A928

An Act establishing the "New Jersey Impact Fee Act" and supplementing P.L.1975, c.291 (C.40:55D-1 et seq.).

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

1. P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the "New Jersey Impact Fee Act."

2. The Legislature finds and declares that:

a. Impact fees are an important source of revenue for municipalities to use in funding the infrastructure necessitated by new growth and development;

b. Impact fees are a reasonable exercise of municipal authority, under home rule principles, to provide services within their jurisdictions;

c. Revenues accrued from impact fees should be expended on infrastructure improvements that directly benefit, or are impacted by, the development that pays the fee;

d. Impact fees allow local governments to fund specific components of their infrastructure in an intentional and targeted manner, addressing the needs of a growing community more effectively than revenue derived from property taxes; and

e. It is appropriate for the Legislature to provide a degree of flexibility to adjust impact fee schedules to account for rising construction prices and property values, and thereby enhance the role of impact fees, an invaluable tool for municipalities in New Jersey.

3. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

"Commissioner" means the Commissioner of Community Affairs.

"Impact fee" means a one-time fee imposed by a municipality on a developer pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) to offset the costs of infrastructure necessitated by the development.

"Impact fee ordinance" means an ordinance adopted pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Infrastructure" means a fixed capital expenditure or fixed capital outlay, excluding the cost of repairs or maintenance, associated with the construction, reconstruction, or improvement of public facilities that have an expected useful life of at least five years; related land acquisition, land improvement, design, engineering, and permitting costs; and other related construction costs required to bring the public facility into service. "Infrastructure" shall include, but shall not be limited to:

a. transportation infrastructure, including roads, bridges, sidewalks, bike paths, and public transit facilities;

b. public safety infrastructure, including police stations, fire stations, emergency medical service facilities, and associated vehicles and equipment;

c. educational infrastructure, including school buildings, libraries, and associated facilities;

d. utility infrastructure, including water supply, stormwater management, and sanitary sewer systems;

e. parks and recreational facilities, including public parks, trails, sports fields, and playgrounds; and

f. public buildings, including government administrative offices and public meeting spaces.

"Proportionate fair share agreement" means an agreement between a municipality and a developer that allows the developer to provide infrastructure improvements or land contributions in lieu of paying impact fees, subject to valuation at fair market value.

"Public facility" means an emergency medical, fire, law enforcement, or school facility, transportation infrastructure, a park, or public utility infrastructure.

4. As an alternative to the application of the authority provided pursuant to section 30 of P.L.1975, c.291 (C.40:55D-42), the governing body of a municipality may adopt an ordinance to impose an impact fee on a developer, as long as the ordinance complies with the provisions of this section.

a. The calculation of an impact fee shall be based on recent, localized data, as relevant, including:

(1) population projections;

(2) traffic and transportation data;

(3) school enrollment forecasts;

(4) public safety and emergency response data;

(5) construction and land acquisition costs; and

(6) inflation and property value adjustments.

b. Impact fee revenues shall be accounted for and reported separately and shall only be used for the specific infrastructure improvements for which the impact fee was collected.

c. Administrative charges for the collection of impact fees shall be limited to actual reasonable and necessary costs.

d. At least 90 days prior to the effective date of an impact fee ordinance, which imposes a new or increased impact fee, a municipality shall publish notice of the impact fee ordinance in the same manner as provided for in R.S.40:49-2.

e. The amount of an impact fee required for a development shall not be altered after the date of issuance of preliminary approval for the development.

f. An impact fee shall be proportional and reasonably connected to the increased impact generated by the development.

g. Impact fee revenues shall not be used to pay existing debt or for previously approved projects unless the expenditure is reasonably connected to the increased impact generated by new development.

h. An impact fee shall not be used for ongoing maintenance or operational costs.

i. Unless individualized exemptions are authorized by an ordinance adopted pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill), an impact fee shall apply equally to all development projects, including but not limited to projects that include low- and moderate-income housing.

5. An increase in the amount of an impact fee that may be charged for a development shall not be implemented unless the increase is in compliance with the following schedule:

a. An increase of not more than 25 percent of the existing rate may be implemented in two equal annual increments over the course of not less than two years.

b. an increase exceeding 25 percent, but not more than 50 percent, of the existing rate may be implemented in four equal annual increments over the course of not less than four years.

c. an increase exceeding 50 percent of the current rate shall not be permitted unless the following criteria are met:

(1) a demonstrated need study justifying the increase is completed within 12 months prior to adoption;

(2) at least two public hearings are held to review the proposed increase; and

(3) the municipality adopts the increase by at least a two-thirds majority vote of the governing body.

d. A new increase in impact fees shall not be initiated within four years following the completion of a prior increase in impact fees.

e. An impact fee shall not be applied retroactively to a previously-approved project or existing development.

