S4364 1R

An Act establishing certain State funding preferences for municipalities that adopt certain strategies to encourage denser residential development, supplementing Titles 40, 52, and 27 of the Revised Statutes and amending P.L.2000, c.72.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) a. The governing body of a municipality may direct the planning board to undertake and provide for a special reexamination of the municipality’s master plan and development regulations for the purpose of enabling the municipality to qualify for preferential status in the distribution of ¹[State aid] financial assistance competitively awarded by the State¹ in accordance with the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. (1) A planning board directed to undertake and provide for a special reexamination of the municipality’s master plan and development regulations pursuant to subsection a. of this section shall, at a minimum, review the provisions of the municipality’s existing master plan and development regulations that address areas of the municipality within which residential development is permitted, and ¹[shall] may¹ consider recommending specific changes to the master plan and development regulations for the purpose of enhancing the potential development of the municipality for residential purposes.

(2) A planning board directed to undertake and provide a special reexamination of the municipality’s master plan and development regulations pursuant to subsection a. of this section, prior to reporting recommendations for changes thereto pursuant to subsection c. of this section, ¹[shall] may¹consider whether to include in the master plan and development regulations one or more housing strategies that may enhance the development potential of property for residential purposes at greater densities, ¹[which shall include] including¹ but not limited to the following housing strategies:

(a) permit development of an accessory dwelling unit in addition to a single-unit dwelling on developable lots in areas restricted to the development of single-unit dwellings;

(b) permit development of a two-unit dwelling on lots in areas restricted to the development of single-unit dwellings;

(d) eliminate or reduce off-street parking requirements;

(e) eliminate or reduce minimum lot size requirements;

(f) permit the siting of manufactured housing or a mobile home on lots in areas restricted to the development of single-unit dwellings;

(g) permit development of a multi-unit dwelling or a mixed-use development on lots zoned exclusively for office, retail, or commercial uses;

(h) permit development of a multi-unit dwelling on at least 10 percent of the developable land within the municipality;

(i) permit higher density housing near transit stops; and

(j) eliminate or reduce minimum size requirements for dwelling units.

c. (1) A planning board directed to undertake and provide for a special reexamination of the municipality’s master plan and development regulations pursuant to subsection a. of this section shall prepare and adopt by resolution a report on the findings of the special reexamination, a copy of which report and resolution shall be sent to the ¹Division of Local Planning Services in the Department of Community Affairs, the¹ Office of Planning Advocacy ¹,¹ and the county planning board. A notice that the report and resolution have been prepared shall be sent to any military facility commander who has registered with the municipality pursuant to section 1 of P.L.2005, c.41 (C.40:55D-12.4) and to the municipal clerk of each adjoining municipality, who may request a copy of the report and resolution on behalf of the military facility or municipality.

(2) If a special reexamination report recommends changes to a municipality’s existing master plan, the planning board shall ¹forward its recommendations to the governing body. The governing body shall, by resolution, accept, reject, or modify the recommendations of the planning board and direct the planning board to¹ commence the process of amending the master plan ¹accordingly, and¹ in accordance with the requirements for amendment of a master plan under P.L.1975, c.291 (C.40:55D-1 et seq.), which include holding a hearing upon public notice.

(3) If a planning board amends a master plan pursuant to this subsection, the governing body of the municipality ¹[shall] may¹ commence the process of ¹[considering amendment of] amending¹ the municipality’s zoning ordinance under P.L.1975, c.291 (C.40:55D-1 et seq.) for the purpose of making it substantially consistent with the land use plan element and the housing plan element of the municipality’s master plan.

¹(4) Within 45 business days following the date of adoption of any revisions to the municipality’s zoning or other land development ordinances pursuant to paragraph (3) of this subsection, the clerk of the municipality shall transmit copies of the ordinances to the Division of Local Planning Services in the Department of Community Affairs.

d. If a municipality has already adopted ordinances substantially similar to the provisions of this section, the municipality shall transmit copies of the ordinances to the Division of Local Planning Services in the Department of Community Affairs for evaluation in preferential status determinations to be made in accordance with the provisions of P.L. , c. (C. ) (pending before the Legislatures as this bill).¹

2. (New section) a. As used in this section:

"Department" means the Department of Community Affairs ¹[;] .¹

"Grant or other type of competitively-awarded financial assistance" means all types of competitively-awarded financial assistance that the department or another State agency may distribute to one or more municipalities pursuant to a program administered by the department or other State agency ¹that is solely funded by State funds¹, other than a program ¹[, including] :

(1)¹ that awards funds to help a municipality fulfill its fair share housing obligation pursuant to P.L.1985, c.222 (C.52:27D-301 et al.) ¹;

(2) administered by the department and that awards funds to municipalities in support of shared services and consolidation;

(3) where multiple municipalities may join a single application for competitively-awarded financial assistance; or

(4) where other entities in addition to municipalities may apply for competitively-awarded financial assistance.

