LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 4071

STATE OF NEW JERSEY

221st LEGISLATURE

DATED: JUNE 30, 2025

SUMMARY

Synopsis:	Authorizes HMFA to use certain tax credits; directs HMFA to conduct tax credit auctions to provide financial assistance for middle-income workforce housing purposes.
Type of Impact:	Net State revenue decrease.
Agencies Affected:	Department of the Treasury.

Office of Legislative Services Estimate

Fiscal Impact
Net State Revenue Loss	Indeterminate

· The Office of Legislative Services (OLS) estimates that this bill will result in an annual State revenue decrease of up to $75.0 million through the issuance of tax credits for middle-income workforce housing development.

· The State revenue loss will be partially offset by auction proceeds of at least 85 percent of the face value of tax credits sold annually and transfer fees equal to 10 percent of consideration received from secondary sales; the revenue decrease occurs later when credits are applied against taxpayer liabilities.

BILL DESCRIPTION

      The bill authorizes the Housing and Mortgage Finance Agency to use certain tax credits allocated from existing economic development programs and directs the agency to conduct competitive tax credit auctions to provide financial assistance for middle-income workforce housing purposes.  The bill reallocates $400 million in tax credits from the Community-Anchored Development Act to the agency for this purpose.

      Under the bill, the agency may sell up to $75 million in tax credits annually through competitive auctions at a minimum price of 85 percent of the tax credit face value.  The proceeds must be used to provide financial assistance for middle-income workforce housing developments, defined as housing for households earning between 80 percent and 120 percent of area median income.  Projects must also receive Four-Percent Low Income Housing Tax Credits to be eligible for funding.

      The bill allows tax credit purchasers to transfer their credits to other taxpayers, with a minimum resale price of 85 percent of credit value and a requirement that ten percent of transfer consideration be remitted to the State General Fund.

FISCAL ANALYSIS

EXECUTIVE BRANCH

      None received.

OFFICE OF LEGISLATIVE SERVICES

      The OLS estimates that this bill will result in an annual State revenue decrease of up to $75.0 million through the issuance of tax credits for middle-income workforce housing development.  The State revenue loss will be partially offset by auction proceeds of at least 85 percent of the face value of tax credits sold annually and transfer fees equal to 10 percent of consideration received from secondary sales; the revenue decrease occurs later when credits are applied against taxpayer liabilities.

      The primary fiscal impact results from the annual authorization to sell up to $75.0 million in tax credits.  When these credits are ultimately applied against taxpayer liabilities, the State will experience a corresponding revenue decrease of up to $75 million annually.  Based on the bill’s limitation structure, the program could operate for approximately five to six years before reaching the total $400.0 million authorization.

      The State will receive immediate revenues through auction proceeds and transfer fees. The Housing and Mortgage Finance Agency must sell tax credits at a minimum of 85 percent of face value, generating auction proceeds of at least 85 percent of the annual tax credits sold when the program is fully utilized.  These proceeds are deposited with the agency and dedicated to middle-income workforce housing development. Additionally, the bill requires ten percent of consideration received from secondary tax credit transfers to be remitted to the State General Fund.  The OLS cannot quantify this revenue source as it depends on the frequency and value of secondary market transactions.

      The OLS expects the annual $75.0 million limitation to be fully utilized based on demonstrated demand for housing tax credit programs in New Jersey.  The State currently operates a separate $50 million workforce housing program that addresses similar housing needs, and demand for existing housing tax credit programs consistently exceeds available supply.  The 85 percent minimum purchase price and seven-year carryforward period make these credits attractive to investors.  The program specifically targets middle-income workforce housing for households earning between 80 and 120 percent of area median income.

Section:	Revenue, Finance, and Appropriations
Analyst:	Patrick Walsh Associate Fiscal Analyst
Approved:	Thomas Koenig Legislative Budget and Finance Officer

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).