ASSEMBLY, No. 1442
STATE OF NEW JERSEY
INTRODUCED FEBRUARY 5, 1996
By Assemblymen KELLY and DORIA
An Act concerning housing and economic development and supplementing Titles 52 and 55 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Jobs from Housing and Economic Development Implementation Act."
2. The Legislature hereby finds that:
a. New Jersey suffers from a high rate of unemployment, which causes great hardship to working families, results in the demoralization of young persons who are attempting to enter the workforce, and places a severe burden on the resources of government and private charities.
b. Small businesses and the construction industry are an important source of primary and secondary employment in the State, especially in New Jersey's cities and low income communities. The stagnation of the small business sector of the economy and the construction industry in New Jersey's cities and low income areas has had a detrimental impact on those cities and communities and on the economy of the entire State.
c. Small businesses and the construction industry in particular, especially in New Jersey's cities and low income areas, have experienced great difficulty securing private financing because they often do not satisfy conventional underwriting criteria and suffer disproportionately from the general pattern of disinvestment in the cities and low income areas.
d. The lack of capital for housing production, planning and development, construction financing, long-term financing, and project-based assistance has served as a major impediment to the production of affordable housing in this State, whether that housing is newly constructed or rehabilitated. As a result, the entire State continues to suffer from a shortage of safe, decent rental and sales housing affordable to low and moderate income households, including housing for the elderly and for disabled persons. Currently, more than 800,000 low and moderate income households lack safe, decent housing that they can afford without giving up other necessities of life.
e. The ability of low and moderate income households, including households with elderly and disabled persons, to purchase housing is limited, in part, by their inability to make downpayments and pay closing costs.
f. The lack of safe, decent, affordable housing discourages job-creating businesses from moving to, and remaining in this State. Because access to safe, decent affordable housing and opportunities for remunerative employment are intimately connected, it is sound policy to seek to address these problems in a manner which is mutually reinforcing.
g. Experience has shown that non-profit entities can be efficient and effective producers and managers of low and moderate income housing. Experience also has shown that non-profit entities can be efficient and effective catalysts for the promotion of private entrepreneurship and small businesses in cities and low income areas.
h. Accordingly, it is the purpose of this act to promote job creation by providing funding to foster the development of small businesses in New Jersey's cities and low income areas, provide funds for the construction and rehabilitation of very low, low, and moderate income housing throughout the State, including housing for households with elderly and disabled persons, and assure the long-term economic viability of such housing, to fund loans and grants to low, moderate, and middle income households for downpayment and closing costs, and provide funds to build the capacity of non-profit entities to construct and rehabilitate low and moderate income housing and foster economic development.
i. The "Jobs from Housing and Economic Development Bond Act," P.L. , c. (pending before the Legislature as Assembly Bill No. of ), would provide the financial resources necessary to stimulate the small business sector throughout the State, particularly in the State's cities and low income areas, and thereby promote significant gains in primary and secondary employment in those areas most in need of economic revitalization.
j. Accordingly, it is the purpose of this act to implement the "Jobs from Housing and Economic Development Bond Act," P.L. , c (pending before the Legislature as Assembly Bill No. of ) and to establish the terms and conditions for expenditure of funds deposited into the "Jobs from Housing and Economic Development Fund."
3. As used in this act:
"Affordable" means, (1) in the case of sales housing, housing whose sales price is such that households throughout the relevant income range need pay no more than 25 percent of gross household income for principal, interest, insurance, taxes, homeowners association fees and assessments, and fees for sewerage, water and solid waste disposal. Payments required for principal and interest shall be determined on the basis of 95 percent mortgages at rates generally available within the housing market in the relevant housing region; (2) in the case of rental housing, housing whose rents and fees are such that households throughout the relevant income range need pay no more than 30 percent of gross household income for rents and fees, including heat, hot water, gas, electricity, water, sewerage, and solid waste disposal.
"Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to section 4 of P.L.1983, c.530 (C.55:14K-4).
"Commissioner" means the Commissioner of Community Affairs.
"Corporation" means the Urban Development Corporation created pursuant to P.L.1985, c.227 (C.55:19-1 et seq.).
