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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 a different community’s view of affordable housing—non-residential developers. Here is what she has to say:

“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 and are likely to be adopted next week threaten to derail non-residential development in New Jersey in its entirety 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 was based on the amount of residential and job growth in the area, and that made sense. But the law says that if you’re going to ask a developer to participate in this, they’re entitled to a compensatory benefit. If you tell 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 round 3A was written, none of the courts or the participants could figure out what the benefit was for participants. Round 3B, which is now pending adoption May 6, tried to address that by giving the developer the relaxation of certain rules regarding height restrictions and maximum floor area.

“The real problem, where my clients are afraid this is going to completely derail non-residential development, is, typically, back in the days of legislation round two, which ended in 1999, non-residential developers were asked to pay a 1% development fee into a fund that the town was supposed to use for affordable housing units. Round 3A raises that fee to 2%, and with round 3B it went up again to 3%. So if you run those numbers by the square footage of what you’re building, it’s a significant fee per sf that’s likely to impact your ability to rent something that you build. So this 150% increase in the fee between 2004 and 2008 is a real problem. The increase from 1% to 2% is defensible because it hadn’t increased for 15 years, but between 2004 and 2008, it increased by another 50%, and that’s a little hard for the state to justify.

“So there’s the increase, which is hard to swallow, but there’s another matter to consider. It’s the town’s option to take the fee or require a non-residential developer to build, so this new regulatory scheme defies sound planning principles. If I built a warehouse or a big-box store, that’s going to generate a housing obligation. The way the regulations are written, the town could force me to build apartments, condos or townhouses in my parking lot. Towns ideally have a master plan, so commercial and business districts are unto themselves and are surrounded by residential. If I build a big-box store but have to create X number of units based on the square footage of that store, it absolutely defies sound planning principles, so that’s a problem.

“But round three regulations are even more onerous because if you wanted to build the housing offsite in a place that makes better planning sense, the regulations provide for a penalty. They require me to pay a certain fee, and there’s an enhanced penalty if I move it offsite. 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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