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AN ORDINANCE AMENDING TITLE II, ADMINISTRATION, CHAPTER 10, DEPARTMENT OF ECONOMIC AND HOUSING DEVELOPMENT, SECTION 7, LIVE NEWARK LOAN FORGIVENESS PROGRAM FOR ADVANCING CLOSING COSTS OR PROVIDING FUNDING FOR ELIGIBLE FAÇADE IMPROVEMENTS, SECTION 7.2 CLOSING COSTS PROGRAM, OF THE REVISED GENERAL ORDINANCES OF THE CITY OF NEWARK, NEW JERSEY, 2000, AS AMENDED AND SUPPLEMENTED, BY AMENDING SECTIONS 7.2(a)(1), 7.2(a)(4), 7.2(a)(6), AND 7.2(a)(7), TO INCREASE THE AMOUNT OF THE CLOSING COST LOAN FOR ELIGIBLE APPLICANTS FROM TWENTY THOUSAND DOLLARS TO FIFTY THOUSAND DOLLARS.
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WHEREAS, the Newark Municipal Council (“Municipal Council”) adopted Ordinance 6PSF-d on February 17, 2016, establishing the Live Newark Loan Forgiveness Program, which includes the Closing Costs Program, providing eligible applicants with funding up to Five Thousand Dollars and Zero Cents ($5,000.000) towards the purchase of a home in the City of Newark (“City”) with the goal of stabilizing, upgrading, and promoting the advancement of neighborhoods within the City, with the intent to arrest and reverse any deteriorating conditions; and
WHEREAS, the Municipal Council thereafter adopted Ordinance 6PSF-b on April 27, 2021, increasing the funding to eligible applicants for the Closing Costs Program to Ten Thousand Dollars and Zero Cents ($10,000.00); and
WHEREAS, pursuant to Ordinance 6PSF-e, adopted on September 20, 2023, the Municipal Council, on behalf of the City of Newark, increased the Closing Costs Program amount from Ten Thousand Dollars and Zero Cents ($10,000.00) to Twenty Thousand Dollars and Zero Cents ($20,000.00) to provide additional financial support throughout the neighborhoods in the City; and
WHEREAS, pursuant to Ordinance 6PSF-b, adopted on September 18, 2024, the Municipal Council, on behalf of the City , adjusted the term of the loan by increasing it from five (5) years to ten (10) years and decreased the percentage of the amount of the total Closing Costs loan forgiven for each full consecutive year following the closing that the borrower makes the subject property his primary residence from 20% to 10% up to 100% until the Closing Costs Loan is fully satisfied; and
WHEREAS, the City recognizes the demand to facilitate affordable housing to eligible applicants and the need to provide additional financial support throughout the neighborhoods; and
WHEREAS, the City of Newark has determined that there is a need to adjust the aforementioned loan amounts; and
WHEREAS, the Municipal Council on behalf of the City of Newark wishes to increase the Closing Cost Program loan amount from Twenty Thousand Dollars and Zero Cents ($20,000.00) to Fifty Thousand Dollars and Zero Cents ($50,000.00) to benefit Newark residents; and
WHEREAS, the Municipal Council finds and declares the following amendments to the Revised General Ordinances of the City of Newark, New Jersey, 2000, are deemed necessary.
NOW, THEREFORE, BE IT ORDAINED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
Note: Additions are shown as underlined and bold. Deletions are strikethroughs.
SECTION 1.
§ 2:10-7.2 CLOSING COSTS PROGRAM.
a. Closing Costs Program.
1. Establishment. The Department of Economic and Housing Development is hereby authorized to renew, implement and administer a Closing Costs Program in order to advance (but not to reimburse) up to $20,000 $50,000 (“Closing Costs Loan”) for Eligible Closing Costs to eligible closing Cost applicants, as those terms are defined in this subsection of the Live Newark Loan Forgiveness Program, pursuant to the minimum requirements set forth herein. The borrower(s) shall be responsible for any closing costs exceeding $20,000 $50,000. Modification of these minimum requirements may only be made by the Municipal Council.
SECTION 2.
§ 2:10-7.2 CLOSING COSTS PROGRAM.
a. Closing Costs Program.