"Grant or other type of competitively-awarded financial assistance" shall include,¹ but ¹shall¹ not ¹be¹ limited to ¹[: the Main Street New Jersey Program established pursuant to P.L.2001, c.238 (C.52:27D-452 et seq.), and] ,¹ the Neighborhood Preservation Program established pursuant to P.L.1975, c.248 (C.52:27D-142 et seq.) ¹[; and] .¹

"State agency" means any department, division, office, board, commission, council, or bureau in the Executive branch of State government.

b. (1) Notwithstanding any provision of law, rule, or regulation to the contrary, when determining the eligibility of a municipality to receive a grant or other type of competitively-awarded financial assistance, the department shall establish a preference for those municipalities that have amended their development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development within the municipality. ¹Funds awarded under the Transitional Aid to Localities program or any successor discretionary aid program pursuant to P.L.2011, c.144 (C.52:27D-118.42a), as Consolidated Municipal Property Tax Relief Aid, or as Energy Tax Receipts Property Tax Relief Aid shall not be considered a type of competitively-awarded financial assistance under the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).¹

(2) ¹[The department shall research and analyze each grant or other type of competitively-awarded financial assistance awarded to municipalities by State agencies. Notwithstanding any provision of law, rule, or regulation to the contrary, the department shall enter into a memorandum of understanding with each State agency that awards a grant or other type of competitively-awarded financial assistance to municipalities. A memorandum of understanding entered into pursuant to this paragraph shall establish a preference in the award of a grant or other type of competitively-awarded financial assistance for those municipalities that have amended their development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development in the municipality. A memorandum of understanding with the Department of Transportation shall reflect the requirements of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), and the memorandum of understanding with the Department of Education shall reflect the requirements of section 9 of P.L.2000, c.72 (C.18A:7G-9) and section 15 of P.L.2000, c.72 (C.18A:7G-15)] Notwithstanding any provision of law, rule, or regulation to the contrary, the department shall publish on the department’s Internet website a list of municipalities that have amended their development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and that have increased the number of housing units permitted for development in the municipality. The department shall, in a manner determined by the department, order the municipalities within three tier categories based on the impact of, and the amount of changes made, relative to the municipalities’ planning areas. The department shall update this list on a quarterly basis. Each State agency that awards a grant or other type of competitively-awarded financial assistance to a municipality shall utilize this list to establish an award preference for those municipalities that have amended their development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have increased the number of housing units permitted for development within the municipality¹.

c. The Department of Community Affairs, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations it deems necessary or desirable to effectuate sections 1 and 2 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill), which rules and regulations shall:

(1) specify the ¹[numbers of additional housing units and the]¹ types ¹and number¹ of housing strategies appropriate for use by a municipality based upon the municipality’s planning region, as identified within the most recently adopted State Development and Redevelopment Plan;

(2) specify a range of values to be accorded to municipalities determined to be eligible for a preference in ¹[State aid] financial assistance competitively awarded by the State¹ pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), based upon the number of additional housing units permitted for development and the types of housing strategies adopted pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill); and

(3) provide ¹[model ordinance provisions, in the form of templates,] a housing siting and best practices guide¹ for the purpose of assisting municipalities opting to incorporate one or more of the housing strategies identified in P.L. , c. (C. ) (pending before the Legislature as this bill) into their ordinances.

3. (New section) The Commissioner of Transportation, in determining the allocation of funds for municipal projects from the "Transportation Trust Fund Account," established by section 20 of P.L.1984, c.73 (C.27:1B-20), shall establish a criterion to provide, at the commissioner’s discretion, within the schedule of all other criteria for prioritization, as provided in section 25 of P.L.1984, c.73 (C.27:1B-25), a preference for those municipalities that have amended their master plan and development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development within the municipality.

