S3097

An Act promoting family homeownership, including through restrictions, assistance, and tax incentives and disincentives related to single-family residences, and supplementing and amending various parts of the statutory law.

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

1. (New section) P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the "Protection of Homeownership and Limiting Institutional Investor Acquisition Act."

2. (New section) The Legislature finds and declares that:

a. The Great Recession of 2008-2009 and the COVID-19 pandemic contributed to fundamental changes in the real estate market and facilitated a dramatic transfer of wealth from low-, moderate-, and middle-income households to the wealthy, due in substantial part to the surge of institutional investors in the residential real estate market that purchase and convert substantial numbers of single-family homes into rental properties;

b. Single-family homes purchased by institutional investors may be completely taken off the market for individual homebuyers, leading to the concentration of single-family homes, capital, and market power in the hands of large institutional investors;

c. Institutional investors thereby cripple the ability of individual homebuyers to compete with and purchase single-family homes, since institutional investors have a ready supply of capital, high liquidity, and significant bargaining power compared to individual homebuyers;

d. Homeownership, which commonly begins with the purchase of a small- or moderate-sized single-family home, or starter home, is essential for building wealth and for retirement, including through equity, tax deduction incentives, and capital gains exclusions on sales, and therefore provides for generational wealth;

e. The influx of institutional investors in the real estate market has contributed to the increase in the cost of living, which has skyrocketed since 2008, making the American dream of homeownership unattainable for many;

f. While an October 2022 study, entitled "Buying New Jersey: The Rise of Institutional Ownership of Residential Properties," produced by the Office of Policy and External Affairs in the Department of Community Affairs, observed that approximately six percent of residential properties were institutionally owned as of 2020, institutional investors wield a tremendous amount of market power at significantly lower market shares;

g. The unique structure of the housing market enables institutional investors, through their purchasing behavior, to manipulate both supply and demand in the markets for single-family home sales and single-family home rentals;

h. To account for the gross imbalance in market power between institutional investors and individual homebuyers in New Jersey, it is critical for legislative responses to not only place reasonable restrictions on the ability of institutional investors to dominate the residential real estate market, but also to increase the power of individual homebuyers to compete with institutional investors; and

i. Therefore, it is necessary and proper for the Legislature to place reasonable restrictions on institutional investors related to the purchase of single-family homes; impose tax incentives and disincentives on certain acquisitions by institutional investors to help stabilize homeownership opportunities for New Jersey families; provide additional down payment assistance for individual homebuyers for the purchase of starter homes; expedite the production of single-family and starter homes by reducing certain statutory and regulatory impediments; provide tax incentives for the development of single-family and starter homes; and enable individual New Jersey homebuyers to claim certain gross income tax deductions.

3. (New section) As used in sections 3 and 4 of P.L. , c. (C. and ) (pending before the Legislature as this bill):

"Affordable housing" means an inclusionary development, as defined pursuant to subsection f. of section 4 of P.L.1985, c.222 (C.52:27D-304), and other low- and moderate-income housing.

"Beneficial owner" means, with respect to an entity, an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, exercises substantial control over the entity, or in aggregate owns or controls, along with ownership or control by family members within the third degree of consanguinity of the individual, through affiliated entities, or investment vehicles, not less than 10 percent of the ownership interests of the entity. "Beneficial owner" shall not include:

(1) a minor;

(2) an individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;

(3) an individual acting solely as an employee of a corporation, limited liability company, or other similar entity and whose control over or economic benefits from such entity is derived solely from the employment status of the person;

(4) an individual whose only interest in a corporation, limited liability company, or other similar entity is through a right of inheritance; or

(5) a creditor of a corporation, limited liability company, or other similar entity.

"Commissioner" means the Commissioner of Community Affairs.

"Family limited liability company" means a limited liability company:

(1) that has no more than five members;

(2) whose membership satisfies the following criteria:

(a) each member is an individual or a family trust; and

(b) each member who is an individual is related to each of the other members who are individuals, within and including the third degree of consanguinity or affinity; and

(3) whose revenue is paid directly from one member to another.

"Family trust" means:

(1) a trust in which a majority of the beneficiaries are individuals who are related to each other within and including the third degree of consanguinity or affinity; and where each beneficiary is an individual or an organization described pursuant to section 170(c)(2) of the Internal Revenue Code (26 U.S.C. s.170(c)(2));

(2) a charitable remainder annuity trust or a charitable remainder unitrust, as those terms are defined pursuant to section 664 of the Internal Revenue Code (26 U.S.C. s.664); or

(3) a charitable lead trust.

"Institutional investor":

(1) means a person or entity that pools capital to purchase securities, real property, and other investment assets or originates loans, including institutional investors in the form of:

(a) a partnership, corporation, limited liability company, or trust;

(b) an affiliate, subsidiary, or holding company of a partnership, corporation, limited liability company, or trust;

(d) a beneficial owner of an affiliate, subsidiary, or holding company of a partnership, corporation, limited liability company, or trust; and

(2) shall not mean:

(a) a nonprofit corporation organized for the exclusive purpose of acquiring a single-family home that is, or is to be, used for the development and provision of affordable housing;

(b) a family trust; or

"Low-income housing" means the same as the term is defined pursuant to subsection c. of section 4 of P.L.1985, c.222 (C.52:27D-304).

"Minor" means a person under the age of 18 years.

"Moderate-income housing" means the same as the term is defined pursuant to subsection d. of section 4 of P.L.1985, c.222 (C.52:27D-304).

"On the market and available for purchase" means the status of real property, on which real property there is constructed or is to be constructed, a single-family home:

(1) which real property is listed by a real estate agent or other similar real estate professional, or the seller of the real property, on a multiple listing service, or other similar database, for which, if the seller has chosen to use a real estate agent or other similar real estate professional, the seller has signed a contract with the real estate agent or other similar real estate professional for the real estate agent or other similar real estate professional to advertise the real property to potential buyers; and

(2) for which the seller is accepting bids or offers for the purchase of the real property, and which listing is easily accessible by the public and active, active with contract, pending, contingent, or back on the market.

"Real estate agent" means a real estate broker, broker salesperson, sales person, or real estate salesperson licensed with a referral company pursuant to R.S.45:15-1 et seq.

"Single-family home" means a residential property and any ownership interest of a residential property, consisting of one to four dwelling units. A "single-family home" shall include a townhome or townhouse.

"Small institutional investor" means an institutional investor that, in the aggregate through any combination of the institutional investor’s partnerships, corporations, limited liability companies, beneficial owners, or trusts; or affiliates, subsidiaries, or holding companies of a partnership, corporation, limited liability company, beneficial owner, or trust, owns 20 or fewer single-family homes.

"Townhome" or "townhouse" means a single-family dwelling unit, constructed in a group of three or more attached units in which each unit extends from foundation to the roof and has a yard or public way on not less than two sides.

4. (New section) a. An institutional investor shall not contact the owner of a single-family home, or the agent of that owner, with respect to that single-family home, during the first 90 days that the single-family home is on the market and available for purchase. An institutional investor shall not place a bid on or purchase, directly or indirectly, or through any combination of the institutional investor’s constituent persons or entities, a single-family home in this State during the first 90 days that the single-family home is on the market and available for purchase. An institutional investor shall not lease a single-family home acquired or purchased by the institutional investor for a period of five years following the date of acquisition or purchase.

b. An institutional investor that purchases, owns, or acquires a single-family home prior to the first day that a single-family home is on the market and available for purchase, or after the first 90 days that a single-family home is on the market and available for purchase shall be subject to the provisions of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

c. Except as provided in subsection d. of this section, the provisions of sections 1 through 4 of P.L. , c. (C. through ) (pending before the Legislature as this bill) shall not apply to:

(1) a tax exempt nonprofit organization that is described in section 501(c) of the Internal Revenue Code (26 U.S.C. s.501(c)) and exempt from federal taxation pursuant to section 501(a) of the Internal Revenue Code (26 U.S.C. s.501(a)), which purchased a single-family home or homes for the exclusive purpose of providing, and which serve to provide, affordable housing in this State;

(2) a small institutional investor;

(3) a financial institution, including a credit union, or an institutional investor, as a direct result of any foreclosure, or a secured transaction pursuant to the "Uniform Commercial Code - Secured Transactions," N.J.S.12A:9-101 et seq.;

(4) an institutional investor, which, as a condemnor, as the term is defined pursuant to subsection (b) of section 2 of P.L.1971, c.361 (C.20:3-2), places a bid on, acquires, or purchases a single-family home pursuant to the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.);

(5) a governmental authority; or

(6) such other institutional investors that the commissioner, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety, determines to be necessary to effectuate the provisions of sections 1 through 4 of P.L. , c. (C. through ) (pending before the Legislature as this bill), in the public interest, and necessary to preserve the quantity of single-family homes in this State. An institutional investor, subject to an exemption pursuant to this paragraph, shall provide additional information that the commissioner determines to be necessary for the institutional investor to qualify for an exemption pursuant to this paragraph and that effectuates the purposes of sections 1 through 4 of P.L. , c. (C. through ) (pending before the Legislature as this bill).

d. Notwithstanding the provisions of subsection c. of this section to the contrary, an institutional investor shall submit to the commissioner, on a form established by the Department of Community Affairs, in consultation with the Division of Consumer Affairs in the Department of Law and Public Safety, and published by the Department of Community Affairs on the department’s Internet website, for every taxable year by April 15 annually, and within 60 days of the effective date of sections 1 through 6 of P.L. , c. (C. through ) (pending before the Legislature as this bill) if April 15 is not less than 90 days subsequent to the effective date of sections 1 through 6 of P.L. , c. (C. through ) (pending before the Legislature as this bill), a report containing the information required pursuant to this subsection, and such other information as required by the rules and regulations promulgated by the commissioner pursuant to subsection g. of this section, which information shall include but not be limited to, the number of single-family homes that, in the aggregate or through any combination of the institutional investor’s constituent persons or entities, the institutional investor bid on or purchased within the previous taxable year.

e. A person or entity, including a small institutional investor, in the county or vicinage in which the single-family home is located, may file a complaint in the Superior Court of New Jersey, Law Division, against an institutional investor that violates subsection a. of this section. If the court finds the institutional investor violated subsection a. of this section, the institutional investor shall alienate the single-family home within six months of the court’s determination, and any profit received shall be payable to the Attorney General. In addition, an amount equal to the profit received shall also be paid to, and proportionately divided amongst, any person or entity, including a small institutional investor, adversely and directly affected by a violation, which shall be construed liberally, who files a complaint in the Superior Court of New Jersey, Law Division in the county or vicinage in which the single-family home is located within 24 months of the date that the violation occurred.

f. (1) It shall be an unlawful practice, pursuant to and in violation of the New Jersey consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.), for an institutional investor to place a bid on or purchase a single-family home in violation of subsection a. of this section.

