A3388

An Act facilitating affordable housing production through sweat equity, amending and supplementing P.L.1985, c.222, and amending P.L.2005, c.350.

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

1. (New section) a. The Commissioner of Community Affairs shall establish an application process, and shall approve appropriate applicants as sweat equity certified nonprofits. The commissioner shall approve an applicant’s certification application if the applicant:

(1) possesses appropriate experience in facilitating the construction or rehabilitation, or both, of dwelling units, in part through the provision of sweat equity;

(2) maintains appropriate controls on the affordability of dwelling units produced, in part through sweat equity, for low- or moderate-income households, to ensure that the units remain affordable to low- and moderate-income households for a reasonable period of time;

(3) maintains a policy of promoting the opportunities that the organization offers in the production of housing through sweat equity to a diverse cross-section of the public; and

(4) is organized pursuant to the “New Jersey Nonprofit Corporation Act,” N.J.S.15A:1-1 et seq., or is a corporation organized pursuant to Title 16 of the Revised Statutes.

b. If sweat equity is used in the construction or rehabilitation of a low- or moderate-income dwelling unit, and the construction or rehabilitation of the unit is facilitated by a nonprofit entity that is approved as a sweat equity certified nonprofit, then:

(1) the adaptability requirements of P.L.2005, c.350
(C.52:27D-311a et al.) shall not apply;

(2) the provisions of law, rule or regulation, designed to implement P.L.1985, c.222 (C.52:27D-301 et al.) that require an affordable unit to be affirmatively marketed to the public in order to count toward the fair share affordable housing obligation of a municipality, shall not apply, including but not limited to P.L.2020, c.51 (C.52:27D-321.3 et seq.); and

(3) the controls on affordability maintained by the sweat equity certified nonprofit pursuant to paragraph (2) of subsection a. of this section may be substituted for the equivalent requirements of the Uniform Housing Affordability Controls promulgated by the New Jersey Housing and Mortgage Finance Agency.

c. The commissioner shall direct the Office of Local Planning Services, or other appropriate offices or divisions of the Department of Community Affairs, to provide expedited assistance to sweat equity certified nonprofits and municipalities in:

(1) ensuring that units, for which sweat equity is used in the construction or rehabilitation pursuant to subsection b. of this section, are counted towards the fair share affordable housing obligation of the municipality;

(2) facilitating the transfer of abandoned property in the municipality, as appropriate for the purpose of low- and moderate-income housing production, to the sweat equity certified nonprofit through the necessary processes, as provided in statutes and regulations, including but not limited to the process for individual abandoned property takings pursuant to paragraph (2) of subsection c. of section 37 of the “New Jersey Urban Redevelopment Act,” P.L.1996, c.62 (C.55:19-56); and

(3) facilitating use of the municipal affordable housing trust fund, and the “New Jersey Affordable Housing Trust Fund,” for the production of units for which sweat equity is used in the construction or rehabilitation, pursuant to subsection b. of this section.

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

4. As used in P.L.1985, c.222 (C.52:27D-301 et al.):

a. “Council” means the Council on Affordable Housing established in P.L.1985, c.222 (C.52:27D-301 et al.), 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”] “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 percent 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”] “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 percent 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 P.L.1985, c.222 (C.52:27D-301 et al.).

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] low- and moderate-income households.

g. “Conversion” means the conversion of existing commercial, industrial, or residential structures for [low and moderate income] 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] 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 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. “Person with a disability” 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 impairment, deafness or hearing impairment, the inability to speak or a speech impairment, or physical reliance on a service animal, 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”] “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 percent or less of the median gross household income for households of the same size within the housing region in which the housing is located.

n. “Sweat equity” means the provision of labor, the requisite hours of which shall be determined by a sweat equity certified nonprofit, spent in construction or rehabilitation of a low- or moderate-income dwelling unit by one or more members of the low- or moderate-income household who is intended to occupy the dwelling unit.

