On Aug. 25, 2011, Gov. Chris Christie signed into law Senate Bill S-2974 — new legislation providing relief from New Jersey’s 2.5 percent statewide non-residential development fee (2.5 percent fee). This was, of course, previously slated for the creation of affordable housing. With the adoption of S-2974, the 2.5 percent fee shall not be imposed on non-residential projects that receive preliminary or final site plan approval before July 1, 2013, and a building permit before Jan. 1, 2015. S-2974 also allows developers to obtain a refund of any 2.5 percent fee paid after June 30, 2010, subject to certain conditions.

Specifically, S-2974 provides for the following:

Extension of the 2009 moratorium on the 2.5 percent fee.

S-2974 extends the moratorium on the 2.5 percent fee previously conferred by the Economic Stimulus Act of 2009. Now, the 2.5 percent fee shall not be imposed on non-residential projects that receive (1) preliminary or final site plan approval before July 1, 2013 (extended from July 1, 2010), and (2) a building permit before Jan. 1, 2015 (extended from Jan. 1, 2013).

Return of a 2.5 percent fee paid after June 30, 2010.

A developer is entitled to the return of a 2.5 percent fee paid after June 30, 2010, provided that (1) the paid money has not already been expended by the municipality on affordable housing, (2) the subject non-residential development qualifies for the exemption under S-2974 (including the above provisions), and (3) a written claim for the refund is made within 120 days of the new law’s effective date, i.e., by Dec. 23, 2011.

The applicable statute also includes certain de-linking of a municipality’s affordable housing obligation from projects exempted from the 2.5 percent fee, so that such projects should not increase a municipality’s affordable housing obligation.

Follow-Up Action

Interested parties should act quickly to evaluate the impact of S-2974. Where appropriate, developers should now take advantage of the new rights provided by S-2974 to request the return of 2.5 percent fees paid after June 30, 2010. Bear in mind that S-2974 contains certain nuances, the understanding of which are crucial in evaluating this new law with respect to any particular project.