N.J. Admin. Code § 5:43-3.1

Current through Register Vol. 56, No. 23, December 2, 2024

Section 5:43-3.1 - Grant and loan agreements

(a) Successful applicants to the Neighborhood Preservation Balanced Housing Program shall be invited to enter into a grant and/or loan agreement with the Department or its designee. The Department may delegate the authority to enter into an agreement for Balanced Housing loans to the New Jersey Housing and Mortgage Financing Agency for Home Express loans, in accordance with 5:43-3.4(e).

1. The terms and conditions of any grant agreement shall be at the sole discretion of the Department or its designee for Home Express loans, in accordance with 5:43-3.4(e).

2. Balanced Housing grant and/or loan agreements with municipalities shall include provision(s) prohibiting the municipality from selling tax liens on the subject property prior to the closeout of the agreement.

3. The Department reserves the right, at its sole discretion, to require on site construction supervision to ensure successful project conception and compliance with all applicable agencies and funders that have jurisdiction over and/or material interest in the project.

(b) Where Balanced Housing funds are awarded to a municipality, those funds will be awarded to the municipality as a grant, except for municipal land acquisition projects where funds will be awarded to the municipality as a loan in accordance with 5:43-3.6.

(c) Where the municipality has been given a grant of Balanced Housing funds for the benefit of a developer of a rental project, the municipality shall provide the Balanced Housing funds to the developer as a loan. All loans to a rental project, whether by the Department or the municipality, shall be secured by a mortgage and a note, which shall be repayable to the Department. All terms and conditions of the loan documents shall be subject to the approval of the Department or its designee. The following terms shall apply:

1. The length of the loan shall not exceed the affordability period;

2. The interest rate shall be one percent compounded annually;

3. Payment shall equal 50 percent of cash flow, paid annually, with any balance due upon expiration of affordability controls; and

4. The Department or its designee, at its discretion, may independently audit the project records to verify income and expense.

(d) Balanced Housing funds may be provided to a project during the development phase as a construction loan where project feasibility requires supplementing private sources of construction financing. The terms and conditions of the construction loan provided by the Balanced Housing Program shall be at the discretion of the Department. The Department shall subordinate its construction loan to the lien of another construction lender provided that the sponsor/developer provides evidence that the subordination is necessary to achieve project feasibility.

(e) In cases where Balanced Housing funds are made available during construction, the Department shall subordinate the Balanced Housing construction loan to the lien of a permanent lender(s) upon completion of the construction of the project and on terms and conditions determined at the discretion of the Department. After a project's permanent financing is in place and after the project has been placed in service, the Department shall consider honoring a request to subordinate its mortgage to the lien of another lender, provided that the sponsor/developer provides evidence to the satisfaction of the Department that the project income can service an increased level of private debt and that some public benefit will result from honoring the request to subordinate the Department's mortgage. An initial funding commitment to the project by the Department shall not constitute a commitment to subordinate the Balanced Housing loan after the initial permanent financing has been accomplished and after the project has been placed in service.

1. The sponsor/developer shall submit a request for subordination to the Division Director. The decision of the Division Director shall be presented in writing and shall be final. The request for subordination shall include:

i. An up-to-date income and expense statement;

ii. A mortgage commitment regarding the proposed refinancing;

iii. Verification that reserves are at required levels;

iv. A statement regarding project vacancies, turnover and anticipated major expenditures;

v. An explanation of the public benefit that will occur. It shall be considered to be of public benefit if refinancing the project results in cash that will be utilized to:

(1) Perform necessary repairs in the project that cannot be funded by the accumulated reserves;

(2) Provide a source of development funding to create additional units that will be affordable to low and moderate income occupants; or

(3) Allow the sponsor/developer to increase the time period during which units will be affordable to low and moderate income households; and

vi. Any additional information that the Department may deem necessary in order to make a determination.

N.J. Admin. Code § 5:43-3.1

Amended by R.1992 d.144, effective 4/6/1992.
See: 23 N.J.R. 1075(a), 24 N.J.R. 1385(a).
Text on threshold criteria deleted; text on general provisions added.
Amended by R.1996 d.226, effective 5/20/1996.
See: 28 N.J.R. 6(a), 28 N.J.R. 2573(a).
Rewrote section.
Amended by R.1998 d.438, effective 9/8/1998.
See: 30 N.J.R. 1880(a), 30 N.J.R. 3239(b).
In (b), added a second sentence; in (g), substituted a reference to reconstruction for a reference to substantial rehabilitation in the first sentence; in (i)1, substituted "can" for "shall" and "subsidy" for "funds" in ii and added iii; and rewrote (p).
Amended by R.2002 d.325, effective 10/7/2002.
See: 33 N.J.R. 3261(a), 34 N.J.R. 3500(a).
Rewrote the section.
Amended by R.2007 d.202, effective 7/2/2007.
See: 38 N.J.R. 3711(a), 39 N.J.R. 2517(a).
Section was "General provisions". Rewrote (a); deleted (b) through ( l); added new (b) and (c); recodified (m) and (n) as (d) and (e); and deleted ( o) through (v).