Bill Text: NJ S2312 | 2024-2025 | Regular Session | Amended
Bill Title: Allows projects supported by State or municipal affordable housing trust fund to be exempt from property tax and to instead contribute to municipal services by making payments in lieu of taxation.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced) 2024-03-18 - Substituted by A3337 (1R) [S2312 Detail]
Download: New_Jersey-2024-S2312-Amended.html
Senator BRIAN P. STACK
District 33 (Hudson)
Senator TROY SINGLETON
District 7 (Burlington)
SYNOPSIS
Allows projects supported by State or municipal affordable housing trust fund to be exempt from property tax and to instead contribute to municipal services by making payments in lieu of taxation.
CURRENT VERSION OF TEXT
As reported by the Senate Budget and Appropriations Committee on March 11, 2024, with amendments.
An Act authorizing municipalities to grant tax exemptions and negotiate payments in lieu of taxation for housing projects and programs supported by the State or municipal affordable housing trust fund, and amending P.L.1985, c.222 and P.L.2008, c.46.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 20 of P.L.1985, c.222 (C.52:27D-320) is amended to read as follows:
20. There is established in the Department of Community Affairs a separate trust fund, to be used for the exclusive purposes as provided in this section, and which shall be known as the "New Jersey Affordable Housing Trust Fund." The fund shall be a non-lapsing, revolving trust fund, and all monies deposited or received for purposes of the fund shall be accounted for separately, by source and amount, and remain in the fund until appropriated for such purposes. The fund shall be the repository of all State funds appropriated for affordable housing purposes, including, but not limited to, the proceeds from the receipts of the additional fee collected pursuant to paragraph (2) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7), proceeds from available receipts of the Statewide non-residential development fees collected pursuant to section 35 of P.L.2008, c.46 (C.40:55D-8.4), monies lapsing or reverting from municipal development trust funds, or other monies as may be dedicated, earmarked, or appropriated by the Legislature for the purposes of the fund. All references in any law, order, rule, regulation, contract, loan, document, or otherwise, to the "Neighborhood Preservation Nonlapsing Revolving Fund" shall mean the "New Jersey Affordable Housing Trust Fund." The department shall be permitted to utilize annually up to 7.5 percent of the monies available in the fund for the payment of any necessary administrative costs related to the administration of the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.), or any costs related to administration of P.L.2008, c.46 (C.52:27D-329.1 et al.).
a. Except as permitted pursuant to subsection g. of this section, and by section 41 of P.L.2009, c.90 (C.52:27D-320.1), the commissioner shall award grants or loans from this fund for housing projects and programs in municipalities whose housing elements have received substantive certification from the council, in municipalities receiving State aid pursuant to P.L.1978, c.14 (C.52:27D-178 et seq.), in municipalities subject to a builder's remedy as defined in section 28 of P.L.1985, c.222 (C.52:27D-328), or in receiving municipalities in cases where the council has approved a regional contribution agreement and a project plan developed by the receiving municipality.
Of those monies deposited into the "New Jersey Affordable Housing Trust Fund" that are derived from municipal development fee trust funds, or from available collections of Statewide non-residential development fees, a priority for funding shall be established for projects in municipalities that have petitioned the council for substantive certification.
Programs and projects in any municipality shall be funded only after receipt by the commissioner of a written statement in support of the program or project from the municipal governing body.
b. (1) The commissioner shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding grants and loans and the standards for establishing the amount, terms, and conditions of each grant or loan.
