HMFA Board Action Provides Significant Increase in Affordable Housing Opportunities
TRENTON, NJ – The New Jersey Housing and Mortgage Finance Agency (HMFA), an affiliate of the Department of Community Affairs, recently took action at its July 2nd board meeting on 41 multifamily, single family, supportive housing, and federal Low Income Housing Tax Credit (LIHTC) development projects that will significantly increase affordable housing throughout New Jersey for low, moderate, and middle-income residents. The projects will also provide positive economic impact on the greater surrounding communities in which they will be built.
Financing commitments for 11 multifamily housing projects were approved by the Board, bringing them one step closer to breaking ground and creating nearly 1,000 vital rental housing opportunities throughout the state. Among those approved, six will be financed through HMFA’s Multifamily Conduit Bond Program, in the total amount of $82 million. Whereas, five will receive in the total amount of $49 million through the Community Development Block Grant-Disaster Recovery, Fund for Restoration of Multifamily (FRM) Program.
The Multifamily Conduit Bond Program enables well-capitalized developers to issue bonds through the agency on a pass-through basis at the most competitive interest rates available in the marketplace. Since the program’s inception in 2011, HMFA has provided a total of $480 million in Agency financing to preserve and construct nearly 4,020 units across 24 projects.
An example of a project approved at the July 2nd board meetingfinanced through the Conduit Bond Program is 999 Broad Phase I, located in Newark. Part of a two-phase redevelopment plan that will provide a mixed-use, mixed-income anchor for Downtown Newark, the 999 Broad Phase I project will transform a blighted parking lot and vacant parking garage into a new five-story, LEED-certified apartment building with 87 one- to three-bedroom rental units, of which five will be set aside for individuals with special needs. The project will feature approximately 6,500 square feet of commercial space, a community room, and a second floor green garden terrace.
“I commend housing developers for utilizing our Conduit Bond Program which helps them receive the most competitive interest rates available in the marketplace to get the financing they need to embark on these essential projects,” said HMFA Executive Director Anthony Marchetta. “When using this program, developers also benefit from a host of other resources such as HMFA tax-exempt financing and the 4% federal Low Income Housing Tax Credits, which take affordable housing projects from a vision to reality.”
Another funding mechanism provided for the creation of affordable housing through the HMFA is the Fund for Restoration of Multifamily Housing (FRM) Program. This program, created in the aftermath of Sandy, provides qualified housing developers with subsidies in the form of zero- and low-interest loans to finance the development of affordable housing in an effort to increase the essential affordable housing supply in the nine counties the federal government determined were most impacted by the storm (Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, and Union).
HMFA’s board approval of five FRM program financing commitments will assist in the creation of close to 380 rental housing opportunities in the counties most affected by Sandy, help meet an affordable housing demand that was exacerbated by Sandy, and create a foundation upon which communities can build for years to come.
Fort Monmouth Historic, which received approval July 2nd, is part of the Fort Monmouth Reuse and Redevelopment Plan located in Oceanport, Monmouth County. Approved for close to $8 million in construction and permanent financing, the project will significantly rehabilitate a historic housing site with sustainable building materials and energy-efficient appliances. Upon completion, the project will consist of 48 two- to three-bedroom units in duplex buildings, of which five will be set aside for individuals with special needs.
During the first three months of lease up at Fort Monmouth Historic and other projects awarded FRM funds, priority will be given to Sandy-impacted individuals who registered for Federal Emergency Management Agency (FEMA) assistance or who rented an apartment or owned a primary residence that was no longer habitable because of Sandy damage.
“Sandy recovery initiatives like the FRM program are helping to rebuild and restore a lasting foundation for New Jersey after the storm,” said NJ Department of Community Affairs (DCA) Commissioner Charles Richman, who also serves as Chairman of the HMFA Board. “Projects funded by the FRM Program not only provide affordable housing opportunities for Sandy-impacted families, but also benefit the community by creating jobs, generating local and state taxes, and spurring economic growth in the local economy.”
The 11 projects approved have a total development cost of approximately $198 million. This will generate approximately $315 million in one-time economic output, defined as the total value of industry production such as sales and business revenues. During construction, the projects will support approximately 1,880 direct and indirect/induced full-time equivalent jobs and over $12 million in state and local taxes as estimated based on multipliers from a 2013 study entitled “Economic and Fiscal Impacts of the New Jersey Housing and Mortgage Finance Agency’s Investment in Affordable Housing” conducted by HR&A Advisors, Inc., a real estate and economic development consulting firm. Upon completion, these projects will not only provide affordable and high-quality housing for working families and individuals with special needs but will continue to add value to the community by providing more than $35 million in on-going economic output, 195 direct and indirect/induced full-time equivalent jobs, and $2 million in state and local taxes annually.
Finally, 20 Low Income Housing Tax Credit (LIHTC) projects were presented before the HMFA Board for conditional mortgage commitments. The 20 projects mark the first step in the process of applying for the 9% federal LIHTC for 2015. The federal LIHTC program, administered by HMFA for the State of New Jersey, enjoys the reputation of being the most successful federal housing program ever created to provide the private market an incentive to invest in the development of affordable rental housing for residents at or below 60 percent of the Area Median Income. An award of 9% tax credits can provide up to 70 percent of the costs to construct a project, which reduces the amount of debt the project must carry. In New Jersey, demand is so great for the credits that typically only one project is funded for every three to four that apply.
Annually, HMFA is allocated approximately $20 million in 9% LIHTC credits, which will result in $180 million to $200 million in equity for affordable housing projects. Due to the limited number of 9% credits available, developers must compete for them based on criteria established by HMFA in the Qualified Allocation Plan (QAP). The deadline to submit a 9% application is 12 noon on July 24th with awards anticipated on October 28, 2015.
All HMFA Board actions will take effect at the expiration of the statutory period for the Governor’s review and consideration of the meeting minutes.
For more information on HMFA programs, visit www.njhousing.gov.