New Jersey Administrative Code › Title 5 - COMMUNITY AFFAIRS › Chapter 80 - NEW JERSEY HOUSING AND MORTGAGE FINANCE AGENCY › Subchapter 33 - LOW INCOME HOUSING TAX CREDIT QUALIFIED ALLOCATION PLAN › Section 5:80-33.2 - Definitions

Current through Register Vol. 56, No. 14, July 15, 2024
The following words and terms, as used in this subchapter, shall
				  have the following meanings, unless the context clearly indicates otherwise.
"Area median income" or "AMI" means the midpoint of a region's
				  income distribution, that is, one-half of the families in a region earn more than
				  the area median income and one-half of the families earn less than the area median
				  income. The area median income is calculated by the U.S. Department of Housing and
				  Urban Development (HUD) for every metropolitan region in the country.
"At risk of losing its affordability controls" means a project
				  with a deed restriction that expires within five years of the date of the new tax
				  credit allocation that is "likely" to convert to market rate (as supported by the
				  market analysis at
				  N.J.A.C.
				  5:80-33.12(c)1 ii), a project
				  with project-based assistance that expires within five years of the date of the new
				  tax credit allocation, a project that may be condemned, or a project that is subject
				  to foreclosure, unless NJHMFA determines such acquisition is part of an arrangement
				  a purpose of which is to terminate such affordability controls. For multiphase
				  projects, forestalling of a foreclosure by funding of the initial phase shall not
				  preclude latter phases of the same project from qualifying for the set-asides at
				  N.J.A.C.
				  5:80-33.4(a)1  and 33.5(a)1,
				  provided the latter phases satisfy the remaining elements of the definition of
				  "preservation project" below.
"At risk of losing its level of affordability" means that
				  operating expenses or capital repair needs are so high that, without an award of tax
				  credits, only very high rent increases will keep the project in an acceptable
				  condition and financially feasible. If the current owner or a related party of the
				  current owner retains an ownership interest in the project post-rehabilitation, the
				  owner must demonstrate it did not materially contribute to the decline of the
				  property that created the high operating expenses or capital repair needs.
"Average income set-aside" means an election made by a taxpayer on
				  IRS Form 8609 that requires the income designations of at least 40 percent of the
				  units in a housing project to average 60 percent or less of area median income
				  (AMI). For underwriting purposes, the average of all income designations of
				  tax-credit-eligible tenants shall not exceed 57.5 percent of AMI. Designated
				  income/rent levels for tax-credit-eligible units may only be set at 10-percent
				  increments, ranging from 20 percent of AMI up to 80 percent of AMI, and may not be
				  amended without NJHMFA approval. All Federal minimum set-aside elections are
				  irrevocable.
"Brownfield site" means, pursuant to the Brownfield and
				  Contaminated Site Remediation Act,
				  N.J.S.A. 58:10B-1 et seq.,
				  "any former or current commercial or industrial site that is currently vacant or
				  underutilized and on which there has been, or there is suspected to have been, a
				  discharge of a contaminant." As evidence, applicants shall submit a Remedial Action
				  Work Plan or Response Action Outcome (RAO) approved by the New Jersey Department of
				  Environmental Protection (DEP) or its designee (a Licensed Site Remediation
				  Professional or LSRP) or a No Further Action (NFA) letter issued by the DEP within
				  the past 10 years. The NFA shall be for an unrestricted use or, if it is for a
				  limited restricted use, the applicant shall provide confirmation from an LSRP that
				  the proposed development may still be constructed consistent with the limited
				  use.
"Center" means an efficient and compact form of development
				  having one or more mixed-use Cores as well as residential neighborhoods and green
				  spaces. Center designations are based on the area, population, density, and
				  employment of the Center being considered and features of the surrounding areas.
				  Centers can range in scale from very large, an urban center, to the smallest, a
				  hamlet. Centers range in scale in the following order: urban, regional, town,
				  village, and hamlet.
