Part I: Assessing Housing Needs and Policy Tools in New Jersey
A. Current Housing Needs in New Jersey
Housing affordability is shrinking in New Jersey. Although the state’s median income is in the top ten nationwide, there is significant income inequality and racial segregation.3 In 2017, nearly one in five New Jersey households spent at least half of their income on housing costs.4 That same year, New Jersey had the highest foreclosure rate in the country.5 Additionally, with 565 municipalities and an emphasis on “home rule” (i.e., local autonomy of municipalities) New Jersey has prolific and difficult-to-navigate zoning requirements that reduce available affordable housing stock. The Mount Laurel Doctrine, established by the New Jersey Supreme Court in the 1970s and 1980s, requires each municipality to provide for its “fair share” of the regional affordable housing need.6 But political opposition rendered the state Council on Affordable Housing ineffective beginning in the early 2000s, and unmet affordable housing need grew. In 2018, a New Jersey Superior Court trial judge declared unmet fair housing needs to be greater than 150,000 homes for the period 1999–2025.7
Quick Facts on Housing Cost Burden in New Jersey (2018 data):
• Half of all renters in New Jersey are cost-burdened. Nearly three in ten renters spend more than half of their income on housing (i.e., are severely cost-burdened).
• 84% of New Jersey renters earning less than $50,000 per year are cost-burdened.
• The portion of renters who are cost-burdened rose by 0.5 percentage points since 2010 in New Jersey even as it fell by 0.7 percentage points across the USA.
Despite the economic expansion after the Great Recession, the rising cost of housing and other basic expenses has outpaced wage growth.8 States like New Jersey suffer from two key problems: first, wage stagnation makes housing less affordable for households. Second, housing costs are rising quickly because there are not enough homes to meet diverse housing needs across different income levels. Barriers to housing construction include, but are not limited to, rising cost of construction material, limited supply of land, and restrictive zoning laws.
Data Source: US Census Bureau, “2014-2018 ACS 5-Year Estimates”.
Figure 1: What Qualifies as Lower Income for a Family of Four in New Jersey?
The National Low Income Housing Coalition ranked New Jersey as the fifth most unaffordable state for renters in 2019. The average renter in New Jersey earned $18.68 per hour, which is enough to afford an apartment with a $971 monthly rent. But the Fair Market Rent for a two-bedroom apartment was $1,501, which would be affordable only for a worker earning an hourly wage of $28.86 or greater.9 Moreover, in 2017, 573,000 renter households and 699,000 owner households were cost-burdened.10
A close look at the data on cost burden levels reveals a greater need to prioritize NJHMFA’s resources to serve very low-income (VLI) and low-income households. Figure 1 shows various income levels of New Jersey households earning less than 80% of the area median income (AMI).
Data Source: U.S. Department of Housing and Urban Development
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% of AMI 2019 2018 Moderate Income 80% $80,400 $76,100 Low Income 50% $50,250 $47,550 Very Low Income (VLI) 30% $30,150 $28,550
As Figure 2 shows, many more lower-income households are cost-burdened than are higher-income households, and cost burden will have detrimental impacts on these households now and in the future. VLI and low-income households are more likely to spend a greater portion of their incomes on housing and other necessities compared to higher-income groups.11 Therefore, among housing cost-burdened VLI and low-income households, an economic shock—e.g., a job loss or a large health-related expense—is more likely to force these families to cut spending on necessities or to risk eviction. This is particularly relevant with some economists predicting another recession within the next two years.12 Government intervention may be needed to prevent a vicious cycle that can lead to homelessness and displacement.
Figure 2: Cost Burden Share Across Renter Households in 2010 and 2018
Data Source: U.S. Census Bureau, 2006-2010 American Community Survey 5-year Estimates; 2014-2018 American Community Survey 5-year Estimates.
Note: excludes households whose cost burden data could not be calculated, which is about 5% of the renter population in New Jersey. The dollar figures are based on household income.
Housing needs among seniors are also dire, but NJHMFA’s targeted efforts to serve this population seem to be working. Three in five renters over the age of 65 are cost-burdened. However, as Figure 2 shows, the portion of senior renters who are cost-burdened fell since 2010 (from 64.1% to 61.7%), even as it barely moved in the country (from 61.1% to 61.0%). In New Jersey, the number of senior renters increased by 20% from 2010 to 2018 while the number of cost-burdened senior renters increased by 16%. Meanwhile, both the number of senior renters and the number of cost-burdened senior renters increased by 30% over the same time period in the country.
The improvements in New Jersey may be attributable in part to NJHMFA’s programs that fund housing for seniors. Since 2010, the Agency has funded with LIHTC approximately 2,500 senior units across the state. Moreover, the share of LIHTC units allocated for seniors rose from 24% in 2013 to 45% in 2017.13 The QAP’s strategic allocation of LIHTC to seniors may explain some of the change in cost burden rates among seniors.
The need for affordable housing in New Jersey is particularly acute among those who qualify for supportive housing. Supportive housing provides affordable rents and voluntary onsite services to assist those whose life experiences or health conditions impose barriers to securing and maintaining stable housing. In New Jersey, individuals who are experiencing homelessness, are living with a disability, have previously been incarcerated, have aged out of foster care, are in treatment for a substance use disorder, or are living with HIV/AIDS are among those eligible for supportive housing.14
The number of individuals in New Jersey who may qualify for supportive housing is staggering. Presently, 142,750 people with limited resources and living with a disability receive Supplemental Security Income (SSI) in New Jersey.15 The state has 18,514 veterans living in poverty.16 It has a homeless population of 9,398, a number which is likely underestimated.17 There are presently 34,820 incarcerated people, and exiting the criminal justice system leaves some homeless.18 New Jersey has 10,916 children in the foster care system, and
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Data source: U.S. Census Bureau, 2014-2018 American Community Survey 5-year Estimates. For interactive versions of the maps in this report, visit: http://bit.ly/WWS-NJHMFA-Storymap
18% of this population is age 14 or older.19 Upon turning 18, these children will age out of the system, which leaves an estimated one in five youth homeless.20 New Jersey also has a particularly large population of individuals facing substance use issues. For every 100,000 people in the state, there are 352 opioid use-related hospitalizations and 21.5 opioid-related deaths, a significantly higher rate than the national average of 14.2 deaths per 100,000 people.21 The Corporation for Supportive Housing estimates New Jersey’s supportive housing need at 17,987 units, excluding seniors.22 Since 2010, NJHMFA has allocated LIHTC credits for nearly 1,700 affordable supportive housing units.23 As with New Jersey’s affordable housing stock, there are simply not enough supportive housing units to meet the underlying need. It is crucial that state agencies work to meet the supportive housing needs of the most vulnerable New Jerseyans, whose circumstances compound the challenge of securing safe, secure, and decent housing.
B. Projected Trends in Housing Needs in New Jersey
Population shifts must inform housing needs assessments. The state’s growth depends upon its ability to retain young people, maintain a thriving labor force, meet the needs of children and seniors, and maintain housing affordability while keeping up with demand. Understanding population projections can help NJHMFA prepare for the housing needs of a future New Jersey with a residential makeup different than today’s.
Population and labor force projections from the New Jersey Department of Labor and Workforce Development (NJDOLWD) show that by 2034, the average age of New Jersey’s residents will dramatically shift. NJDOLWD expects the senior population to increase by 63% by 2030, making seniors nearly 20% of the total
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Figure 3: Cost Burdened Households by Census Tract in 2018
Among housing cost-burdened low-income households, an economic shock— e.g., a job loss or a large health-related expense— is more likely to force these families to cut spending on necessities or to risk eviction.
population.24 Meanwhile, the population of children in middle school and younger (age 14 and below) is not expected to grow significantly by 2034. In eight counties, this population is expected to decrease by 2034. These age trends may have a significant impact on labor force participation rates, as the share of working age residents between the ages of 18–64 years old is expected to decline.
The importance of the housing market for seniors will intensify, and the housing preferences and growth patterns from decades ago will have important modern-day implications for seniors in the state. As seniors age in place, they find themselves in suburban, car-dependent neighborhoods. Given the housing stock of the state, many seniors will be living in single-family homes without easy access to neighborhood amenities, increasing their risk of social isolation.25
Access to affordable housing is critical for seniors, particularly as incomes tend to decrease with age. Across metropolitan areas in New Jersey, the proportion of households headed by those age 65 and older who are cost-burdened ranges from 25% to 46%. Trenton, Newark, and Jersey City all have some of the highest rates in the nation of cost-burdened homeowners age 65 and older.26
Population shifts and changes in housing demand and value will also be impacted by climate change, which should be considered as part of the state’s population projections, smart growth strategies, and planning. With high sea level rises, an estimated 79,000 New Jerseyans would see their homes “chronically inundated” by floods (defined as 26 floods per year) by 2045, and the homes of an additional 375,727 people would be chronically inundated by 2100.27 Currently, mortgage lenders and other financial entities critical to the housing market, including NJHMFA, do not consider climate change projections beyond whether a property is located in a 100-year flood plain, and 30-year home mortgages may not be available in areas with predicted flooding as the market gets more sophisticated in risk analysis.28 In light of New Jersey’s coastal geography, NJHMFA should include anticipated displacement and destabilization caused by climate change in its future forecasting and planning.
C. Opportunity and Smart Growth in New Jersey
Addressing housing needs requires creating enough units, ensuring they are affordable, and building them in the “right” locations. Selecting the “right” locations for affordable housing often centers on whether the location provides a household with access to economic opportunity and high-performing schools as well as on whether building in the location follows “smart growth” principles. Understanding the qualities of high-opportunity areas and smart growth areas helps shed light on where and how NJHMFA presently incentivizes affordable housing development and how it should do so in the future.