"Costs" means the expenses incurred in connection with: the acquisition by purchase, lease, or otherwise, of land or buildings and the development of any real or personal property for use in connection with a project authorized by this act, including any rights or interests therein, the execution of any agreements and franchises deemed to be necessary or useful and convenient in connection with any project authorized by this act; the preparation of land for development, including the demolition of existing structures; the construction, reconstruction, conversion or rehabilitation of existing structures; the acquisition by purchase, lease or otherwise, of fixtures, machinery, equipment, and other personal property for the operation of small businesses; the acquisition by purchase, lease, license or otherwise, of patents, copyrights, trademarks, service marks, franchises, and other intangible property for the operation of eligible small businesses; acquisition by purchase, lease, or otherwise of raw materials and inventory; loans or other assistance for working capital by an eligible small business; training of current and potential owners of eligible small businesses; development of business and marketing plans in connection with eligible small businesses; project-based rental assistance to very low income tenants occupying housing constructed or rehabilitated with grants or loans provided under this act, the administrative, organizational, operating or other expenses incident to the financing, completing, and marketing, counseling prospective purchasers or tenants, selecting purchasers or tenants for, and placing into service of, any housing development constructed or rehabilitated under this act; the procurement of engineering, inspection, planning, legal, accounting, financial, or other professional services, including the services of a bond register or an authenticating agent; the administrative expenses of underwriting, administering, servicing and collecting loans; the administrative expenses of awarding and administering grants; the issuance of bonds, or any interest or discount thereon; the payment of the salaries and benefits of employees or the fees of independent contractors to perform any of the foregoing functions; the establishment of a reserve fund or funds for working capital, operating, maintenance, or replacement expenses and for the payment or security of principal or interest on bonds, as the Director of the Division of Budget and Accounting in the Department of the Treasury may determine; and reimbursement to any fund of the State of moneys which may have been transferred or advanced therefrom to any fund created by this act, or of any moneys which may have been expended therefrom for, or in connection with, this act or any project authorized by this act.
"Eligible small business" means an entity that:
a. sells goods or services;
b. is independently owned and operated;
c. has no more than 25 employees, provided that the corporation may by regulation establish an alternative standard for retail grocery stores;
d. has its principal place of business in an urban area or a low income area; and
e. either (1) 51 percent or more of the equity in the business is held by persons residing in the municipality which is the primary place of business or (2) 51 percent or more of the current employees reside in the municipality which is the primary place of business and the applicant provides suitable assurances that 51 percent or more of any additional employees hired with the assistance of loans, loan guarantees, equity investments, grants or other forms of assistance provided under this act will either be residents of the municipality which is the primary place of business or be members of low income households.
"Housing region" means "housing region" as that term is or may hereafter be defined pursuant to subsection b. of section 4 of P.L.1985, c.222 (C.52:27D-304).
"Government securities" means any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any federal agency, to the extent those obligations are unconditionally guaranteed by the United States of America, and any certificates or any other evidences of an ownership interest in those obligations of, or unconditionally guaranteed by, the United States of America or in specified portions which may consist of the principal of, or the interest on, those obligations;
"Low income areas" means municipalities in which the median gross annual household income, as reported in the most recent federal decennial census, is less than or equal to 40 percent of the median gross annual household income for all households in the State.
"Low income household" means a household with a gross household income less than or equal to 50 percent of the median gross household income for households of similar size within the housing region in which the housing is located. "Low income household" includes "very low income household."
"Low income housing" means housing affordable to a low income household.
"Middle income household" means a household with a gross household income between 80 and 115 percent of the median gross household income for households of similar size within the housing region in which the housing is located.
"Middle income housing" means housing affordable to a middle income household.
"Moderate income household" means a household with a gross household income greater than 50 and less than 80 percent of the median gross household income for households of similar size within the housing region in which the housing is located.
"Moderate income housing" means housing affordable to a moderate income household.
"Non-profit entity" means an entity that is exempt from federal taxation on income pursuant to 26 U.S.C.§501(c)(3), as amended, or any successor provision of federal law, and is organized for the purpose of providing low and moderate income housing or fostering economic development.
