4. HOUSING ELEMENT AND FAIR SHARE PLAN

With the passage of the Fair Housing Act in 1985 (P.L. 1985, C.222), the Municipal Land Use Law (MLUL) was amended to require a Housing Element as a mandatory element of the municipal master plan.  A variety of components must be incorporated into every Housing Element, summarized as follows:

• An inventory of the municipality's housing stock by age, condition, value and occupancy characteristics;
• A projection of future housing construction for the next six years;
• An analysis of the municipality's demographic characteristics including household size, income level and age;
• An analysis of existing and future probable employment characteristics of the municipality;
• A determination of the municipality's present and prospective fair share of low and moderate income housing and its capacity to accommodate low and moderate income housing; and
• A consideration of the lands that are most appropriate for the construction of low and moderate income housing, including structures which may be rehabilitated and lands of developers, if any, who have expressed a commitment to provide low and moderate income housing.

AFFORDABLE HOUSING OVERVIEW AND BACKGROUND

The Fair Housing Act also created a new state agency, the Council on Affordable Housing (COAH), to provide an administrative alternative to the courts in reviewing and mediating fair housing litigation.  COAH is responsible for publishing estimates of housing need for six year periods, based in large part upon growth projections.  The first estimate was made in 1986 and covered the period from 1987-1993.  COAH is also responsible for establishing regulations governing the preparation and implementation of Housing Elements and Fair Share Plans.  COAH's standards, guidelines and policies apply to all communities which choose to "participate" with COAH and seek "substantive certification" of their municipal housing plans.

Participating in COAH's process and obtaining certification of a plan enables a municipality to protect itself from Mt. Laurel litigation for the period of certification (six years).  In addition to legal protection, participation in COAH's process allows the community to maintain local control over the planning process for affordable housing instead of having a court-imposed housing plan.  Moreover, maintaining local control gives Mountain Lakes the ability to determine appropriate locations for and design/amenities in housing developments consistent with the character of the community.

Background of Mountain Lakes' Housing Plans

Following is a summary of the key events leading up to the preparation and adoption of this new Housing Element and Fair Share Plan.

• In 1986, Mountain Lakes adopted a housing plan in response to the passage of the Fair Housing Act and MLUL requirements.  The housing plan concluded that there was a limited amount of privately owned, developable land to accommodate the 1986 COAH estimate of 92 units of new housing.  Since the adoption of the 1986 housing plan, COAH revised its rules and reformulated its fair share estimates for every municipality in the state.  The new estimates of housing need, released in 1993, covered the 12 year period from 1987 to 1999, inclusive of the "first cycle" estimate.  The total COAH-estimated fair share need for Mountain Lakes for the full 12 year period was 91 units of affordable housing.
• On July 20, 1995 the Planning Board adopted a new Housing Element and Fair Share Plan which addressed the criteria set forth in the Municipal Land Use Law as outlined above, set forth the framework for establishing the Borough's fair share housing obligation on the basis of its available land capacity (a vacant land analysis), and proposed a plan to address the housing need.  The vacant land analysis concluded that the Borough's adjusted obligation should be 27 units of affordable housing.
• On August 21, 1995 the Borough Council petitioned COAH for approval of the Borough's housing plan.  COAH reviewed the Borough's analysis and determined that the fair share obligation should be adjusted to 29 units of affordable housing.  To continue participating in COAH's administrative process and receive COAH's legal protection from Mt. Laurel litigation, the Borough is required to amend the housing plan to fulfill the 29 unit housing obligation.

Organization of this Plan

This Housing Element and Fair Share Plan is, in essence, a revision of the 1995 housing plan.  The 1995 plan remains part of the record of Master Plan adoptions, and historically it is important in that, for the first time, the Borough's housing need was analyzed on the basis of its available land capacity.  Now that COAH has made a final determination as to the Borough's housing obligation, the housing plan needs to be updated and amended to address that obligation.

First, this new housing plan retains the housing data and demographic characteristics required by the statute.  Secondly, the plan reflects the Borough's fair share obligation based upon available land capacity, as modified by COAH's review of the Borough's analysis in 1995.  Finally, the plan sets forth the means by which the Borough proposes to satisfy the COAH-adjusted 29 unit obligation.

HOUSING OBJECTIVES

Each element of the Master Plan contains a section concerning the goals and objectives of the specific element.  The goals and objectives of this Housing Element and Fair Share Plan are as follows:

1. Comply with the constitutional fair housing mandate within the practical limitations of the available land capacity of the Borough.
2. Seek state (COAH) approval of the Borough's housing plan to retain control over the methods by which affordable housing will be provided in the Borough, as guided by the rules and regulations of COAH.
3. Due to limited available land capacity, there are very few areas where higher density inclusionary housing could be encouraged in Mountain Lakes.  For this reason, Mountain Lakes should seek to transfer up to half of the housing obligation to another willing receiving municipality under a Regional Contribution Agreement.
4. Provide opportunities for the rehabilitation of homes which may be in need of repair, and which are occupied by lower income households.
5. Provide the opportunity for affordable housing to be constructed on appropriate sites.

