SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE, No. 4364
with committee amendments
STATE OF NEW JERSEY
DATED: JANUARY 8, 2026
The Senate Budget and Appropriations Committee reports favorably and with committee amendments Senate Bill No. 4364.
As amended, this bill establishes a program to incentivize municipalities to amend their master plans and development regulations by incorporating certain housing strategies for the purpose of enhancing the development potential of property for residential purposes at greater densities.
Under the bill, the governing body of a municipality that is interested in qualifying for preferential status in the distribution of financial assistance competitively awarded by the State pursuant to the bill may direct the municipal planning board to undertake and provide for a special reexamination of the municipality’s master plan and development regulations. A planning board directed to undertake and provide for a special reexamination of the municipality’s master plan and development regulations is to, 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 is authorized to 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. The bill provides that a planning board undertaking a special reexamination of the municipality’s master plan and development regulations is also authorized to consider 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. The bill identifies housing strategies to potentially be considered by a planning board conducting a special reexamination.
A planning board that has undertaken a special reexamination of the municipality’s master plan and development regulations is required to prepare and adopt by resolution a report on the findings of the special reexamination, a copy of which is to be sent to the Division of Local Planning Services in the Department of Community Affairs (DCA), the Office of Planning Advocacy, and the county planning board.
If a special reexamination report recommends changes to a municipality’s existing master plan, the bill requires the planning board to forward its recommendations to the governing body, which is to, by resolution, accept, reject, or modify the recommendations and direct the planning board to commence the process of amending the master plan. This procedure requires the planning board to hold a hearing on the proposed amendments after providing public notice of the hearing.
If a planning board amends a master plan pursuant to the bill, the governing body of the municipality is authorized to commence the process of amending the municipality’s zoning ordinance for the purpose of making the ordinance substantially consistent with the land use plan element and the housing plan element of the municipality’s master plan.
The bill provides that, within 45 business days following the date of adoption of any revisions to the municipality’s zoning or other land development ordinances, the clerk of the municipality is to transmit copies of the ordinances to the Division of Local Planning Services in the DCA. If a municipality has already adopted ordinances substantially similar to the bill’s requirements, the municipality is to transmit copies of the ordinances to the Division of Local Planning Services in the DCA for evaluation in preferential status determinations.
The bill directs the DCA to establish a preference in the award of State financial assistance for those municipalities that have amended their development regulations pursuant to the bill to allow for the use of additional housing strategies and have thereby increased the number of housing units permitted for development. The preference is to apply to all types of competitively-awarded financial assistance that the DCA may distribute to one or more municipalities pursuant to a program administered by the DCA, other than a program that awards funds to help a municipality fulfill its fair share housing obligation. The bill specifically identifies the Neighborhood Preservation Program, established pursuant to P.L.1975, c.248 (C.52:27D-142 et seq.) as State financial assistance programs subject to the bill’s provisions. Funds awarded under the Transitional Aid to Localities program or any successor discretionary aid program pursuant to P.L.2011, c.144 (C.52:27D-118.42), as Consolidated Municipal Property Tax Relief Aid, or as Energy Tax Receipts Property Tax Relief Aid are not to be considered a type of competitively-awarded financial assistance under the provisions the bill.
Additionally, the bill directs the DCA to publish on the DCA’s Internet website a list of municipalities that have amended their development regulations pursuant to the bill to allow for the use of additional housing strategies and have increased the number of housing units permitted for development in the municipality. The DCA is to, in a manner determined by the DCA, order the municipalities within three tier categories based on the impact of, and the amount of changes made, relative to their planning area. The DCA is required to update the list on a quarterly basis. Each State agency that awards a grant or other type of competitively-awarded financial assistance to municipalities is to utilize this list to establish an award preference for those municipalities that have amended their development regulations pursuant to the bill to allow for the use of additional housing strategies and have increased the number of housing units permitted for development within the municipality.
The bill directs the DCA to adopt rules and regulations, as specified in the bill, and as the DCA deems necessary or desirable to effectuate these provisions of the bill.
Additionally, the bill provides that the Commissioner of Transportation, in determining the allocation of funds for municipal projects from the "Transportation Trust Fund Account" is to establish a criterion to provide, at the commissioner’s discretion, priority consideration to municipalities that implement the provisions of this bill, within the schedule of all other criteria for prioritization. Current law provides that that the Commissioner of Transportation may consider several criteria in allocating monies from the Transportation Trust Fund for county and municipal transportation projects.
Finally, the bill permits increases in a school district’s district aid percentage for the purposes of the calculations of the State share of a school facilities project for those municipalities that implement the provisions of this bill. The bill permits increases to a school district’s district aid percentage of no more than 10 percent if the school district is within a municipality that has implemented the provisions of the bill. Under the bill, a regional school district may be eligible for a district aid percentage increase if one or more constituent municipalities of the district has implemented the provisions of the bill. The increase for a regional district, however, may not exceed 10 percent, and the maximum district aid percentage increase due to any one constituent municipality’s implementation of the bill is to be calculated in proportion to the constituent municipality’s share of the overall resident enrollment of the regional school district.
The bill directs the Commissioner of Education and the Commissioner of Community Affairs to develop a uniform methodology to determine the district aid percentage increase for school districts if a municipality has implemented the provisions of the bill.
As amended and reported by the committee, Senate Bill No. 4364 is identical to Assembly Bill No. 4913 (1R), which was reported by the committee on this date.
COMMITTEE AMENDMENTS:
The committee amended the bill to:
· remove references to "State aid" and replace those references with "financial assistance competitively awarded by the State;"
· specify that certain considerations and actions are to be optional rather than mandatory, as previously required by the bill;
· require a planning board to send a report and resolution to the Division of Local Planning Services in the DCA;
· require a planning board to forward its recommendations to the governing body and, in response, the governing body is to, by resolution, accept, reject, or modify the recommendations of the planning board and direct the planning board to commence the process of amending the master plan;
· require the clerk of the municipality to transmit copies of the adopted ordinances to the Division of Local Planning Services in the DCA within 45 businesses days of the adoption of the ordinances;
· require a municipality to transmit copies of substantially similar ordinances required by the bill to the Division of Local Planning Services in the DCA for including in certain priority processes;
· specify in the definition of "grant or other type of competitively-awarded financial assistance" that the assistance is to be distributed by a program administered by the DCA or another State agency solely funded by State funds;
· exclude from the definition of "grant or other type of competitively-awarded financial assistance:"
o programs administered by the DCA in support of shared services;
o programs that allow multiple municipalities to join a single application for competitively-awarded financial assistance;
o programs where other entities in addition to municipalities may apply for competitively-awarded financial assistance; and
o the Main Street New Jersey Program;
· specify that funds awarded under the Transitional Aid to Localities program, as Consolidated Municipal Property Tax Relief Aid, or as Energy Tax Receipts Property Tax Relief Aid are not to be considered a type of competitively-awarded financial assistance;
· delete language requiring the DCA to research and analyze each grant or other type of competitively-awarded financial assistance awarded to State agencies;
· require the DCA to post on its Internet website a list of municipalities that have amended their development regulations and to order them in a three tiered system based on the impact of, and the amount of changes made, relative to their planning area, which is to be updated quarterly, and which State agencies are to utilize to award preference to municipalities for financial assistance; and
· delete a provision concerning the provision of model ordinance templates and adds that provision of a housing siting and best practices guide.
FISCAL IMPACT:
This bill is not certified as requiring a fiscal note.