2021 THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN - Adopted May 26, 2021 - Madison ...
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THIRD ROUND HOUSING ELEMENT AND FAIR SHARE PLAN ADOPTED BY THE PLANNING BOARD MAY 26, 2021 ENDORSED BY THE MAYOR & COUNCIL MAY 26, 2021 PREPARED BY: _____________________________ _____________________________ ELIZABETH MCMANUS, PP, AICP, LEED AP SUSAN G. BLICKSTEIN, AICP/PP, PHD NEW JERSEY PROF. PLANNER LICENSE 5915 NEW JERSEY PROF. PLANNER LICENSE 5134 KYLE + MCMANUS ASSOCIATES SUSAN G. BLICKSTEIN, LLC A SIGNED AND SEALED ORIGINAL IS ON FILE WITH THE BOROUGH CLERK
MADISON BOROUGH PLANNING BOARD Steven R. Tombalakian, Chair John Forte, Regular, Vice-Chair Robert H. Conley, Mayor Astri J. Baillie, Council Liaison Peter R. Flemming, Sr. Tom Harris George Limbach, Jr. Alfredo Garibay Frances Boardman, Board Secretary Susan G. Blickstein, Licensed Professional Planner Ann Huber, Environmental Committee Representative Vincent Loughlin, Planning Board Attorney MADISON MAYOR & COUNCIL Robert H. Conley, Mayor Carmela Vitale, Council President Astri J. Baillie Maureen Byrne John Hoover Debra Cohen Rachel Ehrlich Raymond M. Codey, Borough Administrator James E. Burnet, Assistant Borough Administrator Elizabeth Osborne, Borough Clerk Matthew J. Giacobbe, Esq. Borough Attorney
TABLE OF CONTENTS Introduction & Executive Summary .............................................................................................................. 1 Affordable Housing in New Jersey ................................................................................................................ 8 Affordability Requirements......................................................................................................................... 13 Affordable Housing in Madison .................................................................................................................. 15 Consideration of Land Most Appropriate for Affordable Housing ............................................................. 16 Madison’s Affordable Housing Obligation .................................................................................................. 16 Satisfaction of the Affordable Housing Obligation ..................................................................................... 17 Affordable Housing Administration & Affirmative Marketing .................................................................... 54 Affordable Housing Trust Fund ................................................................................................................... 56 Cost Generation .......................................................................................................................................... 56 APPENDICES 1. FSHC Settlement Agreement 15. 80 Park Avenue 2. Planning Board Resolution 16. Sunrise Assisted Living 3. Governing Body Resolution 17. 27 Elm Street 4. Housing, Demographic & Employment 18. 24 Central Avenue (Firehouse Apts.) Analysis 19. 34 Walnut Street 5. Rehabilitation Documentation 20. Millennium Development 6. Vacant Land Adjustment 21. Madison Mall Apartments 7. Community Place 22. 30 Central Avenue 8. Park Avenue 23. 7 Elm Street 9. John Avenue 24. Civic Center / Community Place Site 10. Belmont Avenue 25. Unmet Need Zoning 11. Rexford Tucker Apartments 26. Administration Documentation 12. 30 Loantaka Way 27. Trust Fund Documentation 13. Strickland Place 14. 44 Cook Avenue
INTRODUCTION & EXECUTIVE SUMMARY Since the 1975 New Jersey Supreme Court decision known as “Mount Laurel I”, New Jersey municipalities have had a constitutional obligation to provide opportunities for creation of low and moderate housing units. This 1975 decision led to a body of case law, legislative changes and rulemaking by a state agency that, collectively, is now referred to as the “Mount Laurel doctrine”. Through these actions, New Jersey municipalities have been assigned a specific number of affordable housing units that must be created or planned for creation in order to have “satisfied” their constitutional obligation, commonly referred to as their affordable housing obligation. The purpose of this Housing Element and Fair Share Plan (hereinafter the “Plan”) is to present how the Borough of Madison will satisfy its constitutional obligation. Affordable housing in New Jersey is defined as housing units which are reserved for households with incomes not more than 80% of the regional median income. Each affordable unit, with limited exceptions, must remain reserved for low and moderate income households for not less than 30 years and it is typically enforced by a 30 year deed restriction. Each affordable unit is eligible for one “credit” against the obligation and certain units are eligible for “bonus credits”, which provide more than one credit per unit. In addition to providing the minimum number of credits, municipalities must ensure diversity in the unit type (at least half of the units must be available to families and the remaining may be reserved for seniors and those with special needs), diversity in the level of affordability (very low, low and moderate income units), and diversity in the size of affordable units (one, two and three bedroom units). Participation in this process, and therefore satisfaction of the affordable housing obligation, can be achieved voluntarily or involuntarily. However, voluntary compliance is heavily incentivized. Municipalities that do not successfully participate may be vulnerable to “builder’s remedy” litigation. A builder’s remedy is a litigation tool that grants a developer the right to develop what is typically a multi- family project on land that was not zoned to permit the use or the residential density desired by the developer, provided a “substantial” percentage of the units are reserved for low and moderate income households. Madison seeks to avoid this possibility and has already taken substantial steps to do so. This Plan supersedes all previously adopted housing plans, including the January 19, 2021 adopted housing plan. It has been prepared pursuant to a 2020 Settlement Agreement between the Borough of Madison and Fair Share Housing Center (hereinafter “FSHC”) that set forth the Borough’s affordable housing obligation and a preliminary plan for how it would be satisfied. FSHC is an interested party in the Borough’s Declaratory Judgment Action filed in Superior Court on July 2, 2015 as permitted by the March 10, 2015 NJ Supreme Court decision known as “Mount Laurel IV.” This Supreme Court decision rendered COAH “moribund” and created a transitional process for municipalities to seek compliance in the State’s trial courts, as opposed to the Council on Affordable Housing (“COAH”) to determine their affordable housing obligation and to seek approval of its Plan to satisfy that obligation. This Plan will serve as the foundation for the Borough’s application to Superior Court for that approval, referred to as a Judgment of Compliance and Order of Repose. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 1