HOUSING OBLIGATION AND FAIR SHARE PLAN SUMMARY

Mountain Lakes is a virtually fully developed community in central Morris County.  COAH's rules and regulations permit communities with limited vacant land to seek a Vacant Land Adjustment to establish their fair share obligations based upon the realistic development potential of the community.  COAH's newly adopted rules contain guidelines for what has become known as the "vacant land adjustment process".  Since Mountain Lakes is nearly fully developed, it is appropriate to establish its fair housing responsibilities based upon the available land capacity of the community to accommodate new housing development.  On the basis of COAH's adjustment criteria, the agency has determined that the Borough's housing obligation should be limited to that which can be accommodated by the realistic development potential: 18 units, plus 11 units representing the indigenous need (the existing substandard housing in the community occupied by lower income households).  The total adjusted housing obligation is therefore 29 units.

According to COAH rules, municipalities with adjusted housing obligations must first plan for their realistic development potential and indigenous need, and then "provide a response toward the obligation not addressed by the realistic development potential".¹ This can be accomplished through a variety of techniques including zoning amendments, rehabilitation programs and even transferring a portion of the obligation to another willing municipality (known as a Regional Contribution Agreement).  The Borough proposes to satisfy the adjusted housing obligation (29 units) using several approaches as follows:

1. A Regional Contribution Agreement for 12 units with another willing community in the region.
2. A local rehabilitation program to provide loans to 11 eligible households to upgrade their homes.
3. Zoning revisions to provide six affordable housing units in the Borough.

¹ Includes families with incomes of $75,000 or more.

This plan also contains a response toward the unmet housing obligation (the difference between the adjusted obligation - 29 units - and the published COAH estimate of 91 units).  The Borough will make provision in the land development ordinances for overlay zoning and encourage redevelopment (through zoning) in the Midvale area to incorporate affordable housing opportunities.  It should be noted that with respect to the "unmet obligation" the Borough is not responsible for guaranteeing that a specific number of units can be attained within a specific time frame, but it is responsible for providing the opportunity for additional affordable housing opportunities in the Borough as the remaining land is developed or redeveloped.

HOUSING INVENTORY DATA

In 1990, the Census counted 1268 housing units in Mountain Lakes.  The total number of housing units was estimated to be 1350 at the end of 1995.  The vast majority of dwellings in Mountain Lakes are single-family homes and are owner-occupied (see "Housing Units By Occupancy: 1990" table below).

Housing Stock

The Borough of Mountain Lakes constitutes an early development in Morris County.  Almost half of the homes were built prior to 1940, half of these before 1918.  Most of the more recent development is located off Intervale Road near Route 46, in the RC-3 zoning district.  The older homes are found in the area west of the railroad (R-A and R-AA) and in the Lake Arrowhead area (R-1).  The area east of the railroad was mostly developed after the Second World War, with the R-2 district built in 1947-1950.  It must be noted that all areas in the Borough, except for the R-2 and RC-3 zones, include buildings of mixed ages and styles.

A significant amount of residential development took place in the early stages of the community's growth, between 1910 and 1920.  Since that time, residential development, as compared with that of surrounding communities, is reflected by the growth in population.

Even though the number of housing units has increased slightly since 1970 (1,268 in 1990, up from 1,183 in 1970) there was a substantial decline in population during the same period.  This has resulted from the long term national trend toward smaller household size.  By the end of 1995, the total number of units was about 1,350.  The great majority are detached single family homes; however, the major increase since 1970 has been due to two townhouse developments (one which is 47 units and another consisting of 68 units).  The following tables display housing characteristics from the 1990 Census.

Housing Values

Mountain Lakes' housing values are detailed in the Census.  In 1990, the median housing value was $363,600 while the mean value was $389,635.  The lowest values reported were between $125,000 and $149,999 out of 1,083 housing units reporting this data.

Median gross monthly rent for leased housing in Mountain Lakes was reported as $1,001 for 62 units reporting rental rates in 1990.  Nine units reported rents between $400 and $449/month; five units reported rents between $550 and $599 while the vast majority, 48 units, reported rents exceeding $1000/month.  Fifteen additional units reported no cash rent.  Most tenants pay extra for one or more utilities according to the Census Bureau.

Residential Rehabilitation Potential

Homes in Mountain Lakes were mostly constructed (up until 1977) in accordance with a local building code which was in some respects more demanding than the present State Code.  Accordingly, the structures are well built and the structural conditions are still rated as average to good, as estimated in 1995 during the last Borough-wide property revaluation.  The "balloon" construction, typical of the stucco homes, coupled with the often habitable third floor cause concern in terms of fire safety but this concern is not reflected in a high number of incidents.