(2) An institutional investor that violates subsection a. of this section shall be liable to a civil penalty per violation as provided for in this paragraph, plus fees and expenses, as follows:

(a) An institutional investor that violates subsection a. of this section shall be liable to a civil penalty of $20,000, or $60,000 if the court finds the institutional investor willfully violated this section, which shall be collected in a civil action by a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). The Superior Court, Law Division in the county or vicinage in which the single-family home is located shall have jurisdiction over the proceedings. Process shall be in the nature of a summons or a warrant, and shall issue upon the complaint of the Attorney General.

(b) Notwithstanding a penalty collected pursuant to subparagraph (a) of this paragraph, an institutional investor that violates subsection a. of this section shall be subject to a complaint at the discretion of any person or entity, including a small institutional investor, directly and adversely affected by a violation, which shall be construed liberally, if the directly and adversely affected person or entity files a complaint with the Superior Court of New Jersey, Law Division in the county or vicinage in which the single-family home is located within 24 months of the date that the violation occurred. The complainant shall be permitted to recover: a civil penalty of $20,000, or $60,000 if the court finds the institutional investor willfully violated this section, which shall be proportionately divided amongst any person or entity, including a small institutional investor, directly and adversely affected by a violation; reasonable attorney’s fees; court costs; expenses for expert witnesses; and other related fees and expenses incurred in proving a violation of subsection a. of this section.

g. Notwithstanding the provisions of subsections e. and f. of this section, a court that receives a complaint against an institutional investor for violation of this section shall send administrative notice of the pending action to the institutional investor, which shall have 60 days from the receipt of the notice to cure the alleged violation. If the institutional investor fails to cure, or take substantial steps to cure, the alleged violation within the 60-day time period, the penalties in subsections e. and f. of this section shall apply.

h. The Commissioner of Community Affairs shall, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety and the Director of the Division of Taxation in the Department of the Treasury, and in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to implement the provisions of sections 1 through 4 of P.L. , c. (C. through ) (pending before the Legislature as this bill). The rules and regulations adopted pursuant to this subsection shall additionally specify the ownership and control structures that shall identify an individual as a beneficial owner, which shall include any individual who is an ultimate beneficial owner and any individual who in aggregate, along with ownership or control by family members within the third degree of consanguinity of the individual, or through affiliated entities or investment vehicles, owns or controls not less than 10 percent of the ownership interests of the entity.

i. Nothing in this section shall be construed to mean that a private cause of action shall have primacy over public administrative action.

j. A real estate agent shall not be liable for information that is required to be disclosed by a seller or buyer pursuant to this section and was not provided to the real estate agent.

k. This section shall expire on the first day of the sixth year following the date of enactment. Within six months of the date of expiration, the Commissioner of Community Affairs, in collaboration with any public institution of high education as determined by the commissioner, shall publish a report on its Internet website assessing the affects the provisions of this section on the housing market in this State, including, but not limited to, single-family home prices, inventory, rental outcomes, rehabilitation activity, tax revenue use pursuant to section 6 of P.L. ,c. (C. ), and details concerning the evaluation metrics and methodology used in generating the report.

5. (New section) As used in sections 5 and 6 of P.L. , c. (C. and ) (pending before the Legislature as this bill):

"Affordable housing" means an inclusionary development, as defined pursuant to subsection f. of section 4 of P.L.1985, c.222 (C.52:27D-304), and other low- and moderate-income housing.

"Agency" means the New Jersey Housing and Mortgage Finance Agency.

(1) a minor;

(2) an individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;

(4) an individual whose only interest in a corporation, limited liability company, or other similar entity is through a right of inheritance; or

(5) a creditor of a corporation, limited liability company, or other similar entity.

"Consumer Price Index" means the Consumer Price Index for All Urban Consumers, as reported by the United States Department of Labor, shown as an average index for the New York-Northern New Jersey-Long Island region and the Philadelphia-Wilmington-Trenton region combined.

"Director" means the Director of the Division of Taxation in the Department of the Treasury.

"Family limited liability company" means a limited liability company:

(1) that has no more than five members;

(2) whose membership satisfies the following criteria:

(a) each member is an individual or a family trust; and

(b) each member who is an individual is related to each of the other members who are individuals, within and including the third degree of consanguinity or affinity; and

(3) whose revenue is paid directly from one member to another.

"Family trust" means:

(2) a charitable remainder annuity trust or a charitable remainder unitrust, as those terms are defined pursuant to section 664 of the Internal Revenue Code (26 U.S.C. s.664); or

(3) a charitable lead trust.

"Institutional investor":

(1) means a person or entity that pools capital to purchase securities, real property, and other investment assets or originates loans, including institutional investors in the form of:

(a) a partnership, corporation, limited liability company, or trust;

(b) an affiliate, subsidiary, or holding company of a partnership, corporation, limited liability company, or trust;

(d) a beneficial owner of an affiliate, subsidiary, or holding company of a partnership, corporation, limited liability company, or trust; and

(2) shall not mean:

(a) a nonprofit corporation organized for the exclusive purpose of acquiring a single-family home that is, or is to be, used for the development and provision of affordable housing;

(b) a family trust; or

"Low-income housing" means the same as the term is defined pursuant to subsection c. of section 4 of P.L.1985, c.222 (C.52:27D-304).

"Minor" means a person under the age of 18 years.

"Moderate-income housing" means the same as the term is defined pursuant to subsection d. of section 4 of P.L.1985, c.222 (C.52:27D-304).

6. (New section) a. On or after the effective date of sections 1 through 6 of P.L. , c. (C. through ) (pending before the Legislature as this bill), there shall be imposed an annual State tax on an institutional investor that purchases, owns, or acquires a single-family home in an amount equal to the sum of:

(1) $2,000 per unit per year on the first 25 single-family homes owned by the institutional investor as of the last day of the tax year;

(2) $10,000 per unit per year on the next 26 through 250 single-family homes owned by the institutional investor as of the last day of the tax year; and

(3) $25,000 per unit per year on each single-family home numbering at least 251 and above owned by the institutional investor as of the last day of the tax year.

b. The tax year liability for the tax imposed pursuant to this section shall be reported and paid by an institutional investor on or before the first day of the first calendar quarter after the end of a tax year in a manner prescribed by the Director of the Division of Taxation in the Department of the Treasury. The director shall collect and administer the tax imposed pursuant to this section, which shall be governed by the provisions of the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.

c. (1) Notwithstanding the provisions of subsection e. of this section to the contrary, the director shall require an institutional investor to report information that the director deems necessary and appropriate to carry out the purposes of this section, which shall include the names and addresses of each beneficial owner, including the ultimate beneficial owner, and each parent entity of the institutional investor. The director may use county deed records, business registration information filed with the Division of Revenue in the Department of the Treasury, and any other information available to confirm the veracity of the report required pursuant to this subsection.

(2) A person who fails to timely report information that the director requires pursuant to this subsection or who fails to include complete and accurate information shall be subject to interest and penalties that are provided for under the provisions of the State Uniform Tax Procedure Law, R.S.54:48-1 et seq., and an additional penalty of $20,000 per report. The director may waive penalties and interest if the person demonstrates to the director by clear and convincing evidence that the failure is not due to willful neglect.

(3) Every contract of sale of real property from an institutional investor shall include a certification by the purchaser or transferee that states:

(a) The name and address of the purchaser or transferee; and

(b) That the purchaser or transferee shall be subject to the penalties imposed under paragraph (2) of this subsection for any false certification.

d. The State tax revenue collected pursuant to this section, and any penalties and interest collected thereon, shall be annually credited by the State Treasurer to the New Jersey Housing and Mortgage Finance Agency to establish new programs or supplement existing programs that award grants to provide down payment assistance to families purchasing single-family homes within the State. Grants awarded pursuant to this subsection by the agency shall give priority to households seeking assistance to purchase any single-family home that is sold or transferred by an institutional investor. The agency shall annually publish on its Internet website the amount of State tax revenue collected pursuant to this section, adjusted for the annual percentage change in the Consumer Price Index, contributed to any down payment assistance program administered by the State.

e. Except as provided in subsection c. of this section, the provisions of sections 5 and 6 of P.L. , c. (C. and ) (pending before the Legislature as this bill) shall not apply to:

(2) a small institutional investor;

(5) a governmental authority;

(6) an institutional investor that uses capital to rehabilitate and stabilize vacant and distressed single-family homes, as determined by the commissioner, and files a binding rehabilitation plan, through escrowed funds or a performance bond, with the director that the rehabilitation shall be completed within 12 months from the date of purchase and shall meet standards of habitability determined by the commissioner, which shall include, but not be limited to, compliance with the "State Uniform Construction Code Act," P.L.1975, c. 217 (C. 52:27D-119 et seq.). Upon completion, the commissioner shall inspect the project and issue a certificate of completion if the project meets the requirements of this paragraph; however, if the commissioner determines the project is not in compliance, the director shall issue a monetary penalty against the institutional investor in an amount determined by the director; or

(7) such other institutional investors that the director, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety, determines to be: necessary to effectuate the provisions of sections 5 and 6 of P.L. , c. (C. and ) (pending before the Legislature as this bill), in the public interest, and necessary to preserve the quantity of single-family homes in this State. An institutional investor, subject to an exemption pursuant to this paragraph, shall provide additional information that the director determines to be necessary for the institutional investor to qualify for an exemption pursuant to this paragraph and that effectuates the purposes of sections 5 and 6 of P.L. , c. (C. and ) (pending before the Legislature as this bill).

f. The Director of the Division of Taxation in the Department of the Treasury shall, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety and the Commissioner of Community Affairs, and in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to implement the provisions of sections 5 and 6 of P.L. , c. (C. and ) (pending before the Legislature as this bill).

g. This section shall expire on the first day of the sixth year following the date of enactment. Within six months of the date of expiration, the Director of the Division of Taxation in the Department of the Treasury, in collaboration with the Commissioner of Community Affairs, shall publish a report on its Internet website assessing the affects the provisions of this section on the housing market in this State, including, but not limited to, single-family home prices, inventory, rental outcomes, rehabilitation activity, tax revenue use pursuant to this section, and details concerning the evaluation metrics and methodology used in generating the report.