As detailed in this Housing Plan, the Borough – like all New Jersey municipalities – has three components of its affordable housing obligation. Each component of the Borough’s obligation is identified in the following: Rehabilitation Obligation: 21 units The rehabilitation obligation can be defined as an estimate of the number of deteriorated housing units existing in Madison that are occupied by low- and moderate-income households. Prior Round Obligation: 86 units The Prior Round obligation can be defined as the cumulative 1987 through 1999 new construction affordable housing obligation. Third Round Obligation: 500 units The Third Round obligation can be defined as the cumulative 1999 through 2025 new construction affordable housing obligation. The Borough received a vacant land adjustment for this obligation that results in a 147 unit RDP and 353 unit unmet need. Due to the Third Round obligations being outsized as compared to the availability of developable land in Madison, the Borough received a vacant land adjustment that reflects a realistic development potential (hereinafter “RDP”) and an unmet need. The RDP represents the portion of the third round obligation that can theoretically be addressed with inclusionary development (defined as a mix of market and affordable units) on lots identified as being developable in the vacant land analysis. Pursuant to N.J.A.C. 5:93-4.2, Madison's Third Round RDP is 147. The unmet need is calculated as the difference between the Third Round obligation (500) and the RDP (147). The total Prior and Third Round obligation is therefore 233, with a remaining Third Round "unmet need" of 353. The Borough satisfies the rehabilitation obligation through continued coordination with the Morris County Rehabilitation Program, the Madison Housing Authority and a local program for the rehabilitation of affordable for-sale and rental housing units. The Borough will utilize the variety of sites and housing types set forth below to meet the 86 unit Prior Round obligation. Community Place 1& 2 An existing 100% affordable family rental located along Cook Avenue adjacent to Central Avenue School. The development consists of 13 affordable units of which 10 units will be applied towards the Prior Round obligation. Each rental unit is also eligible for a bonus credit. Park Avenue An existing 100% affordable family rental located at the intersection of Park Avenue and Elm Street. The development consists of 4 affordable units, with each unit eligible for a bonus credit. John Avenue An existing 100% affordable family rental located adjacent to the Madison Public Works Department near Station Road. The development consists of 13 affordable units of which 10 units BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 2
will be applied towards the Prior Round obligation. Eight (8) of the units are eligible for bonus credits. Belmont Avenue An existing 100% affordable family rental located on Belmont Avenue, close to its intersection with Prospect Street. The development consists of 6 affordable units. No bonus credits are applied. Rexford Tucker Apartments An existing age-restricted rental development located on Chateau Thierry Road. The development consists of 79 affordable units. Twenty-one (21) units will be applied towards the Prior Round obligation. No bonus credits are applied. 30 Loantaka Way An existing 100% affordable family rental development located on Loantaka Way. The development consists of 12 affordable units of which 11 units will be applied towards the Prior Round obligation. No bonus credits are applied. Strickland Place Existing 100% affordable for-sale single-family homes located on Strickland Place. The development consists of 3 affordable units of which 2 units will be applied towards the Prior Round obligation. No bonus credits are applied. The Borough will utilize the variety of sites and housing types set forth below to meet the 147 unit Third Round RDP. The strategies used to meet the RDP differ slightly from those set forth in the January 19, 2021 Housing Plan. Eight (8) units at the Sunrise assisted living facility and only 10 units at the Rexford Tucker Apartments were previously used to meet the RDP. This Housing Plan uses 18 units at the Rexford Tucker Apartments and the 8 units at the Sunrise assisted living facility have been moved the unmet need. Community Place 1& 2 An existing 100% affordable family rental located along Cook Avenue adjacent to Central Avenue School. The development consists of 13 affordable units of which 3 units will be applied towards the Third Round RDP. Each rental unit is also eligible for a bonus credit. John Avenue An existing 100% affordable family rental located adjacent to the Madison Public Works Department near Station Road. The development consists of 13 affordable units of which 3 units will be applied towards the Third Round RDP. No bonus credits are applied. 44 Cook Avenue / Robert T. Burroughs Apartments An existing 100% affordable age-restricted rental located along Cook Avenue close to its intersection with Central Avenue consisting of 12 affordable units. No bonus credits are applied. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 3
80 Park Avenue An existing 100% affordable family rental located along Park Avenue close to its intersection with Elm Street consisting of 8 affordable units. No bonus credits are applied. Rexford Tucker Apartments An existing age-restricted rental development located on Chateau Thierry Road. The development consists of 79 affordable units. Eighteen (18) units will be applied towards the Third Round RDP. No bonus credits are applied. 30 Loantaka Way An existing 100% affordable family rental located on Loantaka Way. The development consists of 12 affordable units of which 1 unit will be applied towards the Third Round RDP, which is also eligible for a bonus credit. 27 Elm Street An existing 100% affordable for-sale family development located on Elm Street, close to its intersection with Park Avenue and the railway corridor, consisting of 5 affordable units. No bonus credits are applied. 24 Central Avenue / Firehouse Apartments An existing 100% affordable age-restricted rental located at the intersection of Central Avenue and Cook Avenue / Elmer Street. The development consists of 12 affordable units of which 3 units will be applied towards the Third Round RDP. No bonus credits are applied. Strickland Place Existing municipal sponsored for-sale single-family homes located on Strickland Place. The development consists of 3 affordable units of which 1 unit will be applied towards the Third Round RDP. No bonus credits are applied. 34 Walnut Street The family for-sale inclusionary development consists of 8 total units, with one affordable unit that will contribute toward the Third Round RDP. No bonus credits are applied. Millennium The family for-sale inclusionary development consists of 5 single-family homes and 1 two-family building located at 285 Kings Road. The 2 units in the two-family building will be affordable units. No bonus credits are applied. Madison Mall Apartments This development has 64 existing units and zoning in place to add 40 additional units along the site’s Main Street frontage. Eight of the 104 total units will be affordable family rental units and 4 are eligible for bonus credits. 30 Central Avenue An existing 100% affordable family rental, located on Central Avenue adjacent to the Firehouse Apartments, consisting of 4 affordable units. No bonus credits are applied. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 4
