SENATE COMMUNITY AND URBAN AFFAIRS COMMITTEE

STATEMENT TO

SENATE, No. 4071

with committee amendments

STATE OF NEW JERSEY

DATED:  MAY 12, 2025

      The Senate Community and Urban Affairs Committee reports favorably and with committee amendments, Senate Bill No. 4071.

      As amended, this bill reallocates $400 million in tax credits, which are currently authorized for the Community-Anchored Development Program and Cultural Arts Incentives Program, to the New Jersey Housing and Mortgage Finance Agency (HMFA) for sale through a competitive tax credit auction.  The proceeds from the sale of tax credits at auction are to be used by the HMFA to support the development of middle-income workforce housing in the State.

      Under current law, the “New Jersey Economic Recovery Act of 2020” (recovery act) has authorized $1.2 billion in tax credits over a nine-year period for the Community-Anchored Development Program.  Following P.L.2023, c.197, a portion of the tax credits allocated for the Community-Anchored Development Program is allowed to be used to support tax credit awards for projects through the Cultural Arts Incentives Program.  However, tax credits are not authorized to be awarded under the Community-Anchored Development Program until beginning on January 1, 2026, and no projects have been awarded tax credits under the Cultural Arts Incentives Program as of February 2025.

      Under this bill, $400 million in tax credits will be transferred from these two programs to the HMFA in order to create middle-income workforce housing programs administered by the HMFA.  The bill specifies that the tax credits reallocated to the HMFA are not subject to any requirements or conditions originally imposed on the tax credits under the recovery act.

      Specifically, this bill requires the HMFA to sell up to $400 million in tax credits through a competitive auction process.  Under the bill, these auctions are to be conducted in a manner consistent with the auctions held by the New Jersey Economic Development Authority (EDA) under the New Jersey Innovation Evergreen Program, as determined by the HMFA.  The bill provides that the tax credits may not be sold for a consideration less than 85 percent of the tax credit amount, and no more than $75 million in tax credits may be sold at auction annually.  This bill also permits the Director of the Division of Taxation in the Department of the Treasury to purchase unused tax credits awarded under the provisions of this bill.  The bill provides that certain of these tax credits may be sold or transferred by the recipient, subject to certain restrictions specified in this bill.  Additionally, the bill requires that the HMFA be permitted to join or be added to any contracts the EDA used for its actions.

      Under the bill, the HMFA is required to use the proceeds of tax credit auctions to provide financial assistance to create middle-income workforce housing, which may include new construction or the rehabilitation or construction of residential units within multiple dwellings.  The bill defines “middle-income workforce housing” to mean housing that is deed-restricted for occupancy by households with a gross household income of 80 percent or more, but not exceeding 120 percent, of the median gross household income for households of the same size within the housing region in which the housing is located.  The bill requires the HMFA to promulgate guidelines for a Middle-Income Workforce Housing Program to govern the application and award processes for projects seeking funds under the provisions of this bill.

COMMITTEE AMENDMENTS:

      The committee amendments:

      (1)  specify that tax credits reallocated to the HMFA under this bill are not to be subject to any requirements or conditions of the “New Jersey Economic Recovery Act of 2020,” as amended or supplemented;

      (2)  specify that proceeds from the sale of tax credits at auction by the HMFA are reserved for the purposes of providing financial assistance to create middle-income workforce housing, which includes new construction and rehabilitation of residential units within multiple dwellings;

      (3)  specify that the project financing subsidy for the creation of middle-income workforce housing authorized under the bill is only available to projects in receipt of a four-percent allocation from the federal Low Income Housing Tax Credit Program administered by the HMFA;

      (4)  permit the HMFA to utilize up to five percent of the proceeds from a tax credit auction for administrative and operational costs, including contracts necessary to hold the auction, which contracts the HMFA may enter on their own or join or be added to alongside the EDA;

      (5)  require the HMFA to promulgate guidelines for a Middle-Income Workforce Housing Program, within 90 days following the effective date of the bill, to govern the application and award processes for qualified projects seeking funds under the provisions of this bill;

      (6)  define “Four-Percent Low Income Housing Tax Credit” to mean a four-percent tax credit provided through the federal Low Income Housing Tax Credit Program established pursuant to section 42 of the federal Internal Revenue Code (26 U.S.C. s.42); and

      (7)  make technical changes, including an update to an underlying statute in light of a recent enactment of law.