Page 19 - RE-NJ

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round — which was largely managed
by the state judiciary — including
the diffi culty of underwriting and
fi nancing new development that
includes below-market housing.
Josh Mann, co-managing member
of Millburn-
based Iron Ore
Properties,
said that’s all
but impossible
without the types
of subsidies
or fi nancial
agreements
Josh Mann
that often draw
intense backlash from residents.
“I think what’s happened over the
years is that people are starting to
recognize that, when you take 20
percent of a project and you devalue
that 20 percent, you actually have to
make up for it somehow,” Mann said,
alluding to so-called inclusionary
projects that have a set-aside for
affordable units. “You have to actually
be able to pay for it.”
He added that “one of the challenges
is how to pay for these things without
a PILOT,” or a payment in lieu of taxes
agreement that’s typically based on a
percentage of the project’s revenue.
Builders favor PILOTs because they
can lock in payments to a municipality
for as much as 30 years, providing
certainty that helps to underwrite
projects and secure other funding
sources, but opponents often cast
them as gratuitous tax breaks.
Developers and local offi cials point out
that the alternative is no tax revenue
at all, given that the projects would not
happen without the agreements.
“I do think a lack of information is
often one of
the biggest
challenges
with PILOT
conversations,”
said Melanie
Walter, executive
director of the
New Jersey
Melanie Walter
Housing and
Mortgage Finance Agency.
She added: “It’s important to
remember that time and friction are
the two things that add money to a
deal for no reason. So when we can
reduce the amount of time that a deal
is taking and when we can reduce the
amount of friction between the parties,
we’re making the deal more feasible.
“As we’re looking at round four,
generally, that’s why collaboration is
so critical.”
Mann pointed to potential solutions
going forward, thanks to a pair of laws
that were passed alongside the fourth-
round affordable housing bill. One
measure, S1422, allows developers
with shorter-term PILOTs to claim
accelerated depreciation on new
affordable housing properties, giving
them added relief against state income
taxes and a way to absorb the cost of
20 percent inclusionary projects.
The second law, A3337, allows projects
that receive monies from state or
local affordable housing trust funds to
qualify for a PILOT agreement. That
benefi t, which is mostly exclusive
to legally designated redevelopment
areas, could unlock additional projects.
“Those two things alone are extremely
helpful,” said Mann, a past president of
the New Jersey Builders Association.
“And if you have a municipality that
understands that these are necessary
tools in order to make it work, I think
it can be extremely valuable moving
forward.”
Also critical, Walter said, is the
continued availability of state and
federal funding programs. She noted
that HMFA received some $475 million
under the American Rescue Plan
Act, which President Biden signed in
March 2021, helping to support low-
income housing projects that were
considered urban preservation, the
creation of workforce housing or the
construction of 100 percent affordable
housing in communities with Mount
Laurel obligations. That has helped the
agency fi nance nearly 14,000 low- and
moderate-income units over the last
two years, including new construction
or preservation and rehabilitation
projects.
HMFA’s pipeline remains full, Walter
added, with 150 active projects on the
books that would comprise 11,800
units and $5 billion in construction
value.
“So as we’re looking toward round
ARCHITECTURE PLANNING INTERIOR DESIGN SUSTAINABILITY