This bill establishes a process for exempting municipalities from certain fair share affordable housing obligations if they are designated as extensively flood-prone by the Commissioner of Community Affairs. Specifically, the bill allows for the exemption from present and prospective fair share obligations, including any unfulfilled prior round obligations and gap period obligations, based on the municipality's flood risk. The Commissioner, in consultation with the Commissioner of Environmental Protection, is tasked with adopting rules and regulations to determine these exemptions, which will consider factors such as flood insurance payments, the number of repetitive loss properties, and other relevant data.

The legislation aims to protect municipalities from potential legal actions that could compel them to construct affordable housing in areas at high risk of flooding. By allowing for these exemptions, the bill acknowledges the unique challenges faced by flood-prone areas and seeks to balance the need for affordable housing with environmental and safety concerns. The rules and regulations are required to be adopted within three months of the bill's enactment, ensuring a timely implementation of the exemption process.