(2) The governing body of a municipality in which a housing project or program is located, and which is awarded a grant or loan from the fund for a housing project or program, may provide, by ordinance 1[or resolution as appropriate]1 , that the units of affordable housing being developed 1or preserved1 pursuant to a housing project or program being funded, in whole or in part, through the "New Jersey Affordable Housing Trust Fund" shall be exempt from real property taxation if the housing sponsor enters into an agreement with the municipality for payments to the municipality in lieu of taxes for municipal services. Any such agreement may require the housing sponsor to pay to the municipality an amount up to 20 percent of the annual gross revenue from each housing project situated on such real property for each year of operation of the agreement following the substantial completion of the housing project. 1Any such agreement shall require the housing sponsor to pay the municipality an amount not less than the greater of four percent of the annual gross revenue or the amount of the taxes attributable to the land value component of the property comprising the project site for the year preceding the recording of the mortgage, if applicable. In the case of a property assessed under the "Farmland Assessment Act of 1964," P.L.1964, c.48 (C.54:4-23.1 et seq.), the minimum amount the housing sponsor shall be required to pay to the municipality shall be four percent of the annual gross revenue.1 For the purpose of this subsection, "annual gross revenue" means the total annual gross rental or carrying charge and other income of a housing sponsor from a housing project. 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 municipality as taxes or as payments in lieu of taxes in respect of the project site shall not be in excess of the amount of taxes on the project site for the year preceding the recording of the mortgage. 1[An agreement between a housing sponsor and a municipality entered into pursuant to this subsection shall be submitted to the commissioner for review in order to avoid duplicating, overlapping or inconsistent regulations or provisions.] Within 30 calendar days following: the effective date of an ordinance adopted by a municipal governing body approving a tax exemption under this subsection; or the execution of a financial agreement between a housing sponsor and a municipality entered into pursuant to this subsection, whichever is later, the municipal clerk shall electronically transmit a certified copy of the ordinance and the agreement to the Director of the Division of Local Government Services in such a manner as may be specified by the director.1 An exemption from taxation provided pursuant to this subsection shall not extend beyond the date on which an eligible loan made for the project is paid in full.
(3) Notwithstanding the provisions of any law or regulation 1[in] to1 the contrary, the governing body of a municipality may agree to continue a tax exemption for a State, federally, or municipally subsidized housing project beyond the date on which an eligible loan made for the project is fully paid, or beyond the date upon which a tax exemption expires, 1[if] for any period1 the project remains subject to affordability controls pursuant to:
(a) project-based federal rental assistance, authorized pursuant to section 8 of the United States Housing Act of 1937 (42 U.S.C. s.1437f), or other federal or State project-based assistance;
(b) the Uniform Housing Affordability Controls promulgated by the New Jersey Housing and Mortgage Finance Agency; or
(c) the rent and income limits established by the federal Low Income Housing Tax Credit program pursuant to section 42 of the Internal Revenue Code (26 U.S.C. s.42).
c. For any period which the council may approve, the commissioner may assist affordable housing programs which are not located in municipalities whose housing elements have been granted substantive certification or which are not in furtherance of a regional contribution agreement; provided that the affordable housing program will meet all or part of a municipal low and moderate income housing obligation.
d. Amounts deposited in the "New Jersey Affordable Housing Trust Fund" shall be targeted to regions based on the region's percentage of the State's low and moderate income housing need as determined by the council. Amounts in the fund shall be applied for the following purposes in designated neighborhoods:
(1) Rehabilitation of substandard housing units occupied or to be occupied by low and moderate income households;
(2) Creation of accessory apartments to be occupied by low and moderate income households;
(3) Conversion of non-residential space to residential purposes; provided a substantial percentage of the resulting housing units are to be occupied by low and moderate income households;
(4) Acquisition of real property, demolition and removal of buildings, or construction of new housing that will be occupied by low and moderate income households, or any combination thereof;
(5) Grants of assistance to eligible municipalities for costs of necessary studies, surveys, plans, and permits; engineering, architectural, and other technical services; costs of land acquisition and any buildings thereon; and costs of site preparation, demolition, and infrastructure development for projects undertaken pursuant to an approved regional contribution agreement;
(6) Assistance to a local housing authority, nonprofit or limited dividend housing corporation, or association or a qualified entity acting as a receiver under P.L.2003, c.295 (C.2A:42-114 et al.) for rehabilitation or restoration of housing units which it administers which: (a) are unusable or in a serious state of disrepair; (b) can be restored in an economically feasible and sound manner; and (c) can be retained in a safe, decent, and sanitary manner, upon completion of rehabilitation or restoration; and
(7) Other housing programs for low and moderate income housing, including, without limitation, (a) infrastructure projects directly facilitating the construction of low and moderate income housing not to exceed a reasonable percentage of the construction costs of the low and moderate income housing to be provided and (b) alteration of dwelling units occupied or to be occupied by households of low or moderate income and the common areas of the premises in which they are located in order to make them accessible to persons with disabilities.
e. Any grant or loan agreement entered into pursuant to this section shall incorporate contractual guarantees and procedures by which the division will ensure that any unit of housing provided for low and moderate income households shall continue to be occupied by low and moderate income households for at least 20 years following the award of the loan or grant, except that the division may approve a guarantee for a period of less than 20 years where necessary to ensure project feasibility.
