This notice shall provide additional guidance on the Agency’s Inclusionary Policy for those interested in applying for 4% and 9% Low Income Housing Tax Credits (LIHTC).
Section 19 of P.L. 2008, c. 46, N.J.S.A. 52:27D-321.1 (A500 ACS), stipulates, in part, that the affordable portion of any mixed-income or mixed-use development that is part of a fair share housing plan approved by the council or a court-approved judgment of repose or compliance shall only be permitted to receive an allocation of Low Income Housing Tax Credits provided the applicant can
that the market-rate residential or commercial units are unable to internally subsidize the affordable units. This includes, but is not limited to, a development that has received a density bonus. Additionally, the affordable units must be developed contemporaneously with the commercial or market-rate residential units. To help implement that law, the Agency published Developer Bulletin 2018-3: Inclusionary Policy in October 2018. Developer Bulletin 2018-3 can be found
The Agency has established a multi-step process whereby all proposed projects applying for Low Income Housing Tax Credits (LIHTC or tax credits) involving the development of new affordable units must undergo an Inclusionary Review and, if applicable, a feasibility analysis will be required, before tax credits are awarded. Applicants are encouraged to carefully review the process described below.
It is the responsibility of the applicant to ensure that all applicable steps are completed. Failure to complete the necessary steps in a timely fashion may result in an extended delay or an application being declared incomplete.
Inclusionary Review and Determination
ALL 4% and 9% LIHTC applications involving the development of new affordable units, including 100% affordable, mixed-income and mixed-use development, must undergo an Inclusionary Review. Applicants are strongly encouraged to complete Step #1 in advance of submitting an application for either Agency financing and/or LIHTC. In the event Step #1 is not completed prior to submission, the Inclusionary Review must be completed as part of the application review.
Applicants must submit the following information to the Tax Credit Division (as applicable). Please note this is not an exhaustive list and additional information may be required.
Basic development information, including but not limited to:
- Project Narrative, including a listing of all existing and future/proposed projects located in the same municipality by the same developer;
- Site plan(s) for affordable and market-rate components;
- Information on any associated market-rate components linked to the affordable component;
- Description and documentation of any business arrangement(s) relevant to additional components of any associated market-rate development;
- Description and documentation of financial ties or subsidies between affordable and market-rate components (e.g., sale or transfer of land, shared infrastructure improvements, financing, etc.);
- A listing of all locally assigned names for the site (e.g Smith Tract, Horse Farm Site);
- Block and lot numbers for all parcels associated with the development including both affordable, market-rate and non-residential components;
- A written description and map showing any subdivision, re-subdivision, lot merger or lot consolidation of any parcels listed above;
- A copy of the Municipal Fair Share Plan and/or Judgment of Repose or Compliance;
- Copies of all municipal planning board, zoning board of adjustment, or land use approvals for the affordable units and any associated market-rate or commercial units;
- The current municipal Master Plan Housing Element, most recent Master Plan Reexamination Report, any applicable Area in Need of Redevelopment designations, any applicable Redevelopment Plans and any applicable Redevelopment Agreements;
- Current zoning applicable to all property associated with the development; and
- If current zoning on the property was adopted specifically to create a realistic opportunity for the construction of affordable housing, a copy of the zoning ordinance that was in effect prior to the adoption of current zoning.
As a result of the Inclusionary Review, the Agency will make a determination as to the project’s inclusionary status and/ or existence of a density bonus, as further defined below:
- A determination as to whether a project contains or is part of a project that contains both affordable residential units and market-rate residential units or non-residential uses. This includes, but is not necessarily limited to new construction, the conversion of a non-residential structure to residential or mixed-use and the creation of new residential units through the reconstruction of a vacant residential structure (“inclusionary status”); and
- A determination as to whether a zoning or other land use change was implemented to create a realistic opportunity for the construction of affordable housing by enhancing permitted uses, increasing permitted density and/or increasing intensity of use (“density bonus”).
Upon completion of the review, the Agency will advise the Applicant as to whether it has determined that the project is inclusionary or not. In the event the project is determined to be inclusionary, the applicant will be required to complete a feasibility analysis in order to conclusively demonstrate that the market-rate residential or commercial components are unable to internally subsidize the affordable units.
A project deemed not to be inclusionary will have no further obligation, provided there is (are) NO substantive change(s) to the project.
Please note that applicants should proceed at their own risk and should determine how far in advance of the LIHTC application to seek the inclusionary determination, taking into consideration that the determination is based on the information provided. If there are substantive changes to any of the project attributes, a new Inclusionary Review will be required by the Agency.
The Agency anticipates that Step #1, based upon a complete submission, will take approximately two to four weeks per review. However, depending on complexity of each individual project, the estimated time for the Inclusionary Review to be completed may be longer that two to four weeks.
There is NO cost to applicants to complete Step #1 of the process.
If a project is determined to be inclusionary, applicants are responsible for commissioning a feasibility analysis, which must be performed by an independent third party skilled in market and financial analysis, and it must be certified to the Agency. Please refer to Developer Bulletin 2018-3: Inclusionary Policy for additional information.
Applicants are responsible for all costs associated with the preparation and completion of the feasibility analysis.
Agency Review and Determination
The Agency has retained a third party firm (Econsult Solutions, Inc) to review the Feasibility Analyses commissioned by applicants in order for the Agency to make a final determination as to whether there is a need for tax credits. The Agency anticipates that Step #3, based upon a complete submission, will take approximately two to four weeks per review.
There will be NO cost to applicants to complete Step #3 of the process.
The Agency will issue a determination of whether the Applicant has conclusively demonstrated a need for tax credits, in whole or in part. However, please be advised that the final determination of the amount of tax credits is based on a number of factors and cannot be concluded until after a complete review of the entire tax credit application, including the needs analysis, as required by Section 42(m)(2)(a) of the Internal Revenue Code.
Applicants may appeal the Agency’s Determination in #3 above by following the request for reconsideration provisions currently set forth in the Qualified Allocation Plan (QAP) at N.J.A.C. 5:80-33.22.