Our permits are in, now we wait to get our approvals. In the meantime, we have found out that the City of Cape May has adopted several ordinances to establish a Housing and Fair Share Plan, a Developer Fee and a Spending Plan. All these things are to gain full compliance with the State of New Jersey Council on Affordable Housing (COAH Fee). 
Basically, this is going to cost us 1.5% to put an addition on our house. This fee could turn out to be pretty expensive to anyone considering buying a “tear-down”. It is my understanding (from reading the ordinance) that the tax assessor makes the determination based on Equalized Assessed Value (EAV) based on plans and requests for permits. The money must be paid prior to receiving a Certificate of Occupancy.
If you are like me, you are probably wondering what the hell is Equalized Assessed Value. It is something I should know, because the fee is going to be determined on this amount. The definition in the ordinance says it is the assessed value of a property divided by the current average ration of assessed to true value for the municipality in which the property is situated. Yeah, I still don’t understand it, but I will before I have to write the check.
What I do know is this, if you are planning to purchase in New Jersey, and are planning to add on to the existing structure or tear down the home that is there and build new, you will have to pay this fee. The fee if you tear down and start again can be 2.5%. So, if you bought a house on an existing lot and tear the house down and build a new home that cost you $200,000.00 to build, it will cost you an additional fee of at least $5,000.00 in Cape May.
The other thing I am trying to find out is if my plumber gave me a quote of $20,000.00, does that mean I have to pay 1.5% of that quote? The quote was to fix the house and the addition, not just the addition. Shouldn’t I be able to separate the two? Does that mean every time you do work on your home in Cape May and take out a permit, they can enforce this rule? Won’t that lead to people trying to avoid taking out permits?
I have a lot of questions and not all of the answers. The people at the construction office have been very helpful, but I still don’t understand the basis of the tax. But I will.