The 1990 Census contains data which gives an indication of the incidence of substandard or overcrowded housing within a community.  Units lacking plumbing, heating or complete kitchen facilities are counted.  Indicators of substandard housing such as these are used by COAH to estimate the likely number of units within a community which may be substandard and are occupied by lower income households.  While COAH estimated that there may be as many as 19 substandard dwellings in Mountain Lakes, known as indigenous need, the Census data reveals that there were only nine units lacking complete plumbing facilities, all had complete kitchens and some form of heating supply.  None were declared to be overcrowded.  Other building deficiencies not counted by the Census can, however, indicate a need for rehabilitation.  Examples include units which might need a new roof, furnace, replacement windows and other structural repairs or improvements.

While COAH indicated that 19 units may be substandard, it also estimated that as many as eight homeowners would rehabilitate their homes "spontaneously".  The remaining 11 substandard units assumed to be occupied by lower income households form a portion of the municipal housing obligation known as the rehabilitation component. This is a portion of the housing obligation for which any community must plan - either a rehabilitation program - or in lieu of rehabilitation, new housing construction.  This will be addressed later in the Fair Share Plan.

PROJECTION OF HOUSING CONSTRUCTION

Because there is so little vacant land and little development in the Borough, approximately eight homes are expected to be constructed in the Borough over the next six years, based upon outstanding subdivision approvals (a seven lot subdivision approved in 1987 along Rock Lane and a vacant lot on Intervale Road).  The population change resulting from approximately eight new houses would not likely affect the overall population count at the end of the planning period, particularly if we assume a continuation of the long term trend toward smaller average household size.

Since so little privately owned vacant developable land exists within the Borough, the Borough's adjusted affordable housing obligation is not expected to have a major impact on housing construction or population growth over the next six years.  As described later in the "Fair Share Plan", Mountain Lakes is able to transfer up to half of this obligation to another community with rehabilitation needs or available land for construction of affordable housing.  The remainder of the obligation is made up largely of indigenous need, for which Mountain Lakes can operate a local rehabilitation program.  This would have no impact on population since the units likely to be rehabilitated are already occupied dwellings.  The remaining inclusionary component will be addressed through the creation of six new affordable housing units (plus 28 market rate units) over the next six years.

DEMOGRAPHIC CHARACTERISTICS

The background sections of the Master Plan contain data concerning Mountain Lakes' population characteristics.  The Fair Housing Act and the Municipal Land Use Law require that some of that data be described in the housing element because certain demographic characteristics bear a strong relationship to housing trends and needs.  The appropriate data is described below.

Household Size

The average number of persons per occupied housing unit was 3.1 in the 1990 Census, a significant reduction from the 1970 average of 4.1.  As a result of this significant decrease in average household size over that period, the Borough's population also experienced a significant reduction from 4,739 in 1970 to 3,847 in 1990.  The following chart displays the number of households constituting one person to seven or more persons per household, in 1990.

Population by Age

The population in 1990 was 3,847: 1,880 males and 1,967 females.  The Census shows that the median age in Mountain Lakes was 40.1 years in 1990.  The median age among males was 39.7 while among females it was 40.3.  Data concerning school enrollments and senior citizens are contained in the Background Sections of the Master Plan.  As a percentage of the population, persons 55 years of age or over represented 20.4% of the total in 1990, up from 14.5% in 1980 and 10.8% in 1970.  The following table displays the population by age from the 1990 Census.

Income Level

The level of education and professional attainment is reflected in the family income statistics for the Borough.  The median income for a family in Mountain Lakes in 1989 was $109,536 compared to $62,749 for Morris County as a whole and $47,589 for the entire state.

²Includes families with incomes of $75,000 or more.
³Includes families with incomes of $100,000 or more.

EMPLOYMENT CHARACTERISTICS

According to the NJ Department of Labor, there were 1,872 private sector jobs available in Mountain Lakes as of September, 1993 (the latest date for which this data is available).  This is the number of jobs which are available from employers located within the Borough of Mountain Lakes.

The Morris County Planning Department has gathered statistics concerning employment and the labor force of residents in Morris County by community.  According to the data the County obtained from the NJ Department of Labor, 91 persons in Mountain Lakes were unemployed in 1992.  The total labor force was constituted of 1,802 persons in 1992.  This represents an unemployment rate of 5.0 percent as compared to the County average of 6.4% at that time.  County Planning Board data also indicates the places of work for employed persons based upon information provided by the U.S. Census Bureau.  In 1990, 76 Mountain Lakes residents worked at home while 275 resident worked in the community.  964 residents worked elsewhere in Morris County while 590 worked out of the county and 270 worked out of New Jersey.

DETERMINATION OF HOUSING NEED

The Mt. Laurel Supreme Court decisions concluded that New Jersey's municipalities have a constitutional obligation to take affirmative steps to provide their fair share of the region's housing needs.  When the Fair Housing Act was enacted, COAH was empowered to periodically (every six years) make estimates of housing need for every community in the state.  The most recent COAH estimates were published in 1993.