7 Elm Street A 1.27 acre currently-vacant lot located on Elm Street close to its intersection with Park Avenue. The proposed 100% affordable development will consist of 2 family rental units. No bonus credits are applied. Municipal Project A proposed 100% affordable development located on two separate, yet proximate, sites consisting of 40 affordable rental units. One portion of the proposed development will be located on a .56 acre parcel that fronts on Community Place that was recently acquired from the Board of Education and designated a non-condemnation area in need of redevelopment. The second portion of the proposed development is at the Civic Center property at 28 Walnut Street. The site is also eligible for 28 bonus credits. In addition to the Prior Round obligation and the Third Round RDP, the Borough will utilize a variety of zoning strategies and existing affordable units to address the 353 unit Third Round Unmet Need. As described previously in the RDP summary, the Sunrise assisted living facility has been moved to unmet need and 40 units, rather than 48, at the Rexford Tucker Apartments will contribute toward the unmet need. Municipalities need not address the entirety of the unmet need; instead, they are required to create and capture affordable housing opportunities when they arise. The Borough will utilize the following to address the unmet need: Rexford Tucker Apartments An existing age-restricted rental development located on Chateau Thierry Road. The development consists of 79 affordable units of which 40 units will be applied towards the Unmet Need. Sunrise Assisted Living An existing assisted living development located at 215 Madison Avenue, close to Danforth Road, with 8 affordable units. 24 Central Avenue / Firehouse Apartments An existing 100% affordable age-restricted rental located at the intersection of Central Avenue and Cook Avenue / Elmer Street. The development consists of 12 affordable units of which 9 units will be applied towards the Unmet Need. CC Overlay Zone - Park Avenue / Loveland Street The CC Overlay Zone allows for residential units on the ground floor and increases the maximum building height to 3 stories. A total of 6.8 affordable units could be created using the strategy of “a zoning overlay to allow residential units on three (3) lots at the intersection of Park Avenue and Loveland Street. CBD-2 Zone - Park Avenue / Ridgedale Avenue The CBD-2 Overlay Zone permits 3-story residential buildings on this site. A total of 6.0 affordable units could be created using this strategy. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 5
CBD-1 Overlay Zone - Alexander Avenue / Main Street The CBD-1 Overlay Zone allows for the provision of 3-story residential buildings on the two (2) lots at the intersection of Alexander Avenue and Main Street. A total of 3.6 affordable units could be created using this. CC Overlay Zone – Rosedale Avenue / Main Street The CC Overlay Zone, on lots along Main Street, allows for the provision of residential units on the ground floor while increasing the maximum building height to 3 stories. A total of 13.5 affordable units could be created using this strategy on nine (9) lots at the intersection of Rosedale Avenue and Main Street – generally between the Madison Masonic Lodge to the north and Rosedale Avenue to the south. CC Overlay Zone – Main Street / Samson Avenue The CC Overlay Zone allows for the provision of residential units on the ground floor while increasing the maximum building height from 2.5 to 3 stories. A total of 11.5 affordable units could be created using this strategy on twelve (12) lots on the southern side of Main Street – generally between Cross Street to the north and Samson Avenue to the south. CC Overlay Zone – Main Street / Seaman Street The CC Overlay Zone allows for the provision of residential units on the ground floor while increasing the maximum building height to 3 stories. A total of 23 affordable units could be created using this strategy on seven (7) lots of land on the southern side of Main Street – generally between Burns Street to the north and Seaman Street to the south. Non-Age-Restricted Residential – Gateway II District A total of 12.9 affordable units could be created using the strategy of allowing family inclusionary development across the entire ‘GW2 Gateway District II’ on the southern end of Main Street, generally between Niles Avenue in the north and Brooklake Avenue in the south. The ‘GW2 Gateway II’ zone previously permitted only age-restricted or senior citizen multi-family dwellings at 18-22 developable units per acre. Non-Age-Restricted Residential – Gateway I District A total of 12.6 affordable units could be created using the strategy of allowing family inclusionary development across the entire ‘GW1 Gateway I’ zone in the southern end of Main Street, generally between Union Avenue in the north and Division Avenue in the south. The ‘GW1 Gateway I’ zone previously permitted only age-restricted or senior citizen multi-family dwellings at 18-22 developable units per acre. Townhouse Overlay – Madison Baptist Church A total of 11.8 affordable units could be created with the townhouse overlay on the Madison Baptist Church at the corner of Green Avenue and Shunpike Road. The Overlay Zone permits townhouse development on some or all of the site, at a density of 12 units/acre. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 6