o. “Sweat equity certified nonprofit” means a corporation with experience in facilitating the construction or rehabilitation, or both, of dwelling units, in part through the provision of sweat equity, that is organized pursuant to the “New Jersey Nonprofit Corporation Act,” N.J.S.15A:1-1 et seq., or is a corporation organized pursuant to Title 16 of the Revised Statutes, and that is certified by the Commissioner of Community Affairs pursuant to subsection a. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.2017, c.131, s.199)

3. Section 20 of P.L.1985, c.222 (C.52:27D-320) is amended to read as follows:

20. There is established in the Department of Community Affairs a separate trust fund, to be used for the exclusive purposes as provided in this section, and which shall be known as the “New Jersey Affordable Housing Trust Fund.” The fund shall be a non-lapsing, revolving trust fund, and all monies deposited or received for purposes of the fund shall be accounted for separately, by source and amount, and remain in the fund until appropriated for such purposes. The fund shall be the repository of all State funds appropriated for affordable housing purposes, including, but not limited to, the proceeds from the receipts of the additional fee collected pursuant to paragraph (2) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7), proceeds from available receipts of the Statewide non-residential development fees collected pursuant to section 35 of P.L.2008, c.46 (C.40:55D-8.4), monies lapsing or reverting from municipal development trust funds, or other monies as may be dedicated, earmarked, or appropriated by the Legislature for the purposes of the fund. All references in any law, order, rule, regulation, contract, loan, document, or otherwise, to the “Neighborhood Preservation Nonlapsing Revolving Fund” shall mean the “New Jersey Affordable Housing Trust Fund.” The department shall be permitted to utilize annually up to 7.5 percent of the monies available in the fund for the payment of any necessary administrative costs related to the administration of the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.), or any costs related to administration of P.L.2008, c.46 (C.52:27D-329.1 et al.).

a. Except as permitted pursuant to subsection g. of this section, and by section 41 of P.L.2009, c.90 (C.52:27D-320.1), the commissioner shall award grants or loans from this fund for housing projects and programs in municipalities whose housing elements have received substantive certification from the council, in municipalities receiving State aid pursuant to P.L.1978, c.14 (C.52:27D-178 et seq.), in municipalities subject to a builder's remedy as defined in section 28 of P.L.1985, c.222 (C.52:27D-328), or in receiving municipalities in cases where the council has approved a regional contribution agreement and a project plan developed by the receiving municipality.

Of those monies deposited into the “New Jersey Affordable Housing Trust Fund” that are derived from municipal development fee trust funds, or from available collections of Statewide non-residential development fees, a priority for funding shall be established for projects in municipalities that have petitioned the council for substantive certification.

Programs and projects in any municipality shall be funded only after receipt by the commissioner of a written statement in support of the program or project from the municipal governing body.

b. The commissioner shall establish rules and regulations governing the qualifications of applicants, the application procedures, and the criteria for awarding grants and loans and the standards for establishing the amount, terms, and conditions of each grant or loan.

c. For any period which the council may approve, the commissioner 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 that the affordable housing program will meet all or part of a municipal [low and moderate income] low- and moderate-income housing obligation.

d. Amounts deposited in the “New Jersey Affordable Housing Trust Fund” shall be targeted to regions based on the region's percentage of the State's [low and moderate income] low- and moderate-income housing need as determined by the council. Amounts in the fund shall be applied for the following purposes in designated neighborhoods:

(1) Rehabilitation of substandard housing units occupied or to be occupied by [low and moderate income] low- and moderate-income households;

(2) Creation of accessory apartments to be occupied by [low and moderate income] low- and moderate-income households;

(3) Conversion of non-residential space to residential purposes; provided a substantial percentage of the resulting housing units are to be occupied by [low and moderate income] low- and moderate-income households;

(4) Acquisition of real property, demolition and removal of buildings, or construction of new housing that will be occupied by [low and moderate income] low- and moderate-income households, or any combination thereof;