Incentivizing development in high-opportunity areas creates potential benefits stretching across generations. Simply put, where you live matters. Location determines access to well-paying jobs, high-performing schools, and ample food options. In the context of affordable housing development, there is no single accepted definition of opportunity. That has not stopped policymakers from attempting to pinpoint opportunity and incentivize it. An analysis conducted by the National Housing Trust found that all states attempt to promote building in opportunity-rich neighborhoods in some manner through their QAPs.29 How and to what extent opportunity is incentivized varies greatly.
In New Jersey, smart growth policies currently play a key role in how the state defines opportunity and shapes its planning efforts. New Jersey’s brief definition of smart growth is found in the New Jersey State Development and Redevelopment Plan, which was adopted in 2001. NJHMFA’s definition of smart growth reads:
“Smart growth areas” means areas that promote growth in compact forms and protect the character of existing stable communities. A compact form of development combines an efficient use of land, natural resources, and public services. An area shall be considered to be a smart growth area if it is within Planning Area 1 [metropolitan], Planning Area 2 [suburban], or within a Designated Center on the State Plan Policy Map. In the Pinelands Area, an area shall be considered to be a smart growth area if it is within a Regional Growth Area, a Pinelands Village, or a Pinelands Town.30
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Though not included in NJHMFA’s definition of smart growth, key features of smart growth policies also include walkable communities, mixed-use centers, a variety of housing and transportation choices, increased land-use density, and environmental conservation. Smart growth increases residents’ freedom to choose where they live, work, and play by engaging community members in development decisions, pursuing environmentally sustainable development, preserving open space and agriculture, making the most of existing infrastructure, and maximizing options for where a family can live and how they can get around.31 These considerations are especially important in the Garden State. New Jersey is coastal, has the densest population in the country, and is squeezed between New York City and Philadelphia at the center of the East Coast megalopolis. These factors present planners with acute challenges related to the environment, economic development, and infrastructure.
According to the Smart Growth Network, the basic principles of smart growth encourage municipalities to:
• Mix land uses
• Take advantage of compact building design
• Create a range of housing opportunities and choices
• Create walkable neighborhoods
• Foster distinctive, attractive communities with a strong sense of place
• Preserve open space, farmland, natural beauty, and critical environmental areas
• Strengthen and direct development towards existing communities
• Provide a variety of transportation choices
• Make development decisions predictable, fair, and cost effective
• Encourage community and stakeholder collaboration in development decisions
Source: The Smart Growth Network, “What Is Smart Growth?,” March 16, 2015.
D. Responsibilities and Roles of NJHMFA and Other State Stakeholders
Promoting a variety and choice of housing opportunities in New Jersey is a team effort that requires political will and coordination. Responsibility for affordable housing programs is divided among several State agencies, particularly NJHMFA and the Department of Community Affairs (DCA). NJHMFA is “established under, but is not a part of” DCA, though the Commissioner of the Department of Community Affairs—currently Lieutenant Governor Sheila Oliver—is ex officio chair of NJHMFA.32
Programs administered by NJHMFA include LIHTC, Section 811 Rental Subsidy for development of supportive housing for people living with disabilities, preservation financing, and the Special Needs Housing Trust Fund. It also administers single-family homeownership programs such as the Down Payment Assistance Program for first-time homebuyers. NJHMFA has relatively few sources of “soft funds” directly under its control—i.e., grants and other funding to fill financing gaps and ensure projects are feasible. To secure gap financing to complete the capital stack for an affordable housing project, a developer may seek out financing from other government agencies in addition to NJHMFA, as well as from private or nonprofit sources.
In New Jersey, DCA administers U.S. Department of Housing and Urban Development (HUD) programs, such as Section 8 Housing Choice Vouchers, the National Housing Trust Fund (NHTF), Community Development Block Grants (CDBG), and the HOME Investment Partnerships block grants. It also oversees the state-level
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State Rental Assistance Program (SRAP), the Neighborhood Revitalization Tax Credit (NRTC), and Neighborhood Preservation Balanced Housing funds, also known as the New Jersey Affordable Housing Trust Fund (AHTF). In some other states, housing finance agencies administer these kinds of programs. Two other state-level agencies—the New Jersey Economic Development Authority (NJEDA) and the New Jersey Redevelopment Authority (NJRA)—provide some funding for projects that include affordable housing components, although these agencies’ primary functions are related to economic development and business growth. Additionally, the Office of Planning Advocacy (OPA) oversees the New Jersey State Development and Redevelopment Plan, which guides statewide development, and the Department of Human Services (DHS) has a role in supportive housing. Other levels of government also have responsibility for affordable housing financing. For example, in addition to DCA, 27 New Jersey counties and municipalities administer HUD HOME funding. Additionally, following a 2009 state law, counties are permitted to charge a document fee to establish county-level Homeless Trust Funds, and at least 11 such funds have been created.33 Figure 4 summarizes how responsibility for several key affordable housing programs and related programmatic areas is divided among various agencies in New Jersey.
Figure 4: Responsibility for Key New Jersey Affordable Housing Programs, Financing, and Planning
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NJHMFA DCA NJEDA NJRA DHS OPA Courts County & Local Gvt Federal LIHTC X HUD ConPlan programs X HOME X X CDBG and CDBG-DR X (DR) X Housing Choice vouchers X Housing Trust Fund X Section 811 Rental Subsidy X State Bond financing X X X X AHTF X SRAP X State Plan X Economic development tax credits X X NRTC X Special Needs Housing Trust Fund X Supportive housing funding (various sources) X X X Fair share housing plans X X Homelessness funding (various sources) X X X
The construction of affordable homes is generally completed by either for-profit or nonprofit developers. Both types of developers access financing from NJHMFA and other agencies. For-profit developers are more likely to complete the kinds of large-scale projects supported by financing tools such as LIHTC, while nonprofit community development corporations tend to complete smaller projects in targeted regions. New Jersey has many active nonprofit community development corporations; however, their productivity has declined in recent years due to sustained cuts to statewide affordable housing funding.34
Part II: Analysis and Recommendations for NJHMFA
As the analysis in Part I indicates, New Jersey needs to build significantly more affordable housing, and need for affordable housing is especially great among low-income and VLI households, seniors, and special needs populations. Part II identifies ways NJHMFA should address these needs using its most powerful financing and policy tools. It focuses on areas where the Agency has the greatest opportunity to maximize housing production and to advance other affordability and smart growth objectives, drawing on best practices from other states.
The following recommendations are addressed to NJHMFA, recognizing the constraints of a housing finance agency while also taking into account how the state as a whole can best allocate its resources to increase affordable housing supply.
A. Update the Qualified Allocation Plan to Address Identified Areas of Need
A QAP is a state’s plan for LIHTC allocation. In states like New Jersey where LIHTC allocation is a highly competitive process, the QAP functions as a tool to score developers’ applications for these tax credits. NJHMFA maintains New Jersey’s QAP and allocates the state’s share of LIHTC. Policy goals are embedded within the QAP; for example, QAPs may allocate points based on characteristics such as a project’s location, proximity to community resources, or energy efficiency.35 The QAP can encourage developers to meet the needs of underserved populations by awarding extra points for projects that set aside units for special populations or keep units affordable for long periods of time. The QAP is a powerful tool, allowing states to encourage or discourage development in certain areas. For instance, in New Jersey, the QAP allocates points for “ready to grow areas,” Opportunity Zones, and Targeted Urban Municipalities (TUMs).
Given the ability of the QAP to advance policy goals, we recommend several revisions to the QAP to help address New Jersey’s affordable housing needs. Some of these QAP recommendations are designed to incentivize lower development costs, while other recommendations may increase development costs by incentivizing services for populations with greater needs, by promoting deeper or longer affordability, or by encouraging more expensive features of design or location. The former group of recommendations would allow NJHMFA to expand quantity—i.e., to build more affordable housing. The latter group would result in better quality of affordable housing and help address areas of high need, but it could result in fewer units of affordable housing overall. When implementing reforms, the Agency should incorporate an evaluation process to review this tradeoff and to measure the outcomes of new incentives.
1. Increase access to high-opportunity areas.
While changes to New Jersey’s QAP over the years have successfully decreased the number of LIHTC properties sited in high-poverty areas, there is less conclusive evidence that they have otherwise meaningfully increased residents’ access to opportunity. A number of studies have demonstrated NJHMFA’s success in deconcentrating poverty. For example, analysis conducted by New Jersey Future found NJHMFA’s 2013 QAP changes reduced the number of LIHTC projects sited in neighborhoods with concentrated poverty by 29.8
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percentage points.36 However, as john a. powell, head of the Haas Institute for a Fair and Inclusive Society at the University of California, Berkeley notes, poverty is more than just a measure of the poverty rate; it must be considered within a web of opportunity.37 A variety of factors make up that web, from education and healthcare to steady and well-paid employment.
The National Housing Trust identifies five overarching themes prevalent in state QAP definitions of opportunity:
1. Access to Education: Does the QAP prioritize neighborhoods with access to schools and/or universities?
2. Economic Jobs/Growth: Does the QAP prioritize access to jobs and/or low unemployment rates within a community?
3. Income Levels: Does the QAP prioritize areas with high income levels and/or low poverty rates?
4. Access to Health Care: Does the QAP prioritize hospitals, doctors and/or health services in close proximity?
5. Access to Transportation: Does the QAP prioritize access to public transportation and/or shorter commute times?
Source: National Housing Trust & Freddie Mac Multifamily, “Opportunity Incentives in LIHTC Qualified Allocation Plans,” 2018.