f. Notwithstanding the provisions of any other law, rule, or regulation to the contrary, in making grants or loans under this section, the department shall not require that tenants be certified as low or moderate income or that contractual guarantees or deed restrictions be in place to ensure continued low and moderate income occupancy as a condition of providing housing assistance from any program administered by the department, when that assistance is provided for a project of moderate rehabilitation if the project: (1) contains 30 or fewer rental units; and (2) is located in a census tract in which the median household income is 60 percent or less of the median income for the housing region in which the census tract is located, as determined for a three person household by the council in accordance with the latest federal decennial census. A list of eligible census tracts shall be maintained by the department and shall be adjusted upon publication of median income figures by census tract after each federal decennial census.
g. In addition to other
grants or loans awarded pursuant to this section, and without regard to any
limitations on such grants or loans for any other purposes herein imposed, the
commissioner shall annually allocate such amounts as may be necessary in the
commissioner's discretion, and in accordance with section 3 of P.L.2004, c.140
(C.52:27D-287.3), to fund rental assistance grants under the program created
pursuant to P.L.2004, c.140
(C.52:27D-287.1 et al.). Such rental assistance grants shall be deemed
necessary and authorized pursuant to P.L.1985, c.222 (C.52:27D-301 et al.), in
order to meet the housing needs of certain low income households who may not be
eligible to occupy other housing produced pursuant to P.L.1985, c.222
(C.52:27D-301 et al.).
h. The department and the State Treasurer shall submit the "New Jersey Affordable Housing Trust Fund" for an audit annually by the State Auditor or State Comptroller, at the discretion of the Treasurer. In addition, the department shall prepare an annual report for each fiscal year, and submit it by November 30th of each year to the Governor and the Legislature, and the Joint Committee on Housing Affordability, or its successor, and post the information to its web site, of all activity of the fund, including details of the grants and loans by number of units, number and income ranges of recipients of grants or loans, location of the housing renovated or constructed using monies from the fund, the number of units upon which affordability controls were placed, and the length of those controls. The report also shall include details pertaining to those monies allocated from the fund for use by the State rental assistance program pursuant to section 3 of P.L.2004, c.140 (C.52:27D-287.3) and subsection g. of this section.
i. The commissioner may
award or grant the amount of any appropriation deposited in the "New
Jersey Affordable Housing Trust Fund" pursuant to section 41 of P.L.2009,
c.90
(C.52:27D-320.1) to municipalities pursuant to the provisions of section 39 of
P.L.2009, c.90 (C.40:55D-8.8).
(cf: P.L.2017, c.131, s.200)
2. Section 8 of P.L.2008, c.46 (C.52:27D-329.2) is amended to read as follows:
8. a. (1) The council may authorize a municipality that has petitioned for substantive certification, or that has been so authorized by a court of competent jurisdiction, and which has adopted a municipal development fee ordinance to impose and collect development fees from developers of residential property, in accordance with rules promulgated by the council. Each amount collected shall be deposited and shall be accounted for separately, by payer and date of deposit.
(2) A municipality may not spend or commit to spend any affordable housing development fees, including Statewide non-residential fees collected and deposited into the municipal affordable housing trust fund, without first obtaining the council's approval of the expenditure. The council shall promulgate regulations regarding the establishment, administration and enforcement of the expenditure of affordable housing development fees by municipalities. The council shall have exclusive jurisdiction regarding the enforcement of these regulations, provided that any municipality which is not in compliance with the regulations adopted by the council may be subject to forfeiture of any or all funds remaining within its municipal trust fund. Any funds so forfeited shall be deposited into the "New Jersey Affordable Housing Trust Fund" established pursuant to section 20 of P.L.1985, c.222 (C.52:27D-320).