6. a. A contribution provided in support of infrastructure shall be credited against an impact fee that would otherwise support the same infrastructure. In compliance with the rules and regulations adopted by the commissioner pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill), contributions that shall be credited against an impact fee shall include, but shall not be limited to, contributions provided through proportionate fair share agreements, contributions for infrastructure in support of the development, land dedications and public facilities in support of the development, site planning and design support, and construction.

b. A credit provided pursuant to this section shall be applied on a proportional basis, at fair market value to reduce the impact fees collected for the general category of public facilities or infrastructure for which the contribution was made.

7. a. In compliance with the rules and regulations adopted by the commissioner pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill):

(1) the proceeds of an impact fee shall be assignable and transferable between municipalities and school districts that share services, have a sending-receiving relationship, or that have consolidated, as applicable; and

(2) the proceeds of an impact fee credit provided pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be assignable and transferable among developments in municipalities and school districts that share services, have a sending-receiving relationship, or that have consolidated, as applicable.

b. Upon receipt by the municipality, impact fees for public school facilities shall be segregated in a separate municipal account to be transferred upon request of the school board to the school district's capital reserve account.

8. a. In compliance with procedures that shall be adopted by the rules and regulations of the commissioner pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill), an impact fee ordinance may permit a developer to request an exemption or waiver from an impact fee, or a portion of an impact fee, for a development, in proportion to the benefit to the public provided by the development.

b. If an exemption or waiver is granted pursuant to subsection a. of this section, a municipality shall not be required to offset the associated loss of revenue from other sources.

9. In an action challenging an impact fee, or the municipality’s failure to provide a required credit pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), the municipality shall have the burden of demonstrating by a preponderance of the evidence that the fee or credit is in compliance with P.L. , c. (C. ) (pending before the Legislature as this bill).

10. a. An impact fee ordinance shall require the municipality to submit an annual report to the commissioner, to be published on the Internet website of the Department of Community Affairs, detailing the collection and use of impact fee revenues.

b. A report published pursuant to subsection a. of this section shall provide:

(1) the specific purpose of the impact fee;

(2) the impact fee schedule and calculation method;

(3) the amount collected and expended for each purpose;

(4) a description of any infrastructure projects funded by impact fees, including project location and status; and

(5) any unspent or unallocated impact fee funds and the planned use for those funds.

c. The chief financial officer of the local government shall certify that all impact fee revenues were collected and expended in compliance with P.L. , c. (C. ) (pending before the Legislature as this bill).

11. The Commissioner of Community Affairs shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) on or before the first day of the fifth month following enactment.

12. This act shall take effect on the first day of the fifth month next following enactment.

STATEMENT

This bill establishes the "New Jersey Impact Fee Act" to regulate the imposition and use of impact fees by municipalities for infrastructure improvements necessitated by the development of real property.

The bill is intended to function as an alternative to the existing authority of municipalities to impose an impact fee, provided by the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.). The bill permits a municipality to adopt an ordinance to collect an impact fee for a development on the basis of recent, localized data, including population projections, traffic and transportation data, school enrollment forecasts, public safety and emergency response data, construction and land acquisition costs, and inflation and property value adjustments.

The bill requires notice to be provided at least 90 days prior to the effective date of an impact fee ordinance that imposes a new or increased impact fee. The bill prohibits the amount of an impact fee required for a development from being altered after the date of issuance of preliminary approval. The bill requires an impact fee to be proportional and reasonably connected to the increased impact generated by the development.

The bill requires contributions of land, infrastructure, and other contributions to be credited against an impact fee that would otherwise support the same infrastructure.

The proceeds of an impact fee are to be assignable and transferable between municipalities and school districts that share services, have a sending-receiving relationship, or that have consolidated. The proceeds of an impact fee credit are to be assignable and transferable among developments in municipalities and school districts that share services, have a sending-receiving relationship, or that have consolidated.

The bill requires impact fees for public school facilities to be segregated in a separate municipal account, and transferred upon request of the school board to the school district's capital reserve account.

An impact fee ordinance adopted by a municipality pursuant to this bill may permit a developer to request an exemption or waiver from an impact fee, or a portion of an impact fee, for a development, in proportion to the benefit to the public provided by the development.

In an action challenging an impact fee, or a municipality’s failure to provide a required credit, a municipality is to have the burden of demonstrating, by a preponderance of the evidence, that the fee or credit is in compliance with the bill.

An impact fee ordinance is to require the submission of an annual report to the Commissioner of Community Affairs (commissioner), to be published on the Internet website of the Department of Community Affairs, detailing the collection and use of impact fee revenues.

The bill requires the commissioner to adopt rules and regulations to effectuate the provisions of the bill on or before the first day of the fifth month following enactment, on which date, the bill is to take effect.