COAH's Estimate

COAH's estimates are to be made on the basis of existing housing needs (substandard housing occupied by lower income households), growth projections and other available planning data.  The projections should take into account available infrastructure (water and sewer facilities), undeveloped land (based upon satellite data), median income data, the value of non-residential ratables, and the community's planning area designation within the adopted State Development and Redevelopment Plan.  A complex formula was derived by COAH (in cooperation with Rutgers University) to attempt to take these factors into account for all municipalities.  For Mountain Lakes, the COAH formula resulted in a calculated need of 91 units of affordable housing.  However, applying this standardized formula to a community like Mountain Lakes is impractical because most of the undeveloped land in the Borough is publicly owned parks, conservation areas or designated open space.

Because there is a lack of available vacant land, COAH may approve an adjustment of the housing obligation, basing it instead on Mountain Lakes' realistic development potential.  This adjustment process is provided for in COAH's rules, NJAC 5:93-4.1 et.  seq., to acknowledge that a municipality may simply not have enough suitable vacant developable land to rezone for the purpose of meeting its fair share obligation.  Typically, inclusionary zoning provides that out of every five housing units, four are permitted to be sold or rented at market rates and one is required to be sold or rented at affordable rates.  To produce 91 units of affordable housing, approximately 76 suitable and developable acres of land would need to be rezoned to accommodate 455 new housing units.⁴

⁴ The 20% "setaside" of affordable housing on a site is presumptively based upon a residential density of six units per acre.  COAH rules state that a lesser setaside shall be required (15%) if the zoning density provided for a site is as low as four units per acre, and (by extrapolation) up to 20% once a density of six units per acre or more is provided.

Vacant Land Adjustment

To establish the fair share obligation on the basis of the realistic development potential, available parcels of vacant land are inventoried and reviewed to determine their suitability for hypothetical Mt. Laurel development based upon an appropriate development density.  On the basis of the remaining vacant land in Mountain Lakes, a certain limited number of housing units can, in theory, be accommodated, of which a percentage (20% under COAH rules) would be available to lower income households.

The process of determining the realistic development potential based upon the lack of available land consists of three basic steps:

1. Establish the vacant land inventory. This results from the identification of parcels of land which are not developed, or because of the nature of their existing land use(s), have potential for redevelopment.
2. Exclude unsuitable sites. This is accomplished by identifying those parcels which, based upon the environmental and land use criteria specified in the COAH rules, would not be appropriate for inclusionary housing development.
3. Determine the realistic development potential. To the remaining parcels a potential density is assigned in order to yield a total number of units (including lower income units) on each site.  The cumulative number of lower income units generated through this process equals the Borough's realistic development potential for COAH purposes.

The Borough prepared a vacant land analysis in 1995 and included it within the Housing Element and Fair Share Plan adopted on July 20, 1995.  The conclusion of that analysis was that Mountain Lakes' realistic development potential should be 16 units.  No adjustment, however, is permitted to the indigenous portion of the housing obligation, since this represents the number of local residents currently living in the community in substandard housing.  Therefore, the rehabilitation component (11 units) is added to the realistic development potential to arrive at the total adjusted obligation, or a total of 27 units as was proposed in the 1995 housing plan.

COAH reviewed the Borough's vacant land inventory and analysis submitted in August 1995,⁵and determined that the Borough's realistic development potential should be 18 units of affordable housing.  Combined with 11 units of rehabilitation, the total adjusted housing obligation is 29 units, as shown in the following chart.

⁵The Borough's comprehensive vacant land analysis, including the basis for calculating the Borough's realistic development potential and adjusted obligation, is contained in the Housing Element and Fair Share Plan adopted on July 20, 1995, on file with the Planning Board Secretary and the NJ Council on Affordable Housing.

HOUSING OPTIONS AND COAH LIMITATIONS

COAH's regulations provide a number of options in planning for affordable housing, including transfers of a portion of the obligation; rehabilitation programs; provisions for rental housing (and related bonus credits); and other methods as described in COAH's rules.  The "Fair Share Plan" section below describes how the Borough will address the total adjusted housing obligation of 29 units, consistent with COAH guidelines.  Following are some of the limitations which must be considered in developing a plan to meet the Borough's adjusted housing obligation.

Regional Contribution Agreements

Pursuant to the Fair Housing Act and COAH's implementing regulations, up to half of the fair share obligation may be transferred to another community pursuant to a Regional Contribution Agreement (RCA).  Under a RCA, the Borough is permitted to pay (at a minimum funding level of $20,000 per unit) the "receiving" community to accept a portion of the Borough's housing obligation.  The receiving community must be located in the same COAH-designated housing region (Warren, Morris, Essex and Union Counties) as the Borough.  The receiver must use the funding to either rehabilitate existing substandard housing, or to construct new housing within its borders.  The receiving community may also agree to accept a portion or all of the sending community's rental housing obligation.  To obtain approval of a proposed RCA, the receiving community must prepare a "project plan" to be submitted for approval to COAH and the New Jersey Housing and Mortgage Finance Agency (NJHMFA) describing how it intends to utilize the funding to provide new or rehabilitated housing.