(3) The governing body of a municipality which is spending or committing to spend affordable housing development fees may provide, by ordinance 1[or resolution as appropriate]1 , that the units of affordable housing being developed 1or preserved1 pursuant to a housing project or program being funded, in whole or in part, through affordable housing development fees shall be exempt from real property taxation if the housing sponsor enters into an agreement with the municipality for payments to the municipality in lieu of taxes for municipal services. Any such agreement may require the housing sponsor to pay to the municipality an amount up to 20 percent of the annual gross revenue from each housing project situated on such real property for each year of operation of the agreement following the substantial completion of the housing project. 1Any such agreement shall require the housing sponsor to pay the municipality an amount not less than the greater of four percent of the annual gross revenue or the amount of the taxes attributable to the land value component of the property comprising the project site for the year preceding the recording of the mortgage, if applicable. In the case of a property assessed under the "Farmland Assessment Act of 1964," P.L.1964, c.48 (C.54:4-23.1 et seq.), the minimum amount the housing sponsor shall be required to pay to the municipality shall be four percent of the annual gross revenue.1 For the purpose of this subsection, "annual gross revenue" means the total annual gross rental or carrying charge and other income of a housing sponsor from a housing project. 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 municipality as taxes or as payments in lieu of taxes in respect of the project site shall not be in excess of the amount of taxes on the project site for the year preceding the recording of the mortgage. 1[An agreement between a housing sponsor and a municipality entered into pursuant to this subsection shall be submitted to the commissioner for review in order to avoid duplicating, overlapping or inconsistent regulations or provisions.] Within 30 calendar days following: the effective date of an ordinance adopted by a municipal governing body approving a tax exemption under this subsection; or the execution of a financial agreement between a housing sponsor and a municipality entered into pursuant to this subsection, whichever is later, the municipal clerk shall electronically transmit a certified copy of the ordinance and the agreement to the Director of the Division of Local Government Services in such a manner as may be specified by the director.1 An exemption from taxation provided in accordance with this subsection shall not extend beyond the date on which an eligible loan made for the project is paid in full.
(4) Notwithstanding the provisions of any law or regulation 1[in] to1 the contrary, the governing body of a municipality may agree to continue 1or grant1 a 1new1 tax exemption for a State, federally, or municipally subsidized housing project beyond the date on which an eligible loan made for the project is fully paid, or beyond the date upon which a tax exemption expires, 1[if] for any period1 the project remains subject to affordability controls pursuant to:
(a) project-based federal rental assistance, authorized pursuant to section 8 of the United States Housing Act of 1937 (42 U.S.C. s.1437f), or other federal or State project-based assistance;
(b) the Uniform Housing Affordability Controls promulgated by the New Jersey Housing and Mortgage Finance Agency; or
(c) the rent and income limits established by the federal Low Income Housing Tax Credit program pursuant to section 42 of the Internal Revenue Code (26 U.S.C. s.42).
b. A municipality shall deposit all fees collected, whether or not such collections were derived from fees imposed upon non-residential or residential construction into a trust fund dedicated to those purposes as required under this section, and such additional purposes as may be approved by the council.
c. (1) A municipality may only spend development fees for an activity approved by the council to address the municipal fair share obligation.
(2) Municipal development trust funds shall not be expended to reimburse municipalities for activities which occurred prior to the authorization of a municipality to collect development fees.
(3) A municipality shall set aside a portion of its development fee trust fund for the purpose of providing affordability assistance to low and moderate income households in affordable units included in a municipal fair share plan, in accordance with rules of the council.
(a) Affordability assistance programs may include down payment assistance, security deposit assistance, low interest loans, common maintenance expenses for units located in condominiums, rental assistance, and any other program authorized by the council.
(b) Affordability assistance to households earning 30 percent or less of median income may include buying down the cost of low income units in a municipal fair share plan to make them affordable to households earning 30 percent or less of median income. The use of development fees in this manner shall not entitle a municipality to bonus credits except as may be provided by the rules of the council.
(4) A municipality may contract with a private or public entity to administer any part of its housing element and fair share plan, including the requirement for affordability assistance, or any program or activity for which the municipality expends development fee proceeds, in accordance with rules of the council.
(5) Not more than 20 percent of the revenues collected from development fees shall be expended on administration, in accordance with rules of the council.
d. The council shall establish a time by which all development fees collected within a calendar year shall be expended; provided, however, that all fees shall be committed for expenditure within four years from the date of collection. A municipality that fails to commit to expend the balance required in the development fee trust fund by the time set forth in this section shall be required by the council to transfer the remaining unspent balance at the end of the four-year period to the "New Jersey Affordable Housing Trust Fund," established pursuant to section 20 of P.L.1985, c.222 (C.52:27D-320), as amended by P.L.2008, c.46 (C.52:27D-329.1 et al.), to be used in the housing region of the transferring municipality for the authorized purposes of that fund.
e. Notwithstanding any provision of this section, or regulations of the council, a municipality shall not collect a development fee from a developer whenever that developer is providing for the construction of affordable units, either on-site or elsewhere within the municipality.
This section shall not apply to the collection of a Statewide development fee imposed upon non-residential development pursuant to sections 32 through 38 of P.L.2008, c.46 (C.40:55D-8.1 et seq.) by the State Treasurer, when such collection is not authorized to be retained by a municipality.
(cf: P.L.2008, c.46, s.8)
3. This act shall take effect immediately.