"Urban areas" means municipalities eligible to receive aid under P.L.1978, c.14 (C.52:27D-178 et seq.).
"Very low income household" means a household with a gross household income below 30 percent of the median gross household income for a household of similar size within the housing region in which the housing is located.
"Very low income housing means housing affordable to a very low income household.
4. The commissioner shall establish a separate "Affordable Housing Development Fund," which shall be a non-lapsing revolving fund. There is appropriated to the Affordable Housing Development Fund from the "Jobs from Housing and Economic Development Fund" established pursuant to section 13 of the "Jobs from Housing and Economic Development Bond Act," P.L. , c. (pending before the Legislature as Senate Bill No.2195 of 1995) the sum of $210 million to provide loans, loan guarantees, equity investments, grants, or other forms of assistance to eligible applicants, which may be non-profit entities, developers, limited dividend corporations, housing authorities, redevelopment authorities, municipalities, or counties. These moneys may be used only to pay the costs of construction and rehabilitation of housing and only in connection with the construction of new housing, conversion of nonresidential to residential space or substantial rehabilitation of housing so long as the construction, conversion or rehabilitation produces housing for occupancy by low or moderate income households.
Moneys also may be made available to finance the moderate rehabilitation of existing housing units for occupancy by low or moderate income households; provided, however, that moneys, whether provided by loan, loan guarantee, grant or other form of assistance, shall be provided for moderate rehabilitation only to non-profit entities, limited dividend corporations, housing authorities, redevelopment authorities, municipalities or counties.
5. The commissioner shall expend moneys from the Affordable Housing Development Fund such that:
a. At least 50 percent of the housing assisted each year shall be rental housing.
b. At least 20 percent of the housing assisted each year shall be affordable to, and reserved for, very low income households.
c. At least 50 percent of the housing assisted each year shall be housing affordable to, and reserved for, low income households.
6. Funds shall be made available by the commissioner to pay the costs of construction, conversion and rehabilitation of housing in municipalities throughout the State without regard to geographic location, except that, to the extent possible, the commissioner shall distribute funds to projects in the various housing regions in proportion to the number of low and moderate income households in need of safe, decent, affordable housing in each such region during the current planning cycle as determined by the Council on Affordable Housing.
7. a. The commissioner shall, in accordance with rules and regulations promulgated pursuant to subsection c. of this section, provide assistance to assure that, to the maximum extent feasible, rental housing constructed, converted, or rehabilitated with funds provided by the Affordable Housing Development Fund is affordable to very low income households. Such assistance shall take the form of project-based rental assistance to very low income households who are renting such housing to make up the difference between the rent that would render the unit affordable to a very low income household and the reasonable operating expenses of the housing, including debt service.
b. (1) On or before April 1 of each year, the commissioner shall, following consultation with organizations representing the interests of consumers of low and moderate income housing and providers of low and moderate income housing, publish a draft annual program plan for the Affordable Housing Development Fund in the New Jersey Register for public comment and shall distribute copies to interested parties.
(2) The annual program plan shall specify the amount of money the commissioner intends to spend from the fund, the commissioner's priorities among the various types of housing to be assisted and the various forms the assistance will take, the means the commissioner will use to implement those priorities, and any changes in the program from the previous year.
(3) On or before June 15 of each year, the commissioner shall submit an annual program plan to the Governor, the Speaker of the General Assembly, and the President of the Senate. The program plan shall be published promptly in the New Jersey Register.
c. The commissioner shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding grants, loans, and forms of assistance and the standards for establishing the amount, terms and conditions of each loan, loan guarantee, equity investment, grant or other form of assistance.
d. As a condition of receiving any loan, loan guarantee, equity investment, grant or other form of assistance, the applicant shall enter into an agreement with the commissioner that incorporates contractual guarantees and procedures by which the commissioner shall ensure that any unit of housing provided for low and moderate income households shall continue to be affordable to, and reserved for, low and moderate income households for at least 30 years following the award of the loan or grant, except that the division may approve a guarantee for a period of less than 30 years where, for exceptional reasons, the shorter period is necessary to ensure project feasibility.
e. The commissioner shall take all steps necessary to assure that all housing assisted under this program is marketed and rented or sold in a manner that fosters racial integration and housing mobility.
