(TRENTON) – Legislation sponsored by
Speaker Pro Tempore Jerry Green (D-Middlesex/Somerset/Union) and Bonnie Watson
Coleman (D-Mercer/Hunterdon) to further extend the moratorium on development
fees for non-residential construction projects, transform foreclosed properties
into affordable housing and protect certain municipalities from having their
affordable housing funds raided by the state was approved Monday by the General
Assembly.
“New Jersey consistently ranks as one
of the most expensive states to live in. Not surprisingly, we also have some of
the highest foreclosure rates in the country. Meanwhile, while we have slowly
made some gains, our job market is still a long way from recovery,” said Green,
who chairs the Assembly Housing and Local Government Committee. “This bill would
help attract more development and hence create needed jobs by reinstating the
moratorium on these fees, while putting in place the controls that will allow
New Jersey to meet the affordable housing needs of its
residents.”
“Economic realities are forcing many
families to foreclose on their homes. Many of these properties end up vacant,
undermining the health, safety and economic vitality of neighborhoods,
depressing their property values and reducing revenues to municipalities. On the
other side of the coin, you have families of lower financial means struggling to
find adequate, affordable housing,” said Watson Coleman. “This bill helps
address this pervasive problem by taking foreclosed properties that threaten the
stability of neighborhoods and turning them into affordable housing. It’s a
win-win.”
The bill (A-4251/S-2716) extends the
moratorium on the imposition of fees on non-residential construction projects
for two and a half years, until January 1, 2016. The statewide non-residential
development fees were enacted as part of revisions to the Fair Housing Act and
Municipal Land Use Law in 2008. The 2.5 percent fee was charged to office,
commercial and industrial real estate developers to help municipalities meet
affordable housing obligations. A moratorium of the non-residential fee
requirement was initially placed on the imposition of fees in 2009. In 2011, the
moratorium on the imposition of the fees was extended by two years, until July
1, 2013.
The bill also creates the “New Jersey
Residential Foreclosure Transformation Act,” which establishes the “New Jersey
Foreclosure Transformation Program” as a temporary program within the New Jersey
Housing and Mortgage Finance Agency (HMFA) to purchase foreclosed residential
properties from institutional lenders and dedicating the properties for
occupancy as affordable housing. Under the bill, the HMFA must cease the
program’s operations on December 31, 2017.
“Foreclosures in New Jersey continue
to rise with no relief in sight. The administration’s answer to this problem has
been to hold on to money allocated to help property owners avoid this very
situation. Now it wants to take away funds from municipalities meant to create
affordable housing,” said Green. “Foreclosed properties can quickly turn into
nuisance properties, attracting criminal activity and driving down property
values. This bill helps us accomplish two things: it helps reduce the growing
number of foreclosure properties, while helping meet the demand for affordable
housing.”
The bill empowers the HMFA to
purchase foreclosed residential properties and mortgage assets from
institutional lenders in order to produce affordable housing and dedicate it as
such for 30 years.
The bill directs the HMFA to enter
into contracts or loans, or both, with no more than two experienced, financially
sophisticated, community development financial institutions to enhance the
ability of the HMFA to fulfill its purpose of producing affordable housing.
Under the bill, the HMFA or, if applicable, one of its contractors, must give
the municipality where the property is located (1) a right to consent or
withhold consent to the proposed purchase and dedication as affordable housing,
as well as (2) the right of first refusal to purchase the property and dedicate
it as affordable housing.
A municipality may exercise its right
to buy and dedicate eligible property for affordable housing, decline the option
to buy, or decline to exercise the option and instead authorize the HMFA or its
contractors to use monies from the town's affordable housing trust fund to buy
the property.
The bill also provides that whenever
the HMFA, its contractors or a municipality buys an eligible property using
monies deposited in a municipality's affordable housing trust fund, the town is
to receive two units of credit toward any Council on Affordable Housing-imposed
obligation to provide affordable housing for each eligible unit of affordable
housing dedicated and provided.
The bill awards municipalities
additional unites of credit, above the actual number of dedicated affordable
housing units produced, as an incentive for them to authorize the use of their
affordable housing monies for the purchase of eligible properties and to
dedicate them as affordable housing.
In addition, the bill establishes a
mechanism through which a “foreclosure-impacted municipality” – a municipality
that has 10 or more foreclosed homes listed on a multiple listing service for at
least 60 days – can insulate its affordable housing trust funds from the laws
that will require the transfer of its trust fund monies to the “New Jersey
Affordable Housing Trust Fund.”
“To take funds meant to create
affordable housing when there is a need for more affordable housing is just
mind-boggling,” said Watson Coleman. “These funds have a specific purpose: to
create moderately priced housing for families of lower means; not help the
administration plug holes in the budget. There is no honor in boasting about a
budget balanced on the backs of our most vulnerable
residents.”
A foreclosure-impacted municipality
can accomplish this by adopting a resolution committing the expenditure of its
municipal affordable housing trust fund monies for the production of affordable
housing and authorizing the transfer of at least $150,000 of its municipal
affordable housing trust fund monies to the HMFA for the HMFA to use to produce
affordable housing. If a municipality adopts the resolution to authorize the
transfer within 60 days after the effective date of the bill, the municipality
would be deemed to have committed the funds by the deadline established in
A-500.
Under the bill, the HMFA must use the
funds transferred from a foreclosure-impacted municipality to produce affordable
housing within that municipality. If the HMFA is unable to use all of the
transferred funds within two years of the date of transfer, it must return the
remaining funds to the municipality, which would have at least six months from
the date the funds are returned to commit the funds in accordance with other
provisions of law. During this time, all municipal trust fund monies designated
for the purchase of foreclosed properties would be protected from transfer to
the state.
The bill also establishes the
“Foreclosure to Affordable Housing Transformation Fund,” a non-lapsing,
revolving fund to serve as the repository for funds appropriated or otherwise
made available for the HMFA to fulfill its purposes. The HMFA would administer
the fund and would be authorized to transfer into the fund any amounts it has
that may be used for the production of affordable housing.
Lastly,
the bill requires the HMFA to make an annual report on the program’s activities
to the governor and the Legislature, setting forth a complete operating and
financial statement covering the program’s operations, transactions, and
holdings during the year. The report must be posted on the agency’s
website.
The bill was approved 46-27-5 by the
Assembly and now awaits further consideration by the Senate.
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