A3246

An Act requiring the New Jersey Housing and Mortgage Finance Agency to create a program to assist municipalities in purchasing foreclosed properties for affordable housing purposes, and amending P.L.1985, c.222.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 4 of P.L.1985, c.222 (C.52:27D-304) is amended to read as follows:

4. As used in this act:

a. "Council" means the Council on Affordable Housing established in this act, which shall have primary jurisdiction for the administration of housing obligations in accordance with sound regional planning considerations in this State.

b. "Housing region" means a geographic area of not less than two nor more than four contiguous, whole counties which exhibit significant social, economic and income similarities, and which constitute to the greatest extent practicable the primary metropolitan statistical areas as last defined by the United States Census Bureau prior to the effective date of P.L.1985, c.222 (C.52:27D-301 et al.).

c. "Low income housing" means housing affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross household income equal to 50% or less of the median gross household income for households of the same size within the housing region in which the housing is located.

d. "Moderate income housing" means housing affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross household income equal to more than 50% but less than 80% of the median gross household income for households of the same size within the housing region in which the housing is located.

e. "Resolution of participation" means a resolution adopted by a municipality in which the municipality chooses to prepare a fair share plan and housing element in accordance with this act.

f. "Inclusionary development" means a residential housing development in which a substantial percentage of the housing units are provided for a reasonable income range of low and moderate income households.

g. "Conversion" means the conversion of existing commercial, industrial, or residential structures for low and moderate income housing purposes where a substantial percentage of the housing units are provided for a reasonable income range of low and moderate income households.

h. "Development" means any development for which permission may be required pursuant to the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.).

i. "Agency" means the New Jersey [Mortgage and] Housing and Mortgage Finance Agency established by P.L.1983, c.530 (C.55:14K-1 et seq.).

j. "Prospective need" means a projection of housing needs based on development and growth which is reasonably likely to occur in a region or a municipality, as the case may be, as a result of actual determination of public and private entities. In determining prospective need, consideration shall be given to approvals of development applications, real property transfers and economic projections prepared by the State Planning Commission established by sections 1 through 12 of P.L.1985, c.398 (C.52:18A-196 et seq.).

k. "Disabled person" means a person with a physical disability, infirmity, malformation or disfigurement which is caused by bodily injury, birth defect, aging or illness including epilepsy and other seizure disorders, and which shall include, but not be limited to, any degree of paralysis, amputation, lack of physical coordination, blindness or visual impediment, deafness or hearing impediment, muteness or speech impediment or physical reliance on a service or guide dog, wheelchair, or other remedial appliance or device.

l. "Adaptable" means constructed in compliance with the technical design standards of the barrier free subcode adopted by the Commissioner of Community Affairs pursuant to the "State Uniform Construction Code Act," P.L.1975, c.217 (C.52:27D-119 et seq.) and in accordance with the provisions of section 5 of P.L.2005, c.350 (C.52:27D-123.15).

m. "Very low income housing" means housing affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross household income equal to 30% or less of the median gross household income for households of the same size within the housing region in which the housing is located.

(cf: P.L.2008, c.46, s.5)

2. Section 21 of P.L.1985, c.222 (C.52:27D-321) is amended to read as follows:

21. The agency shall establish affordable housing programs to assist municipalities in meeting the obligation of developing communities to provide low and moderate income housing.

a. Of the bond authority allocated to it under section 24 of P.L.1983, c.530 (C.55:14K-24) the agency will allocate, for a reasonable period of time established by its board, no less than 25% to be used in conjunction with housing to be constructed or rehabilitated with assistance under this act.

b. The agency shall to the extent of available funds, award assistance to affordable housing programs located in municipalities whose housing elements have received substantive certification from the council, or which have been subject to a builder's remedy or which are in furtherance of a regional contribution agreement approved by the council. During the first 12 months from the effective date of this act and for any additional period which the council may approve, the agency may assist affordable housing programs which are not located in municipalities whose housing elements have been granted substantive certification or which are not in furtherance of a regional contribution agreement; provided the affordable housing program will meet all or in part a municipal low and moderate income housing obligation.

c. Assistance provided pursuant to this section may take the form of grants or awards to municipalities, prospective home purchasers, housing sponsors as defined in P.L.1983, c.530 (C.55:14K-1 et seq.), or as contributions to the issuance of mortgage revenue bonds or multi-family housing development bonds which have the effect of achieving the goal of producing affordable housing.

d. Affordable housing programs which may be financed or assisted under this provision may include, but are not limited to:

(1) Assistance for home purchase and improvement including interest rate assistance, down payment and closing cost assistance, and direct grants for principal reduction;

(2) Rental programs including loans or grants for developments containing low and moderate income housing, moderate rehabilitation of existing rental housing, congregate care and retirement facilities;

(3) Financial assistance for the conversion of nonresidential space to residences;

(4) Other housing programs for low and moderate income housing, including infrastructure projects directly facilitating the construction of low and moderate income housing; [and]

(5) Grants or loans to municipalities, housing sponsors and community organizations to encourage development of innovative approaches to affordable housing, including:

(a) Such advisory, consultative, training and educational services as will assist in the planning, construction, rehabilitation and operation of housing ; and

(b) Encouraging research in and demonstration projects to develop new and better techniques and methods for increasing the supply, types and financing of housing and housing projects in the State; and

(6) A housing purchase program for municipalities to foster the purchase of foreclosed properties by municipalities for use as affordable housing.