CBD-2 Zone – Cook Avenue and Elmer Street The CBD-2 Zone amendments allow ground floor residential units, thereby permitting 3-story residential buildings. A total of 6.0 affordable units could be created using this strategy on fifty (50) lots on Cook Avenue and Elmer Street, generally between Community Place to the north and Greenwood Avenue to the south. CC Overlay Zone – Staples Plaza Shopping Center The CC Overlay Zone allows residential units on the ground floor while increasing the maximum building height to 3 stories, thereby creating an opportunity to develop 3-story multi-family residential buildings. Up to 30.1 affordable units could be created using the zoning overlay strategy on the Staples Plaza shopping center property on Main Street - near Seaman Street. R4 Multi-family Overlay Zone – Park Avenue & Elm Street The ‘R4 Two-Family Residential’ zone previously permitted single-family detached and two-family dwellings. The Overlay Zone on the site permits multi-family residential development at a gross density of 14 units/acre. A total of 12.6 affordable units could be created in the overlay put in place on 13 lots southwest of the intersection of Park Avenue and Elm Street. Mandatory Set-aside – Borough-wide The Borough previously adopted an affordable housing ordinance that requires a 20% affordable housing set-aside where a development has 5 or more new residential units and has a density of 6 dwelling units/acre or greater. This ordinance will continue to be applied throughout the Borough. Adoption of this Housing Element and Fair Share Plan and complete implementation of the mechanisms described above to meet the affordable housing obligation will yield a Judgment of Compliance and Order of Repose from Superior Court and protect the Borough from builder’s remedy litigation through July 2025, the maximum time available. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 7
AFFORDABLE HOUSING IN NEW JERSEY In its landmark 1975 decision, now referred to as “Mount Laurel I”, the NJ Supreme Court ruled that developing municipalities have a constitutional obligation to provide variety and choice of housing types affordable to low and moderate income households. In its 1983 “Mount Laurel II” decision, the NJ Supreme Court extended the regional fair share obligation to all municipalities with any “growth area” as designated in the State Development Guide Plan (NJDCA 1978) and determined that each municipality would have to establish its fair share obligation and provide zoning mechanisms to create a realistic opportunity for fulfilment of the fair share obligation. Mount Laurel II also gave developers, under appropriate circumstances, the opportunity to secure a builder’s remedy. A builder’s remedy is a litigation tool that grants a developer the right to develop what is typically a multi-family project on land that was not zoned to permit the use or the residential density desired by the developer, provided a “substantial” percentage of the units are reserved for low and moderate income households. Madison seeks to avoid this possibility and has already taken substantial steps to do so. In 1985, the Legislature enacted the Fair Housing Act in response to Mount Laurel II. The Fair Housing Act created the Council on Affordable Housing (hereinafter “COAH”) and an administrative alternative to compliance in a court proceeding. The Legislature conferred “primary jurisdiction” on COAH and charged COAH with promulgating regulations to establish housing regions, to estimate the state’s low- and moderate-income housing needs, set criteria and guidelines for municipalities to determine and satisfy their affordable housing obligation, and to create a process for the review and approval of appropriate housing elements and fair share plans. Approval of a municipal housing element and fair share plan by COAH is referred to as “substantive certification” and it provides protection from exclusionary zoning litigation during the time period which the housing element and fair share plan addresses (i.e. the round). Activity From 1987 - 1993 COAH created the criteria and guidelines for municipalities to determine and address their respective affordable housing obligation. COAH originally established a formula for determining municipal affordable housing obligation for the six-year period between 1987 and 1993 (N.J.A.C. 5:92-1 et seq.), which became known as the “First Round.” These rules established the first round rehabilitation obligation (also referred to as the “present need”) and the first round new construction obligation. The First Round formula was superseded by COAH regulations in 1994 (N.J.A.C. 5:93-1.1 et seq.). The 1994 regulations recalculated a portion of the first round 1987-1993 affordable housing obligations for each municipality and computed the additional municipal affordable housing need from 1993 to 1999 using 1990 U.S. Census data. The regulations COAH adopted in 1994 to identify a municipality’s “cumulative” obligations for the First and Second Rounds are known as “the Second Round” regulations. Under regulations adopted for the Third Round, the obligation of municipalities to create new affordable housing for the First and Second Rounds is referred to as the “Prior Round” obligation. This Plan refers to the new construction obligation for the First and Second housing cycles as the “Prior Round” obligation. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 8
Activity From 1999 - 2011 On December 20, 2004, COAH’s first version of the Third Round rules became effective some five years after the end of the Second Round in 1999. At that time, the Third Round was defined as the time from 1999 to 2014 but condensed into an affordable housing delivery period from January 1, 2004 through January 1, 2014. The Third Round rules marked a significant departure from the methods utilized in COAH’s Prior Round. Previously, COAH assigned an affordable housing obligation as an absolute number to each municipality. These Third Round rules implemented a “growth share” approach that linked the production of affordable housing to residential and non-residential development within a municipality. However, on January 25, 2007, the New Jersey Appellate Court decision, In re Adoption of N.J.A.C. 5:94 and 5:95, 390 N.J. Super. 1, invalidated key elements of the first version of the Third Round rules, including the growth share approach. The Court ordered COAH to propose and adopt amendments to its rules within six months to address the deficiencies identified by the Court. COAH missed this deadline but did issue revised rules effective on June 2, 2008 (as well as a further rule revision effective on October 20, 2008). COAH largely retained the growth share approach, but implemented several changes intended to create compliance with the 2007 Appellate Court decision. Additionally, the Third Round was expanded from 2014 to 2018. Just as various parties challenged COAH’s initial Third Round regulations, parties challenged COAH’s 2008 revised Third Round rules. On October 8, 2010, the Appellate Division issued its decision, In re Adoption of N.J.A.C. 5:96 and 5:97, 416 N.J. Super. 