(5) Grants of assistance to eligible municipalities for costs of necessary studies, surveys, plans, and permits; engineering, architectural, and other technical services; costs of land acquisition and any buildings thereon; and costs of site preparation, demolition, and infrastructure development for projects undertaken pursuant to an approved regional contribution agreement;

(6) Assistance to a local housing authority, nonprofit or limited dividend housing corporation, or association or a qualified entity acting as a receiver under P.L.2003, c.295 (C.2A:42-114 et al.) for rehabilitation or restoration of housing units which it administers which: (a) are unusable or in a serious state of disrepair; (b) can be restored in an economically feasible and sound manner; and (c) can be retained in a safe, decent, and sanitary manner, upon completion of rehabilitation or restoration; and

(7) Other housing programs for [low and moderate income] low- and moderate-income housing, including, without limitation, (a) infrastructure projects directly facilitating the construction of [low and moderate income] low- and moderate-income housing not to exceed a reasonable percentage of the construction costs of the [low and moderate income] low- and moderate-income housing to be provided [and] , (b) alteration of dwelling units occupied or to be occupied by households of [low or moderate income] low- or moderate-income and the common areas of the premises in which they are located in order to make them accessible to persons with disabilities , and (c) projects for which sweat equity is used in the construction or rehabilitation of a low- or moderate-income dwelling unit, and the construction or rehabilitation of the unit is facilitated by a nonprofit entity that is approved as a sweat equity certified nonprofit.

e. Any grant or loan agreement entered into pursuant to this section shall incorporate contractual guarantees and procedures by which the division will ensure that any unit of housing provided for [low and moderate income] low- and moderate-income households shall continue to be occupied by [low and moderate income] low- and moderate-income households for at least 20 years following the award of the loan or grant, except that the division may approve a guarantee for a period of less than 20 years where necessary to ensure project feasibility.

f. Notwithstanding the provisions of any other law, rule, or regulation to the contrary, in making grants or loans under this section, the department shall not require that tenants be certified as [low or moderate income] low- or moderate-income or that contractual guarantees or deed restrictions be in place to ensure continued [low or moderate income] low- or moderate-income occupancy as a condition of providing housing assistance from any program administered by the department, when that assistance is provided for a project of moderate rehabilitation if the project: (1) contains 30 or fewer rental units; and (2) is located in a census tract in which the median household income is 60 percent or less of the median income for the housing region in which the census tract is located, as determined for a [three person] three-person household by the council in accordance with the latest federal decennial census. A list of eligible census tracts shall be maintained by the department and shall be adjusted upon publication of median income figures by census tract after each federal decennial census.

g. In addition to other grants or loans awarded pursuant to this section, and without regard to any limitations on such grants or loans for any other purposes herein imposed, the commissioner shall annually allocate such amounts as may be necessary in the commissioner's discretion, and in accordance with section 3 of P.L.2004, c.140 (C.52:27D-287.3), to fund rental assistance grants under the program created pursuant to P.L.2004, c.140
(C.52:27D-287.1 et al.). Such rental assistance grants shall be deemed necessary and authorized pursuant to P.L.1985, c.222 (C.52:27D-301 et al.), in order to meet the housing needs of certain [low income] low-income households who may not be eligible to occupy other housing produced pursuant to P.L.1985, c.222 (C.52:27D-301 et al.).

h. The department and the State Treasurer shall submit the “New Jersey Affordable Housing Trust Fund” for an audit annually by the State Auditor or State Comptroller, at the discretion of the Treasurer. In addition, the department shall prepare an annual report for each fiscal year, and submit it by November 30th of each year to the Governor and the Legislature, and the Joint Committee on Housing Affordability, or its successor, and post the information to its web site, of all activity of the fund, including details of the grants and loans by number of units, number and income ranges of recipients of grants or loans, location of the housing renovated or constructed using monies from the fund, the number of units upon which affordability controls were placed, and the length of those controls. The report also shall include details pertaining to those monies allocated from the fund for use by the State rental assistance program pursuant to section 3 of P.L.2004, c.140 (C.52:27D-287.3) and subsection g. of this section.

i. The commissioner may award or grant the amount of any appropriation deposited in the “New Jersey Affordable Housing Trust Fund” pursuant to section 41 of P.L.2009, c.90
(C.52:27D-320.1) to municipalities pursuant to the provisions of section 39 of P.L.2009, c.90 (C.40:55D-8.8).

