N.J. Admin. Code § 5:43-3.11

Current through Register Vol. 56, No. 21, November 4, 2024

Section 5:43-3.11 - Distressed projects

(a) The Balanced Housing Program may provide assistance to eligible applicants applying on behalf of existing Balanced Housing projects in need of additional financial assistance to establish and/or ensure the ongoing viability of the housing.

(b) Applicants, their subsidiary or parent corporations receiving funding pursuant to this section, shall not be eligible for any other form of Balanced Housing assistance for a period of two years from the time that such funding is received.

(c) Eligible projects shall be limited to those proving severe financial distress and an inability to meet normal operating and debt service obligations. Inability to meet debt service ratios, fund reserve accounts, pay deferred developer fee and/or any other partnership distributions, shall not be considered indicators of severe financial distress.

(d) Eligible projects must be in service for at least two years and shall be in compliance with all affordability control, audit and reporting requirements of the Grant Agreement and loan documents from the Division.

(e) The amount of assistance and the terms and conditions of assistance shall be at the discretion of the Commissioner.

(f) Applicants will provide documentation of need including, but not limited to:

1. A narrative report setting forth the reason(s) that assistance is necessary, steps that have been taken to establish stability, and a specific dollar request for financial support from the Balanced Housing program;

2. Annual audits for the project for all years since the project was completed or placed in service;

3. A Copy of the Equity Investor agreement, if the project has received LIHTCs, including current contact information for the equity investor;

4. A listing of all project debt (hard and soft), the names and current contact information of lenders, the terms and conditions, the current balance and status of all loans;

5. A Certification from the developer/general partner as to the total amount of developer fee allowed, initially taken and still pledged to the project;

6. A Certification from the developer/general partner/equity investor as to any cash infusion into the project after the project was placed in service;

7. A Capital Needs Assessment for the project done by an independent party (architect/engineer), or by the owner using a form approved by the Department and reviewed and certified by the Technical Services Division of the NJHMFA;

8. A 20-year cash flow projection; and

9. A Copy of the Municipal Payment in Lieu of Taxes (PILOT) Agreement.

(g) Sponsors of moderate rehabilitation projects shall be required to demonstrate on-going management capacity and financial feasibility of the project for the length of the control period including, but not limited to, the provision of reserves to ensure timely repair and replacement of any systems not addressed during the initial rehabilitation.

(h) An applicant may request an exception to the allowable annual rental increase subject to the following:

1. A sponsor may request an exception to the allowable annual rental increase no more then once during a 10 year period;

2. If the rents are not subject to review and approval by HUD or subject to automatic annual adjustments pursuant to a valid Housing Assistance Payments contract, or regulated by a local rent control board, then the Commissioner may make or approve a rent increase without a hearing, as long as the resulting rents do not exceed the rents in effect for the same units in the housing project at any time in the previous 12 months by more than the combined percentage of (h)2i and ii below:

i. The allowable increase identified in the existing program affordability control documents for the project; and

ii. The percentage, up to a maximum of 12 percent annually, needed to fund operation deficits, debt service arrears or reserves for repair and replacement incurred at the housing project. No part of the rent increase shall be used for return on equity to the sponsor;

3. If a rent increase is requested, the applicant must provide proof that all tenants have been notified, in writing, of the request. The letter must specify the percentage increase being requested and how it will affect rents; and

4. The allowable rent increase shall be at the sole discretion of the Commissioner and shall be final.

N.J. Admin. Code § 5:43-3.11

New Rule R.1996 d.226, effective 5/20/1996.
See: 28 N.J.R. 6(a), 28 N.J.R. 2573(a).
Former section, "Landlord projects", recodified to 5:14-3.10.
Repeal and New Rule, R.2007 d.202, effective 7/2/2007.
See: 38 N.J.R. 3711(a), 39 N.J.R. 2517(a).
Section was "Matching funds projects".