Establishes "Missing Middle Homes for All Pilot Program" to facilitate development of pre-permitted home designs; appropriates $2 million.

A5339

ASSEMBLY, No. 5339

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 28, 2026

Sponsored by:

Assemblywoman� SHAMA A. HAIDER

District 37 (Bergen)

SYNOPSIS

���� Establishes �Missing Middle Homes for All Pilot
Program� to facilitate development of pre-permitted home designs; appropriates
$2 million.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

facilitating development of pre-permitted home
designs, supplementing P.L.1975, c.291 (C.40:55D-1 et seq.), and making an
appropriation.�

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� The Legislature finds and
declares that:

���� a.� The State of New Jersey
faces a significant shortage in housing to meet the needs of a growing
population;

���� b.� This supply shortage has
contributed to the cost of purchasing a home, which is broadly unaffordable for
many middle-income households;

���� c.� The development of
pre-approved, build-ready construction plan sets, has been demonstrated, in
cities such as South Bend, Indiana, and Kalamazoo, Michigan, to enhance the
efficiency, predictability, and cost of new home construction;

���� d.� Middle-income families
impacted by these affordability challenges are generally ineligible for the
existing housing programs available to moderate-, low-, and very low-income
households in the State; and

���� e.� Due to the substantial
housing affordability challenges faced by many middle-income New Jersey
families, it is appropriate for the Legislature to establish the �Missing
Middle Homes for All Pilot Program� to facilitate the development of housing
affordable to middle-income, or low- and moderate-income households, through
the use of pre-permitted home designs.�

���� 2.� As used in P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill):

���� �Agency� means the New Jersey
Housing and Mortgage Finance Agency.

���� �Commissioner� means the
Commissioner of Community Affairs.�

���� �Department� means the
Department of Community Affairs.�

���� �Middle-income household�
means a household with a gross household income equal to more than 80 percent
but less than 120 percent of the median gross income for households of the same
size within the same housing region.�

���� �Pilot municipality� means a
municipality selected by the department for participation in the pilot
program.�

���� �Pilot program� or �program�
means the �Missing Middle Homes for All Pilot Program,� established pursuant to
subsection a. of section 3 of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill).�

���� �Pre-permitted home design�
means a home design created by the department pursuant to subsection b. of
section 3 of P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill).�

���� �Program coordinator� means
the official appointed pursuant to subsection b. of section 3 of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill) to administer
the responsibilities of the pilot program.�

���� 3.� a.� There is established,
in the department, the �Missing Middle Homes for All Pilot Program� to
facilitate the development of housing at a small-scale, that may be purchased by
middle-income households, or reserved as low- or moderate-income housing in
compliance with the �Fair Housing Act,� P.L.1985, c.222 (C.52:27D-301 et al.).�
The pilot program shall expire 10 years following enactment of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill).� The duration of
any affordability controls, if applicable, shall be compliant with the �Fair
Housing Act,� P.L.1985, c.222 (C.52:27D-301 et al.) and shall not be reduced
upon the expiration of the pilot program.

���� b.� (1)� Within one month
following the enactment of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill), the commissioner shall appoint:

���� (a)� a program coordinator to
administer the responsibilities of the pilot program; and

���� (b)� program staff, who may be
assigned to staff the pilot program from the Division of Codes and Standards,
the Office of Planning Advocacy, the Office of Local Planning Services, from
other divisions of the department, or from public and private entities outside
of the department.� In consultation with the Executive Director of the agency,
the commissioner may assign staff from the agency to the pilot program.�

���� (2)� On or before the first
day of the sixth month next following the date of enactment of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill), the program
coordinator shall:

���� (a)� through the engagement of
program staff and, as necessary, outside experts, produce concept designs that
maintain aesthetic continuity with many neighborhoods of the State, for
potential use as pre-permitted home designs;

���� (b)� administer an educational
campaign to communicate the utility of pre-permitted home design;

���� (c)� engage the opinion of
municipal officials from different housing regions of the State;

���� (d)� engage public opinion on
the desirability of the development of the concept designs through efforts that
may include public meetings in different parts of the State, and survey
research;

���� (e)� develop final
pre-permitted home designs following consideration of public opinion; and

���� (f)� initiate an application
process in a form and manner determined by the department, and encourage
municipalities to apply to participate in the pilot program.�

���� c.� (1)� A municipality shall
apply to participate in the program through the adoption of a resolution by the
governing body, and compliance with simple application requirements established
by the program coordinator pursuant to subparagraph (f) of paragraph (2) of
subsection b. of this section.� A municipality shall be permitted to apply on
the condition that only certain pre-permitted home designs are to obtain the
pre-approval benefits established by P.L. , c.���
(C.������� ) (pending before the Legislature as this bill).� Among the applicant
municipalities, the commissioner, in consultation with the program coordinator,
shall select five municipalities to participate in the pilot program as pilot
municipalities.� In selecting pilot municipalities, the commissioner shall
consider the extent to which:

���� (a)� the prospective municipal
selections collectively represent a geographically diverse cross section of
development patterns, including urban, suburban, and rural areas;

���� (b) �the geographic features
of an applicant municipality facilitate the development of the department�s
pre-permitted home designs, to the extent that reliable data is available; and

���� (c)� the municipality has
accepted a broad range of pre-permitted home designs to obtain the pre-approval
benefits established by P.L. , c.��� (C.������� )
(pending before the Legislature as this bill).�

���� (2)� If a municipality applies
and is selected as a pilot municipality, the commissioner shall:

���� (a) �direct the Office of
Local Planning Services, and other divisions and offices of the department, to
provide additional and expedited support in the municipality�s efforts to
comply with the �Fair Housing Act,� P.L.1985, c.222 (C.52:27D-301 et al.); and

���� (b)� provide preference to
pilot municipalities for allocations from the �New Jersey Affordable Housing
Trust Fund,� established pursuant to section 20 of P.L.1985, c.222
(C.52:27D-320), for the duration of the pilot program.�

���� (3)� At any time following
selection as a pilot municipality, the pilot municipality may rescind its
participation in the program by ordinance of the governing body.� If an
application for development of a pre-permitted home design is submitted prior
to the adoption of an ordinance to rescind municipal participation in the
program, the development shall proceed as if the municipality continues to be a
pilot municipality.�

���� d.� The commissioner shall
approve of a design in order for the design to be considered a pre-permitted
home design.� No fewer than 10 pre-permitted home designs shall be developed by
the program coordinator pursuant to subparagraph (e) of paragraph (2) of
subsection b. of this section.� In developing pre-permitted home designs, the
program coordinator shall consider:

���� (1)� the incorporation of
off-site building methods, such as modular, pod, and panelized systems;

���� (2) �the limitation of
construction costs and maximization of efficiency;

���� (3)� developing a range of
size and housing types, for uses as small accessory dwelling units, multi-family
homes of two to six units, and townhomes;

���� (4)� consideration of
architectural styles that are likely to have an appealing appearance in a broad
range of neighborhoods; and

���� (5)� designs that comply with
many municipal zoning codes in the absence of the pre-approval benefits of
P.L.�� , c.��� (C.������� ) (pending before the Legislature as this bill).�

���� 4.� a.� Notwithstanding any
provisions of a municipal ordinance to the contrary, the proposed or actual use
of a pre-permitted home design shall be a permitted use as of right in a pilot
municipality.� However, a development plan to construct a home in conformity
with a pre-permitted home design in a pilot municipality shall comply with the following
provisions of a municipal ordinance, as applicable:

���� (1) �architectural review
requirements for an application for development of a pre-permitted home design
within an area designated as a historic district; and

���� (2)� set-back restrictions and
dimensional controls, except for residential density controls and minimum lot
size controls, as required for other residential development in the same zoning
district.

���� b.� (1)� Notwithstanding any
provision of P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill) to the contrary, in the case of a lot located within a planned real
estate development, as defined pursuant to subsection h. of section 3 of P.L.1977,
c.419 (C.45:22A-23), a municipality or common interest community association
may impose and enforce reasonable regulations, by ordinance or through
governing documents, that shall apply to pre-permitted home designs concerning:

���� (a)�� stormwater management
and drainage in compliance with the rules and regulations adopted by the
commissioner pursuant to section 7 of P.L.��� , c.��� (C.������� ) (pending
before the Legislature as this bill);

���� (b)�� utility capacity and
utility connections;

���� (c)�� fire safety and
emergency vehicle access;

���� (d)�� parking allocation and
access to private streets or driveways;

���� (e)�� protection of common
elements and common property;

���� (f)�� architectural standards
consistent with the governing documents of the planned real estate development;
and

���� (g)�� the allocation of any
proportionate increase in common expenses directly attributable to the
development or operation of a home built as a pre-permitted home design.�

���� (2)� Any regulation adopted
pursuant to this subsection shall be reasonable, uniformly applied, and shall
not operate to prohibit, unreasonably restrict, or materially delay the
development of a pre-permitted home design.