(cf: P.L.2017, c.131, s.200)

4. Section 5 of P.L.2005, c.350 (C.52:27D-123.15) is amended to read as follows:

5. a. Any new construction for which an application for a construction permit has not been declared complete by the enforcing agency before the effective date of P.L.2005, c.350 (C.52:27D-311a et al.) and for which credit is sought pursuant to P.L.1985, c. 222 (C.52:27D-301 et al.) on or after the effective date of P.L.2005, c.350 (C.52:27D-311a et al.) shall be adaptable; however, elevators shall not be required in any building or within any dwelling unit for the purposes of P.L.2005, c.350
(C.52:27D-311a et al.). In buildings without elevator service, only ground floor dwelling units shall be required to be constructed to conform with the technical design standards of the barrier free subcode in order to be credited pursuant to P.L.1985, c.222 (C.52:27D-301 et al.).

b. Notwithstanding the exemption for townhouse dwelling units in the barrier free subcode, the first floor of all townhouse dwelling units and of all other multifloor dwelling units for which credit is sought pursuant to P.L.1985, c. 222 (C.52:27D-301 et al.) on or after the effective date of P.L.2005, c.350 (C.52:27D-311a et al.) and for which an application for a construction permit has not been declared complete by the enforcing agency pursuant to P.L.2005, c.350 (C.52:27D-311a et al.), shall be subject to the technical design standards of the barrier free subcode and shall include the following features:

(1) an adaptable entrance to the dwelling unit;

(2) an adaptable full service bathroom on the first floor;

(3) an adaptable kitchen on the first floor;

(4) an accessible interior route of travel; and

(5) an adaptable room with a door or a casing where a door can be installed which may be used as a bedroom on the first floor.

c. (1) Full compliance with the requirements of this section shall not be required where an entity can demonstrate that it is site impracticable to meet the requirements. Full compliance shall be considered site impracticable only in those rare circumstances when the unique characteristics of terrain prevent the incorporation of accessibility features.

(2) If full compliance with this section would be site impracticable, compliance with this section for any portion of the dwelling shall be required to the extent that it is not site impracticable.

(3) Pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), compliance with the requirements of this section shall not be required where sweat equity is used in the construction or rehabilitation of a low- or moderate-income dwelling unit, and the construction or rehabilitation of the unit is facilitated by a nonprofit entity that is approved as a sweat equity certified nonprofit pursuant to subsection a. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. In the case of a unit or units which are constructed with an adaptable entrance pursuant to subsection c. of this section, upon the request of a disabled person who is purchasing or will reside in the dwelling unit, an accessible entrance shall be installed. Additionally, the builder of the unit or units shall deposit sufficient funds to adapt 10 percent of the affordable units in the project which have not been constructed with accessible entrances with the municipality in which the units are located, for deposit into the municipal affordable housing trust fund. These funds shall be available for the use of the municipality for the purpose of making the adaptable entrance of any such affordable unit accessible when requested to do so by a person with a disability who occupies or intends to occupy the unit and requires an accessible entrance.

For the purposes of this section:

“Adaptable,” as used with regard to an entrance, means that the plans for the unit include a feasible building plan to adapt the entrance so as to make the unit accessible.

“Disabled person” means “disabled person” as defined in section 4 of P.L.1985, c.222 (C.52:27D-304).

“Ground floor” means the first floor with a dwelling unit or portion of a dwelling unit, regardless of whether that floor is at grade. A building may have more than one ground floor.