462, with respect to the challenge to the second iteration of COAH’s third round regulations. The Appellate Division upheld the COAH Prior Round regulations that assigned rehabilitation and Prior Round numbers to each municipality but invalidated the regulations by which the agency assigned housing obligations in the Third Round. Specifically, the Appellate Division ruled that COAH could not allocate obligations through a “growth share” formula. Instead, COAH was directed to use similar methods that had been previously used in the First and Second rounds. The Court gave COAH five months to address its ruling and provide guidance on some aspects of municipal compliance. In addition to the State agency activity and judicial decisions, the New Jersey Legislature has amended the Fair Housing Act in recent years. On July 17, 2008, Governor Corzine signed P.L. 2008, c. 46 (referred to as the “Roberts Bill”, or “A500”), which amended the Fair Housing Act. Key provisions of the legislation included the following: It established a statewide 2.5% nonresidential development fee instead of requiring nonresidential developers to provide affordable housing; It prohibited new regional contribution agreements (hereinafter “RCAs”) as a compliance technique available to municipalities whereby a municipality could transfer up to 50% of its fair share to a so called “receiving” municipality; It added a requirement that 13% of all affordable housing units and 13% of all similar units funded by the state’s Balanced Housing Program and its Affordable Housing Trust Fund be restricted to very low-income households (30% or less of median income); and BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 9
It added a requirement that municipalities had to commit to spend development fees within four (4) years of the date of collection after its enactment, which commenced on the four-year anniversary of the law (July 17, 2012). These amendments to the Fair Housing Act are not promulgated in any valid COAH regulations. However, the requirement to expend development fees within four-years of their collection was determined in a Middlesex County Superior Court case to instead have the first four-year period to begin upon a Judgment of Repose, or upon a finding by the Court that the municipality is determined to be non-compliant (IMO of the Adoption of the Monroe Borough Housing Element and Fair Share Plan and Implementing Ordinances). Superior Courts around the State have been guided by this decision. Activity from 2011 to the Present COAH sought a stay from the NJ Supreme Court of the March 8, 2011 deadline that the Appellate Division imposed in its October 2010 decision for the agency to issue new Third Round housing rules. The NJ Supreme Court granted COAH’s application for a stay and granted petitions and cross-petitions to all the various challenges to the Appellate Division’s 2010 decision. The NJ Supreme Court heard oral argument on the various petitions and cross-petitions on November 14, 2012. On September 26, 2013, the NJ Supreme Court upheld the Appellate Court decision in In re Adoption of N.J.A.C. 5:96 and 5:97 by New Jersey Council On Affordable Housing, 215 N.J. 578 (2013), and ordered COAH to prepare the necessary rules. Subsequent delays in COAH’s rule preparation and ensuing litigation led to the NJ Supreme Court, on March 14, 2014, setting forth a schedule for adoption. Although ordered by the NJ Supreme Court to adopt revised new rules on or before October 22, 2014, COAH deadlocked 3-3 at its October 20th meeting and failed to adopt the draft rules it had issued on April 30, 2014. In response, FSHC filed a motion in aid of litigant’s rights with the NJ Supreme Court, and oral argument on that motion was heard on January 6, 2015. On March 10, 2015, the NJ Supreme Court issued a ruling on the Motion In Aid of Litigant’s Rights (In re Adoption of N.J.A.C. 5:96 & 5:97, 221 NJ 1, aka “Mount Laurel IV”). This long-awaited decision provides a new direction for how New Jersey municipalities are to comply with the constitutional requirement to provide their fair share of affordable housing. The Court transferred responsibility to review and approve housing elements and fair share plans from COAH to designated Mount Laurel trial judges. The implication of this is that municipalities must now apply to the Courts, instead of COAH, if they wish to be protected from exclusionary zoning lawsuits. These trial judges, with the assistance of an appointed Special Master to the Court, review municipal plans much in the same manner as COAH previously did. While the NJ Supreme Court’s decision set a process in motion for towns to address their Third Round obligations, it did not assign those obligations. Instead, that must be done by the trial courts. However, the NJ Supreme Court did direct that the method of determining municipal affordable housing obligations were to be “similar to” the methodologies used in the First and Second Round rules. Additionally, the Court stated that municipalities should rely on COAH’s Second Round rules (N.J.A.C. 5:93) and certain components of COAH’s 2008 regulations that were specifically upheld (including but not limited to BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 10
Redevelopment Bonuses), as well as the Fair Housing Act (N.J.S.A. 52:27D – 301 et seq.), in their preparation of Third Round housing elements and fair share plans. This plan is prepared in response to and in compliance with the March 10, 2015 NJ Supreme Court decision. FSHC, the only public interest advocacy organization in New Jersey devoted exclusively to promoting the production of housing affordable to low and moderate income households, was permitted to serve as an interested party in every municipal Declaratory Judgment Action. In this role the organization calculated municipal affordable housing obligations and offered to settle with municipalities. Such settlements addressed the municipal affordable housing obligation, compliance mechanisms and other terms intended to promote affordable housing production. Most municipalities that filed a Declaratory Judgment Action have found settlement with FSHC to be in their interest. The alternative to settlement with FSHC is conducting a trial in Superior Court to determine the municipal affordable housing obligation. On January 17, 2017, the NJ Supreme Court rendered a decision, In Re Declaratory Judgment Actions Filed By Various Municipalities, 227 N.J. 508 (2017), that found that the “gap period,” defined as 1999-2015, generates an affordable housing obligation. This obligation requires an expanded definition of the municipal Present Need obligation to include low- and moderate-income households formed during the gap period; however, this component of the obligation is a new-construction obligation rather than a rehabilitation obligation. Accordingly, the municipal affordable housing obligation is now composed of the following 4 parts: Present Need (rehabilitation), Prior Round (1987-1999, new construction), Gap Present Need (Third Round, 1999-2015, new construction), and Prospective Need (Third Round, 2015 to 2025, new construction). While the structure of the obligation established through the Borough’s Settlement Agreement with FSHC is different from the findings of this recent Supreme Court decision (i.e. no redefined Present Need (1999- 2015) and a Prospective Need specific