The N.J. Housing and Mortgage Finance Agency (“HMFA”) recently proposed changes to the Low Income Housing Tax Credit (“LIHTC”) Qualified Allocation Plan (“QAP”). State housing credit agencies, like HMFA, are required to create plans which outline the selection criteria for awarding tax credits for the development of low- and moderate-income housing. The proposed amendments update the QAP to reflect procedural changes to the way in which affordable housing is constructed, but also include some substantive changes to both the allocation of tax credits among developers and the scoring system for awarding tax credits.
To review the full proposed changes to the QAP, as well as the agency analysis of the impact of these proposals, please click here. Comments on these proposed changes are due no later than December 2, 2016.
Allocation of Tax Credits
Two changes are proposed regarding the allocation of tax credits to municipalities, and the allocation of funded tax credit projects among developers. Currently, the QAP encourages the equitable distribution of tax credits throughout the State by capping the number of awards per municipality at two per year. HMFA proposes increasing this number to three awards annually for those municipalities that have a population of 100,000 or more according to data from the most recent American Community Survey. There are presently no controls on how many awards a developer may receive in a given year. HMFA proposes that, in order to “ensure the equitable distribution of tax credit awards among developers,” developers be limited to a cap of three awards per year. This is proposed as a mechanism of addressing potential capacity issues for developers in managing their project development.
Targeting Affordable Development to Redevelopment and Smart Growth Areas
Changes are proposed to certain definitions within the LIHTC rules reflecting a stronger focus on smart growth areas, urban redevelopment projects, and transit oriented development. The term “redevelopment project” is proposed to be amended to require that the majority of the property for any project in non-smart-growth areas must have previously been covered by structures. This is intended to focus development in Planning Areas 1 and 2 (urban and suburban areas), as well as designated centers on the State Plan map, and the designated “smart growth areas” throughout the State. Similarly, the term “transit village” is proposed to be revised to reflect only the transit villages designated by the State’s Transit Village Task Force, not just municipalities that have incorporated public transit into their local development plans. Projects within targeted urban municipalities, which are defined under the existing QAP as Urban Aid municipalities and Atlantic City, now compete for allocations as part of a set-aside number of available credits as well. The proposed set-asides under both the Family and Senior cycles now prefer that projects to be within qualified census tracts and targeted urban municipalities.
Scoring priorities under the rules are also altered to encourage development of affordable housing in areas where the housing is needed. New points are awarded where projects are proposed as part of municipal fair share plans that have been adopted and approved by the courts, or as part of settlements have been reached in previous exclusionary zoning litigation. Additionally, the proposed scoring priorities encourage developments proposed in urban and suburban high-poverty areas.
These proposed QAP regulations will alter the number of available awards annually for developers, and may significantly alter the scoring system for awarding those tax credits. Developers should contemplate submitting comments on these proposed rules to ensure their voices and perspective are heard. The deadline for submitting comments is December 2, 2016. Comments should be submitted to Ann Hamlin, Director of Tax Credit Services, at the New Jersey Housing and Mortgage Finance Agency, 637 South Clinton Ave., P.O. Box 18550, Trenton, NJ 08650-2085, email: email@example.com.