"Certified minority and/or women business enterprise" or
				  "certified M/WBE" means a minority- and/or women-owned business or enterprise that
				  is registered with, and certified by, the Division of Revenue and Enterprise
				  Services, Uniform Certification Service in the State of New Jersey Department of the
				  Treasury. Information on how to register as a certified M/WBE is available at
				  http://www.state.nj.us.treasury/revenue/ucs.shtml.
"Code" means the Internal Revenue Code,
				  26 U.S.C.
				  §§
										1 et seq.
"Common area" means elements of a property available for use by
				  all tenants.
"Community benefits agreement" means a contract between the
				  developer and the municipality, separate from any redevelopment agreement(s), to
				  provide specific amenities to residents of a particular census tract or tracts. A
				  community benefits agreement must be approved by the municipality's governing body
				  and include elements such as, but not limited to, investments in food desert
				  remediation, green spaces, education, and healthcare for residents.
"Complete application" means an application submitted to NJHMFA
				  that includes the application fee, completed application forms and certifications,
				  and that meets all eligibility requirements as set forth at
				  N.J.A.C.
				  5:80-33.12.
"Continuum of care" or "CoC" means one of the 16 local planning
				  bodies in New Jersey that coordinate service providers and other interested parties
				  to prevent and end homelessness, as authorized by subtitle C of title IV of the
				  McKinney-Vento Homeless Assistance Act of 1987,
				  42 U.S.C. §§
										11431-11435.
"Core" means a pedestrian-oriented area of commercial and civic
				  uses serving the surrounding municipality or Center, generally including housing and
				  access to public transportation.
"Core operating expenses" means expenses for administration,
				  salaries, maintenance and repairs, maintenance contracts, and insurance.
"DCA" means the New Jersey Department of Community Affairs,
				  established in the executive branch of State government pursuant to
				  52:27D-1.
"Density bonus" means an economic benefit for low- and
				  moderate-income housing developers resulting from a zoning change that increases
				  permitted density. The determination of whether a project is the recipient of a
				  density bonus shall be made by the municipality or, in the case of a court-ordered
				  project, the Superior Court judge or special master with jurisdiction over the
				  suit.
"Designated Center" means a Center that has been officially
				  recognized as such by the State Planning Commission. In the Pinelands Area,
				  Designated Center means a Regional Growth Area, Pinelands Village, or Pinelands Town
				  designated by the Pinelands Commission.
"Designated Highlands Center" means a Center that has been
				  officially recognized by the Highlands Council.
"Developer fee" or "development fee" means the fee that
				  encompasses the developer's overhead and profit. Certain fees are subsumed within
				  the developer fee--such as acquisition fees, compensation to the general partner,
				  financial consultants, employees of the developer, construction managers/monitors,
				  clerk of the works, and syndicator-required consultants. Professional fees not paid
				  out of the developer fee are the fees for the architect, engineer, lawyer,
				  accountant, surveyor, appraiser, soil investigator, professional planner, historical
				  consultant, and environmental consultant. (If there are costs listed under the
				  professional planner, the executed contract shall be submitted. Only those costs
				  NJHMFA determines are for planning purposes shall be shown as a separate line item.)
				  All other consultant and professional fees shall be included in the developer fee
				  and are not allowed to be shown as separate line items on the tax credit
				  application; otherwise, those fees shown separately will be added to the developer
				  fee line item.
The developer fee contained in the application shall be the
				  maximum fee (dollar amount) recognized by NJHMFA at the time of cost certification
				  so long as the project scope remains the same.
Any fee paid to the developer in excess of the developer fee, such
				  as an acquisition fee, incentive developer fee, or other pseudonym, shall be treated
				  as a funding source and may not be recognized as a use of funds.