to 2015-2025), the Borough’s obligation therein reflects that which was calculated for the entire third round period (1999-2025). The Compliance Process With the Supreme Court’s direction that such responsibility must transfer from COAH to Superior Court Trial Judges, municipalities may no longer seek substantive certification. Instead, municipalities now seek a Judgment of Compliance and an Order of Repose from Superior Court or the judicial equivalent of substantive certification. Doing so first requires that a Declaratory Judgment Action be filed in Superior Court. Most municipalities who filed a Declaratory Judgment Action, including Madison, settled with FSHC. This means a Settlement Agreement, agreed to by both parties, sets forth the affordable housing obligation, compliance mechanisms and other terms intended to promote affordable housing production. This Settlement Agreement must be approved by Superior Court at a “Fairness Hearing” where the Settlement Agreement is evaluated to determine if it is fair to the interests of low and moderate income households. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 11
Once determined to be “fair” via the issuance of a Court Order, a municipality must adopt and endorse a housing element and fair share plan that reflects the terms of the Settlement Agreement. This housing plan must be subsequently submitted to Superior Court for its review and approval. Should the Court find the plan acceptable, the municipality will receive a Judgment of Compliance and an Order of Repose and immunity from builder’s remedy litigation for the remaining portion of the third round, which ends on July 1, 2025. This is similar to COAH’s substantive certification. To maintain the validity of the Order, the municipality is required to conduct the necessary continued implementation and monitoring. Aiding in the Judge’s evaluation of the Settlement Agreement is a Special Master appointed by the Judge. This person serves at the direction of the Judge, including preparation of reports at each step in the process, and may serve as a mediator between the municipality, FSHC and/or other intervenors. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 12
AFFORDABILITY REQUIREMENTS Affordable housing is defined under New Jersey’s Fair Housing Act as a dwelling, either for sale or rent, that is within the financial means of households of low- or moderate-income, as is measured within each housing region. Madison is in COAH’s Region 2, which includes Essex, Morris, Union and Warren counties. Moderate-income households are those with annual incomes greater than 50%, but less than 80% of the regional median income. Low-income households are those with annual incomes that are 50% or less than the regional median income. Very low-income households are a subset of “low-income” households and are defined as those with incomes 30% or less than the regional median income. The Uniform Housing Affordability Controls (hereinafter “UHAC”) at N.J.A.C. 5:80-26.3(d) and (e) requires that the maximum rent for a qualified unit be affordable to households with incomes 60% or less than the median income for the region. The average rent must be affordable to households with incomes no greater than 52% of the median income. The maximum sale prices for affordable units must be affordable to households with incomes 70% or less than the median income. The average sale price must be affordable to a household with an income of 55% or less than the median income. The regional median income is defined by COAH using the federal income limits established by Department of Housing and Urban Development (hereinafter “HUD”) on an annual basis. In the spring of each year, HUD releases updated regional income limits, which COAH historically has reallocated to its regions. It is from these income limits that the rents and sale prices for affordable units are derived. However, COAH has not published updated income limits or rent increases since 2014. As a result, the Affordable Housing Professionals of New Jersey (“AHPNJ”) have published annual income limits the last several years. The following tables are based on the 2020 affordable housing regional income limits for Region 2, prepared by Affordable Housing Professionals of New Jersey (AHPNJ). 2020 INCOME LIMITS FOR REGION 2 Household Income 1-Person 2-Person 3-Person 4-Person 5-Person Levels Household Household Household Household Household Median $73,857 $84,408 $94,959 $105,510 $113,951 Moderate (80%) $59,085 $67,526 $75,967 $84,408 $91,160 Low (50%) $36,928 $42,204 $47,479 $52,755 $56,975 Very Low (30%) $22,157 $25,322 $28,488 $31,653 $34,185 Source: 2020 Income Limits prepared by Affordable Housing Professionals of New Jersey, dated April 24, 2020. The following tables provide illustrative the sale prices and gross rents for general/family units for 2020. The sample rents and sale prices are illustrative and are gross figures, which do not account for the specified utility allowances for rental units or for specific mortgage rates, taxes, etc. for sales units. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 13
As a note, rents have increased by a collective 5.1% in 2015, 2016 and 2017, by 2.2% in 2018, 2.6% in 2019, and by 1.9% in 2020. ILLUSTRATIVE 2020 AFFORDABLE GROSS RENTS FOR REGION 2 Household Income Levels 1-Bedroom 2-Bedroom 3-Bedroom (% of Median Income) Unit Rent Unit Rent Unit Rent Moderate (80%) $1,140 $1,368 $1,580 Low (50%) $874 $1,049 $1,212 Very Low (30%) $570 $684 $790 Source: 2020 Affordable Housing Pricing Calculator: General Affordable Housing Rental Rate Calculators for New Construction prepared by Affordable Housing Professionals of New Jersey. ILLUSTRATIVE 2020 AFFORDABLE SALES PRICES FOR REGION 2 Household Income Levels 1 Bedroom 2 Bedroom 3 Bedroom (% of Median Income) Unit Price Unit Price Unit Price Moderate (80%) $136,486 $163,783 $189,261 Low (50%) $90,155 $108,186 $125,015 Very Low (30%) $48,823 $52,588 $60,768 Source: 2020 Affordable Housing Pricing Calculator: General Affordable Housing Unit Sales Price Calculators for New Construction prepared by Affordable Housing Professionals of New Jersey. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 14
AFFORDABLE HOUSING IN MADISON The Borough’s first round housing plan was prepared in September 1994. The Borough adopted a third round plan on December 18, 2008 to address an 86 unit rehabilitation share, a 306 unit Third Round growth share and an 86 unit new construction Prior Round obligation for a total obligation of 478 units; however, this did not receive substantive certification prior to COAH’s third round rules being overturned. To comply with the March 10, 2015 Mt. Laurel IV decision, Madison petitioned the Superior Court on June 12, 2015 for a Declaratory Judgment and temporary immunity from builder’s remedy suits. This action entered the Borough into the process of determining its affordable housing obligation and how it would be satisfied. Additionally, the Borough received immunity from builder’s remedy litigation while doing so. To avoid a lengthy trial on the Borough’s affordable housing obligation and, potentially, a second trial on how that obligation would be satisfied, Madison and FSHC came to terms in an August 10, 2020 Settlement Agreement that set forth the Borough’s affordable Housing obligation and a preliminary compliance plan. This Settlement Agreement was approved by the Honorable Michael Gaus, J.S.C. This Housing Plan implements the Borough’s settlement agreement with the FSHC. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 15