Currently, NJHMFA addresses these broader aspects of opportunity through point incentives for proximity to “positive land uses.” The list of positive land uses includes items with a logical connection to opportunity (e.g., high-performing schools, daycare centers, and full-service supermarkets), but it also includes items with a more tenuous connection to opportunity (e.g., post offices, county court houses, and department stores).38 Notably, in contrast to the majority of states, NJHMFA does not maintain an explicit definition of what constitutes a high-opportunity area in its QAP. More than half of all states use an explicit definition in their QAP, and 59% have a definition that is mappable or is already mapped statewide.39 NJHMFA does, however, use the Municipal Revitalization Index (MRI) created by DCA to identify and map TUMs. These are cities with high levels of distress that NJHMFA prioritizes for investment through an allocation set-aside. NJHMFA has the expertise to monitor and map geographic quality. Currently, however, this expertise is used to drive investment to distressed areas without a corresponding analysis of access to opportunity.
An explicit, mappable definition of opportunity provides a host of benefits. Most importantly, it offers a more nuanced and cohesive picture of the factors that affect outcomes for families. A composite measure acknowledges that it is not proximity to any single land use, but rather a confluence of many factors, that determines the level of opportunity in a neighborhood.
When incentivizing transit-oriented development (TOD), NJHMFA should consider the
following:
1. Service Type: Distinguish between hard rail, light rail, and bus rapid transit, as well as the service type (e.g., commuter rail vs. daily service).
2. Service Frequency: Prioritize more frequent service. The generally accepted standard for high frequency transit is service every 15 minutes, but NJ should identify it’s own parameters.
3. Transit Access: Take into consideration pedestrian access to transit. Projects that have a connected sidewalk to a transit station are much more valuable than a project close to a station but on the other side of the highway.
4. Population Density: Consider areas that have the necessary population density or potential zoning to support high frequency transit.
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A precise, mappable definition of opportunity also sends a much clearer signal to developers about areas they should consider siting projects. Indeed, one complaint that arose in interviews with affordable housing developers in New Jersey is the difficulty in adhering to arbitrary proximity measures to things such as transit stops. As it is currently constructed, the QAP’s point allocation for positive land-use does not necessarily reflect conditions of the overall neighborhood nor whether those land-uses generate meaningful opportunities for households. Identifying opportunity at the neighborhood or regional level could simplify this process and reduce the gamesmanship it encourages. It can also spur positive changes within the Agency itself.
Housing finance agencies interviewed for this report that have incorporated an opportunity map into their QAPs acknowledged it made them more likely to track and evaluate the effectiveness of their policies over time. It should be noted, however, that the purpose of the LIHTC program is not solely to maximize access to opportunity. The program was originally designed also to spur investment in distressed, lower-income communities, with the hope of revitalizing underinvested neighborhoods. As NJHMFA considers how to better incentivize opportunity, it should be mindful of this dual purpose of the program as well as the systemic racism that has driven racial segregation and racist housing policies, depriving some majority-minority communities of resources and leading neighborhoods to be designated as “low opportunity.” Figure 5 visualizes one possible opportunity index for the state of New Jersey.
A very high opportunity tract has:
(a) a low unemployment rate
(b) a high median household income
(c) a low rate of adults with less than a high school degree
(d) a low rate of severely cost-burdened renters
(e) a low child poverty rate
(f) a rate of individuals without health insurance
Z-scores were calculated for each indicator and averaged across census tracts. The results were then broken into quintiles, with equal numbers of tracts in each bin.
Data source: U.S. Census Bureau, 2013-2017 American Community Survey 5-year Estimates; NJHMFA-provided data on LIHTC allocations. For interactive versions of the maps in this report, visit: http://bit.ly WWS-NJHMFA-Storymap
The map displays a relative comparison of New Jersey census tracts based on a composite index of opportunity measures. The index is modeled after the one used by the Ohio Housing Finance Agency, using the methodology developed by the Kirwan Institute at the Ohio State University.40 This index is intended as a proof of concept. The index uses normalized census tract level data for six indicators across education, health and
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Opportunity
Very Low Low Moderate High Very High Legend
9% LIHTC Allocations 2010-18
Census Tracts
Mapping Opportunity in New Jersey Figure 5: New Jersey Opportunity Map
the economy. For example, a very high-opportunity tract has: (a) a low unemployment rate, (b) a high median household income, (c) a low rate of adults with less than a high school degree, (d) a low rate of severely cost-burdened renters, (e) a low child poverty rate, and (f) a low rate of individuals without health insurance. Each census tract is assigned a composite score and then broken into quantiles (i.e., the top 20% of scores are designated “very high” opportunity, the next 20% “high opportunity” and so on). Using this measure, only 29% of 9% LIHTC-funded properties between 2010 and 2018 were located in census tracts designated as high- or very high-opportunity areas. The indicators in this measure overlap with those included in the MRI. Median household income and the unemployment rate are included in both, as are measures of educational attainment and poverty. If used to prioritize cities with a low rank, the MRI could function as the basis of an opportunity index. It should be noted, however, that the MRI was constructed fundamentally as a measure of distress, not opportunity. As such, it does not currently include measures related to criteria like health or transportation that a curated opportunity index might consider and which also determine the relative opportunity of a place.
NJHMFA deserves credit for success in deconcentrating poverty. This success shows the Agency already has the tools to proactively promote opportunity. To this end, we recommend that NJHMFA implement the following policy changes.
a. Create an explicit definition of opportunity and use it to identify and map regions for tax credit allocation priority.
The index mapped in this report provides a place to start, but we recommend NJHMFA work with other state agencies (e.g., DCA, Department of Health) to refine the measures that represent opportunity in the New Jersey context. This could be achieved by creating a new opportunity index or by expanding the measures included in the MRI to more broadly encompass the factors contributing to opportunity.
NJHMFA should also conduct a survey or otherwise gather feedback from LIHTC project residents to better understand residents’ perceptions of opportunity. Research demonstrates that resident perceptions of opportunity often differ from what statistics can capture.41 Therefore, NJHMFA’s definition of opportunity would benefit from being informed by, and evaluated based on, the lived experience of households and perceptions of their own opportunity and wellbeing.42
An opportunity index could be piloted with a set-aside allocation of tax credits for a project in a high-opportunity area in a future funding round. Using a map or index does not mean that existing incentives, like proximity to high performing schools, need to be eliminated. The opportunity map could be layered on top of existing incentives or set-asides (to preserve the urban/suburban split, for example). Ohio began its opportunity map as a pilot for a few select counties before expanding statewide. We recommend a similar pilot phase to test the measures in the index that best capture opportunity in the New Jersey context, measured against economic, health, and resident satisfaction outcomes.
b. Make it easier for affordable housing developers to build in high-opportunity areas.
This recommendation addresses two aspirations: to make it easier for developers to build in high-opportunity areas, and at the same time ensure that low-income and very low-income renters can afford rents in these new buildings. Developments in high-opportunity areas tend to have higher-than-average total development costs due to constraints such as higher construction costs, a lack of buildable parcels, and greater zoning and regulatory barriers. These costs reduce the likelihood of affordable housing being built in high-opportunity neighborhoods. To offset this effect, NJHMFA could award 30% basis boosts to projects seeking to build in designated high opportunity areas. The power to award such basis boosts at their discretion was granted to HFAs under the Housing and Economic Recovery Act of 2008. The Texas HFA incorporated a 30% basis boost for high opportunity areas in 2010 and saw a significant increase in the number of units built in those areas.43
As NJHMFA makes it easier to build in higher opportunity areas, the Agency must also ensure units are accessible to those most in need. Because LIHTC rents are pegged to AMI, buildings in higher-opportunity areas tend to command higher rents. In some cases, even subsidized LIHTC rents are too high for very
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low-income renters to afford without additional subsidies because regular operation and maintenance costs alone can be prohibitively high for very low-income renters.44 Therefore, to ensure buildings in high opportunity areas also serve very low-income renters, NJHMFA could pair the 30% basis boost with a required unit set-aside for individuals making 0% to 30% of AMI. Michigan, for example, offers a 20% basis boost to projects restricting 20% of their total units to 30% AMI or less.45 This set-aside requirement would be independent of the income-averaging incentives discussed in the next section.
2. Extend affordability of LIHTC units.
NJHMFA can leverage existing funds to increase future affordable housing supply by extending the life of affordable units. LIHTC projects that reach the end of their affordability periods are at risk of conversion to market-rate units. Unlike in some states where a greater share of LIHTC allocations go to nonprofit development organizations with indefinite affordability baked into their missions, the majority of sponsors utilizing LIHTC credits in New Jersey are for-profit developers. The pro forma revenue projections of these for-profit developers reflect an expectation of market-rate conversions. NJHMFA can create new points or a set-aside of tax credits to incentivize developers to commit to affordability periods beyond even 45 years. Since there is a strong competition for the 9% credits, developers are likely to extend the affordability of their projects to maximize their points on the QAP.
For example, Oregon’s QAP requires 60 years of affordability on all 9% projects.46 Even with this requirement, Oregon’s 9% credits have been consistently oversubscribed.47 The City of Portland has gone a step further and added a 99-year affordability requirement in its Inclusionary Housing program.48
It is important to note that longer affordability requirements will effectively commit the state, municipalities, and developers to refinancing of the affordable project regardless of how the real estate market may change after 30 years. While planning for long-term affordability may make sense in hot real estate markets, requiring more than 30 years of affordability in some municipalities also creates the risk that affordable housing projects will be located in places where a longer subsidy would not help NJHMFA achieve its mission. Moreover, total development cost can be higher with longer affordability requirements because the developer needs to set aside a greater capital reserve for significant expenses occurring after 30 years. As such, while we expect for-profit developers would adapt to this change, we do not anticipate they would do so eagerly.