To the extent there is a reasonable expectation of repayment (as
				  evidenced by available cash flow and/or confirmation by the applicant's
				  syndicator/investor or tax attorney), the amount of developer fee allowed for
				  eligible rehabilitation or new construction costs is limited to 15.00 percent of
				  total development cost excluding acquisition (that is, land and building) cost,
				  working capital, marketing expenses, escrows, operating deficit reserves,
				  step-in-the-shoes costs, and costs associated with syndication. However, a developer
				  fee of up to 20.00 percent of total development cost excluding acquisition (that is,
				  land and building) cost, working capital, marketing expenses, escrows, operating
				  deficit reserves, step-in-the-shoes costs, and costs associated with syndication is
				  allowed for the following types of housing:
1. Scattered site single-family detached or duplex
				housing;
2. Projects of 25 units or
				less; or
3. Supportive Housing Cycle
				projects.
The non-deferred portion of the developer fee shall not exceed
				  8.00 percent (13.00 percent for the three types of housing referenced at 1, 2, and 3
				  above) of total development cost excluding acquisition cost, working capital,
				  marketing expenses, escrows, operating deficit reserves, step-in-the-shoes costs,
				  and costs associated with syndication.
A developer fee of up to 4.00 percent shall be permitted for
				  building acquisition costs, but the non-deferred portion shall not exceed 2.00
				  percent. The cost of acquiring a building shall not be allowed in the calculation of
				  the developer fee if the acquisition is between related parties. A related party, as
				  used in this definition, means a relationship between parties when there is a
				  spousal or family relationship, parent-subsidiary relationship, or where owners,
				  officers, directors, partners, stockholders, or members of one business entity hold
				  a 10.00 percent or more interest in the other business entity.
"Eligible basis limits" are limitations on total eligible basis
				  (except for projects in the Supportive Housing Cycle or those projects that receive
				  credits from volume cap). A project whose total eligible basis exceeds its
				  applicable eligible basis limit may participate in the tax credit program; however,
				  the maximum amount of credits allowed to the project will be limited to the amount
				  of the eligible basis limit applicable to the project. The eligible basis limit is
				  not a per se limit on eligible basis as defined in the Code but is a mechanism that
				  facilitates NJHMFA's exercise of its authority to limit tax credits to what is
				  necessary to finance projects. See Code Section 42(m). The eligible basis limits are
				  listed in the application and may change as market conditions dictate. For all
				  projects receiving credits from the State housing credit ceiling, NJHMFA shall also
				  limit the eligible basis used for calculating the tax credit in the following
				  manner:
1. A maximum of three percent per
				annum construction loan interest on unamortized, soft financing shall be recognized
				in eligible basis; and
2. Duplicative
				professional costs shall not be recognized in eligible basis. For example, for HOPE
				VI/Replacement Housing projects in which both the public housing authority and the
				developer retain their own construction managers, architects, engineers, etc., only
				the fees for services retained by the developer shall be recognized in eligible
				basis.
"Equity range" means the range of tax credit pricing that NJHMFA
				  shall utilize in its needs analysis. The equity range is listed in the application
				  and may change as market conditions dictate.
"Hackensack Meadowlands District" means land subject to the
				  jurisdiction of the New Jersey Sports and Exposition Authority (NJSEA) pursuant to
				  the Hackensack Meadowlands Agency Consolidation Act,
				  N.J.S.A. 5:10A-1 et
				  seq.
"Highlands Council" means the Highlands Water Protection and
				  Planning Council established by section 4 of the Highlands Water Protection and
				  Planning Act ("Highlands Act"),
				  13:20-4.
"Highlands Development Credit Receiving Area" means an area
				  designated by the Highlands Council for the receipt of Highlands Development Credits
				  under the Highlands Transfer of Development Rights Program authorized under section
				  13 of the Highlands Act,
				  13:20-13.
"Highlands Redevelopment Area" means a land area designated as
				  such by the Highlands Council that is a brownfield, grayfield, and/or other
				  previously developed area within the Highlands Region that is suitable for
				  development.
"Historic building(s)" means any building or buildings that meet
				  one or more of the following criteria:
1.