CONSIDERATION OF LANDS MOST APPROPRIATE FOR AFFORDABLE HOUSING As part of this Plan, the Borough considered land that is appropriate for the construction of very-low-, low- and moderate-income housing. Although the Borough has limited available and developable land, the Borough successfully satisfied its affordable housing obligation using the vacant land adjustment process and a variety of zoning mechanisms that have or will create low and moderate income housing. In addition to considering vacant land for the creation of affordable housing, the Borough has or will amend the zoning to create 100% affordable and inclusionary housing zone districts that will create low and moderate income housing. These sites will meet the RDP and contribute toward the Borough’s unmet need. Additionally, adoption of the mandatory set-aside ordinance ensures that unforeseen opportunities for affordable housing are captured. The Borough believes that the mechanisms described in this document represent the best options for affordable housing in Madison. The mechanisms satisfy the Borough’s affordable housing obligation as established through the Settlement Agreement. While the Borough recognizes that developers may, in the future, present sites that possess characteristics that could lend themselves to affordable housing development, additional sites are not needed to satisfy the obligation at this time. Additionally, the Borough may consider appropriate sites or projects in the future for an inclusionary or 100% affordable housing project. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 16
MADISON’S AFFORDABLE HOUSING OBLIGATION Since the January 2017 New Jersey Supreme Court ruling on the “gap period”, housing plans must address four main components of a municipality’s affordable housing obligation. These include the Rehabilitation Obligation to improve substandard housing occupied by low- and moderate-income households, the Prior Round for new construction from 1987 to 1999, the Gap Period Present Need for new construction from 1999 to 2015, and the Prospective Need, or the Third Round’s future new construction demand from 2015 to 2025. In this housing plan, the Gap Period Present Need and Prospective Need are collectively referred to as the Third Round Obligation. Rehabilitation Obligation The rehabilitation obligation can be defined as an estimate of the number of deteriorated housing units existing in Madison that are occupied by low- and moderate-income households. The Settlement Agreement with FSHC establishes the Borough’s rehabilitation obligation as 21 units. The basis for this obligation is FSHC’s May 2016 calculations, which used the most recent decennial census year, 2010, as the point in time in determining the number of deteriorated housing units. Prior Round Obligation The Prior Round obligation can be defined as the cumulative 1987 through 1999 new construction affordable housing obligation. This period corresponds to the First and Second Rounds of affordable housing. The Settlement Agreement with FSHC establishes the Borough’s Prior Round obligation as 86 units. The Settlement Agreement adheres to the Prior Round obligations, as calculated in 1993-1994 pursuant to N.J.A.C 5:93 and published by COAH in 2008. Third Round Obligation The future demand for affordable housing includes the portion of the Third Round (1999- 2015) that has already passed – referred to as Gap Period Present Need, as well as a 10-year projection into the future (2015-2025) – referred to as the Prospective Need. The Borough’s cumulative Third Round obligation is 500 units, and the source is the methodology set forth by the Honorable Mary C. Jacobson, A.J.S.C., in her March 2018 opinion on the consolidated declaratory judgment proceedings: In the Matter of the Municipality of Princeton, Docket No. MER-L-1550-15 and In the Matter of West Windsor Township, Docket No. MER-L-1561-15, Superior Court of New Jersey, Law Division, Mercer County . Vacant Land Adjustment The Borough is eligible for a Third Round vacant land adjustment, pursuant to N.J.A.C. 5:93-4.2., and received one as part of its Settlement Agreement with FSHC and the accompanying order approving the Settlement Agreement. Municipalities, such as Madison, that do not have adequate capacity of developable land to fulfil the entirety of the affordable housing obligation are eligible for an adjustment BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 17
of the obligation that reflects a realistic development potential (hereinafter “RDP”) and the unmet need. The RDP represents the portion of the new construction affordable housing obligation that can realistically be addressed with inclusionary development on lots identified as being developable in the vacant land adjustment. The unmet need is calculated as the difference between the total obligation and the RDP. As detailed in Exhibit A. to the Borough’s Settlement Agreement with FSHC, the Borough’s calculated RDP is 147 units. The Borough evaluated vacant (property class 1) lands, public lands (property class 15c) and additional properties which were under-developed or otherwise may offer an opportunity for inclusionary affordable housing. Environmental constraints, such as but not limited to wetlands, and municipally owned recreation lands were excluded from generating an RDP. The Borough utilized densities between 6 and 18 du/ac and a 20% affordable housing set-aside to calculate the RDP. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 18
