Non-Residential Development Fees – How Much Do I Pay and When?

The Statewide Non-Residential Development Fee Act (the “Act”) has been in full effect for the past three years. Yet, there remains confusion as to how the fee is calculated and when it is required to be paid. There shouldn’t be.

Before the Act, both residential and non-residential development fees were governed by the Council on Affordable Housing’s (“COAH”) regulations, and municipalities adopted a form ordinance provided by COAH. COAH’s regulations, for instance, permitted all development fees to be collected with up to 50% due at the issuance of a building permit and 50% due at the issuance of a certificate of occupancy. The same regulations permitted municipalities to collect the full fee at the issuance of a certificate of occupancy.

The current Act makes it crystal clear that “the payment of non-residential development fees … shall be made prior to the issuance of a certificate of occupancy for each development.” The Act also lays out a process for preliminary and final assessments of fees, including a notice required upon issuance of a construction permit to the tax assessor to conduct an initial evaluation of the fee. Thus, any requirement for the payment of a development fee as a condition of the issuance of a construction permit would be inconsistent with the Act. The Act provides that, unless a fee is expressly permitted by certain statutory provisions, the local ordinance imposing same “shall be void and of no effect.” Notwithstanding this language, we are aware of numerous municipalities that continue to impose an obligation to pay a portion of the development fee as a condition of a building or zoning permit.

The Legislature intentionally made the Act preemptive of all local ordinances on this point, so there should be no inconsistency, even where local ordinances might have been endorsed by COAH in the past and are still considered by some municipalities to be applicable. Based on the clear language in the Act, they are not.

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