				Building(s) listed on the New Jersey or National Register of Historic Places either
				individually or as a contributing building to a historic district;
2. Building(s) that have been issued a
				Determination of Eligibility by the Keeper of the National Register of Historic
				Places;
3. Building(s) identified as a
				contributing building to Local Historic Districts that have been certified by the
				Keeper of the National Register as substantially meeting the National Register
				Criteria; or
4. Building(s) with a State
				Historic Preservation Officer Opinion or Certification that the property is eligible
				to be listed on the National Register of Historic Places either individually or as a
				contributing building to a historic district.
"Homeless Management Information System" or "HMIS" means the
				  system used in New Jersey to record and analyze client, service, and housing data
				  for individuals and families who are experiencing homelessness or at risk of
				  experiencing homelessness, as required pursuant to the McKinney-Vento Homeless
				  Assistance Act of 1987.
"HUD" means the United States Department of Housing and Urban
				  Development.
"Individuals and families who are homeless" means any individual
				  or family who does not have stable housing. In addition, depending on the funding
				  sources, individuals coming out of a State psychiatric hospital, transitional living
				  program, halfway house, jail, or a correctional facility with no place to live upon
				  release may be considered homeless.
"Individuals in treatment for substance abuse" means any
				  individual who is a client of programs funded and/or licensed by the New Jersey
				  Department of Human Services, Division of Mental Health and Addiction
				  Services.
"Individuals with developmental disabilities" means any
				  individual with a severe, chronic disability that is attributable to a mental or
				  physical impairment or combination of mental or physical impairments, is manifested
				  before the person attains 22 years of age, and is likely to continue indefinitely.
				  The disability results in substantial functional limitations in three or more of the
				  following areas of major life activity: self-care, receptive and expressive
				  languages, learning, mobility, self-direction, capacity for independent living, and
				  economic sufficiency; and reflects the person's need for a combination and sequence
				  of special, interdisciplinary, or generic care, treatment, or other services that
				  are of lifelong or extended duration and are individually planned and
				  coordinated.
"Individuals with mental illness" means any individual with a
				  mental illness as that term is defined at
				  30:4-27.2, incorporated
				  herein by reference, as amended and supplemented, and/or any individual with a
				  mental illness eligible for housing or services funded by the Division of Mental
				  Health and Addiction Services in the New Jersey Department of Human Services.
"Individuals with physical disabilities" means any individual
				  who, because of a physical condition, needs affordable housing with supportive
				  services, including assistance with three or more activities of daily living (that
				  is, bathing, dressing, using the toilet, eating, and getting in or out of a bed or
				  chair), to live independently in community settings.
"Individuals with special needs" means:
1. Individuals with mental illness;
2. Individuals with physical
				disabilities;
3. Individuals with
				developmental disabilities;
4. Victims
				of domestic violence;
5. Ex-offenders
				and youth offenders;
6. Youth aging out
				of resource family care;
7. Runaway and
				homeless youth;
8. Individuals and
				families who are homeless;
9. Disabled
				and/or homeless veterans;
10.
				Individuals with AIDS/HIV;
11.
				Individuals in treatment for substance abuse; and
12. Individuals in other emerging special needs
				groups identified by State agencies
"Large family unit" means a unit within a non-age-restricted
				  project with three or more bedrooms. For every three bedrooms, there must be at
				  least 1.5 bathrooms. A three-bedroom unit must measure no less than 950 square feet.
				  A four-bedroom unit should measure no less than 1,150 square feet. (Excluded from
				  the calculation are common halls, stairways, unfinished basements and attics,
				  garages, balconies, and porches.) Developments must be structured in conjunction
				  with realistic market demands (that is, if a developer's market analysis does not
				  show a need or demand for all three-bedroom units, the developer should not be
				  developing all three-bedroom units).
"LIHTC project" means a project participating in NJHMFA's
				  Low-Income Housing Tax Credit Program.
"Low-density" means a building having one to four residential
				  floors or stories.