4. Section 9 of P.L.2000, c.72 (C.18A:7G-9) is amended to read as follows:

9. a. State debt service aid for capital investment in school facilities for a district other than an SDA district which elects not to finance the project under section 15 of P.L.2000, c.72 (C.18A:7G-15), shall be distributed upon a determination of preliminary eligible costs by the commissioner, according to the following formula:

Aid is the sum of A for each issuance of school bonds issued for a school facilities project approved by the commissioner after the effective date of P.L.2000, c.72 (C.18A:7G-1 et al.)

where

A = B x AC/P x DAP x M, with AC/P =1

whenever AC/P would otherwise yield a number greater than one, and where:

B is the district's debt service for the individual issuance for the fiscal year;

AC is the preliminary eligible costs determined pursuant to section 7 of P.L.2000, c.72 (C.18A:7G-7);

P is the principal of the individual issuance plus any other funding sources approved for the school facilities project;

DAP is the district's district aid percentage as defined pursuant to section 3 of P.L.2000, c.72 (C.18A:7G-3) and where DAP shall not be less than 40 percent. If the project's design incorporates the implementation of energy efficiency improvements or the installation of energy efficient features or equipment, the DAP shall be increased by no more than five percent. In order to qualify for a DAP increase for the implementation of energy efficiency improvements or the installation of energy efficient features or equipment pursuant to this subsection, a district shall submit to the development authority and Department of Education a certification, along with evidential documentation, attesting that the project's design incorporates the implementation of energy efficiency improvements or the installation of energy efficient features or equipment.

In addition, DAP for a school facilities project that is approved by the commissioner following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) may be increased by no more than 10 percent if the school district submitting the school facilities project is located in a municipality which has amended its master plan and development regulations pursuant section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies, and has thereby increased the number of housing units permitted for development within the municipality. A regional school district may be eligible for a DAP increase if one or more constituent municipalities of the regional school district have each amended its master plan and development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development within the municipality, provided that the DAP increase shall be no more than 10 percent and that the maximum DAP increase due to any one constituent municipality’s amendment of its master plan and development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) is calculated in proportion to the constituent municipality’s share of the overall resident enrollment of the regional school district. The Commissioner of Education and the Commissioner of Community Affairs shall develop a uniform methodology to determine a school district’s eligibility for a DAP increase based upon the number of additional housing units permitted for development and the types of housing strategies adopted pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). In order to qualify for a DAP increase under this paragraph, a school district shall submit documentation verifying that the appropriate municipalities have adopted the requisite changes to their master plans and development regulations; and

M is a factor representing the degree to which a district has fulfilled maintenance requirements for a school facilities project determined pursuant to subsection b. of this section.

For county special services school districts, DAP shall be that of the county vocational school district in the same county.

Notwithstanding the provisions of this subsection to the contrary, DAP for a county vocational school district school facilities project that is approved by the commissioner following the effective date of P.L.2009, c.185 shall equal the greater of the district's district aid percentage as defined pursuant to section 3 of P.L.2000, c.72 (C.18A:7G-3) or the percentage of the students in the county vocational school district's resident enrollment who reside in SDA districts; except that DAP shall not be less than 40 percent or greater than 90 percent.

b. The maintenance factor (M) shall be 1.0 except when one of the following conditions applies, in which case the maintenance factor shall be as specified:

(1) Effective ten years from the date of the enactment of P.L.2000, c.72 (C.18A:7G-1 et al.), the maintenance factor for aid for reconstruction, remodeling, alteration, modernization, renovation or repair, or for an addition to a school facility, shall be zero for all school facilities projects for which the district fails to demonstrate over the ten years preceding issuance a net investment in maintenance of the related school facility of at least two percent of the replacement cost of the school facility, determined pursuant to subsection b. of section 7 of P.L.2000, c.72 (C.18A:7G-7) using the area cost allowance of the year ten years preceding the year in which the school bonds are issued.

(2) For new construction, additions, and school facilities aided under subsection b. of section 7 of P.L.2000, c.72 (C.18A:7G-7) supported by financing issued for projects approved by the commissioner after the effective date of P.L.2000, c.72 (C.18A:7G-1 et al.), beginning in the fourth year after occupancy of the school facility, the maintenance factor shall be reduced according to the following schedule for all school facilities projects for which the district fails to demonstrate in the prior fiscal year an investment in maintenance of the related school facility of at least two-tenths of one percent of the replacement cost of the school facility, determined pursuant to subsection b. of section 7 of P.L.2000, c.72 (C.18A:7G-7).

Maintenance Percentage Maintenance Factor (M)

.199% - .151% 75%

.150% - .100% 50%

Less than .100% Zero

(3) Within one year of the enactment of P.L.2000, c.72 (C.18A:7G-1 et al.), the commissioner shall promulgate rules requiring districts to develop a long-range maintenance plan and specifying the expenditures that qualify as an appropriate investment in maintenance for the purposes of this subsection.

c. Any district which obtained approval from the commissioner since September 1, 1998 and prior to the effective date of P.L.2000, c.72 (C.18A:7G-1 et al.) of the educational specifications for a school facilities project or obtained approval from the Department of Community Affairs or the appropriately licensed municipal code official since September 1, 1998 of the final construction plans and specifications, and the district has issued debt, may elect to have the final eligible costs of the project determined pursuant to section 5 of P.L.2000, c.72 (C.18A:7G-5) and to receive debt service aid under this section or under section 10 of P.L.2000, c.72 (C.18A:7G-10).