7. Section 3 of P.L.2023, c.78 (C.52:27D-161.1) is amended to read as follows:

3. a. There is established in the Department of Community Affairs a Resilient Home Construction [Pilot] Program for the purpose of providing funding for developers to rehabilitate existing homes and construct new affordable homes for sale.

b. As part of the [pilot program] Resilient Home Construction Program, the department shall develop an application process and promulgate criteria that enables a developer to qualify for funding for the rehabilitation or construction of homes for sale. Among such other criteria as the department deems necessary, the department shall require that:

(1) the homes rehabilitated or constructed for sale are not located in the 500-year floodplain or the inland or coastal climate adjusted floodplain, as defined by Department of Environmental Protection;

(2) the homes rehabilitated or constructed are to be sold to households with a gross household income not to exceed 120 percent of the median gross household income for households of the same size within the housing region in which the housing is located;

(3) the prospective homebuyer is a renter that has been impacted by a storm or natural disaster that has prompted the governor to declare a state of emergency; or a first-time homebuyer, including a first-time homebuyer receiving financial assistance from the agency;

(4) the developer include a purchase discount on the home sale price, as established in accordance with criteria developed by the department; [and]

(5) the homes for sale contain a minimum period of affordability as determined by the department ; and

(6) a portion of the funding shall be allocated toward the production of starter homes and affordable starter homes, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), with the assistance of specialized nonprofit organizations.

c. Funding to successful [pilot program] Resilient Home Construction Program applicants shall be provided in a manner determined by the department and pursuant to an agreement between the department and a successful [pilot] program applicant, and shall be conditioned upon compliance with the provisions of such an agreement as determined by the department.

d. As part of the [pilot program] Resilient Home Construction Program, the department shall permit local government entities to apply for funding to provide to developers to rehabilitate existing homes and construct new, affordable homes for sale, so long as: (1) the application process and criteria imposed by the local government entity on developers is the same as the criteria developed pursuant to subsection b. of this section; (2) the local government entity and the developer enter into an agreement subject to the same requirements as an agreement pursuant to subsection c. of this section; and that funding to the local government entity is conditioned upon compliance with the provisions of an agreement as determined by the department.

e. In addition to the funding provided to developers pursuant to the [pilot program] Resilient Home Construction Program, the department may establish incentives to encourage homebuyers to remain in the homes developed pursuant to [this pilot] the program, including through the provision of down payment assistance as a zero-interest forgivable loan for homebuyers who are not eligible or do not qualify for down payment assistance through other State programs including the program established pursuant to section 2 of P.L.2023, c.78 (C.55:14K-105).

f. For the purpose of determining the amount of purchase discount, provided pursuant to paragraph (4) of subsection b. of this section, the department shall establish a sale price, pursuant to an appraisal conducted by a professional appraiser hired by the department.

(cf: P.L.2023, c.78, s.3)

8. Section 4 of P.L.2023, c.78 (C.52:27D-161.2) is amended to read as follows:

4. Notwithstanding the limitations established in section 1 of P.L.2011, c.215 (C.52:14B-3a) on the use of regulatory guidance documents, the commissioner may promulgate application and eligibility criteria and guidelines regarding the [pilot program] Resilient Home Construction Program through regulatory guidance documents as defined in subsection d. of section 1 of P.L.2011, c.215 (C.52:14B-3a).

(cf: P.L.2023, c.78, s.4)

9. Section 1 of P.L.2023, c.78 (C.55:14K-104) is amended to read as follows:

1. As used in P.L.2023, c.78 (C.55:14K-104 et al.):

"Affordable starter home" means a starter home that is subject to affordability controls pursuant to:

a. project-based federal rental assistance, authorized pursuant to section 8 of the United States Housing Act of 1937 (42 U.S.C. s.1437f), or other federal or State project-based assistance;

b. the Uniform Housing Affordability Controls promulgated by the New Jersey Housing and Mortgage Finance Agency; or

c. the rent and income limits established by the federal Low Income Housing Tax Credit program pursuant to section 42 of the Internal Revenue Code (26 U.S.C. s.42).

"Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to section 4 of P.L.1983, c.530 (C.55:14K-4).

"Commissioner" means the Commissioner of Community Affairs.

"Department" means the Department of Community Affairs.

"Down payment assistance" or "assistance" means financial assistance for first-time homebuyers to acquire single-family housing for principal residence through the loan program.

"Executive director" means the Executive Director of the New Jersey Housing and Mortgage Finance Agency.

"First-generation homebuyer" means a first-time homebuyer, who is:

a. an individual:

(1) whose parents or legal guardians do not have any present ownership interest in any residential real property in any state or territory of the United States, or outside of the United States; and

(2) whose spouse or domestic partner has not, during the three-year period ending upon acquisition of the eligible home to be acquired using such assistance, had any present ownership interest in any residential real property used as their principal residence in any state or territory of the United States, or outside of the United States; or

b. an individual who has at any time been placed in foster care in the State, was an emancipated youth, or was designated as a homeless, unaccompanied youth pursuant to the "McKinney-Vento Homeless Assistance Act," as described in 42 U.S.C. s.11434a.

"First-time homebuyer" means a homebuyer who, in accordance with guidelines adopted by the agency, is utilizing a mortgage product offered by the agency through an agency homebuyer program to purchase single-family housing, and has a gross household income that does not exceed a limitation determined by the agency.

"Loan program" means the zero-interest, forgivable loan program established pursuant to section 2 of P.L.2023, c.78 (C.55:14K-105).

"Principal residence" means a homestead that is actually and continually occupied as the permanent residence of a household, as distinguished from a vacation home, real property owned and rented or offered for rent by the household, or other secondary real property holdings.

"Single-family housing" means a one- to four-family residence, a condominium unit, a cooperative unit, a combination of a manufactured housing and lot, or a manufactured housing lot.

"Starter home" means a unit of single-family housing that consists of not more than 1,800 square feet of floor area.

(cf: P.L.2024, c.23, s.1)

10. Section 2 of P.L.2023, c.78 (C.55:14K-105) is amended to read as follows:

2. a. (1) There is established in the agency a zero-interest, forgivable loan program to provide down payment assistance for first-time homebuyers to achieve homeownership. The loan program shall provide down payment assistance to defray the costs associated with acquiring single-family housing for principal residence, as provided for in subsection b. of this section. A first-time homebuyer shall commit to use the home as their principal residence for five years following the purchase of the home, and for these five years retain the first mortgage product offered by the agency through an agency homebuyer program. The agency shall forgive the down payment assistance loan, provided that the five-year commitment is satisfied and the first-time homebuyer meets the other requirements established pursuant to subsection c. of this section.

(2) A portion of the funding for the loan program shall be allocated to provide down payment assistance for first-time homebuyers to purchase starter homes and affordable starter homes.

b. (1) The down payment assistance provided pursuant to this section shall be in the form of a zero-interest, forgivable loan award. The loan award shall be in an amount not to exceed $20,000. The agency shall be authorized to provide an additional zero-interest, forgivable loan award of up to $5,000 if the first-time homebuyer provides matching down payment funds in an amount to be determined by the executive director.

(2) In addition to a loan award that may be provided pursuant to paragraph (1) of this subsection, a first-generation homebuyer shall be eligible for a zero-interest, forgivable loan award of an additional award amount of not less than $7,000 and not more than $10,000 to be used for down payment assistance.

(3) Each first-time homebuyer who receives down payment assistance through the loan program shall, prior to the award of down payment assistance, complete a homebuyer counseling course, as directed by the agency pursuant to subsection c. of this section. The homebuyer counseling course may include, but not be limited to, coursework concerning:

(a) the maintenance of housing costs, including methods for budgeting mortgage payments, utility charges, property taxes, and any other applicable housing cost;

(b) the basics of home finance, property taxes, home warranties, and home inspection;

(d) the process of finding an appropriate house, including how to search real estate listings through a real estate agent or other sources.

c. The executive director shall develop program guidelines to effectuate, administer, and accomplish the purposes of the loan program. The guidelines shall, at a minimum, set forth the requirements for application submissions, the criteria for application selections, the eligible uses of down payment assistance, eligibility as a first-time or first-generation homebuyer, and the curriculum and provision of the homebuyer counseling course.

d. The agency shall permit an individual to establish eligibility for the loan program as a first-generation homebuyer via self-attestation, under penalty of perjury. However, nothing in this subsection shall preclude the agency from establishing measures to identify and deter fraudulent attestations. If it is established that an individual has received assistance as a result of a fraudulent attestation, the individual shall reimburse the agency for the assistance.

e. A down payment assistance loan shall be recoverable as a lien on the real property that the loan is used to purchase, and shall have the priority of a mortgage lien.

f. The annual appropriations act for State fiscal year 2024 shall include an appropriation from the General Fund to the loan program, and the annual appropriations acts following State fiscal year 2024 shall appropriate not less than $25 million from the General Fund to the Community Investment Fund in the agency, established pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill), [during] each State fiscal year [in which the loan program remains in operation,] to effectuate the purposes of the loan program, and defray the costs associated with administering the loan program, except that the agency shall retain not more than five percent of the annual appropriation for administrative costs. Of the total amount of down payment assistance funding awarded each State fiscal year through the loan program, no less than 50 percent shall be awarded to first-generation homebuyers, unless the agency determines that 50 percent of the down payment assistance funding cannot be awarded to first-generation homebuyers, because too few first-generation homebuyers have applied for the loan program, in which case, more than 50 percent of the funding shall be awarded to first-time homebuyers who are not first-generation homebuyers.

g. No later than the 730th day next following the effective date of P.L.2023, c.78 (C.55:14K-104 et al.), the agency shall prepare and submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. The report shall analyze the efficacy of the loan program. The report shall provide an overview of the total amount of down payment assistance provided by the agency, with information by census tract on the race and ethnicity of the recipients of assistance. The report also shall analyze:

(1) the impact of the down payment assistance on the total housing costs of the recipients of such assistance;

(2) the impact of the additional loan award for first-generation homebuyers provided pursuant to paragraph (2) of subsection b. of this section, and the other components of the loan program, on first-generation homeownership; and

(3) any other information determined by the agency to be relevant to the costs and benefits of the loan program.

(cf: P.L.2024, c.23, s.2)

11. (New section) a. There is created a special fund in the New Jersey Housing and Mortgage Finance Agency, which shall be known as the "Community Investment Fund," and shall be administered by the agency as a revolving fund for carrying out the purposes of the loan program established pursuant to section 2 of P.L.2023, c.78 (C.55:14K-105).

b. Moneys to be deposited into the Community Investment Fund shall include, but shall not be limited to:

(1) all moneys appropriated and made available pursuant to subsection f of section 2 of P.L.2023, c.78 (C.55:14K-105), and otherwise made available by the Legislature for inclusion therein;

(2) any other moneys made available to the agency from any source or sources, which the executive director shall determine to use for the purposes authorized by the loan program; and

(3) moneys earned through investment pursuant to subsection c. of this section.

c. Any moneys held in the Community Investment Fund that are not able to be disbursed immediately may be invested and reinvested.

d. A portion of the funds expended from the Community Investment Fund for the purposes of the loan program shall be used for the purpose of providing down payment assistance for first-time homebuyers to purchase starter homes and affordable starter homes under P.L.2023, c.78 (C.55:14K-104 et al.).

