Now builders who create brand new space — either commercial or residential —will have to pay 1 percent of the added assessed value of the property upon receiving a certificate of occupancy.
This doubles the current fee levied on new properties but does not affect homes or businesses that merely replace homes or businesses.
The fee is designed to correspond to rules that require towns in New Jersey to provide affordable housing when they create new housing or jobs. A builder who replaces a single-family home with a duplex would pay the fee. The builder who merely rebuilds an existing single-family home would not.
Council voted 6-0 on Thursday to approve the fee increase. Nobody in the public spoke.
The amount of money raised by the fee will depend on the rate of new construction on the island, Business Administrator James Rutala said.
“The rationale is for every eight additional residential units, you have to build one affordable housing unit,” Rutala said. “For every 25 additional jobs created in nonresidential projects, you have to provide for one additional (affordable) unit.”
Councilman Keith Hartzell, who is a landlord, said the rules for tenants interested in low-income housing are much stricter than those a private landlord could impose.
“I'm glad we're doing this. The purpose of the COAH requirement is not to stop sensible development,” he said. “I hope as a community we embrace the COAH requirement.”
Mayor Sal Perillo noted that the 1 percent fee is the most the city can charge developers. But that alone will not pay for the city's existing affordable-housing obligation, he said. Nor will it pay for all the future affordable homes the city must provide.
The city must provide at least 26 new affordable homes and rehabilitate another 71 under its COAH plan. But to meet some of this obligation, the city likely will pay for affordable housing in another town through a Regional Contribution Agreement. Building 18 affordable rental units on the island is expected to cost the city $4.6 million. The city will contribute another $515,000 for affordable housing off the island.
“Any additional obligation will be funded by the taxpayers,” Perillo said. “When we talk about adding additional residential units, we have to keep that in mind.”
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