Where a vacant land adjustment is granted, the number of units that may be transferred is calculated as follows: RCA = 0.50 x (prior cycle fair share + realistic development potential + rehabilitation component - credits pursuant to NJAC 5:93-3.4).  In Mountain Lakes this will be calculated as shown below.

Local Rehabilitation

Every community must address the indigenous need component of its fair share obligation.  Communities may address this portion of the obligation either by zoning for new construction or by operating a local rehabilitation program to enable lower income households to borrow funds to repair their homes.  COAH calculates this need after subtracting the number of units which will likely be "spontaneously" rehabilitated by their owners.  In Mountain Lakes, the 19 indigenous units are offset by eight spontaneous rehabilitation units.  The remainder (11 units) is the rehabilitation component which must be addressed in the Fair Share Plan.

Rental Housing

Pursuant to COAH rules, each community must plan so that 25% of its inclusionary component could be constructed as rental housing.  Bonus credits are available for rental housing which is guaranteed to be constructed.  Conditional use zoning allowing rental housing is one method of addressing this obligation.  Some towns choose to enter into agreements with builders to construct rental housing, while others choose to construct rental housing themselves, avoiding the construction of market rate units which are typical of inclusionary developments and to obtain the rental bonus.  Communities entering into RCA agreements may also choose to transfer the rental requirement to another community; however, no rental bonus is available for those units.  The rental requirement for Mountain Lakes is based upon the realistic development potential of 18 units.  Five units of rental housing must be addressed.

Senior Citizens Housing

Communities are also encouraged to plan for the housing needs of senior citizens.  However, the number of units which may be specifically reserved for senior citizens is limited to 25% of the obligation in accordance with the following formula: Senior Citizens = 0.25 x (prior cycle fair share + realistic development potential + rehabilitation component - credits pursuant to NJAC 5:93-3.4). In Mountain Lakes this will be calculated as shown below.  It should be noted that if units are transferred via a Regional Contribution Agreement, the 25% calculation is applied only to the remaining new units to be constructed in the municipality.

FAIR SHARE PLAN

A Fair Share Plan is essentially a recommendation by the Planning Board to the Borough Council as to how the Borough should fulfill the fair share obligation.  The plan should be readily convertible into ordinances for implementation.  If the Borough Council endorses the plan and continues the Borough's participation in COAH's administrative process, the Council must enact municipal ordinances to implement the plan within a specified period of time when substantive certification is granted.  Subsequently, COAH monitors the Borough's compliance with the plan and ordinances on at least an annual basis.

Consideration of Lands for the Construction of Affordable Housing

As was evident from the vacant land inventory analyzed in 1995, there are very few parcels of land available for consideration for inclusionary zoning (zoning which provides that approximately one out of every five residential units shall be sold or rented at rates affordable to lower income households).  Some are unavailable because of development approvals granted for other uses.  Others are very small parcels, some in locations not considered desirable for the development of new housing because of their proximity to Route 46 and the attendant commercial development that is characteristic there.  Some sites are fundamentally unsuitable because they are situated between the railroad and the highway, are of a very small size, and/or are surrounded by commercial uses.  In addition, environmental constraints are present on most sites.  For all of these reasons, the Borough should transfer a significant portion of the obligation pursuant to a Regional Contribution Agreement (RCA) to another community in need of funding for rehabilitation and/or new construction.

The Borough should also make funding available for local rehabilitation to address the indigenous need component of the obligation.  Promoting rehabilitation is advantageous because like a RCA, it doesn't require the Borough to seek sites for new housing construction.

New affordable housing can be accommodated through inclusionary zoning on an available site in the Borough.  The owner of the former Fusee industrial site has entered into an agreement with the Borough which provides for the construction of 34 dwelling units (including 6 affordable units) on the Fusee site (see "Inclusionary Component" section below).

Based on the above, the following chart displays how the Borough will meet the 29 unit housing obligation.

Regional Contribution Agreement

The City of Orange has expressed a willingness to enter into a Regional Contribution Agreement with the Borough.  An agreement has been drafted for the transfer of 12 units, including five rental units.  The cost of the RCA would be $240,000 payable pursuant to terms negotiated between the two towns.  The City of Orange is responsible for preparing and obtaining approval of a project plan describing how the funds will be used.  If, for any reason, the City decides to withdraw from these negotiations, the Borough will immediately seek to enter into an agreement with another willing municipality within the housing region.

Rehabilitation Component

As indicated previously, the rehabilitation component for Mountain Lakes is 11 units.  This can be addressed with new units or by operating a local rehabilitation program.  Because of the limited vacant land in the Borough, it makes sense to promote the rehabilitation of existing units.  The program would have to be completed during the period of certification (six years).  This equates to two units per year, on average.

