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Jan 26

Housing Reform Package

Posted on January 26, 2024 at 3:19 PM by Legislative Staff

Legislation retooling the state’s affordable housing policy and abolishing COAH (A-4/S-50) is part of a package of legislation introduced to address affordable housing in New Jersey. This blog post will provide information on the package of bills, except for A-4/S-50.

S-1415/A-2267 “Permits for-profit affordable housing entities to join with non-profit entities and housing authorities in joint insurance funds under certain circumstances.”

Sponsors: Senator Singleton; Assemblywoman Lopez

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

This legislation would: 

  • Define a “for-profit affordable housing entity” as an organization created for the purpose of providing either one or more: 
    1. 100% low- and moderate-income developments in association with the “Fair Housing Act,” ( N.J.S.A.52:27D-301 et al.), constructed through the direction of a municipal fair share plan or a court order to enforce the construction, or  
    2. Project-based federal rental developments, authorized pursuant to the federal Section 8 Program, including but not limited to housing constructed for this purpose, and housing converted for this purpose through the federal Rental Assistance Demonstration Program.
  • Deem a non-profit housing entity or a for-profit affordable housing entity as a local unit for the purpose of establishing or joining a Joint Insurance Fund
  • Such a Joint Insurance Fund would be comprised of either non-profit housing entities, housing authorities, for-profit affordable housing entities, or a combination of the same.
  • Such a Joint Insurance Fund could not have as its members local units that are municipalities, counties, boards of education, or fire districts. 
  • Provides that a Joint Insurance Fund that includes for-profit affordable housing entities as members may participate in Joint Insurance Funds: 
    1. Where the membership is exclusively comprised of other Joint Insurance Funds and whose purpose is to provide excess levels of coverage;
    2. Where the membership is exclusively comprised of other Joint Insurance Funds and whose purpose is to accept the transfer of residual claims liabilities; or 
    3. Whose purpose is to provide environmental impairment liability insurance.

 S-2309/A-2296 “Permits municipality to authorize the municipal clerk to submit certain written statements concerning affordable housing, limits certain Housing and Mortgage Finance Agency (HMFA) powers.”

Sponsors: Senator Singleton; Assemblywoman Lopez

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

This permissive legislation would: 

  • Permit the governing body of a municipality to delegate to its municipal clerk, by ordinance, the authority to provide, on the governing body’s behalf, a written statement in support of one or more affordable housing programs or projects, or reciting the need for one or more affordable housing programs or projects in the municipality to satisfy any other provision of statute or regulation, provided that the proposed affordable housing program or project conforms to the provisions of the municipality’s fair share plan and housing element.  
  • Enable affordable housing programs and projects in a municipality to: 
    1. Receive funding from the State Affordable Housing Trust Fund by submitting a written statement in support of the program from the municipal clerk, instead of having to submit a written statement of the governing body in support of the program or project; and 
    2. Be processed by the HMFA by submitting a written statement from the municipal clerk stating that there is a need for such a housing project in the municipality, instead of a resolution stating such a need. 
    3. Limit an existing grant of authority to the HMFA to do any acts and things necessary or convenient to carry out its powers, so that the authority only extends to acts that do not negatively impact the efficiency of the programs to produce, manage, or maintain the financial viability of projects. 

S-2312/A-3337 “Allows projects supported by State or municipal affordable housing trust funds to be exempt from property tax and to instead contribute to municipal services by making payments in lieu of taxation.”

Sponsors: Senator Singleton; Assemblyman Wimberly

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

This permissive legislation would: 

  • Permit a municipality to negotiate with a housing sponsor an agreement providing for Payments in Lieu of Taxes (PILOT) for municipal services.
  • The municipality may require the housing sponsor to pay an amount up to 20% of the annual gross revenue from each housing project for each year of operation of the agreement following the substantial completion of the housing project.
    1. “Annual gross revenue” is the total annual gross rental or carrying charge and other income of a housing sponsor from a housing project.
    2. If an agreement is entered into from the date of recording the mortgage on the housing project to the date of substantial completion of the housing project, the annual amount payable to the municipalities as taxes or PILOT in respect to the project site cannot exceed the amount of taxes on the project site for the year preceding the recording of the mortgage. 
  • Agreements negotiated must be reviewed by the Commissioner of Community Affairs for review to avoid duplicating, overlapping or inconsistency with regulations. 
  • While there are some exceptions allowing for a longer agreement period, tax exemptions under the bill could not extend longer than the date on which an eligible loan made for the project is paid in full. 

