Developments Would Provide More Than 1,300 Affordable Housing Opportunities in 12 Counties
TRENTON – The Murphy Administration announced today it has awarded over $27 million in annual 9% federal Low Income Housing Tax Credits (LIHTC), opening the door to over 1,300 new apartments for families, seniors, and residents with special needs. The highly competitive tax credits are expected to generate over $254 million in private investment to create 21 developments valued at over $550 million to help build a stronger and fairer New Jersey.
The 2020 LIHTC awardees represent exciting adaptive reuse and new development projects, including some in municipalities new to affordable housing opportunities. With awards in areas such as Holmdel, Princeton, and Saddle River, and a combination of mixed-income and 100% affordable projects, these awards help drive the NJHMFA’s goals of deconcentrating poverty and encouraging development in communities of high opportunity. There are also 3 awards to projects in the Opportunities Zones of New Brunswick, Trenton and East Orange, which are instrumental in driving long-term capital investments and bringing a range of housing affordability to low-income rural and urban communities like these. A focus of the LIHTC awardees is also on essential support service infrastructures for our most vulnerable residents — health and wellness programs, job training, and education and enrichment opportunities can be found with multiple awarded projects.
“The increases in the number of applications, awards, and the diversity of project locations occurring despite a pandemic speaks volumes to the State of New Jersey’s resiliency and growth,” said Lt. Governor Sheila Oliver, who serves as Commissioner of the Department of Community Affairs and NJHMFA board chair. “These LIHTC awards are an investment in our future that will help to ensure that safe, affordable housing in vibrant and healthy communities is available to everyone.”
The LIHTC program, which was established by the Tax Reform Act of 1986, is the most prolific source of funding for new affordable rental apartments for residents. Under the Murphy administration, NJHMFA has awarded 9% tax credits toward the creation or rehabilitation to 60 developments providing close to 5,000 total units, of which 81% are affordable, totaling nearly $1.35 billion in development investment to help build a stronger New Jersey.
One of the most effective features of the LIHTC program is each state’s ability to craft its own allocation plan and define the criteria for awarding tax credits. New Jersey has one of the most innovative LIHTC programs in the country. “A focus of our program is on high opportunity municipalities with high performing school districts, access to transportation, and proximity to other positive land uses such as to hospitals, and grocery stores,” said NJHMFA Executive Director Charles A. Richman. “Low Income Housing Tax Credits have been instrumental in spurring developments that change the lives of many of New Jersey’s most vulnerable residents.”
How the LIHTC program keeps housing affordable
Under the LIHTC program, federal tax credits are awarded to help developers afford to build new apartments or rehabilitate existing apartments. Typically, the tax credits are sold to investors to raise equity to fund construction. In return, the investors receive a dollar-for-dollar reduction on their federal tax returns for a period of 10 years. The equity generated from the sale of the tax credits can fund approximately 70% of a project. This additional capital lessens a developer’s debt burden and allows the project to carry a smaller mortgage. Consequently, rents will be more affordable to low- and moderate- income residents who qualify.
Since the inception of the LIHTC program, more than 60,000 apartments have been created in New Jersey. No direct funding comes from the New Jersey Treasury for the LIHTC program.
To read more visit: https://www.insidernj.com/press-release/murphy-administration-awards-federal-tax-credits-incentivize-half-billion-housing-development-families-seniors-special-needs-residents/?fbclid=IwAR1IckcQ70uI8OyETsNyXvcpOZiz42bPLSKzorJP3-a_sDxmIQ6kdZWLoms