"Minimum rehab project" means any project undertaking only a
				  minimum amount of rehabilitation. Minimum rehab is defined as construction cost
				  totaling less than $ 30,000 per unit. Minimum rehab projects are eligible to apply
				  only in the Supportive Housing Cycle. NJHMFA shall utilize an amount not less than
				  33.33 percent of developer fee based on building acquisition costs as a funding
				  source in its evaluation required at
				  26 U.S.C. §
										42(m).
"Municipal Revitalization Index" or "MRI" means the Municipal
				  Revitalization Index Distress Score by which New Jersey's municipalities are ranked
				  according to 10 separate indicators that measure diverse aspects of social,
				  economic, physical, and fiscal conditions. Each municipality in the State receives a
				  composite score and ranking, ranging from the most distressed (ranking number 1) to
				  the least distressed (ranking number 564). The MRI is available at
https://www.nj.gov/dca/home/MuniRevitIndex.html
.
"Neighborhood Revitalization Plan" means a plan, as further
				  defined at N.J.A.C. 5:47-3, for the preservation or
				  revitalization of an eligible neighborhood.
"NJHMFA" means the New Jersey Housing and Mortgage Finance
				  Agency.
"Passive House" is a design standard that achieves thermal comfort
				  with minimal heating and cooling by using insulation, air-tightness, appropriate
				  window and door design, ventilation systems with heat recovery, and the elimination
				  of thermal bridges, resulting in significantly lower-than-average energy usage and
				  utility costs. In order to meet the Passive House standard, a project must be
				  certified as such by either the Passive House Institute U.S. (PHIUS) or the Passive
				  House Institute (PHI).
"Pinelands Commission" means the Pinelands Commission created by
				  section 4 of the Pinelands Protection Act,
				  13:18A-4.
"Preservation project" means an existing housing project that is
				  at least 50 percent occupied and is at risk of losing its affordability controls or
				  at risk of losing its level of affordability. In order to qualify for the
				  preservation set-aside, the proposal must be for the rehabilitation of at least 75
				  percent of the affordable units and no new construction of units is permitted. The
				  application shall include the following:
1.
				Documentation that the property is at risk of losing its affordability controls or
				level of affordability;
2. An agreement
				precluding the involuntary displacement of any existing resident (other than for
				good cause) and, in the case of scattered site projects, a copy of the relocation
				plan for over-income residents;
3.
				Documentation of how rents will remain at or near existing levels;
4. Utilization of an applicable fraction based on
				an analysis of both the income levels of existing residents and the market analysis
				required under 5:80-33.12(c)1ii; and
5.
				A capital needs assessment certified by the project architect which illustrates that
				the proposed rehabilitation meets identified critical repair items and 12-month
				physical needs.
"Public transportation" means any mode of transit available to the
				  general public with fixed fares and daily scheduled service with no seasonal
				  interruption. At a minimum, public transportation shall operate Monday through
				  Friday and provide regularly scheduled service during commuter hours (defined as
				  daily service at least once between 6:30 A.M. to 9:30 A.M. and at least once between
				  3:00 P.M. to 6:00 P.M.
"Qualified Census Tract," as defined in Section 42(d)(5)(C) of
				  the Code, means a census tract designated by the Secretary of HUD in which 50
				  percent or more of households have an income less than 60 percent of the area median
				  gross income or in which there exists a poverty rate of 25 percent or
				  greater.
"Qualified nonprofit organization" means, pursuant to Section
				  42(h)(5)(B) of the Code, an entity that owns an interest in the project (directly or
				  through a partnership) and materially participates (within the meaning of Section
				  469(h) of the Code) in the development and operation of the project throughout the
				  compliance period and is not affiliated with or controlled by a for-profit
				  organization.
1. Section 42(h)(5)(C)
				defines a qualified nonprofit organization as follows:
"(i) Such organization is described in paragraph
				(3) or (4) of Section 501(c) and is exempt from tax under Section 501(a);
(ii) Such organization is determined by the State
				housing credit agency not to be affiliated with or controlled by a for-profit
				organization; and
(iii) 1 of the exempt
				purposes of such organization includes the fostering of low-income
				housing."