 S-1422/A-3365 “Allows taxpayers to utilize alternative method of depreciation of certain expenditures in connection with construction of new affordable housing developments.”

Sponsors: Senators Singleton & Turner; Assemblywoman Lopez

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

This legislation would: 

  •  Permit taxpayers to claim a deduction for depreciation, based on a formula, under the Corporate Business Tax & Gross Income Tax for eligible property expenditures over a ten-year period. 
  • The formula is 2x the number of affordable housing units in the development/the number of non-affordable housing units in the development.
  • “Eligible property tax expenditures” is defined as the capital expenditures incurred by the taxpayer in connection with the construction of a new affordable housing development owned by the taxpayer.
  • “Affordable housing development” is defined as a development that includes one or more units of housing, at least 20% of which qualify as affordable housing. 
  • “Affordable housing” is defined as housing occupied or restricted to occupancy by households with income no greater than 80% of the regional median income, including but not limited to, housing that is deed restricted as affordable under the “Fair Housing Act.”

  S-1484/A-1495 “Exempts receipts from sales of materials, supplies, and services for certain affordable housing projects from sales and use tax.”

 Sponsors: Senators Lagana & Diegnan; Assembly representatives Karabinchak, Lopez, & Swain

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

 This legislation would: 

  •  Expand the Sales & Use Tax exemption to include sales made to contractors or repairmen of materials, and supplies.
  • Applies only to Housing sponsors engaged in affordable housing projects where all the units are intended for occupants with moderate-, low-, or very-low income.
  • Current law already provides this exemption for affordable housing projects receiving financing through the Housing and Mortgage Financing Agency (HMFA) or other state and local financial subsidies.

 S-1430/A-586 “Requires expanded use of affordable housing voucher program funding for homeownership expense assistance.”

Sponsors: Senator Singleton; Assemblymen Stanley & Atkins

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

This legislation would: 

  •  Require the expanded use of affordable housing voucher program funding for homeownership expense assistance.
  • Require the Department of Community Affairs to reserve a portion of the State Rental Assistance Program (SRAP) funding to establish and administer a program comparable to the federal Section 8 Housing Choice Voucher Program.
  • Allow federal Section 8 Housing Choice Voucher Homeownership Program participants, who would otherwise apply a voucher towards rent payments, to instead apply the voucher towards principal and interest on mortgage debt, insurance, taxes, utilities, and other homeownership expenses. 
  • Require local housing authorities in the State that administer funding through the federal Section 8 Housing Choice Voucher Program to also implement the Housing Choice Voucher Homeownership Program.  

 S-1446/A-2824 “Modifies down payment assistance program for benefit of first-generation and first-time homebuyers.”

Sponsors: Senator Singleton; Assemblyman Greenwald

Committee Reference: Released from Senate Community & Urban Affairs and reference to Senate Budget & Appropriations Committee; Assembly Housing Committee (scheduled January 29)

This legislation would: 

  •  Modify the down payment assistance loan program, administered by the New Jersey Housing and Mortgage Finance Agency (HMFA), for the benefit of first-generation and first-time homebuyers.  
  • Amend the definition of "first-generation homebuyer" so that a loan program applicant would be able to meet this definition if a member of their household has acquired a home in the last three years, so long as the applicant, and their spouse or domestic partner, have not.  
  • Amend the definition of "first-time homebuyer" so that the definition would not restrict ownership of residential real property within the previous three years, as long as an applicant is using a mortgage product offered by HMFA through an HMFA homebuyer program to purchase single-family housing and has a gross household income that does not exceed a limitation determined by HMFA.  
  • Require a first-time homebuyer to commit to using a home purchased through the loan program as their principal residence for five years following the purchase, and retain the first mortgage product offered by HMFA through a HMFA homebuyer program for the five years. 
  • Adjust the loan award to be offered through the loan program from $15,000 to an amount not to exceed $20,000.  
  • Modify a homebuyer education requirement for participation in the loan program to provide HMFA with more discretion over how to administer the coursework.  
  • Adjust the regulatory guidance requirements for the loan program, requiring HMFA to develop guidelines instead of promulgating rules and regulations.  

 Contact: Frank Marshall, Associate General Counsel, 609-695-3481 x. 137 or fmarshall@njlm.org