SATISFACTION OF THE AFFORDABLE HOUSING OBLIGATION The Borough is addressing its affordable housing obligation through a variety of mechanisms that include existing affordable units, inclusionary housing, assisted living units and 100% affordable housing sites. Satisfaction of the Rehabilitation Obligation The Borough will address its 21 unit obligation through participation in the Morris County Rehabilitation Program, which provides financial assistance to income-eligible homeowners to repair major systems in their home. This County program is funded by the federal Community Development Block Grant (CDBG) program. Additionally, the Borough will operate a municipal rehabilitation program available to renter- occupied households through its administrative agent. All rehabilitated units will comply with the definition of a substandard unit in N.J.A.C. 5:93-5.2(b), which states, “a unit with health and safety code violations that require the repair or replacement of a major system.” Major systems include weatherization, roofing, plumbing, heating, electricity, sanitary plumbing, lead paint abatement and/or load bearing structural systems. All rehabilitated units shall meet the applicable construction code. Additionally, all rehabilitated units shall be occupied by low- or moderate- income households and subject to 10-year affordability controls, which shall be placed on the property in the form of a lien or deed restriction. It is anticipated that the average hard cost will be at least $10,000. Satisfaction of the Prior Round Obligation The Borough is addressing its 86-unit Prior Round obligation with a mix of unit types and projects throughout the Borough. Satisfaction of the 86-unit Prior Round Obligation Mechanism Unit Type Rental Units Bonus Credits Total Credits Community Place (1 & 2) Family Rental 10 10 20 Park Avenue Family Rental 4 4 8 John Avenue Family Rental 10 8 18 Belmont Avenue Family Rental 6 0 6 Rexford Tucker Apartments Age-Restricted Rental 21 0 21 30 Loantaka Way Family Rental 11 0 11 Strickland Place Family For-Sale 0 0 2 Total 62 22 86 BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 19
Community Place 1& 2 (20 credits) The existing 100% affordable family rental is located at 24-32 Community Place on Block 1601, Lot 23 off Cook Avenue just south of Ridgedale Avenue, and adjacent to Central Avenue School. Aerial Photo of Community Place 1 & 2 Site The development consists of 5 buildings on 1.53 acres of land within the R-4 zoning district. The property, built in 1984, is owned and operated by Madison Housing Authority. The affordable units have 40 year affordability controls extending to 2024 and is operated consistent with U.H.A.C. (N.JA.C. 5:80-26.1 et seq.) The development consists of 13 affordable units of which 4 units are 1-bedroom, 3 units are 2-bedroom, and 6 units are 3-bedroom. of which 7 units are affordable to very-low-income households, 4 units are affordable to low-income households and 2 units are affordable to moderate-income households. Only 10 units will be applied toward the Prior Round obligation. Each rental unit is also eligible for a bonus credit. BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 20
Park Avenue (8 credits) The existing 100% affordable family rental is located at 70-72 Park Avenue on Block 1203, Lot 24, at the intersection of Park Avenue and Elm Street. The development consists of 2 buildings on 0.4 acres of land within the R-5 zoning district. The property, built in 1983, is owned and operated by Madison Housing Authority. The affordable units have 40 year affordability controls extending to 2023 and is operated consistent with U.H.A.C. (N.JA.C. 5:80-26.1 et seq.) The development consists of 4 2-bedroom units of which 2 are affordable to very-low-income households, 1 is affordable to low-income households and 1 is affordable to moderate-income households. Each rental unit is also eligible for a bonus credit. Aerial Photo of Park Avenue Site BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 21
John Avenue (18 credits) The existing 100% affordable family rental is located on Block 2207, Lot 15, adjacent to the Madison Public Works Department near Station Road. The development consists of 5 buildings on 1.94 acres of land within the R-3 zoning district. The property, built in 2002, is owned and operated by Madison Housing Authority and has 40-year affordability controls extending to 2044. The affordable units are administered consistent with U.H.A.C. (N.JA.C. 5:80-26.1 et seq.). The development consists of 13 affordable units of which 1 unit is 1-bedroom, 8 units are 2-bedroom and 4 units are 3-bedroom of which 4 are affordable to very-low-income households, 5 are affordable to low-income households, and 4 are affordable to moderate-income households. Only 10 units will be applied towards the Prior Round obligation. Eight of the rental units are also eligible for a bonus credit. Aerial Photo of John Avenue Site BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 22
Belmont Avenue (6 credits) The existing 100% affordable family rental is located at 20-22 Belmont Avenue on Block 3803, Lot 61, close to its intersection with Prospect Street. The development consists of 3 buildings on about 1 acre of land within the R-4 zoning district. The property, built in 1984, is owned and operated by Madison Housing Authority and has 40 year affordability controls extending to 2024. The affordable units are administered consistent with U.H.A.C. (N.JA.C. 5:80- 26.1 et seq.). The development consists of 6 3-bedroom units of which units are affordable to very-low- income households, units are affordable to low-income households and 2 units are affordable to moderate-income households. Aerial Photo of Belmont Avenue Site BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 23
Rexford Tucker Apartments (21 credits) The existing age-restricted rental development is located at 15 Chateau Thierry Avenue on Block 402, Lot 1.01. The development consists of a single L-shaped, 3 storey building on 4.1 acres of land within the R- SH zoning district. The property, built in 1986, is owned and operated by Madison Housing Authority and has 30 year affordability controls. The original affordability controls lapsed in 2016 and were extended to 2046. The affordable units are administered consistent with U.H.A.C. (N.JA.C. 5:80-26.1 et seq.). The development consists of 79 affordable units of which 73 units are 1-bedroom and 6 units are 2- bedroom of which 41 units are affordable to very-low-income households, 28 units are affordable to low- income households, and 10 units are affordable to moderate-income households. Only 21 units will be applied towards the Prior Round obligation. Aerial Photo of Rexford Tucket Apartments Site BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 24
30 Loantaka Way (11 credits) The existing 100% affordable family rental is located at 30 Loantaka Way on Block 3001, Lot 1.47. The development consists of 6 buildings on 1.87 acres of land within the R-PH zoning district. The property, built in 1998, is owned and operated by Madison Housing Authority and has 30-year affordability controls extending to 2028. The affordable units are administered consistent with U.H.A.C. (N.JA.C. 5:80-26.1 et seq.). The development consists of 12 3-bedroom units of which 7 units are affordable to low-income households and 5 units are affordable to moderate-income households. Only 11 units will be applied towards the Prior Round obligation. Aerial Photo of 30 Loantaka Way Site BOROUGH OF MADISON, MORRIS COUNTY THIRD ROUND HOUSING ELEMENT & FAIR SHARE PLAN ADOPTED MAY 26, 2021 PAGE 25
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