By Joshua Burd
The state has detailed plans to finance 1,200 affordable housing units under a federal tax credit program, with an added focus on projects in Opportunity Zones and other newly added criteria.
The New Jersey Housing and Mortgage Finance Agency on Thursday announced that it will award $24 million in 9 percent Low Income Housing Tax Credits this year, its latest round of funding under the highly competitive program. In the process, the agency is rolling out 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.
The changes, which the HMFA approved last month, will be in effect through 2020 and are expected to be published in the New Jersey Register in June, according to a news release. The agency is accepting applications for family, senior, special needs and mixed-income development proposals through Sept. 12, with award announcements slated for December.
“Low Income Housing Tax Credits have been key to our efforts to build affordable housing. This new round of tax credits will further incentivize construction within Opportunity Zones in urban areas to help build a stronger and fairer New Jersey,” said Charles A. Richman, the HMFA’s executive director. “We also are encouraging more mixed-income developments to boost income diversity and further deconcentrate poverty.”
The LIHTC program has helped finance more than 50,000 housing units in New Jersey since it was established by the Tax Reform Act of 1986. 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.