$28 Million in LIHTC Will Help Fund 1,400 Affordable Housing Units
On March 12, 2018, the New Jersey Housing and Mortgage Finance Agency (NJHMFA) announced that it is now accepting applications from developers for approximately $28 million in federal 9% Low Income Housing Tax Credits (LIHTC.)
The LIHTC funding is expected to help finance an estimated 1,400 affordable rental apartments in the state. NJHMFA is the administrator of the LIHTC program for the State of New Jersey.
- The application deadline for family, senior and supportive housing projects is 12:00 p.m. on Tuesday, July 24, 2018.
- Applications for mixed-income projects will be accepted on a rolling basis starting on July 24, 2018 through 12:00 p.m. Friday, August 31, 2018.
- The 9% tax credit awards will be announced in early November 2018.
- The LIHTC program, which was established by the Tax Reform Act of 1986, is one of the most successful federal affordable housing programs created and has helped finance approximately 55,000 housing units in New Jersey to date.
- No direct funding comes from the New Jersey Treasury for the LIHTC program.
“These tax credits have been instrumental in creating homes for families seeking affordable places to live, in developing independent living opportunities for persons with special needs, and in providing stable residences for seniors on fixed incomes,” said Lt. Governor Sheila Y. Oliver, commissioner of the New Jersey Department of Community Affairs (DCA) and chairwoman of the NJHMFA board. “We look forward to continuing our partnership with the federal government on this beneficial program, which has done so much to spur the development of low- to moderate-income housing in New Jersey.”
“Tax credits are a critical tool in enabling the development of thousands of affordable housing units across the state,” said NJHMFA Executive Director Charles A. Richman. “In addition to family, senior and supportive housing, the mixed-income program specifically targets the need for projects combining both market rate and affordable housing for low- to moderate-income residents.”
The 9% tax credits, which are a dollar-for-dollar reduction in federal tax liability, act as a catalyst to attract private investment into the affordable housing market. Credits are awarded to a developer and are then sold to an investor. The equity generated from their sale 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, a developer can charge more affordable rents. It is anticipated the 2018 round of tax credits will produce approximately $250 million in equity for the construction of the housing units.
NJHMFA is an affiliate of DCA and has been a leader in the creation and rehabilitation of nearly 100,000 affordable housing opportunities for families, seniors, and special needs residents statewide through its programs.