12. Section 6 of P.L.1975, c.291 (C.40:55D-10) is amended to read as follows:

6. Hearings. a. The municipal agency shall hold a hearing on each application for development, adoption, revision or amendment of the master plan, each application for approval of an outdoor advertising sign submitted to the municipal agency as required pursuant to an ordinance adopted under subsection g. of section 29.1 of P.L.1975, c.291 (C.40:55D-39) or any review undertaken by a planning board pursuant to section 22 of P.L.1975, c.291 (C.40:55D-31).

b. The municipal agency shall make the rules governing such hearings. Any maps and documents for which approval is sought at a hearing shall be on file and available for public inspection at least 10 days before the date of the hearing, during normal business hours in the office of the administrative officer. The applicant may produce other documents, records, or testimony at the hearing to substantiate or clarify or supplement the previously filed maps and documents.

c. The officer presiding at the hearing or such person as he may designate shall have power to administer oaths and issue subpoenas to compel the attendance of witnesses and the production of relevant evidence, including witnesses and documents presented by the parties, and the provisions of the "County and Municipal Investigations Law," P.L.1953, c.38 (C.2A:67A-1 et seq.) shall apply.

d. The testimony of all witnesses relating to an application for development shall be taken under oath or affirmation by the presiding officer, and the right of cross-examination shall be permitted to all interested parties through their attorneys, if represented, or directly, if not represented, subject to the discretion of the presiding officer and to reasonable limitations as to time and number of witnesses.

e. Technical rules of evidence shall not be applicable to the hearing, but the agency may exclude irrelevant, immaterial or unduly repetitious evidence.

f. The municipal agency shall provide for the verbatim recording of the proceedings by either stenographer, mechanical or electronic means. The municipal agency shall furnish a transcript, or duplicate recording in lieu thereof, on request to any interested party at his expense; provided that the governing body may provide by ordinance for the municipality to assume the expense of any transcripts necessary for appeal to the governing body, pursuant to section 8 of [this act] P.L.1975, c.291 (C.40:55D-17), of decisions by the zoning board of adjustment pursuant to subsection [57d. of this act] d. of section 57 of P.L.1975, c.291 (C.40:55D-70), up to a maximum amount as specified by the ordinance.

The municipal agency, in furnishing a transcript or tape of the proceedings to an interested party at his expense, shall not charge such interested party more than the actual cost of preparing the transcript or tape. Transcripts shall be certified in writing by the transcriber to be accurate.

g. The municipal agency shall include findings of fact and conclusions based thereon in each decision on any application for development and shall reduce the decision to writing. The municipal agency shall provide the findings and conclusions through:

(1) A resolution adopted at a meeting held within the time period provided in the act for action by the municipal agency on the application for development; or

(2) A memorializing resolution adopted at a meeting held not later than 45 days, or 30 days for an application for development, for which at least 40 percent of the units to be developed, 40 percent of the lots on which residential dwellings are to be constructed, or 40 percent of the total acreage, is to be used for the construction and development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), after the date of the meeting at which the municipal agency voted to grant or deny approval. Only the members of the municipal agency who voted for the action taken may vote on the memorializing resolution, and the vote of a majority of such members present at the meeting at which the resolution is presented for adoption shall be sufficient to adopt the resolution. If only one member who voted for the action attends the meeting at which the resolution is presented for adoption, the resolution may be adopted upon the vote of that member. An action pursuant to section 5 of [the act] P.L.1975, c.291 (C.40:55D-9) (resulting from the failure of a motion to approve an application) shall be memorialized by resolution as provided above, with those members voting against the motion for approval being the members eligible to vote on the memorializing resolution. The vote on any such resolution shall be deemed to be a memorialization of the action of the municipal agency and not to be an action of the municipal agency; however, the date of the adoption of the resolution shall constitute the date of the decision for purposes of the mailings, filings and publications required by subsections h. and i. of this section [(C.40:55D-10)]. If the municipal agency fails to adopt a resolution or memorializing resolution as hereinabove specified, any interested party may apply to the Superior Court in a summary manner for an order compelling the municipal agency to reduce its findings and conclusions to writing within a stated time, and the cost of the application, including attorney's fees, shall be assessed against the municipality.

h. A copy of the decision shall be mailed by the municipal agency within 10 days of the date of decision to the applicant or, if represented, then to his attorney, without separate charge, and to all who request a copy of the decision, for a reasonable fee. A copy of the decision shall also be filed by the municipal agency in the office of the administrative officer. The administrative officer shall make a copy of such filed decision available to any interested party for a reasonable fee and available for public inspection at his office during reasonable hours

i. A brief notice of the decision shall be published in the official newspaper of the municipality, if there be one, or in a newspaper of general circulation in the municipality. Such publication shall be arranged by the applicant unless a particular municipal officer is so designated by ordinance; provided that nothing contained in [this act] P.L.1975, c.291 (C.40:55D-1 et seq.) shall be construed as preventing the applicant from arranging such publication if he so desires. The municipality may make a reasonable charge for its publication. The period of time in which an appeal of the decision may be made shall run from the first publication of the decision, whether arranged by the municipality or the applicant.

(cf: P.L.2004, c.42, s.5)

13. Section 34 of P.L.1975, c.291 (C.40:55D-46) is amended to read as follows:

a. An ordinance requiring site plan review and approval shall require that the developer submit to the administrative officer a site plan and such other information as is reasonably necessary to make an informed decision as to whether the requirements necessary for preliminary site plan approval have been met. The site plan and any engineering documents to be submitted shall be required in tentative form for discussion purposes for preliminary approval. If any architectural plans are required to be submitted for site plan approval, the preliminary plans and elevations shall be sufficient.

b. If the planning board required any substantial amendment in the layout of improvements proposed by the developer that have been the subject of a hearing, an amended application for development shall be submitted and proceeded upon, as in the case of the original application for development. The planning board shall, if the proposed development complies with the ordinance and [this act] P.L.1975, c.291 (C.40:55D-1 et seq.), grant preliminary site plan approval.

c. Upon the submission to the administrative officer of a complete application for a site plan which involves 10 acres of land or less, and 10 dwelling units or less, the planning board shall grant or deny preliminary approval within 45 days, or 30 days for such an application, for which at least 40 percent of the units to be developed, 40 percent of the lots on which residential dwellings are to be constructed, or 40 percent of the total acreage, is to be used for the construction and development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), of the date of such submission or within such further time as may be consented to by the developer. Upon the submission of a complete application for a site plan which involves more than 10 acres, or more than 10 dwelling units, the planning board shall grant or deny preliminary approval within 95 days, or 60 days for such an application, for which at least 40 percent of the units to be developed, 40 percent of the lots on which residential dwellings are to be constructed, or 40 percent of the total acreage, is to be used for the construction and development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), of the date of such submission or within such further time as may be consented to by the developer. Otherwise, the planning board shall be deemed to have granted preliminary approval of the site plan.

(cf: P.L.1984, c.20, s.8)

14. Section 14 of P.L.1979, c.216 (C.40:55D-46.1) is amended to read as follows:

14. An ordinance requiring, pursuant to section 7.1 of P.L.1975, c.291 (C.40:55D-12), notice of hearings on applications for development for conventional site plans, may authorize the planning board to waive notice and public hearing for an application for development, if the planning board or site plan subcommittee of the board appointed by the chairman finds that the application for development conforms to the definition of "minor site plan." Minor site plan approval shall be deemed to be final approval of the site plan by the board, provided that the board or said subcommittee may condition such approval on terms ensuring the provision of improvements pursuant to sections 29, 29.1, 29.3 and 41 of P.L.1975, c.291 (C.40:55D-38, 40:55D-39, 40:55D-41 and 40:55D-53).

a. Minor site plan approval shall be granted or denied within 45 days of the date of submission of a complete application to the administrative officer, within 30 days for such an application, for which at least 40 percent of the units to be developed, 40 percent of the lots on which residential dwellings are to be constructed, or 40 percent of the total acreage, is to be used for the construction and development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), or within such further time as may be consented to by the applicant. Failure of the planning board to act within the period prescribed shall constitute minor site plan approval.

b. Whenever review or approval of the application by the county planning board is required by section 8 of P.L.1968, c.285 (C.40:27-6.6), the municipal planning board shall condition any approval that it grants upon timely receipt of a favorable report on the application by the county planning board or approval by the county planning board by its failure to report thereon within the required time period.

c. The zoning requirements and general terms and conditions, whether conditional or otherwise, upon which minor site plan approval was granted, shall not be changed for a period of two years after the date of minor site plan approval. The planning board shall grant an extension of this period for a period determined by the board but not exceeding one year from what would otherwise be the expiration date, if the developer proves to the reasonable satisfaction of the board that the developer was barred or prevented, directly or indirectly, from proceeding with the development because of delays in obtaining legally required approvals from other governmental entities and that the developer applied promptly for and diligently pursued the approvals. A developer shall apply for this extension before: (1) what would otherwise be the expiration date, or (2) the 91st day after the date on which the developer receives the last of the legally required approvals from the other governmental entities, whichever occurs later.

(cf: P.L.1991, c.256, s.8)

15. Section 36 of P.L.1975, c.291 (C.40:55D-48) is amended to read as follows:

a. An ordinance requiring subdivision approval by the planning board shall require that the developer submit to the administrative officer a plat and such other information as is reasonably necessary to make an informed decision as to whether the requirements necessary for preliminary approval have been met; provided that minor subdivisions pursuant to section 35 of [this act] P.L.1975, c.291 (C.40:55D-47) shall not be subject to this section. The plat and any other engineering documents to be submitted shall be required in tentative form for discussion purposes for preliminary approval.

b. If the planning board required any substantial amendment in the layout of improvements proposed by the developer that have been the subject of a hearing, an amended application shall be submitted and proceeded upon, as in the case of the original application for development. The planning board shall, if the proposed subdivision complies with the ordinance and [this act] P.L.1975, c.291 (C.40:55D-1 et seq.), grant preliminary approval to the subdivision.

c. Upon the submission to the administrative officer of a complete application for a subdivision of 10 or fewer lots, the planning board shall grant or deny preliminary approval within 45 days, or 30 days for a complete application for a subdivision of 10 or fewer lots for which at least 40 percent of the units to be developed, 40 percent of the lots on which residential dwellings are to be constructed, or 40 percent of the total acreage, is to be used for the construction and development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), of the date of such submission or within such further time as may be consented to by the developer. Upon the submission of a complete application for a subdivision of more than 10 lots, the planning board shall grant or deny preliminary approval within 95 days, or 60 days for a complete application for a subdivision of more than 10 lots for which at least 40 percent of the units to be developed, 40 percent of the lots on which residential dwellings are to be constructed, or 40 percent of the total acreage, is to be used for the construction and development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), of the date of such submission or within such further time as may be consented to by the developer. Otherwise, the planning board shall be deemed to have granted preliminary approval to the subdivision.