COAH's rules require the Borough to appoint a rehabilitation administrator and make funding available in the form of loans or grants to households living in substandard housing.  At least $10,000 per unit must be provided, of which $2,000 per unit is set aside for administrative costs to run the program.  On average, at least $8,000 must be made available to cover the "hard" costs of rehabilitation.  Only substandard units will qualify for this funding.  A substandard unit is defined as a unit with health and safety code violations that require repair or replacement of a major system such as a roof, plumbing, heating, electricity, sanitary plumbing and/or a load bearing structural system.  No cosmetic improvements (except as related to eligible repairs) or luxury improvements are permitted.  Each household occupying a substandard unit benefiting from this kind of program must be an income eligible low or moderate income household and the housing must be brought fully up to code standards.

Based upon COAH guidelines, the total cost of this program would be approximately $110,000 over the six year term.  The Borough Council will appoint an administrative entity to be responsible for coordinating the program, including reviewing applications, qualifying applicants, arranging for inspections, bids and construction.  Brochures and posters can be placed in prominent places in the Borough (public buildings, churches etc.) indicating the program's availability.  If necessary, newspaper ads and notices mailed to residents can be arranged to generate interest in the program.

Inclusionary Component (The Fusee Property)

Transferring 12 units and providing for the rehabilitation of 11 units fulfills 23 out of the 29 unit fair share obligation.  The remaining six units can be provided by rezoning a tract of available land for inclusionary housing.  COAH rules stipulate that sites selected for inclusionary zoning should be available, approvable, developable and suitable as defined by COAH.

The owner of the 2.19^+/- acre Fusee tract (Block 88 Lot 18) located at the intersection of Morris Avenue and Fanny Road has entered into an agreement with the Borough calling for the property to be rezoned to permit it to be developed with 34 dwelling units, including six affordable housing units.  Currently, the property is zoned R-A which permits single family homes on minimum 15,000 square foot lots.  This site is an abandoned industrial site which is proposed to be redeveloped by the owner who is a residential builder.  An application for environmental clean-up has been under review by DEP.

Surrounding land uses include a non-residential development located opposite the site in the OL-2 Zone along Morris Avenue.  Vacant land (in Boonton) lies directly opposite the site on Fanny Road.  Residential development is, however, found along Morris Avenue in Boonton.  The Lakeland Hills YMCA is located along Fanny Road within walking distance of the site.  Mountain Lakes High School (on Powerville Road) is also within walking distance of the site.  Water and sewer facilities are available to service this site.⁶ The current terminus of the sewer line on Morris Avenue is approximately 2000 feet from the site; a pumping station would be needed to serve a development.  According to the Borough Engineer, adequate sewer capacity is available, and the extension of the line and pumping station would be considered reasonable for a development of this property.  A water line from the Town of Boonton already serves this area.  Subject to DEP approval and environmental compliance, the site appears to meet COAH criteria and be approvable and developable for residential purposes.

⁶ Information concerning water and sewer facilities was obtained from the Borough Engineer.

On the basis of all of the above, the Borough should rezone this site (Block 88, Lot 18) to accommodate 34 units of attached housing, of which six units will be reserved as affordable housing for low and moderate income households.  Zoning standards relating to the development density, height of buildings, setbacks, buffers, landscaping, etc.  should be included in the implementing ordinance.

Agreement with Developer to Fund Affordable Housing (The Rush Property)

The Borough has entered into an agreement with the developer of Block 116, Lot 3.03 located to the north of Route 46 (the Rush property).  This site is a 5.2^+/- acre parcel currently owned by Weichert Real Estate.  This vacant site is currently zoned OL-2 (Office, Light Industrial) which permits businesses, manufacturing and related uses and was the subject of a development approval for nonresidential development.  The agreement stipulates that the Borough will allow an alternative development through overlay zoning to permit a maximum of 15 single family homes on lots of at least 10,000 square feet.  In lieu of an affordable housing component, the developer has agreed to make a cash contribution of $60,000⁷ in three installments (on the dates of closing on each of the first three homes).  These funds will be used to offset the costs of this affordable housing plan (see "Fiscal Requirements and Funding Sources" section below).

⁷This contribution equates to $20,000 per unit for three units which is 20% of the maximum number of units (15) permitted on the site.

This site is moderately sloping and heavily wooded.  Ingress and egress should be from Fox Hill Lane which presently terminates adjacent to the site.  Although the property also fronts on a jughandle on the northerly (westbound) side of Route 46, this would not be a suitable means of access for a residential development on this property.  Since Fox Hill Lane serves as access for several single family homes, it is the more appropriate form of ingress and egress for a residential development on the Rush property.

Low/Mod "Split"

COAH regulations require that at least half of the affordable housing created pursuant to a Fair Share Plan be priced or rented so as to be affordable to low income households.  The remainder may be priced or rented so as to be affordable to moderate income households.  Low income households are those earning an income equal to 50% or less of the median income for the area, based upon family size.  Moderate income households may earn more than 50% but less than 80% of the area median, adjusted for household size.

