Listen to this articleThe basics:
- NJHMFA approves $500M State Tax Credit Subsidy to spur development
- Auctions open Oct. 27 for tax credits
- Funds support workforce, affordable housing projects statewide
- Program aims to deliver billions in development
A newly approved state subsidy aims to incentivize private investment to create new workforce and affordable housing options in New Jersey.
The New Jersey Housing and Mortgage Finance Agency approved the State Tax Credit Subsidy program during an Oct. 2 board meeting. According to NJHMFA, the first-of-its-kind initiative will launch competitive auctions Oct. 27 at 9 a.m. for up to $500 million in New Jersey State tax credits.
Winning bidders can apply credits to the Corporate Business Tax or Insurance Premium Tax over the seven years following the auction purchase.
The auction portal will accept bids for 30 days on NJHMFA’s website. The minimum bid price per tax credit is 80 cents on the dollar. The agency says it will dole out a maximum of $100 million in subsidies each year.
The program debuts as municipalities statewide work through fourth round affordable housing obligations.
More than 400 Garden State towns adopted and filed plans to fulfil their mandates at the beginning of the summer. With the deadline to submit challenges passed Aug. 31, program decisions must be made by Dec. 31, 2025. The state’s fourth found assessment dictates approximately 150,000 units to address present and future housing needs.
NJHMFA Executive Director Melanie Walter characterized the STCS launch as a pivotal step toward expanding access to housing for low- to moderate-income families.
According to the agency, STCS will yield billions of dollars in total development.
“By creating a competitive and transparent auction for raising funds to subsidize workforce and affordable housing production, NJHMFA is unlocking new opportunities for public-private investment in the communities that need it most,” she said.
Walter went on to add, “The STCS Program strengthens NJHMFA’s financing tools and deepens NJHMFA’s impact – ensuring that more families across New Jersey have a place to call home.”
Hey, bid spender
Businesses interested in participating in the Oct. 27 auction should get a Tax Clearance Certificate from the New Jersey Division on Taxation. NJHMFA says these are available by emailing [email protected] or calling (609) 322-6835.
For more information on the STCS Program Fund, contact [email protected].
The agency anticipates auctions taking place over the next five to six years.
According to NJHMFA, the effort will return at least $400 million in housing production investment.
The agency said it will deposit funds received from the auction to the STCS Program Fund for housing production, less administrative and operational costs. Half of the money in the fund will go toward the creation of workers’ housing through the Workforce Housing Fund set-aside. The rest will go toward the Affordable Housing Production Fund. Both programs require pairing the gap subsidies with federal 4 Low-Income Housing Tax Credits.
NJHMFA also administers LIHTC.
STCS will create new affordable and middle-income housing for families earning between 80% and 120% of the area median income.
The Housing and Mortgage Finance Agency notes the program does not require new spending by the state. Instead, it said, the proceeds come from the sale of unused state tax credits already allocated to the Brownfields Redevelopment Incentives, the New Jersey Aspire and the Emerge program acts.
Creating options
“These tax credits make that dream possible and will spur the development of both affordable and workforce housing by closing critical financing gaps and moving long-awaited projects forward,” Assembly Speaker Craig Coughlin, D-19th District, said on the launch of STCS.
Said Senate Majority Leader Teresa Ruiz, D-29th District, “To truly confront New Jersey’s housing crisis and ensure every family has a place to call home, we need a comprehensive approach — one that not only expands affordable housing but also creates more options for middle-income families who don’t qualify for assistance yet remain priced out.”
According to Zillow, as of Oct. 1, the average monthly rent for all sizes and property types in New Jersey is $2,500. The site says rates here are 22% higher than the national average.
The agency will begin accepting applications for workforce and affordable housing subsidy applications this fall.
Approvals will be based on a project:
- Demonstrating it meets all eligibility requirements; and
- Has secured funding commitments from all other financing sources
Because STCS funding depends upon the sale of state tax credits, the NJHMFA Board will only receive subsidy award recommendations that match available funds.
At the start of September, the Department of Community Affairs issued a request for proposals for $45 million to support affordable housing projects. The Affordable Housing Trust Fund will make $35 million available to 10-20 projects statewide, with an additional $10 million dedicated for Habitat for Humanity projects.
