growth Share formula, was based on the amount of residential and job growth in the area, and it made some sense. But the law of affordable housing says that if you’re going to ask a developer to participate in this, the developer is entitled to a compensatory benefit. So, if a municipality tells a developer they have to build X number of houses that are deed-restricted “affordable”, the developer has to get something in exchange for the loss of revenue for that house. The way that the 2004 Rules were written, neither the courts nor the participants could figure out what benefit there was for the participants. The 2008 version of the Rules, slated for adoption on May 6, tried to address the absence of a compensatory benefit by relaxing certain zoning rules regarding height restrictions, set back requirements, impervious coverage limitations and maximum floor area ratios.

“The real problem, the one that causes my clients to fear the end of non-residential development in New Jersey, is the issue of fees. During Round Two, which ended in 1999, non-residential developers were asked to pay a 1% development fee into an affordable housing trust fund that the town was supposed to use for affordable housing units. The 2004 Rules raised that fee to 2%, and the 2008 Rules raised it again to 3%. So if you run those numbers against the square footage of the building proposed by the developer, it becomes a significant fee per square foot – one that is likely to impact the developer’s ability to rent whatever he has built. This 150% increase in the fee between 2004 and 2008 is a real problem. While the increase from 1% to 2% between 1999 and 2004 was defensible because there hadn’t been an increase for 15 years, the additional 50% increase between 2004 and 2008, is a little hard for the State to justify.

“There’s another problem to consider. In the 2008 Rules, the towns retained the option either to take a fee in lieu of building or require a non-residential developer to build affordable housing, in certain instances on the site of the non-residential development. This new regulatory scheme defies sound planning principles. If a developer builds a warehouse or a big-box store, under the Third Round Rules, that building is going to generate a housing obligation. The way the Rules are written, the town could conceivably force the developer to build apartments, condos or townhouses in the parking lot. Towns ideally have a master plan, so commercial and business districts are usually unto themselves, with residential areas located elsewhere. If a developer builds a big-box store but has to create X number of housing units on site simply based on the square footage of that store, it absolutely defies sound planning principles.

“The Round Three rules enable a developer in this example to move the housing off-site, which makes more planning sense, but the 2008 Rules are even more onerous than the earlier version because if the developer seeks to build that housing offsite in a place that makes better planning sense, the Rules penalize him for doing so.

“From my perspective and from my clients’ perspectives, non-residential developers are basically taking a beating coming and going. I suspect that in the next two weeks, you’ll see a series of lawsuits filed challenging these regulations. It’s inevitable.”

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