To extend affordability, NJHMFA can also incorporate a “right of first refusal” for all 9% credit projects. This would give the state or mission-driven nonprofit organizations the first opportunity to acquire LIHTC projects at the end of their affordability periods. In order to ensure the projects are available at a reasonable price, NJHMFA should also set price restrictions on the resale price of a project at the end of the affordability period when a right of first refusal is exercised. Specifically, NJHMFA can tie the maximum resale price to the federally-determined AMI to ensure the state or other sponsor has a reasonable opportunity to acquire the building. For example, a building occupied by residents with incomes at 50% of AMI should be priced such that the new sponsor can continue renting to residents with similar levels of income. In essence, the resale value of an affordable housing project should move in proportion with the changes in AMI. This contractual arrangement would give NJHMFA future flexibility to preserve affordable units, and thus reduce displacement, without committing itself to the financing of a specific building and its surrounding real estate market after the end of the initial affordability period.
Washington State’s Department of Revenue has published a Low-Income Housing Valuation Guide49 to help calculate an appropriate sale price of LIHTC projects. A series of formulas is used to set a maximum sales price. One of the valuation methods generates two estimates: a Restricted Leased Fee Value using
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Photo credit: NJHMFA 2019
income-limited rents and an Unrestricted Market Value using market rents. The final value of the project is set in between the two estimates and depends on the discount rate that is used. This guide can be a template from which NJHMFA establishes its own methodology.
NJHMFA can also extend affordability by limiting use of qualified contracts. This can be accomplished by either requiring or incentivizing that they be waived in the QAP. Currently, LIHTC property owners are allowed to sell properties after 15 years by requesting a “qualified contract” from the Agency. If NJHMFA cannot find a buyer for the qualified contract within a year after the owner has declared their intent to sell, then the owner is released from all LIHTC restrictions. This process threatens rent affordability for all developments in the extended use period, but it can be prevented if the owner has waived their right to seek a qualified contract.
To address this, many states have introduced point incentives or requirements in their QAPs for waiving the right to request a qualified contract. South Carolina awards five points for waiving the right and Tennessee awards four to ten points for deferring requests for qualified contracts.50 In 2019, Oregon and Virginia changed their QAPs to require the waiver for all future LIHTC projects.51 While it is unclear whether an outright restriction on qualified contracts is more appropriate than point incentives, NJHMFA should choose one of these two options to prevent loss of rent affordability after the fifteenth year.
3. Encourage deeper affordability.
Trends in housing affordability indicate a greater need to focus LIHTC allocations toward households earning less than 50% of AMI. To participate in the LIHTC program, a development must meet one of the following conditions: at least 20% of its units are affordable for households at or below 50% AMI, or at least 40% of the units must have an average affordability equal to or below 60% AMI (with the maximum allowable rent being affordable to households at 80% AMI). Although deeper affordability is technically permitted, as both options allow for underwriting rents below the AMI thresholds, for-profit developers are financially incentivized to maximize revenues by setting rents as high as possible while still remaining LIHTC-eligible. Additionally, designating “the least amount of tax credit per tax unit” as a tiebreaker for project funding in the QAP discourages deep affordability, since these developments often require more tax credits per unit. Indeed, the share of LIHTC units targeted at households earning less than 50% of AMI has been trending downward in New Jersey, from 59% in 2013 to 45% in 2017.52
NJHMFA currently encourages deeper affordability in its QAP by offering one bonus point to applications that underwrite 20% of units (not including those with other rental assistance) for rents affordable to households earning 30% AMI or below.53 However, developers can also claim the same bonus point by setting aside at least 20% of their units for market-rate tenants or by using NJHMFA’s traditional multifamily pooled permanent bond financing, so it’s unclear whether this incentive impacts affordability. Because of the relative lack of supply of units affordable below 50% AMI, NJHMFA should adjust its QAP to incentivize the development of housing affordable to New Jersey households with incomes below 50% of AMI using one or several of the recommendations below.
a. Introduce sliding-scale incentives for income averaging and non-tax credit leverage.
NJHMFA should consider a sliding-scale incentive that awards more points to applications proposing to serve lower average income levels. A sliding-scale incentive provides a progressively larger point award as performance on a desired metric improves. In this case, as the average rent (corresponding to a certain income level measured as a percentage of AMI) falls for a proposed development, its application will receive more points, up to a specified maximum. Maryland and Washington State currently have versions of sliding scales for deeper affordability, and South Carolina has proposed adding one for its 2020 QAP.54 By itself, however, a sliding-scale income-averaging incentive may not be wise at a time when NJHMFA is trying to maintain its level of financing support while all federal Superstorm Sandy disaster recovery funding has been committed by the Agency. Without complementary cost-containment incentives in the QAP, winning projects will likely require a greater per-unit tax credit subsidy. Since the tiebreaker—the main reward for developments with a smaller per-unit LIHTC subsidy—would be rendered less meaningful by a sliding scale, an income-averaging sliding scale should also be paired with a sliding scale incentive to limit the per-unit LIHTC subsidy. As the
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percentage of non-state financing per unit increases, an application will receive more points, up to a specified maximum. Care must be taken to specifically define “non-state financing” to meet NJHMFA goals. As an example, Maryland includes Community Development Block Grant funds and other rental housing resources administered by its HFA in its definition of state financing, while allowing Multifamily Bond Program proceeds, basis boost equity, and demolition funds to count toward the “leveraged” amount.55
Taken together, these point incentives are likely to be more effective than requirements to set aside a certain percentage of units at a lower income level. The combination of these two incentives obliges developers to
Maryland’s Department of Housing and Community Development (DHCD) prioritizes serving lower income households with its 9% tax credit allocation, awarding up to 10 points (out of 200) for pricing rents affordable from an average household income of 55.5% AMI down to 32% AMI. The award increases from zero points at 55.5% AMI by a half-point for every 1.5-point drop in the target AMI household income band.
Source: Maryland Department of Housing & Community Development, “Multifamily Rental Financing Program Guide: Attachment to Maryland Qualified Allocation Plan for the Allocation of Federal Low Income Housing Tax Credits,” February 14, 2019.
trade off points between the two scales to reach the lowest average AMI in the most efficient way possible. The sliding scales should be designed such that it is difficult to achieve perfect scores simultaneously on both scales. For example, NJHMFA might consider awarding up to three points for developments proposing to price rents down to an average of 40% or 45% of AMI across the development, which likely would be challenging to achieve without a large amount of LIHTC financing per unit.
Use of sliding scales for income averaging and tax credit leveraging would provide NJHMFA with the added benefit of making perfect scores and ties much less likely. Ties have been common in prior NJHFMA funding rounds, and the tiebreaker has been the lowest tax credit cost per unit. When ties are commonplace, the tiebreaker necessarily becomes the decisive criterion determining which projects are funded. By reducing the frequency of ties, sliding scales would give NJHMFA more flexibility to differentiate along several measures in awarding credits rather than relying so heavily on the cost containment criteria.
When used to promote deeper affordability, sliding-scale point incentives have consequences NJHMFA must anticipate. First, as described, the tiebreaker incentive will become less relevant. Second, it is possible that these incentives will inadvertently advantage projects in higher-income areas. Because rents are set as a percentage of AMI, a project in a higher income area will generate greater rental revenues, and thus more operating income, than an equivalent project in a lower-income area. If deeper affordability is rewarded through the QAP, developers may find it increasingly difficult for projects in lower-income areas to both be competitive and to be financially feasible. For this reason, some states like Washington have bifurcated their sliding-scale incentives so that projects in lower-income areas receive more points for the same average AMI.56 Note that NJHMFA may find one or both of these consequences to be beneficial.
b. Adjust the caps on tax credit allocations and per-unit total developments costs for the Supportive Housing Cycle.
Affordability could also be incentivized within a specific cycle, and the Supportive Housing Cycle would be a good candidate. Supportive housing is one of the most difficult forms of affordable housing to make financially feasible, due to high operating costs for ongoing supportive services combined with rent caps to ensure its affordability for tenants with special needs. Currently, the QAP places a cap on tax credit allocations per project ($1.4 million for the Supportive Housing Cycle and the Senior Cycle, $1.75 million for Family Cycle) and per-unit total development costs from $275,000 to $325,000, depending on the number of stories in the building.57 Adjusting the values such that the Supportive Housing Cycle has a higher maximum per-unit total development cost than the Family or Senior Cycles could help supportive housing developers assemble a larger capital stack, providing additional financial bandwidth to serve lower AMI households.
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4. Improve targeting of special needs populations.
Supportive housing can take a variety of forms, but generally it is affordable, permanent, income-restricted housing that offers voluntary social and/or health services for individuals with special needs. These units are typically designed for residents with incomes below 50% AMI who pay no more than 30% of their income towards rent. Permanent Supportive Housing (PSH)—where residents have leases in their own names and full tenant rights, regardless of whether they participate in support services—originally started as a solution to chronic homelessness, and has since become the gold standard of supportive housing across populations who are vulnerable to homelessness and/or institutionalization.58
NJHMFA prioritizes production of supportive housing for twelve categories of individuals with special needs, both through its Supportive Housing Cycle and by incentivizing unit set-asides in the Family Cycle. New Jersey deserves celebration as one of only six states to set aside a designated portion of its LIHTC allocation for supportive housing.59 Yet because the need for supportive housing is greater than the volume produced annually, we recommend NJHMFA be more targeted and intentional about the types and quality (including fidelity to the PSH model) of its supportive housing projects.
The twelve populations with special housing needs, as outlined by NJHMFA are:
• Individuals with mental illness
• Individuals with developmental disabilities
• Ex-offenders and youth offenders
• Runaway and homeless youth
• Disabled and homeless veterans
• Individuals in treatment for substance abuse
• Individuals with physical disabilities
• Victims of domestic violence
• Youth aging out of foster care
• Individuals and families who are homeless
• Individuals with HIV/AIDS
• Individuals in other emerging special needs groups identified by State agencies
Source: NJHMFA, “Proposed 2019-20 Qualified Allocation Plan (QAP),” November 19, 2018.
