New Developments Will Provide More Than 1,200 Housing Opportunities in 10 Counties for Families, Seniors, Special Needs Residents
The Murphy Administration has announced the awarding of over $22 million in annual 9% federal Low Income Housing Tax Credits (LIHTC.)
These new Tax Credits will help build 1,200 new affordable apartments for families, seniors and residents with special needs. Click here for a full listing of awards.
The highly competitive tax credits will generate $214.7 million in private investment to create 17 developments totaling nearly $325 million. This investment will help build a stronger New Jersey. The 2019 awards were administered under the New Jersey Housing and Mortgage Finance Agency’s (NJHMFA) new, innovative guidelines.
The Alpert Group was awarded almost $2.5 million in two Tax Credit awards. West Orange Senior Housing will create 65 new units in West Orange and North Bergen Supportive Housing will create 61 new units in North Bergan. Monarch Housing is pleased to partner with the Alpert Group in these developments.
“Low Income Housing Tax Credits make it financially possible to build and rehabilitate affordable housing for residents in New Jersey, which is why it is such a critical federal program,” said Lt. Governor Sheila Oliver, who serves as commissioner of the Department of Community Affairs and NJHMFA board chair and was quoted in a recent Patch article.
“Governor Phil Murphy and I remain committed to the production of safe, decent and affordable housing through the LIHTC program and New Jersey’s Affordable Housing Trust Fund – these are the engines that help drive our mission to ensure that everyone has a place to call home,” Oliver said.
The new guidelines place greater emphasis on locating housing in areas providing children access to good school systems, creating on-site services, such as nurses and health-related programs, and in senior housing to enable them to remain in their community. The new guidelines place a greater emphasis on mixed-income development to avoid segregating low- and moderate-income housing.
The LIHTC program, established by the Tax Reform Act of 1986, is the workhorse funding source for new affordable rental apartments for residents. Under the Murphy administration to date, NJHMFA has financed or awarded tax credits toward the creation or rehabilitation of over 6,400 affordable apartments across the state.
These tax credit funded apartments include including more than 330 special needs beds and an additional 440 market-rate apartments with a total development cost of $1.45 billion. Since the inception of the LIHTC program, more than 59,000 apartments have been created in New Jersey.
The LIHTC program allows each state to craft its own allocation plan and define the criteria for awarding tax credits. New Jersey has one of the country’s most innovative LIHTC programs.
Under the LIHTC program, federal tax credits are awarded to developers to build new apartments or rehabilitate existing apartments. Typically, the tax credits are sold to investors who then provide private 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.
How do tax credits make the house affordable to low- and moderate-income renters? The equity generated from the sale of the tax credits can fund approximately 70% of a development project. This additional capital funding decreases a developer’s debt burden and allows the project to carry a smaller mortgage. This smaller mortgaged allows for rents will be more affordable to low- and moderate- income residents who meet the income requirements.