(cf: P.L.1984, c.20, s.9)

16. Section 14 of P.L.1975, c.217 (C.52:27D-132) is amended to read as follows:

14. a. The enforcing agency shall periodically inspect all construction undertaken pursuant to a construction permit issued by it to ensure that the construction or alteration is performed in accordance with the conditions of the construction permit and consistent with the requirements of the code and any ordinance implementing said code.

b. The owner of any premises upon which a building or structure is being constructed shall be deemed to have consented to the inspection by the enforcing agency and the department, of the entire premises and of any and all construction being performed on it until a certificate of occupancy has been issued. An inspector, or team of inspectors, on presentation of proper credentials, shall have the right to enter and inspect such premises, and any and all construction thereon, for purposes of ensuring compliance with the provisions of the applicable construction permit, the code, and other applicable laws and regulations. All inspection pursuant to P.L.1975, c.217 (C.52:27D-119 et seq.) shall be between the hours of 9 a.m. and 5 p.m. on business days or at another time that has been agreed upon by the owner and the relevant inspecting entity, whether the enforcing agency, department, or private on-site inspection agency, or when construction is actually being undertaken, provided, however, that inspections may be conducted at other times if the enforcing agency has reasonable cause to believe that an immediate danger to life, limb or property exists, or if permission is given by an owner, or the owner's agent, architect, engineer or builder. No person shall accompany an inspector or team of inspectors on any inspection pursuant to P.L.1975, c.217 (C.52:27D-119 et seq.), unless the person's presence is necessary for the enforcement of P.L.1975, c.217 (C.52:27D-119 et seq.), or the code, or unless consent is given by an owner or the owner's agent, architect, engineer or builder.

c. If the construction of a structure or building is being undertaken contrary to the provisions of a construction permit, P.L.1975, c.217 (C.52:27D-119 et seq.), the code, or other applicable laws or ordinances, the enforcing agency may issue a stop construction order in writing which shall state the conditions upon which construction may be resumed and which shall be given to the owner or the holder of the construction permit or to the person performing the construction. If the person doing the construction is not known, or cannot be located with reasonable effort, the notice may be delivered to the person in charge of, or apparently in charge of, the construction. No person shall continue, or cause or allow to be continued, the construction of a building or structure in violation of a stop construction order, except with the permission of the enforcing agency to abate a dangerous condition or remove a violation, or except by court order. If an order to stop construction is not obeyed, the enforcing agency may apply to the appropriate court as otherwise established by law for an order enjoining the violation of the stop construction order. The remedy for violation of such an order provided in this subsection shall be in addition to, and not in limitation of, any other remedies provided by law or ordinance.

d. When an inspector or team of inspectors finds a violation of the provisions of a construction permit, the code, or other applicable laws and regulations at an owner-occupied single-family residence, and issues a notice of violation and an order to terminate the violation, the enforcing agency shall require the same inspector or team of inspectors who found the violation to undertake any subsequent reinspection thereof at the premises. When the same inspector or team of inspectors cannot be assigned to undertake the reinspection, the enforcing agency may assign an available inspector provided the scope of the reinspection shall be limited to the violation for which the reinspection is required. The requirements of this subsection shall not apply to violations of the plumbing or electrical subcodes, or to fire safety code violations, or to any violation of any other subcode that the Department of Community Affairs determines to be a health or safety violation. Nothing in this subsection shall be construed to infringe upon the right of a property owner to request a different inspector, team of inspectors, or supervisor, to perform any required reinspection.

e. The owner, agent, or other responsible person in charge of work shall notify the enforcing agency when the work is ready for any required inspection under the code. This notice shall be given in writing at least 24 hours prior to the date and time requested for the inspection. The enforcing agency shall perform an inspection within three business days of the date for which the inspection is requested. The owner, agent, or other responsible person in charge of work may provide oral notice for inspections of minor work projects, as defined by the code.

(1) The owner, agent, or other responsible person in charge of work shall be present and prepared at the time of any inspection that has been scheduled upon the owner, agent, or other responsible person's request. A failure by the owner, agent, or other responsible person in charge of work to be present and prepared for inspection shall be considered a failed inspection.

(2) If the enforcing agency is unable to perform a requested inspection within three business days of the date for which the inspection is requested, the enforcing agency shall inform the owner, agent, or other responsible person in charge of work in writing within 24 hours of receiving the request, at which time the enforcing agency and the owner, agent, or other responsible person in charge of work may agree to a different date and time for inspection. The enforcing agency shall commit the agreed upon inspection date to writing and provide a copy to the owner, agent, or other responsible person in charge of work.

(3) If the enforcing agency is unable to perform the requested inspection within three business days of the date for which the inspection is requested and the enforcing agency and the owner, agent, or responsible person in charge of work are unable to come to an agreement pursuant to paragraph (2) of this subsection, the owner, agent, or other responsible person in charge of work may choose to contract with a private on-site inspection agency authorized by the department to conduct on-site inspections pursuant to paragraph i. of section 6 of P.L.1975, c.217 (C.52:27D-124) to perform the requested inspection or inspections.

(a) The owner, agent, or other responsible person in charge of work shall notify the enforcing agency in writing of any choice to utilize an authorized private on-site inspection agency to conduct the requested inspection or inspections.

(b) The owner, agent, or other responsible person in charge of work may elect to utilize the private on-site inspection agency to conduct all subsequent associated inspections. In the event of a project with multiple units in one building, this provision shall apply to the specific unit or units affected by the inspection delay.

(c) The use of a private on-site inspection agency by an owner, agent, or other responsible person for on-site inspections shall be subject to the conflict-of-interest provisions in the code. In addition to those requirements, no private on-site inspection agency shall perform an inspection for any owner, agent, or other responsible person in charge of work, if an owner, agent, or other responsible person is currently employed by or affiliated with any individual affiliated with the private on-site inspection agency or has employed or was associated with an individual affiliated with the private on-site inspection agency within a timeframe established by the commissioner by regulation.

(d) The enforcing agency shall, if warranted, provide a fee reconciliation to the owner for an inspection completed by a private on-site inspection agency as a result of a missed inspection. The enforcing agency shall perform the reconciliation at the conclusion of the project. This reconciliation shall be based on the fees already paid less administrative costs for the enforcing agency and shall not exceed the amount already paid for the project, nor shall it exceed the amount that the enforcing agency is authorized to impose for inspections, and shall take into account the administrative costs of the enforcing agency.

(4) If the owner, agent, or other responsible person in charge of work believes an enforcing agency has demonstrated a repeated inability to conduct inspections for a construction project within the timelines required by this section, as established by the commissioner by regulation, the owner, agent, or other responsible person in charge of work may notify the department in writing to request authorization to utilize an authorized private on-site inspection agency. Within 15 business days of receiving a notification under this paragraph, the department shall determine whether the enforcing agency has demonstrated repeated inability, and, if the department determines, shall authorize the owner, agent, or other responsible person in charge of work to utilize an authorized private on-site inspection agency for all or a portion of the necessary inspections for the remainder of the project.

f. Each enforcing agency shall establish a process for ensuring inspections are performed within three business days of a requested inspection date, as required by subsection e. of this section. Authorized processes include, but are not limited to, the use of supplemental shared services agreements with other municipalities or enforcing agencies or the use of contracted private on-site inspection agencies, including supplemental private on-site inspection agencies.

g. (1) At timeframes established by the commissioner by regulation, adopted in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), the municipal construction official shall submit an annual report detailing compliance with the code. The report shall include, at a minimum information related to the staffing, staff titles, and expenses of the enforcing agency, in addition to any other information required by the commissioner. The annual report shall take into account projected work and agency resource needs for the next budget year.

(2) A municipality that enters into a contract for supplemental services pursuant to subsection f. of this section shall provide a copy of the contract to the department upon entering into the contract.

(3) The information required by paragraphs (1) and (2) of this subsection, in addition to the inspection log, the municipal monthly activity reports, and the fee schedule shall be maintained by the municipal construction official or enforcing agency, and the municipal construction official or enforcing agency shall make the information and documents described in this paragraph available to the department upon request.

(4) The department may utilize the information provided pursuant to this subsection to determine appropriate staffing levels for the enforcing agency. If the department determines that an enforcing agency has not maintained appropriate staffing levels, the department may require the municipality to take corrective actions to ensure that the enforcing agency's staffing needs are met.

(5) The department may take corrective action, including the issuance of penalties, pursuant to subsection k. of section 6 of P.L.1975, c.217 (C.52:27D-124), if an enforcing agency fails to maintain or provide the information required by this subsection or maintain appropriate staffing levels, as determined by the department pursuant to paragraph (4) of this subsection.

h. If an enforcing agency is unable to meet its obligations under P.L.1975, c.217 (C.52:27D-119 et seq.), the enforcing agency shall promptly notify the department within 15 business days. The department may take corrective action, including the issuance of penalties, pursuant to subsection k. of section 6 of P.L.1975, c.217 (C.52:27D-124) if an enforcing agency fails to meet its obligations under P.L.1975, c.217 (C.52:27D-119 et seq.).

i. Notwithstanding any provision of subsection e. of this section to the contrary, the owner, agent, or other responsible person in charge of work, for an inspection of any work related to the construction or development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), may elect to contract with and utilize a private on-site inspection agency authorized by the department to conduct on-site inspections pursuant to subsection i. of section 6 of P.L.1975, c.217 (C.52:27D-124) to perform any requested inspection or inspections related to the construction or development of a starter home, as defined pursuant to section 1 of P.L.2023, c.78 (C.55:14K-104), regardless of whether the enforcing agency is able to perform a requested inspection within three business days of the date for which the inspection is requested.