Currently, QAP applicants choose their project’s population without explicit guidance from the state. As such, these populations are not prioritized based on trends in New Jersey’s special needs population. A review of projects funded by NJHMFA in the 2013–2019 Supportive Housing Cycles shows nearly six of ten beds created for a special needs population went to tenants with a physical, mental, or intellectual disability who were registered with the Division of Developmental Disabilities, part of the New Jersey Department of Human Services.
Data sources: NJHMFA-provided data on LIHTC allocations along with NJHMFA press releases and independent analysis of individual project type and population served.
*Percentage calculated from total number of beds created, including those for which the population served is unknown
*Includes homeless sub-population designations (i.e., homeless women with children; homeless youth; homeless individuals with coexisting mental health needs)
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Figure 6: Percentage of New Beds Funded through the Supportive Housing Cycles (2013-2019), by Special Needs Population
Figure 7: Beds and Units Created for the 12 Special Needs Populations Designated by NJHMFA through the LIHTC Supportive Housing Cycle (2013 – 2019)
Data Sources: NJHMFA-provided data on LIHTC allocations along with NJHMFA press releases and independent analysis of individual project type and population served.
A Special needs beds created for each special needs population using 9% LIHTCs is indicated in the chart above. Note this is the number of beds, not the number of units
B Includes homeless sub-population designations (i.e., homeless women with children; homeless youth; homeless individuals with coexisting mental health needs)
C Defined as a physical or intellectual disability - which were often not distinguished in NJHMFA’s tracking data
D Percentage calculated from beds and units where special needs population data is available
Of the 561 supportive housing beds for which we have complete data, only 24 were PSH beds for people living with substance use disorder (the remaining are temporary beds) and zero were for formerly incarcerated New Jerseyans, despite formerly incarcerated New Jerseyans comprising 25% of the need estimated by the Corporation for Supportive Housing. Currently, NJHMFA does not actively track the populations being served through the Family Cycle 5% / five-unit set-aside point category.
While this breakdown may indeed reflect underlying population needs, it is not informed by a comprehensive statewide review of needed units. NJHMFA reports a key factor in choice of special needs population is the availability of housing vouchers and/or service provider funding. While this does reflect available resources, an important consideration, it does not necessarily reflect underlying need. In this spirit, NJHMFA should conduct an analysis of statewide need for each of the special needs populations and provide guidance from this analysis to developers. Without such an analysis, it is not clear whether the current allocation of tax credits is best serving the needs of New Jersey’s most housing insecure residents. One potential consequence of such an analysis would be a real or perceived competition between special needs populations for LIHTC allocation. However, a comprehensive analysis of statewide supportive housing opportunities and gaps could generate political and public support for greater overall investment in supportive housing.
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Special Needs Beds CreatedA 2013 2014 2015 2016 2017 2018 2019 Total % of TotalD HomelessB 30 14 0 27 11 4 0 86 16% DisabilityC 60 82 64 28 40 34 20 328 62% Mental Health 0 0 0 0 0 0 0 0 0% Substance Use 40 24 0 0 0 0 0 64 13% Domestic Violence 0 12 0 0 0 0 0 12 2% Veteran 0 0 14 0 6 0 0 20 4% Re-Entry 0 0 0 0 0 0 0 0 0% TransitionAged Youth 0 0 0 0 0 16 0 16 3% Person Living with HIV/AIDS 0 0 0 0 0 0 0 0 0% Unknown 35 10 N/A N/A N/A N/A N/A 45 Total 165 142 78 55 57 54 20 571
following steps:
a. Track robustly the quantity and durability of special needs units funded through the Family and Supportive Housing funding cycles.
As stated, NJHMFA does not actively track which special needs populations are selected for set-aside units in its Family Cycle. NJHMFA also does not track or monitor the status of supportive units over time—for example, whether they continue to be rented to the special needs population designated in the application or to any special needs residents at all. Without this information, the Agency will have difficulty evaluating its effectiveness at meeting population needs. We recommend thorough and ongoing tracking as a first and vital step in an ongoing evaluation.
b. Prioritize special needs population(s) identified as having the highest unmet housing needs in the Supportive Housing Cycle through point allocations in the QAP. Under the current Supportive Housing Cycle, developers will serve the populations for whom it is easiest to secure funding, to gain municipal support, and to provide services. Given the clear commitment of the Agency to supportive housing, it is a missed opportunity for NJHMFA to not actively incentivize developers to use the tax credits for New Jersey residents most in need by awarding points for serving these populations in the Supportive Housing Cycle of the QAP. NJHMFA should take a more active role to ensure credits in the Supportive Housing Cycle go to the populations most in need, to track the allocation of credits by special needs population, and to set explicit goals for housing production targeted for specific populations. The designated targeted populations should be based on the results of a statewide supportive housing needs assessment and should be revised on a regular basis with the QAP revision.
As one potential model, NJHMFA can look to the Indiana Housing and Community Development Finance Agency. In 2017, Indiana began proactively selecting populations of focus for its supportive housing LIHTC allocations. Applicants are required to participate in a Supportive Housing Institute, and expectations for what high-quality “support” looks like are established in the application and further clarified through technical assistance throughout the Institute.60
Washington State takes a different approach. Given the scope of need and the availability of local and state funding to address homelessness, Washington State prioritizes projects with significant supportive housing components within its 9% LIHTC allocation. Projects can receive up to 35 points (out of a total of about 130) for setting aside between 50–75% of units as PSH. Of the 1,020 new units funded through Washington State’s 2019 cycle, 602 were PSH units and all projects included at least some PSH units for people experiencing homelessness, ranging from 13 to 75 units for people experiencing homelessness per project.61
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To ensure supportive housing development is aligned with population need, NJHMFA should take the
Photo credit: NJHMFA 2019
c. Require developers to work with their local Continuums of Care when designing and leasing-up supportive housing projects and multifamily set-aside units for individuals and households experiencing homelessness.
Currently, New Jersey’s QAP recommends that projects with units for homeless individuals or families have a letter of support from their local Continuum of Care. New Jersey’s sixteen Continuums of Care (CoCs) are designed to access and address homelessness within their respective regions, and some maintain by-name lists of people experiencing homelessness, as well as their special needs and vulnerabilities.62 Consequently, CoCs are well positioned to help NJHMFA better align the projects it funds with local needs. NJHMFA should require, rather than recommend, that developers housing families and individuals experiencing homelessness secure a letter of support from their local Continuum of Care indicating how they will collaborate.
NJHMFA should also require that projects with units for people experiencing homelessness maintain updated records through the Homeless Management Information System (HMIS), currently managed by the Agency. HMIS supports statewide homeless response coordination and monitoring of supportive housing quality.63 Currently, the QAP offers two points to supportive housing developers that give each resident a lease in their own name and full tenant rights. This is what makes supportive housing “permanent,” as housing is not conditional on participating in available supports nor time-limited to the length of a social service or health program.64 To monitor permanency, Indiana is beginning to require HMIS use by all supportive housing units for individuals experiencing homelessness, which in turn will enable the state to investigate if they notice an unusual number of evictions, which could be symptomatic of poor fidelity to Permanent Supportive Housing principles.65 We suggest NJHMFA adopt this monitoring practice for developments serving individuals experiencing homelessness.
d. Expand the QAP definition of “in treatment for substance abuse.”
There is no single treatment universally recommended for substance use disorder, and New Jerseyans may not be actively enrolled in existing treatment programs for many reasons. We encourage NJHMFA to have a more expansive definition of what “treatment” entails. Currently, the QAP defines “individuals in treatment for substance abuse” as “any individual who is a client of programs funded and/or licensed by the New Jersey Department of Human Services, Division of Mental Health and Addiction Services.” We suggest NJHMFA coordinate with the Department of Human Services, along with the New Jersey Department of Health and the newly-created Office of Homelessness Prevention at DCA, to update this definition so that it does not require active participation in a treatment program. For example, a collaboratively-created definition could include participation at one of the state’s Harm Reduction Centers, allow for referrals from case managers at the state’s substance use treatment hotline, or prioritize those identified in HMIS as experiencing a substance use disorder or chaotic substance use. Expanding this definition would create the opportunity for projects that deploy a Housing First model, which does not require abstinence or participation in a treatment program, to be funded through the Supportive Housing Cycle.
e. Incentivize projects that use universal design architecture in all funding cycles.
Projects that practice universal design are those “usable by all people, to the greatest extent possible, without the need for adaptation” and that “meet the broadest spectrum of abilities regardless of age, ability or life status.”66 By promoting a universal standard of accessibility, NJHMFA can increase the quantity of affordable accessible housing that is appropriate for New Jerseyans with a wide range of abilities—for example, those with special needs who do not require supportive housing or those whose needs change over time due to age, accident, or illness. Universal design not only benefits New Jerseyans today by increasing variety and choice for those living with a disability, it’s also smart design because it prepares for a future when population needs may be quite different than they are today. As of 2017, six states included incentives for universal design in their QAPs.67 While universal design could increase development costs, housing stock that can adapt to population needs and that is inclusive of tenants with a wide range of abilities also offers long-term benefits that will accrue over time. In New York City, prohibitively expensive renovations have caused developers to struggle with renovating units for an aging population. Developing according to universal design principles would help ensure that all populations can access the units and avoid high renovation costs in the future.
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5. Incentivize long-term rental assistance from non-governmental sources in the Supportive Housing Cycle.
NJHMFA should amend the QAP to award two points to supportive housing projects with project based rental assistance from non-governmental sources. These points would complement the two points NJHMFA already awards to supportive housing projects with project-based rental assistance from government sources.
