News Flash

Affordable Housing

Posted on: December 15, 2023

Host of Affordable Housing Related Bills See Action in Assembly

On Monday, the Assembly Housing Committee reported favorably on several recently introduced bills related to affordable housing, including:

A-5604 “Exempts receipts from sales of materials, supplies, and services for certain affordable housing projects from sales and use tax.”

  • Current law already provides for an exemption from sales and use tax for materials used in affordable housing projects that receive financing through the Housing and Mortgage Financing Agency (HMFA) or have received other state and local financial subsidies. 
  • This bill would expand the sales and use tax exemption to projects where all the units are intended for moderate, low, or very low incomes, regardless of any financing or subsidies. 

A-5868 “Allows projects supported by affordable housing development fees to be exempt from property tax and to instead contribute to municipal services by making payments in lieu of taxation.”

  • This bill is permissive. 
  • It allows a municipality to negotiate with a housing sponsor an agreement providing for Payments in Lieu of Taxes (PILOT) for municipal services.
  • The municipality may require the housing sponsor to pay an amount up to 20% of the annual gross revenue from each housing project for each year of operation of the agreement following the substantial completion of the housing project. 
  • Agreements negotiated must be reviewed by the Commissioner of the Department of Community Affairs.
  • While there are some exceptions allowing for a longer agreement period, tax exemptions under the bill could not extend longer than the date on which an eligible loan made for the project is paid in full. 

A-5869 “Requires municipalities in compliance with affordable housing obligations be provided priority consideration for certain State grants and assistance.”

  • This bill would give priority consideration for certain grants and financial assistance to municipalities that are in compliance with their affordable housing obligations.
  • Under the bill the status of a municipality’s affordable housing compliance would be determined by reviewing the municipality’s compliance in the first five years after a new round of affordable housing obligations begins, considering prior round builder’s remedy lawsuits, prior round fair share settlements, the percentage of fulfilled obligation, and any other factors deemed relevant by the Department of Community Affairs. 

A-5870 “Facilitates construction and rehabilitation of affordable housing built in part through sweat equity by eventual occupant.”

  • This bill is meant to support non-profits such as Habitat for Humanity, which is a “sweat-equity nonprofit” as defined by the bill.
  • The bill would exempt affordable housing units built by sweat-equity nonprofits from certain adaptability requirements currently required by other affordable housing builders.
  • Affordable housing units built by sweat-equity nonprofits would be exempt from affirmative marketing requirements currently required for other affordable housing projects. 
  • The bill would also expedite assistance to sweat equity non-profits to:
    1. Ensure sweat equity units count towards a municipality’s fair share obligations;
    2. Facilitate the transfer of abandoned property from the municipality to the non-profit; and
    3. Facilitate the use of the municipal affordable housing trust fund and the NJ Affordable Housing Trust Fund. 

A-5871 “Requires HMFA to assume administration of affirmative marketing for affordable housing and reduces municipal responsibility.”

  • The bill would require the HMFA to assume administration of and responsibility for the affordable housing marketing plan for all affordable housing units. 
  • The HMFA, instead of the municipality (as required under current law), would be required to coordinate with the municipal housing liaison in enforcing the affirmative marketing plan. 
  • Fines levied and collected by the HFMA would remain with the municipal housing fund within the municipality.   

The League is reviewing all these bills and anticipates taking a position on them shortly. 

Contact: Frank Marshall, Esq., Associate General Counsel, fmarshall@njlm.org, 609-695-3481, x137. 

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