8. The agency shall establish a separate "Homeownership Fund," which shall be a non-lapsing revolving fund. There is appropriated to the "Homeownership Fund" from the "Jobs from Housing and Economic Development Fund" established pursuant to section 13 of the "Jobs from Housing and Economic Development Bond Act," P.L. , c. (pending before the Legislature as Assembly Bill of ) the sum of $30,000,000 to provide loans, grants, and other forms of assistance to enable low, moderate and middle income households to make downpayments, pay closing costs, and pay other one-time expenses associated with the purchase of housing, including condominium and cooperative housing and to provide housing counsel to prospective applicants.
9. The agency shall expend moneys from the Homeownership Fund other than moneys for housing counseling in such a manner that each year:
a. One-third of the households assisted are low income households.
b. One-third of the households assisted are moderate income households.
c. One-third of the households assisted are middle income households.
10. The agency shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding grants, loans, and other forms of assistance and the standards for establishing the amount, terms and conditions of each grant, loan, or other form of assistance.
11. On or before April 1 of each year, the agency shall, following consultation with organizations representing the interests of low and moderate income consumers of housing, financial institutions, developers, and real estate brokers, publish a draft annual program plan for the next fiscal year for the Economic Development Fund in the New Jersey Register for public comment and shall distribute copies to interested parties.
a. The annual program plan shall specify the amount of money the agency intends to spend from the fund, the agency's priorities among the various types of activities to be assisted and the various forms the assistance will take, the means the agency will use to implement those priorities, and any changes in the program from the previous year.
b. On or before June 15 of each year, the agency shall submit the annual program plan to the Governor, the Speaker of the General Assembly, and the President of the Senate. The program plan shall be published promptly in the New Jersey Register.
c. The agency shall provide, or contract with other public or private entities to provide, housing counseling to eligible households, especially households in urban areas and low income communities, to enable such households to effectively utilize loans, grants, and other forms of assistance available under this section and to promote responsible homeownership, racial integration, and housing mobility.
12. a. The commissioner shall establish a separate "Non-Profit Financial Assistance Fund," which shall be a non-lapsing revolving fund. There is appropriated to the "Non-Profit Financial Assistance Fund" from the "Jobs from Housing and Economic Development Fund" established pursuant to section 13 of the "Jobs from Housing and Economic Development Bond Act," P.L. , c. (pending before the Legislature as Assembly Bill No. of ) the sum of $9,000,000 for moneys appropriated for that purpose under the "Jobs from Housing and Economic Development Bond Act," P.L. c. (pending before the Legislature as Assembly Bill of ) and such other funds as may be appropriated or received by the commissioner for that purpose.
b. The commissioner shall make loans, grants or provide other forms of assistance from funds appropriated under the "Jobs from Housing and Economic Development Bond Act," P.L. c. (pending before the Legislature as Assembly Bill No. of ) to non-profit entities for purposes of increasing their capability to 1) plan, develop, and manage safe, decent housing affordable to low and moderate income households and 2) foster the creation of businesses and employment in urban areas and low income areas.
c. In making loans, grants and other forms of assistance to increase the capability of non-profit entities to foster the creation of businesses and employment in urban areas and low income areas, the commissioner shall consult with the executive director of the corporation, or if the corporation has no separate executive director, with the executive director of the Economic Development Authority.