This recommendation is based on the Flexible Housing Subsidy Pool in Los Angeles County. The Flexible Housing Subsidy Pool is distributed by the County Department of Health Services for the housing and service needs of individuals experiencing homelessness in LA County, including housing based supportive services, rental agreements, and both project and tenant based rental assistance. For everyone dollar spent on housing for this population a study by RAND found a net savings directly to the LA County health care system of $1.20.
While this program is not a non-governmental source of rental assistance incentivized through a QAP, the Flexible Housing Subsidy Pool does provide a model for leveraging non-governmental funding in affordable housing for special needs populations. The funding for the Flexible Housing Subsidy Pool is provided by foundations, primarily the Hilton Foundation, L.A. Cares (one of two Managed Care Organizations in Los Angeles County), the Los Angeles County Department of Health Services, and other governmental agencies including the local office of diversion and re-entry. The program launched in February 2014 with an initial contribution of $14 million from Los Angeles County and $4 million from the Conrad N. Hilton Foundation.
This would incentivize developers to work with non-government stakeholders who have helped fund supportive housing development in other states, such as hospitals, managed care organizations, and foundations (as highlighted in section II-C-3 of this report, “Expand partnerships with healthcare institutions”). These stakeholders have provided critical soft funds in addition to capital and in-kind land donations.
In Los Angeles and Chicago, for example, they have provided rental assistance and social service funding for some of the “hardest to serve” special needs populations like individuals experiencing homelessness, acute mental health substance abuse disorder needs, justice involvement, or medical frailty.68 Typically, these funds are used to provide rental or social service supports for the non-governmental parties’ population of interest in supportive or affordable housing.
To ensure this funding provides long-term benefits, the QAP should include explicit guidelines for what qualifies as non-governmental rental assistance and require the assistance to, at minimum, mirror the structure of Section 8 project-based financing. Almost all state QAPs incentivize federal vouchers, and many also incentivize state and local rental assistance. A few states—including Utah, Hawaii, Indiana, New Hampshire, and New Mexico—allow non-governmental sources of rental assistance, subject to state standards for qualifying rental assistance and approval by the entity allocating tax credits in the state.69 New Jersey should follow their lead. This change would complement the Agency’s active effort to engage other stakeholders in housing financing, as in its innovative hospital partnership, and provide a flexible tool for partnerships to come.
Source: Los Angeles County Department of Health Services, “Housing for Health-Highlights”.
B. Leverage Other Financing Tools to Produce Variety and Choice of Housing
NJHMFA receives no direct funding from the State of New Jersey and only small amounts from the federal government for various programs. It is crucial that the Agency find innovative ways to continue to finance affordable housing given its financial constraints. Other government-subsidized funding streams, such as tax-exempt bonds and tax credits, are some of the best ways to produce much-needed rental housing in
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New Jersey. However, New Jersey often maximizes the use of its federally-allocated annual tax-exempt bond volume cap (currently about $935 million, of which roughly 50% is allocated by the State Treasurer to NJHMFA every year). Faced with similar constraints, other states have found creative ways to better leverage their allocations of tax-exempt bonds and tax credits to increase affordable housing production, as explained in two examples below. The Agency should consider implementing these policies.
1. Use bond recycling and bifurcated financing to reuse and preserve limited bond volume cap.
Authorized in the Housing and Economic Recovery Act of 2008, bond recycling involves refunding some of a state’s unused tax-exempt bonds for use in future affordable housing projects. As the New York University Furman Center for Real Estate and Urban Policy explains, “Recycling allows for reuse of tax-exempt bonds that are only needed for a few years, far short of the potential years of tax-exempt financing possible with private activity bonds.”70 Prior to 2008, short-term bonds and longer-maturity bonds both counted against a state’s volume cap. The relationship between 4% credits and bonds requires that “an initial level of bond financing will no longer be needed once a project has completed construction or been placed in service.”71 As bond-financed projects reach this stage, volume cap that was previously used by the project where the loan has been prepaid can be used again for future multi-family housing. This allows the bonds to be reused, or recycled, without allocating additional volume cap.
The State of New York used this method to generate nearly $2 billion in recycled tax-exempt bond financing, which in turn helped finance almost 70,000 affordable housing units from 2009–2017.72 New York City has been effective at using recycled bond revenues for middle-income housing.
The law does not allow New York to “double-dip”—that is, to use recycled bonds with new 4% tax credits since they had originally been paired with 4% credits in the first project. Instead, the City has used the bonds for middle-income housing, as this requires less subsidy- and gap-financing due to relatively higher rents. In cities and states with tight housing markets, bond recycling can be a source of extra funds for middle income housing without decreasing tax-credit financing available to projects with deeper affordability.
New York City also successfully preserved more of its bond cap allocation by bifurcating financing for mixed income projects. When using 4% tax credits and bonds to finance affordable housing, bonds must be used to cover 50% of total development costs (TDC). As the law stands now, if the project is less than 100% affordable, the bond proceeds still need to cover 50% of TDC. Through bifurcated financing, the 50% test would only apply to the tax credit (i.e., the affordable) portion of the development, rather than the whole project with potential market rate units. This would free up bonds to be used for other affordable developments.73 There is great potential in New Jersey for bond recycling and bifurcated financing.
As cities across the state look to build more mixed-income projects, NJHMFA needs to leverage its bond cap allocation as much as possible to maximize rental unit production. NJHMFA should reach out to the New York City Housing Development Corporation for specific financial records showing how bonds are recycled from one deal to the next and the legal frameworks used to comply with the Housing and Economic Recovery Act.
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The state of New York generated nearly $2 billion in recycled bonds to help finance roughly 70,000 units from 2009-2017.
Recently proposed federal legislation would make bond recycling easier by extending the length of time in which recycled bonds must be used.74 Representatives from both sides of the aisle in large and small states support the measure, indicating broad support for expanding bond recycling.
2. Explore and encourage separate ownership of tax credit deals to maximize eligible basis and to produce larger projects with more affordable units.
Several states, including Virginia, Maryland, and California, have encouraged split ownership of tax credit deals in what they call “twinning”, “hybrid deals”, or “stretching the 9s,” to maximize the use of their scarce 9% credits. This is made possible by allowing a development to be divided into two discrete deals with separate ownership structures. One deal is constructed using 9% credits and the other with 4% credits, which stretches the limited 9% credits to maximize their efficiency.
This structure allows states to build denser projects with more units by “monetizing” the unused “eligible basis,” or cap on tax credits.75 States often put a lower cap than that required by the IRS on the amount of tax credits a developer or project can receive in every allocation cycle, which spreads 9% tax credits across more projects. The New Jersey 2019–2020 Qualified Allocation Plan (QAP) places a $1.75 million cap on tax credits for Family Cycle projects and $1.4 million cap for Senior and Supportive Housing Cycle projects. By creating a split-ownership structure with 9% and 4% credits, projects can reach the cap of 9% tax credits laid out in the QAP for the 9% “owner one” deal while utilizing the remaining eligible basis for 4% credits and bonds in the “owner two” deal.
This allows developers to produce more units on the same site, increasing density. In some cases, this frees up enough 9% credits for a state to allocate for an additional affordable project.76 The Virginia Housing Development Authority (VHDA) proposed a first-of-its-kind incentive in their QAP for this twinning model and has seen great success. Developers who blended the 9% and 4% tax credits were awarded more points for their projects. In 2015, the first year the incentive was implemented, VHDA produced 707 units of affordable housing through these hybrid deals. In 2018, 2,368 units were built in fourteen developments in hybrid deals, underscoring the popularity and success of the incentive. Ultimately, Virginia has been able to fund at minimum an additional project of approximately 70 units each year using 9% credits that were not used because of the proliferation of hybrid deals.77 Maryland has already added an incentive in its QAP for developers to use leveraged funds gained through such hybrid deals.
New Jersey should incentivize hybrid deals and the additional affordable units they can produce in future QAPs. They can do this by awarding more points to projects that use this structure, depending on the Agency’s anticipated bond volume cap utilization.
For states that have not hit their volume cap, splitting the deals to use more 4% credits and bonds instead of 9% credits allows the 9% credits to be leveraged further for additional projects, as seen in Virginia. For years in which New Jersey does not anticipate using its full volume cap, incentivizing this structure in the QAP could free up 9% credits to use for more projects. However, there are still benefits if the Agency anticipates hitting its volume cap.
By monetizing unused eligible basis, this ownership structure has the potential to increase density by creating more units on a single site. NJHMFA should keep in mind that these deals tend to be more complex and work
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Virginia used hybrid deals in fourteen developments to produce 2,368 units in 2018. The Virginia Housing Development Authority estimates that an additional, medium sized 70-unit project can be built each year as a result of its program.
best in areas with potential for increased density and soft funding. Since the deals are more complicated and require strict adherence to rules surrounding 9% and 4% credits, bond counsels, developers, and HFAs refer to “brain damage,” or added mental strain, accompanying hybrid deals. However, New Jersey can benefit from attorneys and developers in others states who already navigated this process and acquired expertise.
C. Strengthen Partnerships and Collaboration to Efficiently Allocate Resources
NJHMFA has powerful financing and policy tools at its disposal. But the Agency’s ability to use these tools most efficiently depends on its working in close partnership with other state agencies and other stakeholders. By implementing the following recommendations, NJHMFA can better leverage statewide resources to address New Jersey’s affordable housing needs.
1. Establish a consolidated financing application.
NJHMFA should lead an interagency effort to create a consolidated housing financing application. Currently, NJHMFA provides a “Unified Application for NJHMFA Multifamily Rental Housing Production Programs,” which lists the various financing sources offered by NJHMFA—but not funds available from other agencies that also help developers complete their capital stacks, such as HUD and state programs administered by DCA.78 A consolidated financing application would help NJHMFA and partner agencies better leverage existing financing for housing development, would reduce duplicative efforts among agencies, and would offer developers a more streamlined process.