At least half of the units transferred in the Regional Contribution Agreement will be required to serve low income households.  Three of the six units to be reserved as affordable housing on the Fusee site in Mountain Lakes shall be made available for low income households.  With respect to the local rehabilitation program, the Borough will strive to assist low income households to achieve a "50/50 split".  However, these units already exist and their owners or occupants reside in the Borough and may be of any income level.  To receive COAH credit, no assistance will be provided to rehabilitate units with households in occupancy earning more than 80% of median income, adjusted for household size.

Affordable Housing Regulations

All affordable housing will be the subject of affordability controls as required by COAH.  Rehabilitated owner-occupied housing will be subject to a minimum six-year loan agreement/mortgage.  Owners of rental housing will be subject to minimum ten-year affordability controls and new inclusionary units shall be subject to 30-year controls, consistent with COAH's rules and implementing deed restrictions.  The Borough will enact a local ordinance based upon COAH's model ordinances, governing the rehabilitation program, inclusionary housing development requirements, income restrictions and affordability controls.

Fiscal Requirements and Funding Sources

The Fair Share Plan will be implemented during the period of substantive certification, the six-year period of approval granted by COAH.  Two of the components in this plan have direct costs (to the Borough) associated with their implementation as shown in the chart below.  The Borough will appropriate funds required to meet its obligation under this plan.  If necessary, the Borough will bond for these expenses.  As indicated above, the Borough has entered into an agreement with the developer of the Rush property calling for the payment of a fee in lieu of constructing affordable housing on this site.  The payment of $60,000 can be applied to the costs of the Borough's affordable housing plan, or may be used to retire bonds, or pay bond indebtedness in connection with the plan.

PLAN FOR THE "UNMET OBLIGATION"

According to COAH rules, municipalities with Vacant Land Adjustments must first plan for their realistic development potential and indigenous need, and then "provide a response toward the obligation not addressed by the realistic development potential" [NJAC 5:93-4.1(b)].  In Mountain Lakes, the fair share obligation would be adjusted by 62 units.  COAH rules suggest a variety of techniques or strategies for communities to address that portion of the obligation which is over and above the realistic development potential.  These include, but are not limited to: provisions for accessory apartments, overlay zoning, redevelopment concepts including the reuse or development of golf courses, nurseries or other lower intensity land uses, and the imposition of development fees.  Mountain Lakes has considered these concepts to ascertain whether they would be effective in producing additional affordable housing.

All of the large undeveloped tracts of land in the Borough are owned by the County of Morris, the Borough or the Board of Education, and are dedicated to some public purpose: park or dedicated conservation land, school sites, utility (water system) sites or other municipal facilities such as the municipal building and public works garage.  When the 1995 housing plan was adopted, the Borough considered the possibility of designating an overlay zone for a vacant site located between Route 46, the Boulevard and Pocono Road (the Office Court site).  This site received site plan approval for an office development in the late 1980's.  The Borough would have provided an alternative inclusionary development option in the Zoning Ordinance if the owner preferred not to proceed with the office project.  Instead, the property owner offered to sell the site to the Borough for park land, conservation and open space purposes.  The property has since been purchased by the Borough and will be added to the parks/open space inventory.

The Borough has no golf course or country club which could be rezoned to provide for an inclusionary development someday in the future.  There are no farms or large scale nursery operations in Mountain Lakes, or other parcels of land which are similarly underutilized.  Redevelopment of the nature COAH described for sites such as these would not be applicable in Mountain Lakes.

Another concept suggested by COAH is a general ordinance requiring the payment of a fee in connection with new construction, expansions or intensification of uses (development fee ordinance).  The fees are calculated based upon a formula and percentage of the equalized assessed valuation (EAV).  Maximum fees permitted are 0.5% of the EAV of the new construction or expansion for residential uses and 1.0% of EAV for non-residential uses.  However, any existing site with site plan or subdivision approval is exempt from paying the fee, as is any site which is already providing affordable housing.  The new construction anticipated in the Borough in the next few years is the direct result of sites which already have a development approval, or will be rezoned for affordable housing.  None of these developments would be subject to the fees under COAH rules.

The Borough could enact a development fee ordinance which could apply to commercial improvements of businesses along Route 46.  However, the Planning Board has been discussing ways to encourage improved, better coordinated development along the highway corridor.  Enacting a development fee ordinance would contradict these initiatives and probably be a disincentive for any landowner wishing to upgrade property.  For all of these reasons, a general development fee ordinance tied to the issuance of construction permits for all new construction would not be productive for Mountain Lakes.  It should be noted that the Borough has entered into an agreement with the developer of one property calling for the payment of a fee in lieu of building affordable housing on the site.  This agreement is consistent with the overlay zoning concept discussed below.

There are two concepts that may realistically foster the construction of additional affordable housing in the Borough in the future and they form the Borough's "response toward the obligation not addressed by the realistic development potential." The first is the enactment of a general affordable housing overlay zone applicable throughout the Borough.  The second is the possibility of redevelopment of an area for retail/apartment mixed use.  The following sections outline how the Borough proposes to address that portion of the fair share obligation which cannot realistically be met on the basis of available land capacity.