13. The loans, grants or other forms of assistance provided for by section 12 of P.L. , c. (C. ) (pending before the Legislature as this bill) may be used only for the following purposes:
a. The costs of planning and developing low or moderate income housing, whether or not the acquisition, construction, conversion, or rehabilitation of the housing is funded through this act, including but not limited to, the costs of identifying and evaluating potential sites for development of housing, assessing the financial feasibility of such development, developing plans to secure necessary financing, whether from public or private sources, planning and designing the development or rehabilitation of such sites, assessing the extent to which permits from governmental entities are needed and developing plans to secure those permits, establishing appropriate entities to carry out the development and management of housing, developing plans for the marketing of housing and the selection of tenants or purchasers, developing financial and management systems to assure that development is carried out in an efficient and financially prudent manner, and designing and carrying out programs of public education.
b. The costs of planning and developing programs to foster the creation and growth of small businesses in urban and low income areas, whether or not those programs are funded through this act.
c. The costs of training officers, directors and employees of non-profit entities to enable them to perform their respective functions in connection with the development, operation, and management of low and moderate income housing or foster the creation and growth of small businesses in urban and low income communities.
d. The payment of the salaries and benefits of employees or the fees of independent contractors to perform any of the foregoing functions.
14. The commissioner may make loans or grants or provide other forms of assistance to applicants who are at any stage of the process of developing or implementing projects or programs.
15. a. On or before June 15 of each year, the commissioner shall submit an annual program plan to the Governor, the Speaker of the General Assembly, and the President of the Senate. The program plan shall be published promptly in the New Jersey Register.
The program plan shall specify the amount of money the commissioner intends to spend, the commissioner's priorities among the various types of housing to be assisted and the various forms the assistance will take, and the means the commissioner will use to implement those priorities, and any changes in the program from the previous year.
b. On or before April 1 of each year, the commissioner shall publish a proposed program plan in the New Jersey Register for public comment and shall distribute copies to interested parties.
c. The commissioner shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding loans, grants and other forms of assistance and the standards for establishing the amount, terms and conditions of each loan, grant or other form of assistance. Prior to establishing rules, regulations, and criteria for loans, grants and other forms of assistance to increase the capability of non-profit entities to foster the creation of businesses and employment in urban areas and low income areas, the commissioner shall consult with the executive director of the corporation, or if the corporation has no separate executive director, with the executive director of the Economic Development Authority.
16. a. The corporation shall establish a separate "Economic Development Fund," which shall be a non-lapsing revolving fund. There is appropriated to the "Economic Development Fund" from the "Jobs from Housing and Economic Development Fund" established pursuant to section 13 of the "Jobs from Housing and Economic Development Bond Act," P.L. c. (pending before the Legislature as Assembly Bill No. of ) the sum of $41 million for moneys appropriated for that purpose under the "Jobs from Housing and Economic Development Act," P.L. , c. (C. ) (pending before the Legislature as this bill) and such other funds as may be appropriated or received by the commissioner for that purpose.
b. The corporation shall expend moneys in the Economic Development Fund for the purpose of providing loans, grants, and other forms of assistance to eligible applicants, which may be non-profit entities, municipalities, or counties, to enable them to plan, develop and implement programs to foster the development and growth of eligible small businesses in urban areas and low income areas.
17. Moneys provided to non-profit entities, municipalities, or counties by loan, grant or other form of assistance from the Economic Development Fund may be used only to pay the costs of fostering the development and growth of small businesses in urban areas and low income areas and only in connection with the following types of activities:
a. Training present and prospective owners, managers, and employees of eligible small businesses.
b. Providing consultation and professional services to individuals and entities to assist them in creating eligible small businesses or enabling existing eligible small businesses to grow.
c. Providing loans, loan guarantees, equity investments, grants, and other forms of assistance to individuals or entities for purposes of creating eligible small businesses and enabling existing eligible small businesses to grow.
d. Acquiring, constructing, converting, or rehabilitating buildings to house eligible small businesses in a manner that will reduce costs by creating economies of scale and fostering the sharing of resources and knowledge.
e. Enabling non-profit entities to establish eligible small businesses which will provide goods or services for which there is a foreseeable demand but no local supplier or which will utilize novel technologies or business methods.
18. In expending moneys from the Economic Development Fund, preference shall be given to:
a. applicants who propose to link assistance under subsection b., c., d. or e. of section 17 of P.L. , c. (C. ) (pending before the Legislature as this bill); and
b. applicants who demonstrate not only the skill, reliability, and experience to carry out the proposed program, but also a knowledge of, and support within, the particular community or communities in which they propose to operate.