Several states offer models for implementing a consolidated financing application. Minnesota Housing, the state’s HFA, has established a Consolidated Request for Proposals (RFP) in partnership with several state and regional entities. Developers of multifamily rental housing can apply for and receive 9% LIHTC, amortizing mortgages, deferred loans, and project-based rental assistance via one application.79
As another example, Washington State offers a “Combined Funders Application” in conjunction with state, county, regional, and local government partners.80 This process simplifies work for developers by providing a common application for use across various funders; however, unlike the Minnesota application, applicants still respond separately to different agencies’ individual Solicitation for Applications or Notices of Funding Availability (NOFA). There are some combined NOFAs within these jurisdictions. Connecticut has a third approach, with only two partners in its Consolidated Application, the Connecticut Housing Finance Authority and the Connecticut Department of Housing.81 Connecticut’s process involves a series of deadlines for applicants seeking various combinations of financing.
Key partners for a consolidated financing application in New Jersey include state agencies such as DCA, NJRA, and EDA. Other levels of government should also be involved if possible, including participating jurisdictions for HOME funding, Continuums of Care, and counties with Homeless Trust Funds.
Challenges to developing a consolidated financing application include securing buy-in from all stakeholders. Also, some funding programs may operate on different timelines, which may necessitate changing deadlines, creating several rounds of applications, or limiting the number of funding opportunities offered through the consolidated application.
These challenges should be weighed against the benefits. First, a consolidated application provides an easier process for developers by removing a regulatory barrier. Second, a consolidated application can help agencies better achieve their missions of increasing the supply of affordable housing with intention and focus. As an administrator of the Minnesota program noted, “it gives funders more than one way to approve an application. For example, a development that might not otherwise happen due to the fierce competition for 9% tax credits might be supported for funding using 4% credits or other sources.”82
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2. Launch a supportive housing partnership with the New Jersey Department of Health.
While Permanent Supportive Housing (PSH) and Housing First—which does not require sobriety or adherence to any medical or social service treatment program as a condition of housing—are recognized best practices in supporting people living with chronic health conditions, including substance use disorder, multiple state housing finance agencies reported that uptake of these best practices has been slow among providers. Several stakeholders interviewed for this report suggested housing providers are hesitant to commit to these models because of longstanding ideas about which tenants are and are not “housing ready” and the ongoing cultural shift within homeless services from transitional to permanent housing. To support and equip providers, Oregon’s HFA launched a Supportive Housing Institute in which a cohort of developers and nonprofits work together to design Housing First projects. The Institute is cohosted with the state health department, and trainings and technical assistance are provided by the Corporation for Supportive Housing; $5 million in funding is given to projects that are successfully created through the Institute. Oregon’s initiative is modeled on Indiana’s Supportive Housing Institute, which has increased both the quality and the strategic focus of the state’s supportive housing developments.
NJHMFA should pursue a partnership with New Jersey Department of Health and New Jersey Department of Human Services to host a Supportive Housing Institute. In the short term, this could increase the number of available PSH and Housing First units. Over the long term, it would help encourage uptake of PSH and Housing First practices and principles by housing and service providers, ultimately expanding housing variety and choice for eligible tenants. Participation in such an institute might also benefit NJHMFA’s Hospital Partnership Subsidy Pilot Program when it reaches the stage of planning how to select tenants and structure its housing and supportive services.
3. Expand partnerships with healthcare institutions.
NJHMFA’s Hospital Partnership Subsidy Pilot Program has been popular, attracting six concrete proposals with another four likely to be submitted, as of mid-October 2019.83 The first phase of the pilot program can support three or four projects, and NJHMFA is working to secure additional funding to increase the total to eight or nine. The Agency will contribute up to $4 million in soft funding per project; hospitals will contribute the same amount and either provide or arrange for the land on which projects will be built. To participate, hospitals submit letters of interest with narrative descriptions of how they envision their roles in developing affordable housing, which funding the hospital might be able to offer, where development might occur, and how quickly the hospital could move forward with NJHMFA on developing a construction plan.
The pilot program’s popularity thus far suggests the importance of affordable housing to interested hospitals’ strategy. While the pilot program is novel, housing investments by healthcare institutions have grown across the country. Factors underlying new healthcare-housing partnerships nationwide and in New Jersey include (a) new requirements for community benefit obligations for nonprofit hospitals; (b) increased recognition of social determinants of health, including housing; (c) changes in payment models; and (d) institutional reputation and mission. See Appendix 4 for additional details.
While community benefit obligations specifically apply to hospitals, these trends influence the decision
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Photo credit: NJHMFA 2019
-making of all types of healthcare institutions. Managed care organizations (MCOs)—insurance companies that manage Medicaid benefits for states—and health-focused philanthropies are also potential partners for NJHMFA.
a. Encourage hospitals to offer greater contributions to the Hospital Partnership Subsidy Pilot Program, reducing the amount of capital that NJHMFA must contribute to each development and enabling it to partner with additional interested hospitals.
Hospitals have a range of sources from which they can draw to make these larger investments. Researchers from the Urban Institute suggest that hospitals’ contributions could include non-traditional assets like insurance reserves, pensions, and endowment funds.84 These sources could comprise or supplement funding dedicated to fulfilling community benefit obligations, as is the practice at integrated healthcare provider Kaiser Permanente. Kaiser’s investments in affordable housing through its Thriving Communities and Housing for Health funds are in addition to the 3%– 4% of operating revenue it dedicates to community benefits.85
By drawing from alternative sources of financing as well as community benefit dollars, hospitals could offer substantial additional funds to the Hospital Partnership Subsidy Pilot Program. Nonprofit hospitals are meant to direct their community benefit giving based upon the needs identified in Community Health Needs Assessments (CHNAs) conducted every three years to comply with the Affordable Care Act (see Appendix 4 for more details). However, of three hospitals participating in the first round of NJHMFA’s subsidy program, just one prioritizes housing needs in its most recent CHNA. For that institution, housing is ranked tenth out of 15 total community health needs. The absence of housing from hospitals’ needs assessments suggests that other motivations—such as institutional mission and reputation—and other budget sources may underlie these hospitals’ contributions to the pilot program to date. Advocating for housing to be further considered within CHNAs could open up an additional source of funding. This advocacy could be conducted by NJHMFA or its partners. Central City Concern, a supportive housing developer and healthcare provider, used the CHNA process to help establish the need for affordable housing in Portland, Oregon; five hospital systems and an MCO subsequently contributed toward the development of almost 400 units of housing in the city.86
Healthcare institutions have significant assets to contribute to affordable housing development. 92% of NJ’s hospitals are in designated smart growth areas. However, just 31% of hospitals in the state – and the land they might contribute to affordable housing development – are located in high opportunity areas as defined in this report. NJHMFA must weigh these somewhat conflicting metrics as it determines what partnerships will further its mission of providing a variety and choice of housing in the state.
b. Consider alternative models for MCOs to invest in housing, including using capital reserves, making grants to pay for supportive housing services and vouchers, and generating housing without LIHTC subsidy.
While MCOs do not have the permanency and physical assets of hospitals, both MCOs and hospitals have available capital and incentives to improve population health while reducing healthcare costs. NJHMFA can offer a number of funding models to entice the state’s five Medicaid MCOs to invest in housing. Several potential funding models have been demonstrated by other states.
One model is comparable to a funding approach used by hospitals: the use of capital reserves. Central California Alliance for Health (CCAH) invested $2.5 million of capital reserves in the development of a 90-unit mixed use project.87 Twenty of these units will be set aside for people experiencing homelessness who frequently use the healthcare system. This potentially offers CCAH future cost savings through lower
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healthcare utilization among its Medicaid beneficiaries. Although affordable housing developments that use public funds cannot restrict these funds to specific populations and must conduct affirmative fair marketing, CCAH’s position as the sole Medicaid plan in its geographic area makes it likely their beneficiaries will be among those placed in supportive housing. CCAH’s exclusive geographic coverage and its ability to establish significant cash reserves may be difficult to replicate in New Jersey, but the investment structure could appeal to local developers and to financers.
A second model is grant-making for supportive housing. L.A. Care, one of two MCOs in Los Angeles County, recently made a five-year, $20 million investment in the county’s Flexible Housing Subsidy Pool to pay for supportive housing for about 300 households; of these, 225 must be L.A. Care members.88 This grant and other Pool contributors are stimulating significant new supportive housing development which, as mentioned previously in the report, requires significant soft funds for operating costs.
New Jersey’s Medicaid program, called NJ Family Care, currently contracts with five MCOs:
• Aetna Better Health of New Jersey
• AMERIGROUP New Jersey, Inc.
• Horizon NJ Health
• UnitedHealthcare Community Plan
• WellCare
A third model for NJHMFA to consider is encouraging the development or preservation of housing outside LIHTC. UnitedHealthcare invested directly in housing in Phoenix in 2015, with a $22 million low-interest loan to a community development corporation so that it could acquire and partially renovate 500 units of rental housing. Because this rehabilitation does not include public funds, some units can be reserved for UnitedHealthcare members who will pay lower rents and have access to supportive health services.89 While investments like these cannot directly involve organizations like NJHMFA, they offer a way to expand the scope of healthcare partnerships and perhaps increase the possibility that national insurers like UnitedHealth, which operates one of New Jersey’s MCOs, might invest in housing in-state as well.
