Appellate Division Rules Contributions into Municipal Affordable Housing Trust Funds Adopted Pursuant to N.J.S.A. 40A:12A-4.1 Are Valid, Statewide Non-Residential Development Fee Not a Substitute

On Thursday August 9, 2018, the New Jersey Appellate Division held that Prepayment Agreements requiring redevelopers to prepay a portion of the annual service charge in advance of the PILOT commencing when seeking a Long Term Tax Exemption are ultra vires and unenforceable. But perhaps more importantly, the Appellate Division held that municipalities are authorized to adopt ordinances pursuant to N.J.S.A. 40A:12A-4.1 that require an urban renewal entity to contribute to a municipal affordable housing trust fund as a condition of receiving a tax exemption under Long Term Tax Exemption Law, which is a separate and distinct requirement from a municipality’s right to impose and collect development fees under N.J.S.A. 52:27D-329.2 of the Fair Housing Act, which includes the Statewide Non-Residential Development Fee Act. The Appellate Division noted that these “contributions are expressly authorized by the Legislature under the LTTEL in N.J.S.A. 40A:12A-4.2, and are independent from and unrelated to the FHA.”