The purpose of the Affordable Housing Trust Fund Program is to provide municipalities, for-profit and non-profit developers with financial assistance to spur the development of affordable housing across the state. These affordable housing developments have the potential to not only provide high-quality, much-needed housing for NJ citizens, but also to strengthen neighborhoods and stimulate economic development across the state. With this allocation of the Affordable Housing Trust Fund, the NJ Department of Community Affairs (DCA) seeks to support municipalities with court-sanctioned affordable housing settlements in creating needed housing, to build on existing assets and collaborations by funding projects that leverage other state or local investments and public-private partnerships to increase the impact of these funds, and to support innovation and projects that maximize impact. Funding for the program is generated from a portion of the realty transfer fee that is deposited into the NJ Affordable Housing Trust Fund.

The current allocation of the Affordable Housing Trust Fund will support affordable rental and homeownership projects sized at 25 units or fewer, to create a funding stream for projects that fit into a variety of communities and that currently do not have a dedicated state funding stream. Financing will be distributed through three funds:

• Municipal Settlement Fund - This fund will help communities create smaller-scale projects that fit into the landscapes of their neighborhoods, and assists municipalities in fulfilling their court-sanctioned affordable housing settlements. Applicants may be municipalities or developers supported by the municipality, and municipalities will be required to provide leverage in the form of funding from their own Affordable Housing Trust Funds or, where there is no AHTF, in the form of publicly owned property made available at low or no cost, or some other form of investment. Approximately 50% of the allocation will be distributed through the Municipal Settlement Fund. The maximum subsidy available per project is $6,000,000.
• Neighborhood Partnerships Fund – This fund will support the development of affordable housing in Qualified Urban Aid towns and will prioritize projects that further community development initiatives through:
  
  • a) coordinated state investments from DCA or other state agency projects, such as:
    • Neighborhood Preservation Program (DCA)
    • Neighborhood Revitalization Tax Credit Program (DCA)
    • Main Street Program (DCA)
    • Transit Villages (Department of Transportation)
    • Local Aid and Economic Development (Department of Transportation)
    • Opportunity Zone Challenge Grant (Economic Development Authority)
    • 21^st Century Redevelopment Program (Economic Development Authority)
      Other State agency investments; and
  •  b) Partnerships with private sector investors such as:
    • Community Development Financial Institutions
    • Philanthropic Foundations
    • Anchor institutions such as hospitals
    • Other private partners

Approximately 40% of this allocation will be distributed through the Neighborhood Partnerships Fund. The maximum subsidy available per project is $6,000,000.

• Innovation Fund – This fund will provide financing for innovative projects, as well as funds for studies, plans and technical services for municipalities as allowed under the establishing statute for these funds. This fund will prioritize innovative projects that may not fit under the umbrella of the other two funds, such as makerhoods, tiny homes, housing innovations aimed at the Asset Limited, Income Constrained, Employed (ALICE) population, healthy homes, and new technologies. A portion of these funds may also be used for grants to municipalities to create long-term affordable housing plans and for capacity building initiatives, such as the creation of a technical guidance “library” offering case studies and how-to information on the development of new models of housing, changes in redevelopment practices, reducing regulatory barriers that increase construction cost, etc. Approximately 10% of this allocation will be distributed through the Innovation Fund. The maximum subsidy available per project is $2,000,000.

The DCA Commissioner has the discretion to alter the amount directed to each fund, or to waive provisions of these guidelines, to reflect the demand for these funds and the State’s priorities.

DCA will accept proposals for these funds on a rolling basis through an open Request for Proposals in the System for Administering Grants Electronically (SAGE). One unified application will be available for all three funds.

Eligible applicants include municipalities, for-profit and non-profit housing sponsors, individuals, corporations, and limited partnerships, etc.

Creation of affordable rental housing or homeownership units in developments of 25 units or fewer (targeted to households below 80% of Area Median Income). Eligible activities include acquisition and new construction, reconstruction or renovation of affordable rental housing or homeownership units. Eligible costs include hard costs, soft costs and developer fees as outlined in the Affordable Housing Trust Fund Guidelines. Funds can also be used to cover a lease-up reserve as detailed in the Guidelines. Ineligible costs include

• Project reserve accounts
• Development, operations or modernization of public housing
• Project or tenant-based rental assistance
• Payment of delinquent taxes, fees, fines or charges
• Payment of court-ordered judgments or governmentally imposed fines
• Projects that can be funded from other sources

The maximum subsidy available per project through the Municipal Settlement and Neighborhood Partnership Funds is $6,000,000. The maximum subsidy available per project through the Innovation Fund is $2,000,000. Financing will be structured as a soft second amortizing loan at 1% with a term equal to the affordability control period. Annual repayment is 50% of cash flow, if available. Developer’s fee will not exceed 8% of the project’s total development cost.