(cf: P.L.2022, c.139, s.2)

17. (New section) a. The Department of Banking and Insurance, in consultation with the New Jersey Housing and Mortgage Finance Agency and the Department of Community Affairs, shall publish and disseminate a buyer’s guide for individuals who are purchasing a home. The guide shall contain a brief description of all essential topics, including, but not limited to, mortgages, homeowner’s insurance, and budgeting for the expenses associated with homeownership.

b. The buyer’s guide shall be written in plain language, and shall be available on the Internet website of the Department of Banking and Insurance.

18. (New section) a. The Department of Banking and Insurance, in consultation with the New Jersey Housing and Mortgage Finance Agency and the Department of Community Affairs, shall undertake a public awareness campaign concerning the impacts of institutional investment in the State housing market and to promote resources available for homebuyers. The campaign shall inform resident homeowners and potential homeowners of:

(1) the buyer’s guide published pursuant to section 17 of P.L. , c. (C. ) (pending before the Legislature as this bill);

(2) the various property tax credits, deductions, and exemptions available in the State;

(3) the impacts of institutional investment on the State housing market, and the various practices prohibited and regulated by P.L. , c. (C. ) (pending before the Legislature as this bill); and

(4) any other information the Department of Banking and Insurance finds relevant to the impacts of institutional investment, or resources available for homebuyers.

b. The public awareness campaign shall be culturally-sensitive, Statewide, and shall engage with local media to disseminate its information.

c. The Commissioner of Banking and Insurance, in consultation with the Commissioner of Community Affairs, shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement the provisions of sections 17 and 18 of P.L. , c. (C. and ) (pending before the Legislature as this bill).

19. (New section) As used in sections 19 through 22 of P.L. , c. (C. through ) (pending before the Legislature as this bill):

"Down payment" means the amount of the initial payment paid by a first-time home buyer for a portion of the purchase price of a single-family residence, which amount is paid to the seller of the residence upon execution of the sale of the property.

"Eligible lender" means a mortgage company, savings and loan institution, or other financial institution organized under the laws of this State; a national bank or federal credit union organized under the laws of the United States; or a lender approved by the New Jersey Housing and Mortgage Finance Agency.

"First-time home buyer" means a resident taxpayer who has not owned a residential real property as the taxpayer’s principal residence prior to the purchase of the single family residence for which a tax deduction is claimed.

"Interest" means "qualified residence interest," as defined in section 163 of the Internal Revenue Code (26 U.S.C. s.163).

"Mortgage" means a mortgage or security interest in which the security is a single-family residence that is occupied, or is to be occupied, by the debtor, who is a natural person or a member of the debtor's immediate family, as that person's residence.

"Mortgage insurance" means an insurance policy that protects the lender, or titleholder, if the borrower defaults on their mortgage.

"Single-family residence" means a residential property consisting of one to four dwelling units that is to be occupied as the principal residence of the owner of the property.

20. (New section) a. A resident taxpayer that is a first-time home buyer of a single-family residence located in this State shall be allowed a deduction from the taxpayer’s gross income for the taxable year in the amount paid by the taxpayer as a down payment for the purchase of the single-family residence during the taxable year.

b. To claim the deduction allowed pursuant to this section, the taxpayer shall attach documentation to any return which the taxpayer is required to file under N.J.S.54A:1-1 et seq., in a form and manner prescribed by the director, substantiating the down payment paid by the taxpayer during the taxable year.

21. (New section) a. A resident taxpayer that is a first-time home buyer of a single-family residence located in this State shall be allowed a deduction from the taxpayer’s gross income for the taxable year in the amount paid by the taxpayer to an eligible lender for mortgage interest payments during the taxable year, up to the amounts allowable pursuant to subsection (h) of section 163 of the Internal Revenue Code (26 U.S.C. s.163(h)).

b. To claim the deduction allowed pursuant to this section, the taxpayer shall attach documentation to any return which the taxpayer is required to file under N.J.S.54A:1-1 et seq., in a form and manner prescribed by the director, substantiating the mortgage interest payments made by the taxpayer to an eligible lender during the taxable year.

22. (New section) a. A resident taxpayer that is a first-time home buyer shall be allowed a deduction from the taxpayer’s gross income for the taxable year in the amount paid by the taxpayer to an eligible lender for mortgage insurance payments during the taxable year, up to $3,000.

(1) that the taxpayer was unable to make a down payment of at least 20 percent of the purchase price of the single-family residence;

(2) that the eligible lender required the taxpayer to purchase mortgage insurance as a condition for securing a mortgage; and

(3) the actual amount of mortgage insurance payments paid by the taxpayer during the taxable year.

c. The Director of the Division of Taxation in the Department of the Treasury shall adopt rules and regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), that are necessary to effectuate the provisions of sections 19 through 22 of P.L. , c. (C. through ) (pending before the Legislature as this bill).

23. (New section) a. As used in this section:

"Controlled group" means one or more chains of corporations connected through stock ownership with a common parent corporation if stock possessing at least 50 percent of the voting power of all classes of stock of each of the corporations is owned directly or indirectly by one or more of the corporations; and the common parent owns directly stock possessing at least 50 percent of the voting power of all classes of stock of at least one of the other corporations.

"Covered taxpayer" means a taxpayer, including, but not limited to, a combined group or a controlled group of corporations that owns more than 20 single-family residences in this State during the privilege period. "Covered taxpayer" shall not include a mortgage note holder that owns a single-family residence through foreclosure; a taxpayer primarily engaged in the construction or rehabilitation of single-family residences; or a taxpayer that owns federally subsidized housing.

"Own" means, with respect to a single-family residence, having a direct majority ownership in the single-family residence, regardless of the percentage of that ownership interest.

"Single-family residence" means a residential property consisting of one to four dwelling units.

b. For purposes of computing the entire net income of a covered taxpayer under P.L.1945, c.162 (C.54:10A-1 et seq.), the covered taxpayer shall add back the amounts of the following deductions, if claimed for federal income tax purposes, in connection with each single family residence owned by the covered taxpayer during the privilege period:

(1) the deduction for interest paid or accrued on indebtedness allowed pursuant to section 163 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.163; and

(2) the deduction for depreciation allowed pursuant to section 167 of the Internal Revenue Code (26 U.S.C. s.167), and no deduction shall be allowed pursuant to paragraph (12) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-4) in relation to a single-family residence.

c. Nothing in this section shall be construed to limit or negate the director’s authority to make adjustments under paragraph (3) of subsection (k) of section 4 of P.L.1945, c.162 (C.54:10A-4), section 8 of P.L.1945, c.162 (C.54:10A-8), or section 10 of P.L.1945, c.162 (C.54:10A-10).

24. (New section) a. As used in this section:

"Covered taxpayer" means any taxpayer that is a pass-through entity that owns more than 20 single-family residences in this State. "Covered taxpayer" shall not include a mortgage note holder that owns a single-family residence through foreclosure, a person primarily engaged in the construction or rehabilitation of single-family residences, or a person who owns federally subsidized housing.

"Own" means, with respect to a single-family residence, having a direct majority ownership in the single-family residence, regardless of the percentage of that ownership interest.

"Pass-through entity" means a sole proprietorship, a partnership, an S corporation, or a limited liability company, with at least one member who is liable for tax on distributive proceeds pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. in a taxable year.

"Single-family residence" means a residential property consisting of one to four dwelling units.

b. Notwithstanding any other provision of law to the contrary, for purposes of determining the amount of a category of income pursuant to N.J.S.54A:5-1 that is net of expenses, a covered taxpayer shall not be allowed to claim the following deductions or expenses, as applicable, in connection with a single family residence owned by the covered taxpayer during the taxable year:

(1) the depreciation deduction otherwise allowed under section 26 of P.L.2004, c.65 (C.54A:5-1.2) or section 2 of P.L.2024, c.1 (C.54A:5-1.2a); and

(2) any business interest expenses incurred in relation to a single-family residence.

c. The Director of the Division of Taxation in the Department of the Treasury shall adopt rules and regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), that are necessary to effectuate the provisions of sections 23 and 24 of P.L. , c. (C. and ) (pending before the Legislature as this bill).

25. (New section) As used in sections 25 through 28 of P.L. , c. (C. through ) (pending before the Legislature as this bill):

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

"Authority" means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).

"Commissioner" means the Commissioner of Community Affairs.

"Developer" means a person who enters or proposes to enter into an incentive agreement award pursuant to the provisions of section 27 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Director" means the Director of the Division of Taxation in the Department of the Treasury.

"Executive director" means the Executive Director of the New Jersey Housing and Mortgage Finance Agency.

"Eligibility period" means the period, as specified in an incentive award agreement, during which a developer may claim a tax credit under the program, as such period shall be determined by the authority pursuant to section 27 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Eligible project" means a construction project or rehabilitation project undertaken in the State by an eligible taxpayer that primarily includes the construction or rehabilitation of one or more starter homes. An eligible project may involve construction or improvement upon lands, buildings, improvements, or real and personal property, or any interest therein, including lands under water, riparian rights, space rights, and air rights, acquired, owned, developed or redeveloped, constructed, reconstructed, rehabilitated, or improved.

"Incentive award" means an award of tax credits to reimburse a developer for the portion of the eligible costs incurred for an eligible project.

"Incentive award agreement" means the contract executed between a developer and the authority pursuant to section 27 of P.L. , c. (C. ) (pending before the Legislature as this bill), which sets forth the terms and conditions under which the developer may receive the incentive awards authorized pursuant to the program.

"Program" means Starter Home Development Incentive Program established pursuant to section 26 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Project cost" or "eligible project cost" means the costs to complete the development of an eligible project, which costs are eligible for subsidy pursuant to the federal Low Income Housing Tax Credit Program administered by the agency, and which costs are incurred by a developer before the issuance of a permanent certificate of occupancy for the eligible project, or before such other time specified by the authority.

"Single-family housing" means a one- to four-family residence, a condominium unit, or a cooperative unit.

"Starter home" means a unit of single-family housing that consists of not more than 1,800 square feet of floor area.

26. (New section) a. There is established the Starter Home Development Incentive Program, to be administered by the New Jersey Economic Development Authority, to encourage the construction of new starter homes through the provision of incentive awards to the developers of eligible projects. The authority may approve the award of tax credits to an eligible developer upon application of the developer and following the payment of fees.

b. To be eligible for tax credits under the program, a developer shall demonstrate to the authority at the time of application that:

(1) the developer will undertake an eligible project;

(2) without the incentive award, the eligible project is not economically feasible;

(3) the eligible project will comply with minimum environmental and sustainability standards;

(4) the eligible project will comply with the authority’s affirmative action requirements, adopted pursuant to section 4 of P.L.1979, c.303 (C.34:1B-5.4); and

(5) any other information that the authority deems necessary.

c. (1) A developer seeking an incentive award for an eligible project shall submit an application to the authority in a form and manner prescribed by the authority.

