As part of the recent legislative package designed to reshape the landscape of affordable housing compliance, the New Jersey Legislature has also adopted in parallel a number of potential incentives and inducements for developers looking to produce the housing vitally necessary to solve New Jersey’s long-standing shortage of affordable housing. In Mount Laurel II, the New Jersey Supreme Court recognized that altruism alone would not lead to the construction of affordable housing in New Jersey, but that instead, “[s]atisfaction of the Mount Laurel doctrine … has to depend on affirmative inducements to make the opportunity real.” S. Burlington County NAACP v. Tp. of Mt. Laurel, 92 N.J. 158, 261 (1983). Simply creating the realistic opportunity through zoning controls alone doesn’t establish economic feasibility; market forces have and will dictate whether housing projects will ultimately be constructed, and more economic tools are necessary to create appropriate incentives to confront and combat the significant housing shortage in New Jersey. In years past, tools such as the suspension of the non-residential development fee, tax abatements, relief of water and sewer connection fees, and even municipal bonding have served to help to incentivize the development of some projects. Given the significant outstanding need in New Jersey for inclusionary and affordable housing, these actions are a clear legislative step, creating fundamental changes in how housing might be incentivized and financed through new payments in lieu of taxation, new abatements from sales and use taxes, proposals for alternative depreciation, and a collective insurance pilot program.

Benefits for Trust Fund Projects

These pieces of legislation create new potential economic benefits for projects financed through the state and municipal affordable housing trust funds. Municipalities and the state collect monies in affordable housing trust funds for the purposes of funding administration and development of low- and moderate-income housing through the assessment of the Non-Residential Development Fee Act, N.J.S.A. 40:55D-8.1 et seq., and municipalities additionally collect funds by way of residential development fees or payments in lieu of construction for inclusionary developments.