(a) Not less than once per month, the agency shall obtain from the Office of Foreclosure in the Administrative Office of the Courts, a list of each parcel of residential real property in the State upon which a complaint for foreclosure has been filed, and a list of residential real property on which a final judgment in foreclosure has been entered. At its discretion, the agency may also contact any bank, credit union or other financial services institution which may write, hold or service mortgages on residential real property to obtain such foreclosure information from those entities. Each listed property shall be identified by its mailing address and by its lot and block numbers, along with the amount of the outstanding principal on the mortgage.

(b) The agency, on a monthly basis, shall sort the lists of residential real property obtained pursuant to subparagraph (a) of paragraph (6) of this subsection by municipality, and shall electronically distribute the list to each municipality.

(c) The agency shall assist a municipality wishing to utilize the program to purchase residential real property available from the list provided. A municipality shall be authorized to expend funds from its affordable housing development fee trust fund for the purposes of this subsection.

e. The agency shall establish procedures and guidelines governing the qualifications of applicants, the application procedures and the criteria for awarding grants and loans for affordable housing programs and the standards for establishing the amount, terms and conditions of each grant or loan.

f. In consultation with the council, the agency shall establish requirements and controls to insure the maintenance of housing assisted under this act as affordable to low and moderate income households for a period of not less than 20 years; provided that the agency may establish a shorter period upon a determination that the economic feasibility of the program is jeopardized by the requirement and the public purpose served by the program outweighs the shorter period. The controls may include, among others, requirements for recapture of assistance provided pursuant to this act or restrictions on return on equity in the event of failure to meet the requirements of the program. With respect to rental housing financed by the agency pursuant to this act or otherwise which promotes the provision or maintenance of low and moderate income housing, the agency may waive restrictions on return on equity required pursuant to P.L.1983, c.530 (C.55:14K-1 et seq.) which is gained through the sale of the property or of any interest in the property or sale of any interest in the housing sponsor.

g. The agency may establish affordable housing programs through the use or establishment of subsidiary corporations or development corporations as provided in P.L.1983, c.530 (C.55:14K-1 et seq.). The subsidiary corporations or development corporations shall be eligible to receive funds provided under this act for any permitted purpose.

h. The agency shall provide assistance, through its bonding powers or in any other manner within its powers, to the grant and loan program established pursuant to section 20 of P.L.1985, c.222 (C.52:27D-320).

(cf: P.L.2004, c.140, s.5)

3. This act shall take effect immediately.

STATEMENT

The provisions of the bill are intended to assist municipalities in meeting their respective fair share housing obligation under the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.) through the purchase of existing units of housing that are the subject of foreclosure proceedings and the rehabilitation or other subsidizing of those housing units for affordable housing purposes, as permitted under the rules of the Council on Affordable Housing.

The bill amends the “Fair Housing Act” to expand the duties of the New Jersey Housing and Mortgage Finance Agency under that act to create a program to assist municipalities in the purchase or subsidizing of homes in foreclosure. The agency is directed, not less than once per month, to obtain from the Office of Foreclosure in the Administrative Office of the Courts a list of each parcel of residential real property in the State upon which a complaint for foreclosure has been filed, and a list of residential real property on which a final judgment in foreclosure has been entered. At its discretion, the agency may also contact any bank, credit union or other financial services institution which may write, hold or service mortgages on residential real property to obtain such information from those entities. The bill requires that each listed property must be identified on the list by its mailing address and by its lot and block numbers, along with the amount of the outstanding principal on the mortgage. The bill requires the agency, on a monthly basis, to sort the lists of residential real property obtained by municipality, and to electronically distribute the list to each municipality. The agency is instructed by the bill to assist municipalities wishing to participate in the program.

It is the belief of the sponsor that municipalities seeking to meet fair-share housing obligations under the “Fair Housing Act,” through the rehabilitation of existing housing, would benefit from the assistance that can be provided by the New Jersey Housing and Mortgage Finance Agency, to help them locate and secure available properties which have fallen into foreclosure, which may be utilized as affordable housing within the municipality. The agency has an obligation under the “Fair Housing Act” to create programs to assist municipalities in meeting their fair share obligation.