Projects must meet the requirements listed above, as well as the following:

• All financial sources must have written commitments
• Projects must be financially feasible as determined through DCA underwriting
• Debt coverage ration must be at least 1.2
• Projects must be completed within two years
• Projects must not be in a floodplain or environmentally sensitive area
• Applicant must be in good standing with NJ and the U.S. Department of Housing and Urban Development (HUD) if applicable
• Project must provide proof of site control (deed, contract of sale, option agreement, etc.)
• Project must provide original sealed resolution of support from applicant’s board
• Project must provide original sealed municipal resolution of support
• All projects must be permanent housing, and housing may not be contingent upon acceptance of supportive services
• Projects must use the NJ Housing Affordability Service as their Administrative Agent
• Projects must use the NJHMFA Resource Center and be affirmatively marketed
• Projects must follow the Uniform Housing Affordability Controls (UHAC)
• Projects participating in the Municipal Settlement Fund must demonstrate investment from the municipal Affordable Housing Trust Fund and/or other municipal investment (donation of land, etc.)

DCA will review and approve applications based on the following criteria:

Organizational capacity and strength of the development team - The applicant’s capacity and successful experience in developing and managing affordable housing projects will be crucial in ensuring that funds are obligated quickly and that projects are successfully completed in a timely fashion. Applications must demonstrate the following:

• • Applicant has experience in developing affordable housing
  • Applicant has demonstrated financial ability to develop the project
  • Applicant has demonstrated successful experience in quickly and efficiently achieving housing objectives through DCA or other similar housing development programs
  • Applicant has no loan findings or other outstanding issues with DCA or HUD
  • Project timeline is feasible, and project will be completed within two years of award
  • Project budget is feasible and reasonable

State priorities -- In addition to the criteria above, projects will be prioritized based on the following criteria:

• • Leverage provided
  • Sustainability/resilience
  • Walkability
  • Mixed use
  • Accessibility
  • Projects addressing gentrification
  • Projects providing deeper affordability, such as those targeting households earning less than 50% of AMI
  • Projects providing family housing, especially those providing units for larger families based on need in the community

For Municipal Settlement Fund projects, additional priorities include

• • Location of project in areas with employment opportunities, access to transit and educational opportunities
  • Projects serving targeted populations for which the municipality has determined an enhanced need (such as homeless families, people with special needs, etc.)

For Neighborhood Partnership Fund projects, additional priorities include:

• • Documented demonstration of coordinated state investments from DCA or other state agency projects, such as:
  • Neighborhood Preservation Program (DCA)
  • Neighborhood Revitalization Tax Credit Program (DCA)
  • Main Street Program (DCA)
  • Transit Villages (Department of Transportation)
  • Local Aid and Economic Development (Department of Transportation)
  • Opportunity Zone Challenge Grant (Economic Development Authority)
  • 21^st Century Redevelopment Program (Economic Development Authority)
  • Other State agency investments; and
  • Partnerships with private sector investors such as:
    • Community Development Financial Institutions
    • Philanthropic Foundations
    • Anchor institutions such as hospitals
    • Other private partners

Supportive housing projects and projects serving people who are homeless, seniors, and people with other special needs are encouraged in all three funds.

Additional Requirements

Please see the Affordable Housing Trust Fund Guidelines for more information about requirements and the process. DCA reserves the right to distribute projects equitably throughout the state. Please note that in addition to requirements in the Guidelines, all projects must meet the requirements of the Neighborhood Preservation Balanced Housing Rules N.J.A.C. 5.43-1.1 et seq. AFFORDABLE HOUSING TRUST FUND PROGRAM (AHTF) - PROGRAM GUIDELINES AND PROCEDURES

• DCA will hold a kickoff webinar to discuss the funds and the application process. Registrations for the webinar will be taken through the DCA website. Questions may be sent to AffordableHousing@dca.nj.gov. Prior to application submission, interested applicants may submit pre-applications (on DCA website) to AffordableHousing@dca.nj.gov and staff will contact you to discuss potential projects.
• Applications will be available through SAGE and will be reviewed on a rolling basis. Once received, staff will review applications to ensure they meet threshold requirements. Projects that meet threshold will move to underwriting. Staff will schedule meetings with the development team, as well as a site visit, as part of project review.
• Once the project has completed underwriting and project review, staff will make funding recommendations to the Commissioner of DCA. The Commissioner will have final approval.
• DCA anticipates that funding decisions will be made within three months of application submission.