Tag: affordable-housing

IMPACT FEES


Come January 31st, each of New Jersey’s 564 municipalities is required to file their own resolution with the State, adopting affordable housing obligations for their municipality.

Come June 30th, each of New Jersey’s 564 municipalities is required to submit their affordable housing plan to the State, for their municipality.

Last October, the New Jersey Department of Community Affairs released New Jersey affordable housing requirements. These will need to be completed by 2035. And here they are…

A) Create 84,698 new affordable housing units.

B) Preserve an additional 65,410 existing housing units.

140,00 homes built or renovated over the next ten years. That’s a lot of homes. That’s a lot of infrastructure needed.

Impact fees…and Trenton.

The Municipal Development Impact Fee Authorization Act – presently in committee in Trenton – would, if passed, broaden New Jersey municipalities’ ability to pass through development-related costs to real estate developers. By broadening the scope for how impact fees can be collected by municipalities.


New Jersey is one of 22 states which presently authorizes the collection of impact fees by a municipality. Different states may refer to “impact fees” though their own state vernacular. For example, in Kansas – Kansas does authorize impact fees – impact fees are also referred to as adequate facility taxes. Or excise taxes.

At the present time, in New Jersey, the impact fees which can be passed along by municipalities to developers are pretty much limited to off-site improvements which arise as a direct consequence of the development. Direct consequence?

My humble opinion…

The way impact fees are levied upon developers in New Jersey today seems a bit…unjust. Tilted too far in favor of developers. At the expense of municipalities. See, direct consequence.

For example, an increased allocation of funds – and personnel – will likely be required in order to accommodate the higher number of classroom students which will be arrived at through the construction of new homes within any municipality. New homes are built. New families move in. Families have kids. Kids go to school.

Yet, in New Jersey, this increase in education funding which will be required by a municipality – as a result of new development – is not able to be passed through to real estate developers by way of impact fees. Though they should be able to be so.

Because any increase in education funding needed in order to accommodate larger classroom sizes – or additional teachers – which comes about as a direct result of development is as much of a direct development-related cost as one can think of. It’s attributed to…the building of new homes. Isn’t it?

Education funds for a New Jersey municipality – collected through impact fees charged to real estate developers – should be permissible.

Larger classrooms. Additional teachers. Potentially, the construction of a brand new school. These are a few of the costs – real costs – that a municipality will incur as a result of an increase in the student population. Because new homes were built in the municipality.

One proposed solution? A boardening of the scope for the collection of impact fees by New Jersey municipalities.

Whereas critics of increasing impact fees may view additional impact fees charged to developers as impediments to growth, that argument is easily overcome.

Impact fees can be collected in lieu of local property tax hikes. Furthermore, impact fees are specific to the development at hand. To the area being developed. As such, the implantation of impact fees enables the broader property tax-paying populace to not be unduly burdened through an increased annual property tax bill. To fund development in town…which really does not directly affect them.

ABANDONED HOMES

Processes to consider when thinking through how to transition abandoned homes from absentee owners to developers could include: a) land banking, b) spot blight eminent domain, and c) receivership. Tools. Why focus on this problem? Why cultivate ideas? Why develop solutions? 

Abandoned homes become financial drains on a city’s resources. For example, the cost to demolish an abandoned home?Demolition costs could reach up to $20,000. Per home.

And there are social costs as well…

Neighborhoods with abandoned homes become breeding grounds for crime. For drug use. For violence. Social costs.

But social costs are not always correlated to dollars and cents. Furthermore, social costs are often viewed as someone else’s problem.

But are social costs easy to understand? Are social costs someone else’s problem?

Social costs attributed to abandoned homes correlate to financial costs. Financial costs incurred by the city. Financial costs incurred by the city’s stakeholders. Financial costs incurred by the city’s taxpayers.

Social costs attributed to abandoned homes affect city residents who may – at first – believe abandoned homes would not be a problem affecting them.

For example…

A New Yorker living in Tribeca or on the Upper East Side is part of New York City. As such, they pay New York City taxes. So, while there may be few abandoned homes in their neighborhood, Tribeca and the Upper East Side are still coupled to the poorest neighborhoods in New York City. To the Morrisania and the Crotona neighborhoods in the Bronx.

In Morrisania and Crotona, nearly 4-out-of-10 live below the poverty line.

Let’s say socioeconomic challenges in Morrisania or Crotona lead to a foreclosure in either neighborhood. That foreclosure, then becoming an abandoned home.

Increased police patrolling is one byproduct of abandoned homes. Enacted to prevent neighborhoods from spiraling into crime magnets.

Increased New York City police patrolling in the Bronx is a financial cost. Which addresses the social cost. And that is a New York City cost. A cost which is bourne by…Morrisania residents. A cost which is bourne by…residents on the Upper East Side. A cost which is bourne by…residents in Tribeca. A cost which is bourne by…Crotona residents.

Density Bonus Programs


Density bonus programs are developer incentives. They function as “build catalysts.” Catalysts which make it worthwhile – and economically feasible – for developers to undertake the construction of inclusionary housing projects. In summary, a density bonus program permits an increase in allowed dwelling units per acre – DU/A.

Here is how a density bonus program works…

Density bonuses enable developers to build in excess of a site’s base zoning. In exchange for the municipality permitting a developer to build unit totals which exceed standard allowances, the developer is required to designate a set number of units built as income-restricted affordable housing.

Density bonus programs are enacted through local ordinances. Ordinances amend zoning codes. The process of having zoning codes amended, through ordinances, accompanies the implementation of density bonus programs. This is so because standard zoning codes – prior to the codes being amended – would not authorize the developer’s proposed build, if not amended. The intended outcome? Construction of more affordable housing units.

Density bonus programs establish developer thresholds. Once the threshold is met by the developer, the developer qualifies for the density bonus.

Typically, density bonus programs allow for increases of between 10% and 20% over baseline permitted density. This, in exchange for the developer’s commitment to the provision of a pre-set number of affordable housing units.