General Affordable Housing Overlay Zone

A concept which may help Mountain Lakes to promote additional affordable housing is a general Affordable Housing Overlay Zone.  This concept has been established in Princeton Borough, another virtually fully developed community with extremely limited vacant land.  Princeton's plan, which has been approved by the Superior Court, is specifically designed to address the "unmet housing need" due to a vacant land adjustment.  The provisions of the zone would require an affordable housing component in any new residential development in the Borough consisting of five or more units.  A provision such as this, as applied in Mountain Lakes, could provide that:

It is possible in the future that a senior citizens housing group may seek to build a senior housing project in the Borough.  If so, and if the project consists of five or more units, it will be required to contain an affordable housing component as part of the development.

As indicated previously, the Borough has already entered into an agreement which provides that a developer make a cash contribution of $60,000 in lieu of building affordable housing on a site proposed for a residential subdivision of single family homes (the Rush property).  These funds will be used to offset the costs of the RCA and/or rehabilitation program, either directly or by retiring or repaying bond indebtedness.

Redevelopment of the Midvale Area

The Mountain Lakes Master Plan Committee has been charged with updating the 1979 Master Plan.  One of the topics under consideration is the concept of promoting a "community center" or "town center".  The area that has been most closely associated with this idea is the Midvale Area where small scale convenience, commercial and community uses, such as a library, post office, eating establishment and convenience store have been located.  The area has, however, declined in recent years; the convenience store is no longer in operation and the use of the train station across the street has diminished.

The current zoning designation is Business Zone A which generally permits commercial uses such as retail and service uses, business/professional offices, and restaurants.  The structures in this area are two and one-half story buildings.  The newer buildings in the zone are devoted completely to commercial uses while the older structures (the "Market" building and Mountain Lakes Motors) have commercial uses on the ground floor and nonconforming residential uses on the upper floors.  One existing commercial structure on Romaine Road has received site plan approval for use as a two-story office building.  If the zoning permitted residential uses on the second floor over commercial uses, it is possible that the owner of the Romaine Road property could amend the approved plan to incorporate a residential component.

The Borough Council should consider whether a mixed business and residential zone would be practical and viable⁸ for the Midvale Area.  If so, the use of upper floors for residential use should be permitted.  This kind of redevelopment or reuse should include an affordable housing component.

⁸ Apart from policy issues, the use of the existing buildings for residential purposes would need to be reviewed in light of construction code requirements and parking availability.

SUMMARY

This housing plan serves as the vehicle for the Borough's compliance with the Mt. Laurel mandate.  It is consistent with the goals and objectives of the Mountain Lakes Master Plan and the Planning Area designation (PA-1: Metropolitan Planning Area) of the adopted State Development and Redevelopment Plan.  The plan can be implemented consistent with state housing policies and it provides a realistic opportunity for the construction and/or rehabilitation of affordable housing, consistent with Mountain Lakes' available land capacity and realistic development potential.  Moreover, the plan provides for the possibility of providing additional affordable housing opportunities beyond the adjusted fair share obligation, consistent with COAH's rules and regulations.

On the basis of all of the above, the Planning Board recommends that the Borough Council endorse this plan, submit same to COAH for review and approval, and consider the following actions, subject to receiving substantive certification of this plan from COAH.

A. Implement the Borough's Fair Share Plan for 29 units of Affordable Housing as follows:

1. Enter into a Regional Contribution Agreement with the City of Orange or another willing receiving municipality for 12 units of affordable housing, including five rental units.
2. Authorize by ordinance a local rehabilitation program for 11 units based upon COAH's implementing regulations.  The Borough Council should appoint an administrative entity to operate the program and if necessary, a rehabilitation manual should be developed and submitted to COAH.  Consistent with COAH rules, funds for the first one-third of program operations should be allocated for implementation of the program.
3. Rezone Block 88, Lot 18 (Fusee property) in accordance with the developer agreement, to permit the development of 34 units of attached housing, of which six units shall be affordable to households of low and moderate income.
4. Rezone Block 116, Lot 3.03 (Rush property) in accordance with the developer agreement to permit an overlay zone which would allow the construction of a residential development consisting of a maximum of 15 single family homes on minimum 10,000 sq. ft. lots.
5. Enact local affordable housing regulations governing the provision of housing for low and moderate income households, affirmative marketing, and other implementing rules, consistent with COAH regulations.

B.  Provide Opportunities for Additional Affordable Housing as a Response Toward the"Unmet" Housing Obligation.

1. Enact a general Affordable Housing Overlay Zoning Provision applying to any new residential development in the Borough.  The overlay zone should stipulate that any future residential development consisting of five or more dwelling units shall include a 20% setaside of affordable housing, or the applicant shall contribute a sum of money (to be approved by the Council) in an amount sufficient to create the equivalent number of affordable housing units.
2. Consider and determine the viability and practicality of a redevelopment concept for the Midvale Area which would permit apartments to be established over the first floor retail uses.  If determined viable, any zoning revisions should include an affordable housing component.