���� 5.� A municipal agency of a
pilot municipality shall not approve an application for development of a
pre-permitted home design if the proposed development site is:

���� (1)� located within an area in
which there exists insufficient public sewer or water service, and within which
there exists severe constraints on the use of wells or septic tanks, as
determined by a competent authority, so to render the addition of new residential
development hazardous to the public health; or

���� (2)� unfit for development
into housing pursuant to any applicable regulation of the Department of
Environmental Protection.

���� 6.� a.� (1)� A municipal
agency of a pilot municipality shall consider and approve an application for
development of a pre-permitted home design as a ministerial action without a
public hearing or review beyond that which is necessary to determine an
applicant�s compliance with the provisions of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill).� A municipal agency of a pilot
municipality may charge a development applicant a reasonable fee for submitting
an application for development of a pre-permitted home design, which fee may
cover the costs associated with reviewing and approving the application for
development, and may, for any development application, impose a surcharge in an
amount necessary to cover the anticipated costs the municipality may incur
complying with P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill).�

���� (2)�� A municipal agency of a
pilot municipality shall provide a written decision on an application for
development of a pre-permitted home design to the applicant within 60 days of
the date on which the applicant submitted a complete application.� If the
municipal agency does not act upon a complete application within the 60-day
time period, the application shall be deemed approved, unless an applicant
agrees in writing to extend the deadline.� If the municipality or municipal
agency denies an application, the written decision shall explain in detail the
reason for the denial and provide recommendations to correct any application
deficiencies.

���� (3)�� If a municipality does
not approve an application to develop a pre-permitted home design, or imposes
conditions on the approval of an application to develop a pre-permitted home
design, the applicant may appeal the decision to the commissioner.� If the
commissioner determines that the municipality�s reasons for withholding
approval or imposing conditions on the approval of an application to develop a
pre-permitted home design are inconsistent with the provisions of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill), the
commissioner shall approve the application, and shall levy the cost of the
proceedings, including the applicant�s legal expenses, if any, against the
municipality.� In the event of a subsequent judicial appeal of the
commissioner�s decision, the court shall consider the standard of review as set
forth in this subsection for the commissioner�s decision on an appeal.

���� b.��� A municipality shall not
interpret or apply a provision of any other municipal ordinance, policy, or
regulation so as to delay or deny approval of an application for development of
a pre-permitted home design.

���� c.���� A municipality shall
not condition approval of an application for development of a pre-permitted home
design upon the correction of a nonconforming zoning condition.

���� d.��� Nothing contained in
this section shall supersede provisions of the State Uniform Construction Code,
promulgated pursuant to the �State Uniform Construction Code Act,� P.L.1975,
c.217 (C.52:27D-119 et seq.), applicable to the construction of a pre-permitted
home design.

���� 7.� The commissioner shall
adopt rules and regulations pursuant to the �Administrative Procedure Act,�
P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to effectuate the purposes of
P.L.��� , c.��� (C. ) (pending
before the Legislature as this bill).� The rules and regulations of the
commissioner shall include, but shall not be limited to, standards for
stormwater management and drainage requirements that may be established by a
municipality or common interest community association pursuant to subparagraph
(a) of paragraph (1) of subsection b. of section 4 of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill).

���� 8.� Within 90 days following
the conclusion of each administrative year for the pilot program, the
commissioner, in consultation with the program coordinator, shall report to the
Governor and the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1),
regarding the allocation of the monies appropriated pursuant to section 9 of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill).� Each
annual report shall include, but not be limited to, a discussion of:

���� a.� the municipalities that
applied, and that were selected, to participate as pilot municipalities;

���� b.� �the progress in
constructing pre-permitted home designs in each pilot municipality; and

���� c.� in the final report, the
opinion of the commissioner on the advisability of continuing, expanding, or
modifying the program.

