ASSEMBLY, No. 3247

STATE OF NEW JERSEY

213th LEGISLATURE

 

INTRODUCED OCTOBER 6, 2008

 


 

Sponsored by:

Assemblyman SCOTT T. RUMANA

District 40 (Bergen, Essex and Passaic)

Assemblywoman DAWN MARIE ADDIEGO

District 8 (Burlington)

 

Co-Sponsored by:

Assemblyman Rudder, Assemblywoman Karrow and Assemblyman DeAngelo

 

 

 

 

SYNOPSIS

     Allows corporation business tax credit to foster donation of foreclosed real property to municipalities for use as affordable housing.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act authorizing a corporation business tax credit for certain financial entities to foster the donation of certain foreclosed residential real property to municipalities for use as affordable housing, designating such act as the “Affordable Housing State Tax Credit Act,” and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).

 

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

 

     1.  a.  As used in this section:

     “Agency” means the New Jersey Housing and Mortgage Finance Agency;

     “Financial entity” means a bank, credit union, mortgage company, or other financial services institution doing business in New Jersey which holds mortgages on residential real property;

     “Qualified municipality” means a municipality that has petitioned the Council on Affordable Housing (COAH) for substantive certification pursuant to the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.).

     “Eligible affordable housing tax credit certificate” means the certificate issued by the agency pursuant to subsection c. of this section which shall be obtained by a taxpayer claiming a tax credit pursuant to this section.

     b.  (1)  A taxpayer that is a financial entity that has donated to a qualified municipality a residential real property for which it has received a final judgment in foreclosure and for which it has obtained an eligible affordable housing tax credit certificate from the agency shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to the true value of the donated residential real property, as calculated by the municipal tax assessor.

     (2)  The amount of a tax credit allowed a taxpayer for a privilege period shall not exceed $1,000,000, except that the amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), for a privilege period, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).  The priority in which credits allowed pursuant to this section and any other credits shall be taken shall be determined by the Director of the Division of Taxation.  The amount of the credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 may be
carried over, if necessary, to the seven privilege periods following the privilege period for which the credit was allowed.

     c.  A financial entity that intends to claim a tax credit pursuant to this section for an intended donation of a residential real property for use as affordable housing shall apply to the agency for an eligible affordable housing tax credit certificate.  To obtain a certificate the financial entity shall provide the agency with the name of the qualified municipality in which the residential real property is located, and the street address, lot number and block number for the property that it is seeking to donate, on such form and in such manner as the agency shall require.  The agency shall forward this information to the municipality wherein the property is situate within a reasonable time period.  If the municipal governing body determines that the residential real property being offered by the financial entity is desirable and appropriate for local affordable housing needs, the governing body shall advise the agency and the financial institution that it will accept the donation of the residential real property.  If the agency has not exceeded its limit for the issuance of certificates for the state fiscal year, it shall coordinate the donation of the residential real property and shall ensure that affordability controls are placed on any property being credited pursuant to the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.).  After all documents required to be recorded have been recorded, the agency shall issue an eligible affordable housing tax credit certificate to the financial entity which certificate shall state thereon the amount equal to the true value of the donated residential real property, as calculated by the municipal tax assessor.  The total amount of eligible affordable housing tax credit certificates issued by the agency during any State fiscal year shall not exceed $10,000,000.

     d.    (1) The agency shall establish any necessary forms, procedures or rules to effectuate this act, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

     (2)  The agency shall seek to foster use of the tax credit and to make the tax credit simple to apply for and simple to use.

     (3)  The agency shall submit to the Governor and Legislature an annual report which shall include at least:

     (i)  the purpose and effectiveness of the credit;

     (ii)  the benefits of the credit to the State;

     (iii)  the number of affordable housing units created through the use of the tax credit; and

     (iv)  any recommendations by the agency for legislative changes needed to better carry out the purposes of P.L.    , c.    (C.       ) (pending before the Legislature as this bill).

 

     2.    This act shall take effect immediately and shall apply to privilege periods beginning after enactment.

STATEMENT

 

     This bill, designated as the “Affordable Housing State Tax Credit Act,” creates a corporation business tax credit for financial entities that hold residential mortgage loans, and which donate foreclosed residential real property to municipalities for use as affordable housing.

     Under the bill, a taxpayer that is a financial entity a financial entity (defined in the bill as a bank, credit union, mortgage company or other financial service institution doing business in New Jersey that holds mortgage loans on residential real property) that has donated to a qualified municipality (defined in the bill as a municipality that has petitioned the Council on Affordable Housing for substantive certification pursuant to the “Fair Housing Act”) a residential real property for which it has received a final judgment in foreclosure and for which it has obtained an eligible affordable housing tax credit certificate from the Housing and Mortgage Finance Agency shall be allowed a credit against the corporation business tax, imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to the true value of the donated residential real property, as calculated by the municipal tax assessor.  The bill caps the amount of a tax credit allowed a taxpayer for a tax year at $1,000,000, but the amount of this credit for a tax year, when taken together with any other credits allowed against that tax, cannot exceed 50% of the tax liability otherwise due and cannot reduce the tax liability to an amount less than the statutory minimum provided by law

     The bill provides that the total tax credits certified for all donations proposed in a fiscal year shall not exceed $10,000,000.

     A financial entity desiring to donate a residential real property for use as affordable housing pursuant to the provisions of the bill would provide the New Jersey Housing and Mortgage Finance Agency with the name of the municipality in which the residential real property is located, and the street address, lot number and block number for the property that it is seeking to donate.  The agency must forward this information to the municipality wherein the property is situate within a reasonable time period.  If the municipal governing body determines that the residential real property being offered by the financial entity is desirable and appropriate for local affordable housing needs, the governing body would advise the agency and the financial institution that it will accept the donation of the residential real property.  The bill requires the agency to coordinate the donation of the residential real property and to ensure that affordability controls are placed on any property being credited pursuant to the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.).  Once all documents required to be recorded have been recorded, the agency would then issue a certificate of tax credit to the financial entity.

     It is the intent of the sponsor that the provisions of this bill will assist the State and its municipalities in achieving the Governor’s stated goal of the production of an additional 100,000 units of affordable housing in 10 years, by facilitating the use of existing housing stock to produce a portion of those desired 100,000 units.  The use of existing housing to fulfill affordable housing needs would also make the affordable housing available to needy families in a more expeditious time frame than is possible when housing is newly constructed, and will also allow a municipality to avoid construction of massive amounts of new housing that would inevitably lead to sprawl, the overcrowding of local schools and a financial strain on municipal services.