“Site impracticable” means having the characteristic of “site impracticability” as set forth in section 100.205 (a) of title 24, Code of Federal Regulations.

“Sweat equity” means the provision of labor, the requisite hours of which shall be determined by a sweat equity certified nonprofit, spent in construction or rehabilitation of a low- or moderate-income dwelling unit by one or more members of the low- or moderate-income household who is intended to occupy the dwelling unit.

“Sweat equity certified nonprofit” means a corporation with experience in facilitating the construction or rehabilitation, or both, of dwelling units, in part through the provision of sweat equity, that is organized pursuant to the “New Jersey Nonprofit Corporation Act,” N.J.S.15A:1-1 et seq., or is a corporation organized pursuant to Title 16 of the Revised Statutes, and that is certified by the Commissioner of Community Affairs pursuant to subsection a. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.2005, c.350, s.5)

5. On or before the first day of the fourth month next following enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), the Commissioner of Community Affairs shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations to necessary for the implementation of P.L. , c. (C. ) (pending before the Legislature as this bill).

6. This act shall take effect on the first day of the fourth month next following enactment, except that the Commissioner of Community Affairs shall take such anticipatory action as is necessary in order to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

STATEMENT

This bill would facilitate the construction and rehabilitation of affordable housing that is built in part through sweat equity by the eventual occupant. “Sweat equity” refers to the provision of labor spent in construction or rehabilitation of a low- or moderate-income dwelling unit by one or more members of the low- or moderate-income household intended to occupy the unit.

The bill directs the Commissioner of Community Affairs (commissioner) to establish an application process, and approve appropriate applicants as sweat equity certified nonprofits.

The bill directs the commissioner to approve a certification application if the applicant:

· possesses appropriate experience in facilitating the construction or rehabilitation of dwelling units, in part through sweat equity;

· maintains appropriate controls on the affordability of dwelling units produced, in part through sweat equity, for low- or moderate-income households, to ensure that the units remain affordable for a reasonable period of time;

· maintains a policy of promoting the opportunities that the organization offers in the production of housing through sweat equity to a diverse cross-section of the public; and

· is organized under the “New Jersey Nonprofit Corporation Act,” N.J.S.15A:1-1 et seq., or as a religious organization under Title 16 of the Revised Statutes.

If sweat equity is used in producing an affordable dwelling unit, and the unit’s production is facilitated by a sweat equity certified nonprofit, then the bill directs that the adaptability requirements, which ordinarily apply to affordable housing construction, would not apply. The adaptability requirements concern compliance with the technical design standards of the barrier free subcode of the State Uniform Construction Code. Additionally, for sweat equity produced units facilitated by a sweat equity certified nonprofit, the bill would:

· provide the units with an exemption from the ordinary affirmative marketing requirements of the “Fair Housing Act,” P.L.1985, c.222 (C.52:27D-301 et al.); and

· allow the controls on affordability maintained by the sweat equity certified nonprofit to be substituted for the equivalent requirements of the Uniform Housing Affordability Controls.

The bill requires the commissioner to direct the appropriate offices or divisions of the Department of Community Affairs, to provide expedited assistance to sweat equity certified nonprofits and municipalities in:

· ensuring that units, for which sweat equity is used in construction or rehabilitation, are counted towards the fair share affordable housing obligation of the municipality;

· facilitating the transfer of abandoned property in the municipality, as appropriate for the production of affordable housing, to the sweat equity certified nonprofit through necessary processes, including but not limited to the process for individual abandoned property takings pursuant to section 37 of the “New Jersey Urban Redevelopment Act,” P.L.1996, c.62 (C.55:19-56); and

· facilitating use of the municipal affordable housing trust fund, and the “New Jersey Affordable Housing Trust Fund,” for the production of units for which sweat equity is used in the construction or rehabilitation.

The bill directs the commissioner, by the first day of the fourth month next following enactment, to adopt the rules and regulations necessary for the implementation of the bill. The bill would take effect on the first day of the fourth month next following enactment.