���� 9.� There is appropriated from
the General Fund the sum of $2,000,000 to the Department of Community Affairs
for the purposes of effectuating the provisions of the �Missing Middle Homes
for All Pilot Program,� established pursuant to section 3 of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill).� The monies may
also be expended for appropriate and reasonable administrative expenses
incurred in the administration of the pilot program by the department.

���� 10. �This act shall take
effect immediately and shall expire upon submission of the final report
required to be prepared under section 8 of this act, except the regulations
adopted pursuant to section 7 of this act shall remain in effect.

STATEMENT

���� This bill establishes the
�Missing Middle Homes for All Pilot Program� in the Department of Community
Affairs (department) to facilitate the development of pre-permitted home
designs that may be constructed for purchase by middle-income households, or subject
to deed restriction as low- or moderate-income housing in compliance with the
�Fair Housing Act,� (FHA) P.L.1985, c.222 (C.52:27D-301 et al.).�

���� The bill directs the
Commissioner of Community Affairs (commissioner) to appoint a program
coordinator and program staff within one month following the bill�s enactment.�
On or before the first day of the sixth month following the bill�s enactment,
the bill directs the program coordinator to:

�

produce concept designs that maintain aesthetic continuity with
many neighborhoods for potential application as pre-permitted home designs;

�

engage public opinion, and the opinions of municipal officials
from around the State, on the desirability of the concept designs;

�

develop final pre-permitted home designs; and

�

initiate an application process, encourage municipalities to
apply to participate in the pilot program, and select municipalities to
participate in the program.

���� A municipality may apply to
participate in the program by resolution of the governing body, and through a
simple application process to be established by the program coordinator.� The
bill permits a municipality to apply on the condition that only certain
pre-permitted home designs are to obtain the pre-approval benefits established
by the bill, but the commissioner is to consider those conditions as a factor
against the municipality�s selection for participation.� Five municipalities
are to be selected as pilot municipalities.� If a municipality applies, and is
selected as a pilot municipality, the commissioner is to direct certain
divisions and offices of the department to provide additional and expedited
support in the municipality�s efforts to comply with the FHA, and grant the
municipality preference for funding from the �New Jersey Affordable Housing
Trust Fund.��

���� At any time following
selection as a pilot municipality, the municipality may rescind its
participation in the program by adopting an ordinance.� However, if a development
application for a pre-permitted home design is submitted before the adoption of
an ordinance to rescind municipal participation, the development is to proceed
as if the municipality continues to be a pilot municipality.

���� No fewer than 10 designs are
to be approved by the commissioner as pre-permitted home designs.� The designs
may consist of a range of sizes and styles, and incorporate off-site building
methods to limit costs and increase efficiency while maintaining consideration
for architectural appeal.�

���� The bill provides that a
pre-permitted home design is to be a permitted use in a pilot municipality.�
However, a development plan to construct a pre-permitted home design is to
comply with certain provisions of a municipal ordinance, consisting of:
architectural review requirements if in a historic district; and certain
set-back restrictions and dimensional controls.� The bill also requires a
municipal agency to deny development approval if located in an area where
development would be hazardous to public health, or unfit as a housing project
due to any applicable regulation of the Department of Environmental Protection.�

���� The bill provides that if a
lot is located within a planned real estate development, a municipality or
common interest community may impose and enforce certain reasonable regulations
enumerated in the bill except that those regulations are not to prohibit or
restrict the development of pre-permitted home designs otherwise permitted by
State and local law.�

���� The bill requires a pilot
municipality to consider and approve an application to develop a pre-permitted
home design as a ministerial action.� The bill permits a municipality to charge
a reasonable application fee and certain application surcharges associated with
pre-permitted home design approvals.� The bill directs that a municipal agency
is to provide a written decision on an application for development of a
pre-permitted home design within 60 days of the date of application, and
provide a written decision if the application is denied.� The bill prohibits a
pilot municipality from conditioning approval of an application to develop a
pre-permitted home design upon the correction of a nonconforming zoning
condition.� If a municipality does not approve an application to develop a
pre-permitted home design, or imposes conditions that are inconsistent with
this bill, the applicant may appeal the decision to the commissioner.�

���� The bill appropriates $2
million from the General Fund to the department for the purposes of the pilot
program.� The bill directs the commissioner to issue annual reports detailing
the progress of the pilot program, and a final report that is to also recommend
whether to continue, expand, or modify the program.� The program is to expire
after 10 years.