N.J. Admin. Code § 5:80-32.1
The following words and terms, when used in this subchapter, shall have the following meanings:
"Eligible LD sponsor" means a for-profit corporation or partnership organized under, and remaining subject to, the Limited Dividend Law, P.L. 1949, c. 184, § 1 et seq., as amended (N. J.S.A. 55:16-1et seq.) (repealed by P.L. 1991, c. 431, § 20 (N.J.S.A. 40A:20.1 et seq.)), that owns and operates an Agency-financed, multifamily, rental housing project that, in each of the three fiscal years preceding the housing investment sale, had:
1. Produced a positive cash flow from operations; and
2. Been current in all debt service and escrow payments required by the Agency.
"Housing investment sale" means a previously completed transaction that promotes the provision or maintenance of low and moderate income housing, as defined pursuant to the Fair Housing Act, N.J.S.A. 52:27D-301 et seq., through the sale by an eligible LD sponsor of an Agency-financed, multifamily, rental housing project to a qualified housing sponsor upon the following terms:
1. The buyer executed a deed restriction (and such other instruments reasonably required by the Agency) at the closing of the housing investment sale to ensure that the project will remain affordable to low and/or moderate income tenants as provided in the original mortgages; and subject to Agency restrictions regarding tenant income eligibility, tenant selection, project reserves, return on equity, rent increases, and the provisions at N.J.S.A. 55:14K-7bfor 35 years after the expiration of the term of the project mortgage. The foregoing documents shall also have provided for the payment of a servicing fee to the Agency through the end of the additional 35 years for monitoring the restrictions that apply to the project, such fee not being less than the servicing fee being paid by the eligible LD sponsor seller at the time of the housing investment sale; and
2. The eligible LD sponsor invested an amount equal to 50 percent of the maximum additional return in the Housing Investment Sale.
"Housing Investment Sales Account" means an account established under the Agency's administrative fund. Moneys on deposit in the account may be used, at the Agency's sole discretion, to provide loans or grants that will promote the provision or maintenance of low and moderate income housing as defined pursuant to the Fair Housing Act.
"Maximum additional return" means the additional return that was payable to the owners of an eligible LD sponsor under the Limited Dividend Law but not under the Housing and Mortgage Finance Agency (HMFA) Law, N.J.S.A. 55:14K-1 et seq.
"Maximum additional return" means the additional return payable to the owners of an eligible LD sponsor under the Limited Dividend Law but not under the Housing and Mortgage Finance Agency (HMFA) Law, N.J.S.A. 55:14K-1 et seq., consisting of:
1. Cash invested by the owners in the eligible LD sponsor that has not previously been recognized by the Agency as investment in a housing project (including, but not limited to, those amounts invested by the owners at the initial Agency mortgage closing; any DCE/CDE funds; and the reserve for repair and replacement account, the operating reserve account and the tax and insurance escrow accounts (being transferred to the buyer in conjunction with the housing investment sale);
2. A cumulative annual return of eight percent on the investment described in 1 above;
3. If project revenues representing the return described in 2 above have been invested in the project's residual receipts account or otherwise, any income earned on said annual return;
4. An amount equal to the total reduction or amortization of the original principal owing on the eligible LD sponsor's mortgage loan from the Agency; and
5. An amount equal to the increase in the market value of the eligible LD sponsor's realty and tangible personalty during the period such assets were owned by the eligible LD sponsor, such increase to be determined by subtracting the following from the purchase price for those assets:
i. The eligible LD sponsor's investment in the project as determined by the Agency under the HMFA Law; and
ii. The original principal amount of the eligible LD sponsor's mortgage indebtedness to the Agency.
"Purchase price" means, in a housing investment sale, a sum equal to the fair market value of the realty and tangible personalty transferred to the buyer in the sale said sum to be comprised of:
1. Assumption of the eligible LD sponsor's first mortgage loan from the Agency and any other indebtedness of the eligible LD sponsor secured by project assets;
2. Cash paid by the buyer at the closing of the housing investment sale; and
3. Such obligations or instruments of indebtedness of the buyer in favor of the seller as the Agency may approve pursuant to N.J.A.C. 5:80-32.3(c).
"Residual receipts" means the balance of funds (including Development Cost Escrow and Community Development Escrow funds) remaining after the deduction of the following items from the cash and the investment accounts of an eligible LD sponsor:
1. Debt service arrearages;
2. Current unpaid invoices;
3. Three months of operating expenses (for senior citizen projects) or six months of operating expenses (for family projects), which includes debt service and reserve payments, of the latest Agency approved annual budget;
4. Full funding of all required reserve accounts;
5. Anticipated or proposed capital improvements;
6. Any other current obligations of the qualifying development; and
7. Accrued but undistributed return on equity.
N.J. Admin. Code § 5:80-32.1