(2) In addition to any other information that the authority may deem appropriate, the application shall require the applicant to submit information:

(a) demonstrating that the developer meets the eligibility criteria established pursuant to subsection b. of this section; and

(b) outlining any proposed project costs to be undertaken by the developer

(3) The authority shall review and approve applications submitted pursuant to this section on a rolling basis. In reviewing applications, the authority may give preference to qualified applicants based on any considerations that the authority deems appropriate.

27. (New section) a. Following the approval of an application submitted pursuant to section 26 of P.L. , c. (C. ) (pending before the Legislature as this bill), the authority shall enter into an incentive award agreement with the developer of an eligible project. The chief executive officer of the authority shall negotiate the terms and conditions of the incentive award agreement.

b. An incentive award agreement shall specify the amount of the incentive award that shall be awarded to the developer and the duration of the eligibility period. The incentive award agreement shall provide an estimated date of completion and include a requirement for periodic progress reports, including the submittal of executed financing commitments and documents that evidence site control, provided, however, that the developer may sell one or more buildings during the eligibility period, subject to such rules and regulations as may be adopted by the authority. If the authority does not receive periodic progress reports, or if the progress reports demonstrate unsatisfactory progress, then the authority may rescind the incentive award. If the authority rescinds an incentive award in the same calendar year in which the authority approved the incentive award, then the authority may assign the incentive award to another applicant.

c. (1) A developer shall submit, prior to the first disbursement of tax credits pursuant to the incentive award agreement, but no later than six months following project completion, satisfactory evidence of actual project costs, as certified by a certified public accountant, and evidence of a temporary certificate of occupancy, or other event evidencing project completion that begins the eligibility period indicated in the incentive award agreement. The developer, or an authorized agent of the developer, shall certify that the information provided pursuant to this subsection is true, under the penalty of perjury. Claims, records, or statements submitted by a developer to the authority in order to receive tax credits shall not be considered claims, records, or statements made in connection with State tax laws.

(2) The incentive award agreement shall include a provision allowing the authority to extend, in individual cases, the deadline for any annual reporting or certification requirement.

28. (New section) a. In accordance with an incentive award agreement, beginning upon the receipts of occupancy permits for all single family housing units within the eligible project, or upon any other event evidencing project completion as set forth in the incentive award agreement, a developer shall be allowed a total tax credit not to exceed:

(1) 20 percent of the eligible project costs if the eligible project includes less than 10 starter homes; or

(2) 30 percent of the eligible project costs if the eligible project includes 10 or more starter homes.

b. A developer that enters an incentive award agreement pursuant to section 27 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall submit annually, commencing in the year in which the incentive award is issued and for the remainder of the eligibility period, a report indicating whether the developer is aware of any condition, event, or act that would cause the developer not to be in compliance with the incentive award agreement or the provisions of sections 25 through 28 of P.L. , c. (C. through ) (pending before the Legislature as this bill) and any additional reporting requirements contained in the incentive award agreement or tax credit certificate. The developer, or an authorized agent of the developer, shall certify that the information provided pursuant to this subsection is true, under the penalty of perjury.

c. (1) Upon receipt and review of each report submitted during the eligibility period, the authority shall provide to the developer and the director a certificate of compliance indicating the amount of tax credits that the developer may apply against the developer's tax liability. Notwithstanding any provision of law or regulation to the contrary, the authority shall not require the developer to include a permanent certificate of occupancy in the first annual report, but the developer shall include the permanent certificate of occupancy in the next annual report after the developer receives the permanent certificate of occupancy. Subject to forfeiture, reduction, or other action for failure to comply with a program requirement, within 120 days after the authority preliminarily determines that an annual report is complete, the authority shall either: (a) approve the annual report and notify the director that the authority has approved the report and that the director is to issue the tax credit certificate; or (b) request more information from the developer to finalize the approval. If the authority fails to act within 120 days from its preliminary determination that the annual report is complete, the annual report shall be deemed approved by the authority, and the developer shall be entitled to receive its tax credit certificate.

(2) Upon receipt by the director of the certificate of compliance, the director shall allow the developer a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5, which credit may be first applied in the tax period for which it was issued, in the tax period in which it was issued, or in a successive tax period, as authorized in this paragraph, without the need to amend the tax return for the tax period for which the credit was issued, subject to the carry-forward provision in this section. Notwithstanding the foregoing, no more than the amount of tax credits equal to the total credit amount divided by the duration of the eligibility period, in years, may be taken in any tax period. A developer may carry forward an unused credit resulting from the limitations of this subsection, if necessary, for use in the seven privilege periods next following the privilege period for which the credits are issued.

(3) The director shall prescribe the order of priority of the application of the credit allowed under this section and any other credits allowed by law against the tax imposed under section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, together with any other credits allowed by law, shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).

d. (1) A developer may apply to the director and the chief executive officer of the authority for a tax credit transfer certificate, covering one or more years, in lieu of the developer being allowed any amount of the credit against the tax liability of the developer. Subject to the forfeiture, reduction, or other action for failure to comply with a program requirement, within 120 days after the authority preliminarily determines that an application is complete, the authority shall either: (a) approve the application and notify the director that the authority has approved the application and that the director is to issue the tax credit transfer certificate; or (b) request more information from the developer to finalize the approval. If the authority fails to act within 120 days from its preliminary determination that the application is complete, the application shall be deemed approved by the authority, and the developer shall be entitled to receive its tax credit transfer certificate.

(2) The tax credit transfer certificate, upon receipt thereof by the developer from the director and the chief executive officer of the authority, may be sold or assigned, in full or in part in an amount not less than $25,000, in the tax period during which the developer receives the tax credit transfer certificate from the director, to another person, who may apply the credit against a tax liability pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5. The certificate provided to the developer shall include a statement waiving the developer's right to claim the amount of the credit that the developer has elected to sell or assign against the developer's tax liability.

e. (1) The developer shall not sell or assign, including a collateral assignment, a tax credit transfer certificate allowed under this section for consideration received by the developer of less than 85 percent of the transferred credit amount before considering any further discounting to present value which shall be permitted. The tax credit transfer certificate issued to a developer by the director shall be subject to any limitations and conditions imposed on the application of State tax credits pursuant to sections 25 through 28 of P.L. , c. (C. through ) (pending before the Legislature as this bill) and any other terms and conditions that the director may prescribe, provided, however, that the holder of a tax credit certificate may transfer all or part of the tax credit amount, on or after the date of issuance of the tax credit transfer certificate, for use by the transferee in the tax period for which it was issued, in the tax period in which it was issued, or in any of the next three successive tax periods. The tax certificate holder or transferee may first use the credit against tax liabilities in the tax period in which it was issued or in a succeeding tax period, as authorized in this subsection, without the need to amend the tax return for the tax period for which the credit was issued, subject to the provisions of this section. A transferee may carry forward an unused credit for use in any of the next five successive tax periods, and the unused credit shall expire thereafter. Notwithstanding any provision of this section to the contrary, the amount of tax credits that may be claimed by the transferee in any tax period shall not exceed the total tax credit amount divided by the duration of the eligibility period in years.

(2) A purchaser or assignee of a tax credit transfer certificate pursuant to this section shall not make any subsequent transfers, assignments, or sales of the tax credit transfer certificate.

(3) The authority shall publish on its Internet website the following information concerning each tax credit transfer certificate approved by the authority and the director pursuant to this section:

(a) the name of the transferor;

(b) the name of the transferee;

(d) the consideration received by the transferor.

f. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the chief executive officer of the authority, in consultation with the executive director and the commissioner, shall adopt, immediately, upon filing with the Office of Administrative Law, such rules and regulations as the chief executive officer deems necessary to implement the provisions of sections 25 through 28 of P.L. , c. (C. through ) (pending before the Legislature as this bill), which rules and regulations shall be effective for a period not to exceed 365 days after the date of the filing. Before the expiration of the rules and regulations, the chief executive officer, in consultation with the executive director and the commissioner, shall amend, adopt, or readopt the rules and regulations in accordance with the requirements of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

29. a. Sections 1 through 6 of P.L. , c. (C. through ) (pending before the Legislature as this bill) shall take effect on the first day of the sixth month next following the date of enactment, and shall apply to all bids placed and contracts for the purchase of a single-family home executed, or a single-family home owned or acquired, on or after the effective date of sections 1 through 6 of P.L. , c. (C. through ) (pending before the Legislature as this bill), except that:

(1) sections 5 and 6 of P.L. , c. (C. and ) (pending before the Legislature as this bill) shall apply to the tax year beginning on or after January 1 next following the date of enactment; and

(2) the Commissioner of Community Affairs, the Director of the Division of Taxation in the Department of the Treasury, and the Director the Division of Consumer Affairs in the Department of Law and Public Safety shall take anticipatory action necessary to effectuate the provisions of sections 1 through 6 of P.L. , c. (C. through ) (pending before the Legislature as this bill).

b. Sections 7 through 16 of P.L. , c. (C. through ) (pending before the Legislature as this bill) shall take effect immediately.

c. Sections 17 and 18 of P.L. , c. (C. and ) (pending before the Legislature as this bill) shall take effect on the first day of the fourth month next following the date of enactment, except that the Commissioner of Banking and Insurance and the Commissioner of Community Affairs shall take anticipatory action necessary to effectuate the provisions of sections 17 and 18 of P.L. , c. (C. and ) (pending before the Legislature as this bill).

d. Sections 19 through 22 of P.L. , c. (C. through ) (pending before the Legislature as this bill) shall take effect immediately, and shall apply to taxable years beginning on or after January 1 of the year next following enactment.

e. Sections 23 and 24 of P.L. , c. (C. and ) (pending before the Legislature as this bill) shall take effect immediately, and shall apply to privilege periods and taxable years beginning on or after the January 1 next following the date of enactment.

f. Sections 25 through 28 of P.L. , c. (C. through ) (pending before the Legislature as this bill) shall take effect immediately.

STATEMENT

This bill, entitled the "Protection of Homeownership and Limiting Institutional Investor Acquisition Act": (1) restricts institutional investor acquisition of single-family homes and imposes certain tax penalties on acquisition of single-family homes by institutional investors; (2) provides down payment assistance and funding for certain homebuyers and developers for the purchase and development of starter homes; (3) reduces the timeframe for the approval of development applications to certain municipal government entities, and expedites starter home inspections; (4) requires the creation of a buyer’s home purchasing guide and establishment of a public awareness campaign concerning the impact of institutional investors on the housing market; (5) permits resident taxpayers who are first-time homebuyers to claim certain gross income tax deductions; and (6) establishes the "Starter Home Development Incentive Program" within the New Jersey Economic Development Authority.

