TRENTON, N.J. — A newly proposed bill would create a statewide framework for how municipalities in New Jersey can impose and use impact fees on property developments to fund infrastructure improvements driven by growth.
The legislation, titled the “New Jersey Impact Fee Act,” would serve as an alternative to the authority already granted to municipalities under the Municipal Land Use Law. It allows towns to adopt ordinances imposing fees on developers based on recent and localized data related to population growth, transportation, school enrollment, emergency services, and construction costs.
Under the bill, municipalities would be required to give at least 90 days’ notice before implementing a new or increased impact fee. Once a developer receives preliminary approval for a project, the impact fee amount cannot be changed. The legislation mandates that any imposed fee must be proportional to the projected burden the development will place on local infrastructure.
“The bill requires an impact fee to be proportional and reasonably connected to the increased impact generated by the development,” according to the text.
Fee structure tied to data, limits on changes post-approval
Municipalities would be obligated to credit any contributions made by developers—such as land, infrastructure, or facilities—against the impact fee when those contributions support the same infrastructure that the fee would fund.
Collected fees could be shared between municipalities and school districts that have established partnerships, such as shared services or sending-receiving relationships. Additionally, any fee credit earned in one development may be transferred to another, provided it is within an eligible jurisdiction.
Funds collected for school facility improvements must be placed in a dedicated municipal account and transferred to the school district’s capital reserve account upon request. The bill also allows for exemptions or waivers for developments that provide a public benefit, in proportion to that benefit.
In disputes over a fee or a denied credit, the burden of proof would rest with the municipality, which must show by a preponderance of the evidence that its actions are compliant with the bill’s requirements.
Oversight and transparency requirements included
The legislation mandates annual reporting from municipalities to the Commissioner of Community Affairs, including a detailed account of all collected and expended impact fees. These reports must be published on the department’s official website for public access.
The Department of Community Affairs is tasked with adopting rules to implement the act no later than the first day of the fifth month following enactment. The bill would take effect on that date.
