How to Develop in a Jersey City Inclusionary Zone

Jersey City is Currently Considering the Adoption of an Inclusionary Zone Ordinance, Which Would Require Developers to Build New Affordable Housing Units as Part of New Residential Projects

Jersey City is currently considering the adoption of an inclusionary zone ordinance, which would require developers to build new affordable housing units as part of new residential projects.  The mandatory affordable-housing set aside would specifically apply to all properties/developments with a residential component that are requesting an additional 5 units or 5,000 square feet of additional residential floor area, whichever is less, beyond the permitted existing zoning through a variance pursuant to N.J.S.A. 40:55D-70(C), N.J.S.A. 40:55D-70(D), or a Redevelopment Plan Amendment.

As detailed more fully in a prior post, the proposed inclusionary zoning ordinance mandates that applicable developments set aside not less than 20% of the total number (permitted plus additional) of residential units as affordable housing. However, it provides exemptions for developments of 30 units or less; any project which is to be undertaken by the Jersey City Housing Authority; and rezoning initiated by the City as a result of a Master Plan Update or Amendment. The required affordable housing units must be built on-site and integrated with the market rate units unless an exemption is granted. The various options are detailed below.

Off-site Affordable Units in Lieu of On-Site Affordable Units

Under the ordinance, the city may permit the creation of off-site affordable units for some or all the obligation provided the following conditions are satisfied:

• The developer/applicant pays $5,000 to the City of Jersey City to cover the administrative fees required for the fiscal analysis study to determine how the proposed off-site affordable housing units compare in value to the required on-site affordable housing units.
• Off-site affordable housing units are within the same Ward as the development.
• The off-site location is available, approvable, developable, and will NOT require a variance for density, F.A.R., or height.
• The specific location for the off-site units is provided at the time of request for such approval.
• Off-site units are developed either prior to or simultaneously with on-site market rate units.
• The off-site affordable units meet all applicable requirements of the Jersey City Code Chapter 188.

Payment In Lieu of Creating Affordable Housing Units

At the discretion of the approving authority, developers can also make a voluntary cash payment into the City of Jersey City’s Affordable Housing Trust Fund in lieu of constructing all or part of the affordable housing units required by the ordinance. However, it is important to highlight that the ordinance expressly states that Jersey City favors construction of on-site affordable units and that “[t]he opportunity to provide a payment in lieu of constructing on-site affordable housing units is not intended to be and should not be construed as a right available to developers at their sole option.”

To be eligible to make a payment in lieu of building affordable housing, the applicant must demonstrate to the approving authority that the development of on-site affordable units is not feasible or not needed. The proposed ordinance provides that the approving authority  should consider the following metrics when determining if an application should be allowed to use the payment in lieu option:

• The site is in a designated Opportunity Zone.
• The site is more than a 1-mile radius outside of any existing or proposed light rail, PATH station, or Bus Rapid Transit stops.
• The site is in a census tract that already has a majority of units (50% or more) available where the median income of a family with 4 individuals can afford to live without paying more than 30% of their monthly income on housing costs.
• The amount of on-site units the developer proposes that are designated for households at or below 30% of the area median income for a minimum of 20 years. For example, if the project proposes only 10% on-site but all or most of those units are reserved for households at 30% AMI or lower; it should be looked at more favorably to allow the remaining 10% set aside to be a payment in lieu.
• In no instance shall the on-site affordable units be less than 5% of the total development.

The above list is not exhaustive, and the consideration of other relevant factors is permissible. The amount of the payment-in-lieu figure will be based upon a tiered payment-in-lieu system that will increase 2% every year. The boundaries of the tiered areas will be established on the map entitled “INCLUSIONARY ZONING: Payment in Lieu of Creating Affordable Housing.” The requirements for each tier are:

• Tier 1 must pay $25,000 a unit
• Tier 2 must pay $35,000 a unit
• Tier 3 must pay $50,000 a unit
• Tier 4 must pay $75,000 a unit
• Tier 5 must pay $100,000 a unit

The approval of any payment in lieu benefit is conditioned upon the developer and the City entering into a developer’s agreement that details the manner in which the contribution will be fulfilled.

Community Benefits in lieu of Creating Affordable Housing Units

A reduction in the mandatory on-site affordable housing requirement may also be considered relative to the value of community benefits proposed by the developer. Under the proposed inclusionary zoning ordinance, the City of Jersey City will only accept community benefits in the case of a redevelopment plan amendment and acceptance will be at the discretion of the Mayor or their designee, the Jersey City Redevelopment Agency, and the City Council.

Eligible community benefits may consist of, but are not limited to, the following: construction of a public facility, such as, but not limited to, public schools, public recreational facilities, government offices, fire stations, police stations, public parking garages, public transportation systems or facilities, roads and water infrastructure, etc. The approval of any community benefit is conditioned upon the developer and the City entering into a redevelopment agreement that details the manner in which the contribution will be fulfilled.

The members of the Scarinci Hollenbeck Land Use group often provide advice and guidance regarding development and redevelopment within the requirements of Jersey City’s ever-changing zoning regulations. We will continue to track the progress of the proposed ordinance and provide updates as they become available.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Donald M. Pepe, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.