Restrictions on Institutional Investor Acquisition of Single-Family Homes and Imposition of Certain Tax Penalties:

Sections 3 through 6 of the bill prohibit certain institutional investors from placing a bid on or purchasing a single-family home during the first 90 days that the home is available, and subject an institutional investor who owns or acquires a single-family home to certain taxes.

Specifically, the bill prohibits an institutional investor, as defined in the bill, from contacting the owner of a single-family home, or the owner’s agent, with respect to the single-family home, or soliciting, placing a bid on, or inducing an offer for, a single-family home during the first 90 days that the single-family home is "on the market and available for purchase," as the term is defined in the bill. To discourage circumvention of the bill by institutional investors, the bill provides that an institutional investor that places a bid on, acquires, or purchases a single-family home outside of the 90-day period set forth in the bill is to be subject to an annual State tax in an amount equal to the sum of certain calculations provided in the bill according to the number of single-family homes owned by the institutional investor. The State tax revenue collected through the tax is to be credited to the New Jersey Housing and Mortgage Finance Agency (HMFA) to establish new programs or supplement existing programs that award grants to provide down payment assistance to families purchasing single-family homes in the State. The HMFA is to annually publish on its Internet website the amount of State tax revenue collected pursuant to the bill. The bill authorizes the Director of the Division of Taxation (director) and the Commissioner of Community Affairs (commissioner) to require institutional investors to report certain information provided in the bill. The bill also prohibits an institutional investor from leasing a single-family home acquired or purchased by the institutional investor for a period of five years following the date of acquisition or purchase.

The bill would not apply to certain nonprofit organizations; small institutional investors, as defined in the bill; financial institutions owning or acquiring a single-family home through foreclosure or through a secured transaction; institutional investors acting as condemnors; governmental authorities; an institutional investor that uses capital to rehabilitate vacant and distressed single-family homes, dependent on certain conditions; or other institutional investors excepted from the requirements of the bill by the commissioner.

A person or entity, including a small institutional investor, in the county or vicinage in which the single-family home is located, may file a complaint in the Superior Court of New Jersey, Law Division, against an institutional investor that violates the bill. If the court finds the institutional investor did violate the bill, the institutional investor is to alienate the single-family home within six months of the court’s determination, and any profit received shall be payable to the Attorney General. In addition, an amount equal to the profit received is to also be paid to, and proportionately divided amongst, any person or entity, including a small institutional investor, adversely and directly affected by a violation, which is to be construed liberally, who files a complaint in the Superior Court of New Jersey, Law Division in the county or vicinage in which the single-family home is located within 24 months of the date that the violation occurred.

A violation of the bill is to also constitute an unlawful practice in violation of the New Jersey consumer fraud act. Further, notwithstanding a penalty collected by the Attorney General pursuant to the bill, the bill permits any person or entity directly and adversely affected by a violation to file a complaint against an institutional investor in violation of section 4 of the bill. The complainant is to be permitted to recover $20,000, or $60,000 if the court finds the institutional investor willfully violated section 4 of the bill, which is required to be proportionately divided amongst any person or entity, including a small institutional investor, directly and adversely affected by a violation who files a complaint within 24 months of the date that the violation occurred, in addition to certain fees and expenses incurred in proving a violation of the bill.

The bill provides that a court that receives a complaint against an institutional investor for violation of the bill is to send administrative notice of the pending action to the institutional investor, who is to have 60 days from the receipt of the notice to cure the alleged violation. If the institutional investor fails to cure, or take substantial steps to cure, the alleged violation within the 60-day time period, the penalties in the bill are to apply.

This portion of the bill would take effect on the first day of the sixth month next following the date of enactment, and sections 5 and 6 of the bill would apply to the tax year beginning on or after January 1 following the date of enactment. This portion of the bill is to expire on the first day of the sixth year following the date of enactment. The commissioner and the director are to issue reports on the effectiveness of the provisions of these sections and these reports are to be published on their respective Internet websites.

Down Payment Assistance, Developer Funding, and the Community Investment Fund:

Sections 7 through 11 of the bill provide down payment assistance and developer funding for the purchase and development of starter homes and affordable starter homes.

The bill modifies a down payment assistance loan program (loan program), established for the benefit of first-time homebuyers pursuant to a recently enacted statute, P.L.2023, c.78 (C.55:14K-104 et seq.). The bill also modifies the Resilient Home Construction Pilot Program (construction program), established to provide funding for developers to rehabilitate existing homes and construct new affordable homes for sale, changing it from a pilot program to a permanent program in the HMFA. The bill ensures that a portion of the funding for the loan program and construction program, respectively, is to be allocated to provide down payment assistance for first-time homebuyers to purchase starter homes and affordable starter homes, and funding for developers to construct starter homes and affordable starter homes, as those terms are defined in the bill by size and formal price control.

In addition to the loan awards already offered through the loan program, the bill authorizes the HMFA to provide an additional zero-interest, forgivable loan award of up to $5,000 if the first-time homebuyer provides matching down payment funds in an amount to be determined by the Executive Director of the HMFA.

The bill also establishes a revolving fund in the HMFA, to be known as the Community Investment Fund, for carrying out the purposes of the loan program (fund), and permits moneys held in the fund that are not able to be disbursed immediately to be invested and reinvested. The bill requires that a portion of the money expended from the fund for the loan program be used for down payment assistance for first-time homebuyers to purchase starter homes and affordable starter homes.

Sections 7 through 11 of the bill would take effect immediately.

Shortened Timeframe for Land Use Applications for Development and Expedited Inspections for Starter Homes:

Sections 12 through 16 of the bill reduce certain allowed timeframes under the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.) related to the approval of an application for development, an application for certain site plans, or for an application for certain subdivisions, if at least 40 percent of the units to be developed, total acreage, or lots on which residential dwellings are constructed, are to be used for starter homes.

Further, for the inspection of any work related to the construction or development of a starter home, the bill permits an owner, agent, or other responsible person in charge of work to contract with and utilize a private on-site inspection agency authorized by the department to conduct on-site inspections, and further permits the private on-site inspection agency to perform any requested inspections related to the development of a starter home, regardless of whether the enforcing agency is able to perform a requested inspection within three business days of the date for which the inspection is requested. Sections 12 through 16 of the bill would take effect immediately.

Buyer’s Home Purchasing Guide and Institutional Investment Impacts Public Awareness Campaign:

Sections 17 and 18 of the bill require the Department of Banking and Insurance, in consultation with the HMFA and the Department of Community Affairs, to:

(1) publish and disseminate a buyer’s guide for individuals who are purchasing a home; and

(2) undertake a public awareness campaign concerning the impacts of institutional investment in the State housing market and to promote resources available for homebuyers.

Sections 17 and 18 of the bill would take effect immediately.

Tax Incentives for Individual Homebuyers:

Sections 19 through 22 of the bill permit resident taxpayers of this State who are first-time home buyers to claim a gross income tax deduction for certain expenses.

Specifically, the bill allows a resident taxpayer who is a first-time home buyer, as defined in the bill, to claim a gross income tax deduction for the amount paid by the taxpayer as a down payment for the purchase of a single-family residence during the taxable year. The bill also allows a first-time home buyer to claim a gross income tax deduction for the amount of mortgage interest paid by the taxpayer to an eligible lender during the taxable year, up to amounts allowable under the federal Internal Revenue Code, on a single-family residence that is purchased and occupied as the owner’s primary residence. If applicable, a first-time home buyer would also be allowed to claim a gross income tax deduction for any mortgage insurance payments paid by the taxpayer during the taxable year, up to $3,000.

Sections 19 through 22 of the bill would take effect immediately, and apply to taxable years beginning on or after January 1 of the year next following enactment.

Tax Disincentives for Business Entities Owning Single-Family Residences:

Sections 23 and 24 of the bill prohibit certain business entities from claiming deductions or expenses under the corporation business tax and gross income tax for depreciation allowances and business interest expenses related to single family residences owned by the business.

Under the bill, a corporation business taxpayer that owns more than 20 single-family residences, as defined in the bill, during the privilege period would be required to include the amounts of certain deductions specified in the bill, if claimed for federal income tax purposes in connection with a single-family residence owned by the taxpayer, to the taxpayer’s entire net income for the privilege period. The bill also prohibits the taxpayer from claiming a deduction for depreciation in relation to single-family residence ownership.

Additionally, business interest expenses and depreciation deductions related to single family residences owned by certain pass-through business entities, which own more than 20 single-family residences, are not to be included in the calculation of the various categories of business income, which are calculated net of expenses. As a result, the taxable income generated by these business entities would not be reduced based on these expenses and deductions.

Sections 23 and 24 of the bill would take effect immediately, and apply to privilege periods and taxable years beginning on or after the January 1 following the date of enactment.

Starter Home Development Incentive Program:

Sections 25 through 28 of the bill establish the "Starter Home Development Incentive Program" (incentive program) within the New Jersey Economic Development Authority (EDA).

The purpose of the incentive program is to attract developer investment in the development of starter homes in the State. Under the bill, "starter home" means a unit of single-family housing that consists of not more than 1,800 square feet of floor area. The bill defines a "single-family home" as a one- to four-family residence, a condominium unit, or a cooperative unit.

Under the program, the EDA would provide tax credits to eligible developers, following the approval of an application by the EDA. Eligible projects would include projects that primarily include the construction or rehabilitation of one or more starter homes. Under the bill, projects that include at least 10 starter homes would receive a tax credit in the amount of 30 percent of the developer’s eligible project costs, whereas projects that include less than 10 starter homes would receive a tax credit in the amount of 20 percent of the developer’s eligible project costs. Under the bill, "eligible project costs" means the costs to complete the development of an eligible project, which costs are eligible for subsidy pursuant to the federal Low Income Housing Tax Credit Program, and which costs are incurred by a developer before the issuance of a permanent certificate of occupancy for the eligible project, or before such other time specified by the EDA.

The bill provides that an eligible developer that executes an incentive award agreement with the EDA may receive tax credits as authorized under the agreement, subject to the approval of annual compliance reports submitted by the developer to the EDA.

After issuance of the certificate of compliance by the EDA, the taxpayer would be permitted to claim the tax credit. Any amount of tax credit that cannot be used on a tax period may be carried forward for use in the seven tax periods following the period for which the credit was issued. The bill also allows a taxpayer to apply for a tax credit transfer certificate so that all or part of the credit awarded may be sold or assigned to a third-party purchaser, as provided for in the bill.

Sections 25 through 28 of the bill would take effect immediately.