By Joshua Burd
Developers in New Jersey have until late July to apply for a share of $24 million in tax credits to help finance affordable housing, under a new timeline announced Wednesday by a state agency.
The New Jersey Housing and Mortgage Finance, which administers the federal 9 percent Low Income Housing Tax Credit program, announced an application deadline of noon Wednesday, July 22, for family, senior and special needs projects, with awards expected to be announced in November. The agency also said non-competitive applications for mixed-income projects will be accepted on a rolling basis from April 2 through the July 22 deadline.
The tax credit allocation is projected to help finance some 1,200 units of affordable housing in New Jersey. HMFA added Thursday that the highly competitive tax credit awards are projected to generate about $230 million in private equity.
“Low Income Housing Tax Credits are instrumental in our ability to create affordable housing opportunities throughout New Jersey,” said Charles A. Richman, the agency’s executive director. “We are guided by our efforts to deconcentrate poverty, incentivize investment in Opportunity Zones, expand opportunities for seniors and veterans, and provide housing for our most vulnerable residents.
“These tax credits can also fund mixed-income developments which increase housing and income diversity in our communities.”
The announcement comes nearly a year after the agency approved changes to how it scores applications for the subsidy, in an effort to achieve several policy goals. For instance, the HMFA is giving greater weight to proposals for mixed-income developments and those that lie within federally designated Opportunity Zones, in which investors can qualify for special tax treatment. The agency is also seeking projects that integrate support services to allow seniors to age in place, those in high-performing school districts and those that preserve existing affordable housing stock.
Established by the Tax Reform Act of 1986, the LIHTC program is the most prolific source of funding for new rental apartments affordable to families, seniors and individuals with special needs. The 9 percent tax credits, which are a dollar-for-dollar reduction in federal tax liability, help attract private investment by allowing affordable housing developers to receive the subsidy and then sell the credits to investors.
The equity generated from the sale can fund about 70 percent of a project, the HMFA said. The additional capital lessens a developer’s debt burden and allows the project to carry a smaller mortgage, resulting in more affordable rents.
The HMFA administers the program, noting that no direct funding for the subsidy comes from the state treasury. The 10-year tax incentive is meant to encourage the development of residential rental apartments at or below 80 percent of area median income.
HMFA said Thursday that it currently monitors more than 700 tax credit developments of nearly 60,000 apartments statewide.