Any district which received approval from the commissioner for a school facilities project at any time prior to the effective date of P.L.2000, c.72 (C.18A:7G-1 et al.), and has not issued debt, other than short term notes, may submit an application pursuant to section 5 of P.L.2000, c.72 (C.18A:7G-5) to have the final eligible costs of the project determined pursuant to that section and to have the New Jersey Economic Development Authority construct the project; or, at its discretion, the district may choose to receive debt service aid under this section or under section 10 of P.L.2000, c.72 (C.18A:7G-10) or to receive a grant under section 15 of P.L.2000, c.72 (C.18A:7G-15).

For the purposes of this subsection, the "issuance of debt" shall include lease purchase agreements in excess of five years.

d. For school bonds issued for a school facilities project after the effective date of P.L.2000, c.72 (C.18A:7G-1 et al.) and prior to the effective date of P.L.2008, c.39 (C.18A:7G-14.1 et al.), State debt service aid shall be calculated in accordance with the provisions of this section as the same read before the effective date of P.L.2008, c.39 (C.18A:7G-14.1 et al.).

(cf: P.L.2023, c.311, s.6)

5. Section 15 of P.L.2000, c.72 (C.18A:7G-15) is amended to read as follows:

15. a. In the case of a district other than an SDA district, for any project approved by the commissioner after the effective date of P.L.2000, c.72 (C.18A:7G-1 et al.), the district may elect to receive a one-time grant for the State share of the project in accordance with the provisions of subsection b. of this section rather than annual debt service aid under section 9 of P.L.2000, c.72 (C.18A:7G-9). The State share payable to the district shall equal the product of the project's final eligible costs and the district aid percentage or 40 percent, whichever is greater. If the project's design incorporates the implementation of energy efficiency improvements or the installation of energy efficient features or equipment, the district aid percentage shall be increased by no more than five percent. In order to qualify for a district aid percentage increase for the implementation of energy efficiency improvements or the installation of energy efficient features or equipment pursuant to this subsection, a district shall submit to the development authority and Department of Education a certification, along with evidential documentation, attesting that the project's design incorporates the implementation of energy efficiency improvements or the installation of energy efficient features or equipment. In addition, the district aid percentage for a school facilities project that is approved by the commissioner following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) may be increased by no more than 10 percent if the school district submitting the school facilities project is located in a municipality which has amended its master plan and development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development within the municipality. A regional school district may be eligible for a district aid percentage increase if one or more constituent municipalities of the regional school district has amended its master plan and development regulations pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development in the municipality, provided that the district aid percentage increase shall be no more than 10 percent and that the maximum district aid percentage increase due to any one constituent municipality’s amendment of its master plan and development regulations is calculated in proportion to the constituent municipality’s share of the overall resident enrollment of the regional school district. The Commissioner of Education and the Commissioner of Community Affairs shall develop a uniform methodology to determine the district aid percentage increase based upon the number of additional housing units permitted for development and the types of housing strategies adopted pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). In order to qualify for a district aid percentage increase pursuant to this subsection, a school district shall submit documentation verifying that the appropriate municipalities have adopted the requisite changes to their master plans and development regulations.

b. The commissioner shall establish a process for the annual allocation of grant funding. Under that process, the commissioner shall annually notify districts of the date on which the commissioner shall begin to receive applications for grant funding. A district shall have 90 days from that date to submit an application to the commissioner. The commissioner shall make a decision on a district's application within 90 days of the submission of all such applications and shall allocate the grant funding in accordance with the priority process established pursuant to paragraph (4) of subsection m. of section 5 of P.L.2000, c.72 (C.18A:7G-5).

c. The development authority shall provide grant funding for the State's share of the final eligible costs of a school facilities project pursuant to an agreement between the district and the development authority which shall, in addition to other terms and conditions, set forth the terms of disbursement of the State share. The funding of the State share shall not commence until the district secures financing for the local share.

(cf: P.L.2023, c.311, s.10)

6. This act shall take effect on the first day of the ninth month next following enactment, except that the Commissioner of Community Affairs, and the commissioners of other State departments impacted by this act may take anticipatory administrative action in advance as shall be necessary for the implementation of this act.