SENATE ECONOMIC GROWTH COMMITTEE
SENATE, No. 928
with committee amendments
STATE OF NEW JERSEY
DATED: JANUARY 30, 2014
The Senate Economic Growth Committee reports favorably and with committee amendments Senate Bill No. 928.
As amended and reported, this bill, designated as the “Economic Opportunity Act of 2014, Part 1,” concerns the use of State economic development incentives and the development of affordable housing.
Section 1 of this bill allows certain municipalities in which a qualified residential project, under the Economic Redevelopment and Growth Grant (ERGG) program, is located to determine the percentage of newly-constructed residential units within the project that must be reserved for occupancy by low or moderate income households.
A general rule under current law provides that if a developer receives State financing for a project consisting of newly-constructed residential units, the developer is to reserve at least 20 percent of the new residential units for low or moderate income households. This rule does not apply if the municipality in which the property is located has satisfied its affordable housing obligations. Current law also contains an exception to the general rule for qualified residential projects in which a business receives a tax credit pursuant to the "Urban Transit Hub Tax Credit Act," which afforded "Urban Transit Hub” municipalities the option of deciding the percentage of newly-constructed residential units within the project to reserve for low or moderate income households.
The “New Jersey Economic Opportunity Act of 2013” merged the “qualified residential project” component of the "Urban Transit Hub Tax Credit Act" into the ERGG program, but did not authorize an exception to the 20 percent affordable housing set-aside requirement for qualified residential projects under the ERGG program. Section 1 of this bill amends the law to address that omission.
Sections 2 and 3 of the bill amend the ERGG program to authorize an additional $250 million of tax credits for certain qualified residential projects. These credits are to be used exclusively for the redevelopment or rehabilitation of supportive housing, special needs housing, very low-income housing, low-income housing, or moderate-income housing, so long as 100 percent of the housing units redeveloped or rehabilitated are reserved for affordable housing. Of the additional $250 million, $50 million is to be used for projects with 25 to 100 housing units. The bill places the New Jersey Housing and Mortgage Finance Agency (HMFA) in control of this pool of tax credits, because of the HMFA’s expertise over affordable housing programs, but requires the HMFA to consult with the Economic Development Authority in the exercise of its powers. The bill directs the HMFA, when awarding tax credits, to give priority consideration to qualified residential projects within counties identified by the federal Department of Housing and Urban Development (HUD) as the most impacted and distressed counties affected by Hurricane Sandy for the purpose of distributing disaster recovery funds. The bill provides residents who are displaced as a result of a qualified residential project that is granted this tax credit with a limited right of first refusal to purchase or lease a dwelling unit constructed within that qualified residential project.
The committee amended the bill to: 1) increase from $200 million to $250 million the additional amount of tax credits for certain qualified residential projects and to specify that $50 million of that amount is to be used for projects with 25 to 100 housing units; 2) provide that the limited right of first refusal is to include the opportunity to lease at a similar amount of rent as the displaced resident was paying prior to being displaced; provided, however, that the rent may be increased in proportion to any increase in assistance provided to the displaced resident from the federal Section 8 Program or paid as a rental assistance grant; 3) cite the HUD’s designation of counties most impacted and distressed by Hurricane Sandy, rather than listing those counties individually; and 4) delay by three years, from July 28, 2015, to July 28 2018, the deadline by which a temporary certificate of occupancy for a qualified residential project is to be submitted to qualify for the tax credits. The amendments also make a grammatical correction.