4. Eligible Closing Costs. Eligible Closing Costs may consist of any one or a combination of the following items, as applicable, if said costs are to be payable at or immediately upon the transfer of the subject property from the seller to the applicant (as the buyer of the subject property) (“Closing”), subject to review by the Deputy Mayor/Director of the Department of Economic and Housing Development, at the Director’s discretion, up to $20,000 $50,000:
(a) Applicant’s legal fees;
(b) Appraisal fees;
(c) Credit report fees;
(d) Title search fees;
(e) Survey fees;
(f) Flood determination fees;
(g) Courier fees;
(h) Title Insurance;
(i) Transfer taxes;
(j) Recording fees;
(k) Loan processing fees; and
(l) Home inspection fees, including asbestos inspection fees, lead paint inspection fees and wood destroying pest inspection fees.
SECTION 3.
§ 2:10-7.2 CLOSING COSTS PROGRAM.
a. Closing Costs Program.
6. Disbursement of the Closing Costs Loan. Upon receipt of a Closing Costs Determination Letter indicating that an application for a loan under the Closing Costs Program has been approved, or thereafter upon request of the City, and the successful completion by the applicant of a first time homebuyer program approved by the City, the applicant shall promptly provide the Loan Administrator(s) with the written instructions for the amount of $20,000 $50,000 to be deposited into the applicant’s attorney’s trust account. The applicant shall be required to keep the Loan Administrator(s) apprised of the date for the closing and further, shall promptly advise the Loan Administrator(s) once the closing has been completed. If it is determined at the closing or thereafter that Eligible Closing Costs total or totaled less than $20,000 $50,000, any excess funds shall be promptly returned to the City. The failure to promptly return any such excess funds shall be deemed an event of default hereunder. Following the closing, the City shall take all necessary steps to establish and record with the Essex County Registrar a mortgage to be secured by a lien against the subject property in the amount of the loan extended to the applicant under the Closing Costs Program.
SECTION 4.
§ 2:10-7.2 CLOSING COSTS PROGRAM.
a. Closing Costs Program.
7. Forgiveness or Repayment of the Closing Costs Loan. Closing Costs Loans shall be made in the form of ten (10) year interest-free, forgivable loans, up to the amount of $20,000 $50,000. For each full, consecutive year following the closing that the borrower makes the subject property his or her primary residence, 10% of the amount of the total Closing Costs Loan shall be forgiven, up to 100%, until the Closing Costs Loan is fully satisfied. In the event that the borrower(s) sells or transfers the subject property, or the subject property is no longer the borrower’s primary residence at any time prior to the satisfaction of the Closing Costs Loan, the borrower(s) shall notify the Loan Administrator(s) accordingly. The borrower(s) shall then be required to repay the pro-rated amount to the City in an accelerated manner upon the borrower’s sale of the subject property from the sale proceeds or by prompt payment directly to the City, respectively. Upon full satisfaction of the Closing Costs Loan, the City shall discharge the mortgage upon the subject property in accordance with the terms of the loan documents.
By way of example, if the borrower(s) is disbursed $20,000 $50,000 but only makes the subject property his or her primary residence for two (2) years following the closing (i.e. equivalent to $2,000 $5,000 per year for a total of $4,000 $10,000), the borrower would be required to repay the City the pro-rated sum of $16,000 $40,000.
SECTION 5: If any provision of this Ordinance or application thereof to any person(s) or circumstance is judged invalid by a court of competent jurisdiction, the invalidity shall not affect other provisions or applications of the Ordinance that can be given effect without the invalidated provision or application, and to this end the provisions of this Ordinance are declared severable.
SECTION 6. Codification. This Ordinance shall be a part of the Code of the City of Newark as though codified and fully set forth therein. The City Clerk shall have this Ordinance codified and incorporated in the official copies of the Code. The City Clerk and the Corporation Counsel are authorized and directed to change any Chapter, Article and/or Section number of the Code of the City of Newark in the event that the codification of this Ordinance reveals that there is a conflict between the numbers and the existing Code, and in order to avoid confusion and possible accidental repealers of existing provisions not intended to be repealed.
SECTION 7. This Ordinance shall take effect upon final passage and publications in accordance with the laws of the State of New Jersey.
STATEMENT
This Ordinance Amends Title II, Administration, Chapter 10, Department of Economic and Hosing Development, Section 7, Live Newark Loan Forgiveness Program for Advancing Closing Costs, by amending Section 7.2, Closing Cost Program, to increase the amount of the Closing Cost Loan for eligible applicants under the Live Newark Loan Forgiveness Program.