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ORDINANCE AMENDING TITLE X, FINANCE AND TAXATION, CHAPTER 24, PROCEDURES FOR APPLICATION, APPROVAL AND ADMINISTRATION OF LONG TERM TAX EXEMPTIONS, SUBSECTION 11, AFFORDABLE HOUSING TRUST FUND OF THE REVISED GENERAL ORDINANCES OF THE CITY OF NEWARK, NEW JERSEY, 2000, AS AMENDED AND SUPPLEMENTED BY EXPANDING THE GUIDELINES FOR THE EXPENDITURE OF THE AFFORDABLE HOUSING TRUST FUNDS.
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WHEREAS, the Newark Municipal Council adopted Title X, Finance and Taxation, Chapter 24, Procedures for Application, Approval and Administration of Long Term Tax Exemptions, Subsection 11, Affordable Housing Trust Fund establishing an Affordable Housing Trust Fund pursuant to N.J.S.A. 40A:12A-4.1; and
WHEREAS, the City wishes to amend the Guidelines for the Expenditure of Funds under its Affordable Housing Trust Fund to afford the City with more flexibility for the expenditure of funds towards affordable development projects within the City.
NOW, THEREFORE, BE IT ORDAINED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
[Note: Additions are shown in bold and underlined and deletions are shown as strikethrough.]
Section 1. Title X, Finance and Taxation, Chapter 24, Procedures for Application, Approval and Administration of Long Term Tax Exemptions, Subsection 11, Affordable Housing Trust Fund of the Revised General Ordinances of the City of Newark, New Jersey, 2000, is hereby amended and supplemented to read as follows
10:24-11. AFFORDABLE HOUSING TRUST FUND.
An abatement authorized pursuant to this Chapter for any market rate housing project and/or housing development, or any commercial or industrial project and/or development shall not be approved unless the entity makes a contribution to the City of Newark's Affordable Housing Trust Fund, in accordance with N.J.S.A. 40A:12A-4.1 et seq. and this Chapter (the “Fund”).
No contribution shall be required of an entity that by a recorded deed or agreement, restricts (thereby setting aside) a minimum of twenty (20%) percent of the project and/or development for low and moderate income affordable housing for a minimum period of thirty (30) years in accordance with the Fair Housing Act, N.J.S.A. 52:27D-301 et seq.
a. Amount of payments. The amount of contribution shall be calculated based upon the classification of the improvements to be tax exempt in accordance with the following formulas:
Market Rate Housing: $1,500.00 per unit
Commercial Space: $1.50 per square foot
Industrial Space: $.10 per square foot
b. Time of Contribution. All contributions shall be due and payable as follows:
1. One-third (1/3) on or before the effective date of the executed Financial Agreement;
2. One-third (1/3) on or before the issuance of the first of any construction permit for the project and/or development, but no later than six (6) months after the date of the Financial Agreement;
3. One-third (1/3) on or before the date the first of any Certificate of Occupancy is issued for the project and/or development, but no later than twenty-four (24) months after the date of the Financial Agreement.
Any payment that is late or unpaid in whole or in part, whether billed or not, shall bear the highest rate of interest allowed by law for unpaid taxes until paid in full.
c. Notices. The entity shall send a written notice to the Business Administrator and the Tax Assessor's Office, immediately advising the City of the occurrence of each of the following events:
1. The submission of the executed Financial Agreement to the City;
2. The filing of the application for the first construction permit for the project and/or development; and
3. The issuance of the first Certificate of Occupancy by the Construction Code Official for any part of the project and/or development.
d. Guidelines for the Expenditure of Funds. All contributions made to the Affordable Housing Trust Fund shall be expended solely for the rehabilitation or preservation of existing low or moderate income affordable housing or the construction of new low or moderate income affordable housing as those terms are defined in the Fair Housing Act, N.J.S.A. 52:27-301 et seq., and any regulations promulgated thereunder (the “FHA”), and/or any other federal programs administered by the United States Department of Housing and Urban Development (“HUD”), where applicable, in the discretion of the City of Newark.
All funds shall be awarded by the City from the Affordable Housing Trust Fund pursuant to an Affordable Housing Agreement in form and substance approved by the City as loans or grants, on a reimbursement basis only, to supplement other private or public funds needed to complete the project and/or the low or moderate income housing development.
No award will be approved unless the Applicant at a minimum satisfies the following conditions:
1. An Applicant must file a completed application form; which shall include an administrative questionnaire, financial disclosure statement and any other forms or supporting documents the City deems appropriate or necessary; and
2. An Applicant must provide proof that it is a for profit or a nonprofit entity, organized under State and Federal Law for the purpose of constructing affordable housing or a public entity; and
3. An Applicant must demonstrate that it or a related entity has successfully completed the construction of at least one other significant housing project and/or affordable housing development; and
4. An Applicant must provide proof that it is the recipient of funds from another public or private source that, together with the Trust Fund award, will constitute sufficient funds to complete the proposed project and/or affordable housing development; and
5. The Applicant must commence construction no later than one (1) year from the date of the award of the Trust Fund money. Failure to commence construction within one (1) year will result in cancellation of the award.
e. Dedication of Funds. The funds shall be used only for the rehabilitation, preservation or construction of low or moderate income housing projects and/or developments consisting of either rental units or ownership units in accordance with the FHA Fair Housing Act, N.J.S.A. 52:27D-301 et seq. and/or any other federal programs administered by HUD, where applicable, in the discretion of the City. Two (2%) percent of the funds shall be retained by the City for its own administrative fees and/or capacity building activities for local development corporations.
No funds shall be distributed to an entity earlier than closing date of the first mortgage. The funds shall be distributed in accordance with and in proportion to the construction draws which the entity is scheduled to receive from the financing source(s)
f. Collateral and Security. All loans and grants shall be secured and collateralized by a note and the recordation of a mortgage executed and made by the Applicant in favor of the City to ensure compliance with the rules and regulations of the program. A qualified low to moderate income homebuyer shall also execute and deliver a note, mortgage and Beneficiary Agreement, in form and substance as approved by the City, which shall be recorded to ensure the homebuyer’s compliance with the requirements of the program as determined by the City. With respect to the Applicant, the mortgage may only be subordinated to a permanent governmental loan or a private institutional lender used to finance the initial project and/or affordable housing development acquisition or construction. With respect to a qualified homebuyer, the mortgage may only be subordinated to a permanent governmental loan or a private institutional lender used to finance the acquisition of the ownership unit. All loans or grants, including self-amortizing loans, may shall bear interest as to be determined by the City on a project-by-project and unit-by-unit basis at a rate not to exceed the interest rate imposed on the first mortgage as of the 1st day of the month immediately preceding the closing. The City shall have the discretion to defer or forgive the payment or accrual of interest for all loans or grants provided by the City from the Fund.
Section 2. Any prior ordinances or parts thereof inconsistent herewith are hereby repealed and superseded by this Ordinance.
Section 3. If any part of this Ordinance is declared unconstitutional or illegal, the remaining provisions shall continue in full force and effect.
Section 4. This Ordinance shall take effect upon final passage and publication in accordance with the laws of the State of New Jersey.
STATEMENT
This ordinance amends and supplements Title X, Finance and Taxation, Chapter 24, Procedures for Application, Approval and Administration of Long Term Tax Exemptions, Subsection 11, Affordable Housing Trust Fund of the Revised General Ordinances of the City of Newark, New Jersey, 2000, by amending and supplementing Subsection 11 by expanding the guidelines for the expenditure of the Affordable Housing Trust Funds.