19. The corporation shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding grants, loans, and forms of assistance and the standards for establishing the amount, terms and conditions of each grant, loan, or other form of assistance.
20. a. On or before April 1 of each year, following consultation with organizations representing the interests of persons who may be the direct beneficiaries of programs to foster the creation and growth of small businesses of urban and low and moderate income communities and with providers of programs to foster the creation and growth of small businesses, the corporation shall publish a draft annual program plan for the next fiscal year for the Economic Development Fund in the New Jersey Register for public comment and shall distribute copies to interested parties.
b. The annual program plan shall specify the amount of money the corporation intends to spend from the Fund, the corporation's priorities among the various types of activities to be assisted and the various forms the assistance will take, and the means the corporation will use to implement those priorities, and any changes in the program from the previous year.
c. On or before June 15 of each year, the corporation shall submit the annual program plan to the Governor, the Speaker of the General Assembly, and the President of the Senate. The program plan shall be published promptly in the New Jersey Register.
21. The corporation shall take all steps necessary to assure that recipients of funds from the "Economic Development Fund" comply with the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.), and do not discriminate on the basis of political beliefs, membership or non-membership in any political party, or support or non-support for any candidate for elective office.
22. If any clause, paragraph or section of this statute is found by any court of competent jurisdiction to be unconstitutional, the remainder the statute shall remain in effect as if that clause, paragraph, or section had never been enacted.
23. This act shall take effect upon the approval by the voters of the referendum provided for by the "Jobs from Housing and Economic Development Bond Act," P.L. , c. (pending before the Legislature as Assembly Bill No. of ).
STATEMENT
This bill, designated the "Jobs from Housing and Economic Development Implementation Act," establishes four non-lapsing revolving funds. $290 million appropriated out of the "Jobs from Housing and Economic Development Fund" would be distributed among the four funds to foster the development of affordable housing and the growth of small business in the State.
Specifically, the bill would distribute the proceeds of the bond sale among four non-lapsing revolving funds as follows:
(1) The "Affordable Housing Development Fund" would be administered by the Department of Community Affairs. It would be capitalized by $210,000,000 out of which would be provided loans, loan guarantees, equity investments, grants or other forms of assistance for the costs of construction and rehabilitation of safe, decent rental and sales housing affordable to low and moderate income households, including housing for households with elderly or disabled persons. Of this amount, $50,000,000 shall be devoted to project-based assistance to assure that, to the maximum extent feasible, rental housing constructed or rehabilitated with assistance from the Affordable Housing Development Fund is affordable to very low income households.
(2) The "Homeownership Fund" would be administered by the New Jersey Housing Mortgage and Finance Agency. It would be capitalized by $30,000,000 out of which would be provided loans, loan guarantees, grants, and other forms of assistance to enable low, moderate, and middle income households to make downpayments, pay closing costs, and pay other one-time expenses associated with the purchase of housing, including condominium and cooperative housing.
(3.) The "Economic Development Fund" would be administered by the Urban Development Corporation. It would be capitalized by $41,000,000 out of which would be provided loans, loan guarantees, equity investments, grants and other forms of assistance to pay the costs of fostering the development and growth of eligible small businesses in urban areas and low income areas.
(4.) The "Non-Profit Financial Assistance Fund" would be administered by the Department of Community Affairs. It would be capitalized by $9,000,000 out of which would be provided loans, grants and other forms of assistance to non-profit entities for the purposes of increasing their capability to (i) plan and develop safe, decent housing affordable to low and moderate income households and (ii) foster the creation of small businesses and employment in urban areas and low income areas. Of this sum, one-third would be for the purpose of providing loans, grants and other forms of assistance to non-profit entities for the purposes of increasing their capability to foster the creation of small businesses and employment in urban areas and low income areas.
The bill sets forth the specific criteria according to which moneys are to be loaned or granted out of each fund.
The bill would not take effect until the passage by the voters of the companion bond measure at the November 1996 general election.
Designated the "Jobs from Housing and Economic Development Implementation Act"; appropriates $290 million.