NJHMFA could consider additional models for encouraging the development and preservation of affordable housing in partnership with the state’s Medicaid program, NJ FamilyCare. For example, Arizona’s Medicaid program requires its MCOs to invest six percent of annual profits in community reinvestment programs such as transitional housing and food assistance programs.90 NJHMFA should initiate regular meetings with NJ FamilyCare to discuss opportunities for joint policymaking and program development.
c. Explore the role foundations can play, such as acting as a convener for housing and health organizations and providing funds for piloting supportive housing models. Philanthropy has played a critical role in spurring affordable and supportive housing investments elsewhere in the country. City and county policymakers as well as advocates emphasized the role United Way and the Hilton Foundation played in the establishment of the Housing for Health program that operates the Flexible Housing Subsidy Pool in Los Angeles County. The Hilton Foundation’s initial investment enabled proof of concept, and the organization continues to play a convening role for governmental and non-governmental agencies addressing the area’s growing homelessness crisis.
New Jersey benefits from being the home base of the Robert Wood Johnson Foundation (RWJF), a leading national philanthropy dedicated to improving health outcomes and social determinants of health. In its recent report on improving health in New Jersey, RWJF called for, among other things, greater affordable housing development, and the report specifically mentioned the hospital subsidy pilot.91 The foundation has subsequently posted a Call for Proposals offering $2.5 million in funding to support statewide policy advocacy, community organizing, and other efforts in support of its recommendations,92 suggesting a high level of institutional commitment to those policy changes. Other foundations have a presence in the state as well, but by one measure RWJF accounts for 35% of philanthropic giving in New Jersey and its mission to build a “Culture of Health” is well aligned with NJHMFA’s efforts to increase variety and choice of housing.93 In considering partnerships with organizations such as RWJF, NJHMFA should keep in mind philanthropic operating models. Philanthropies generally focus on experimental and pilot programs—it is unlikely RWJF and other founda-
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tions would translate interest in addressing social determinants of health in New Jersey to directly paying for affordable housing construction or preservation. NJHMFA should instead engage with these organizations with an objective to support affordable housing through organizing and advocacy and via funding to support experimental programs. This could include piloting housing navigation and rental assistance for high utilizers of the healthcare system and identifying housing needs for the state’s designated special needs populations.
4. Pilot an expansion of partnership initiative with county colleges.
New Jersey’s 18 county colleges—the state’s community colleges—are feasible and attractive potential partners for NJHMFA. Other states, such as California, Washington and Florida, have launched or are exploring housing partnership initiatives with their community colleges. New Jersey can do the same. Compared to other types of higher education institutions, New Jersey’s county colleges are promising partners for the following reasons:
• County colleges serve a population of low-income students that is in need of affordable housing;
• County colleges face volatile enrollment rates and are more entrepreneurial today in pursuing partnerships, such as housing partnerships, that may increase or sustain enrollment and revenue;
• Many county colleges have land available for housing development;
• County colleges were originally established to be non-residential, and only the recent private-public partnership law has clarified that the colleges can develop housing. As such, there is great opportunity and interest in building housing on college land today;94
• County college leaders are interested in developing housing for both the public and their students, and they are looking for partners.95
To pilot an expansion of NJHMFA’s anchor institution initiative, the Agency should convene a stakeholder meeting with the community colleges. The New Jersey Council of County Colleges would be an ideal convening partner. Some institutions, such as Raritan Valley, Sussex and Mercer colleges, both have larger stocks of land and have already expressed interest in mixed-use housing development through public-private partnerships. NJHMFA should examine these colleges as potential pilot partners. The Agency should also investigate other potential partners, such as urban colleges in high-cost areas like Hudson, Passaic and Essex counties. Overall, 100% of New Jersey’s county colleges are in smart growth areas, and 50% are in “high opportunity” areas, as defined by this report’s opportunity index.
Community College Housing Initiatives: Examples from Across the Country
WASHINGTON: Tacoma Housing Authority (THA) - Since 2014, THA has partnered with Tacoma Community College (TCC) to provide Section 8 vouchers to students experiencing or at risk of homelessness. This is possible through THA’s status in HUD’s Moving to Work Demonstration Program. THA purchased apartments near campus, has contracted with private developers for housing subsidies and has extended the partnership to Univeristy of Washington at Tacoma.
FLORIDA: Southern Scholarship Foundation (SSF) - SSF, a private philanthropy, provides rent-free housing for 450 students attending select community colleges and public universities in Florida. The foundation’s 25 homes are financed by private contributions.
CALIFORNIA: The Southern California Association of NonProfit Housing and cityLAB (a think tank at UCLA) recently conducted an analysis of housing development opportunities at Los Angeles Community College District institutions and prototyped housing developments for three colleges. Separately, Orange Coast College will open a 323-unit complex on campus in 2020, which will target veterans and adults leaving foster care, among others.
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The capital stack for these developments will need to differ from the hospital partnerships. County colleges are cash-constrained and are unlikely to have capacity to contribute a $1–$3 million capital subsidy. However, college-supplied land (through discounted ground leases), philanthropic contributions from college-affiliated donors, and mixed-use developments may make these projects financially feasible with 4% LIHTC and an NJHMFA subsidy. NJHMFA should explore opportunities for additional subsidies from state agencies, such as NJEDA.
5. Explore partnerships with four-year colleges and research universities, starting with Rutgers-Newark.
New Jersey’s colleges and universities are attractive potential partners for NJHMFA because of their land assets, cultural amenities, and locations in smart growth and high-opportunity areas. However, the majority of higher education institutions prioritize housing their own students and faculty over affordable housing that is open to the public. And a limited number of New Jersey institutions have the financial capacity to contribute a subsidy to a housing partnership.
Among New Jersey’s four-year institutions, Rutgers University-Newark is the most promising potential partner. Unlike most colleges and universities that are chiefly concerned about their students and faculty, Rutgers Newark has an expressed outward-facing mission as a leading anchor institution in New Jersey’s largest city. The university’s leadership sees as its constituents not only students but also the residents of Newark. As such, Rutgers-Newark is interested in collaborative programs that allow it to use its assets to safeguard local affordable housing. This is especially important as the city, particularly areas near the university, experiences rising rents and gentrification. Leadership at Rutgers-Newark expressed particular interest in housing initiatives for populations that it already serves through educational and social programs, such as people who were formerly incarcerated, youth exiting foster care, youth experiencing homelessness, and artists. NJHMFA should explore these housing partnership opportunities with Rutgers-Newark.96
In approaching other institutions of higher education, NJHMFA should pursue two routes for potential partnerships. First, the Agency should approach the partnerships with the goal of serving a target population that aligns with the interests and offerings of the institution, such as seniors or youth adults exiting foster care.
From Arizona State University to the State University of New York at Purchase, colleges and universities across
Potential Populations for Higher Education-Housing Partnerships
Senior Citizens: UC Berkeley partnered with a developer to create Belmont Village Senior Living on land leased from the university. The university offers programming for the seniors and the development is located alongside graduate student housing.
Re-entry Populations: New Jerseyans exiting the criminal justice system would likely benefit from housing in educational environments, especially individuals who began GED or associate degree programs while incarcerated. A potential partner would be the NJ STEP program (New Jersey Scholarship and Transformative Education in Prisons) at Rutgers-Newark.
Young Adults Exiting Foster Care: NJHMFA has already investigated potential housing developments for young adults leaving foster care in association with Rutgers-Newark. This is a college-age population that could benefit from university association and potential enrollment.
Formerly Homeless Youth: Through supportive care and educational and training programs, university housing programs could provide formerly youth with housing stability and opportunity.
Disabled or Medicially Frail Populations: Higher education institutions with hospitals, clinics and medical schools offer opportunities for providing supportive housing services to disabled and medicially frail people in a socially-rich setting.
Sources: Belmont Village, “Belmont Village Goes Big on Intergenerational Living with University, Mixed-Use Projects” Katie Brennan and Ann Sarnak, NJHMFA, October 23, 2019.
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the country have shown interest in developing housing for seniors.97 The University of California, Berkeley ground-leased land for the Belmont Village, a senior living community located alongside graduate student housing and involving university programming. 98 However, like the University of California, Berkeley, most institutions view senior housing development as a revenue generator and would be less likely to consider projects calling for financial contributions. NJHMFA should evaluate these potential target populations as well as financing opportunities that could make affordable housing partnerships revenue-positive for colleges and universities.
Second, since New Jersey’s local governments have affordable housing obligations under the Mount Laurel Doctrine, municipalities may play a critical role in potential NJHMFA partnerships with colleges and universities. Municipalities are interested in the role colleges and universities may play in housing issues since such institutions are major employers, landowners, and the sources of housing needs, while nonprofit colleges and universities are also exempt from property taxes. As such, NJHMFA should request municipalities’ participation in NJHMFA-college partnerships. NJHMFA, the municipality and the college could pursue joint projects— such as Rowan University’s town center project with the Borough of Glassboro for retail and student and market-rate housing—through a public-private partnership or a public redevelopment process.99
6. Evaluate opportunities for partnerships with other types of anchor institutions following a partnership framework.
We investigated the feasibility for partnerships with types of anchor institutions beyond hospitals—such as colleges and universities, managed care organizations, foundations and major corporations. No institution type is as natural a partner for NJHMFA as hospitals. Hospitals have the financial and land resources to power a partnership and have clear interests and client populations that overlap with those of NJHMFA. The Agency has been right to prioritize hospitals as partners.
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Photo credit: NJHMFA 2019
While partnerships with other types of institutions would face more obstacles, we recommend that NJHMFA evaluate such opportunities using an Anchor Institution Partnership Framework (see Appendix 5). Understanding that NJHMFA faces constraints in human and financial capacity to pursue housing partnerships, we recommend that NJHMFA prioritize partners that possess the following attributes:
• Financial or land assets: In lieu of or in addition to financial subsidies, the institution may have land available for housing development. Such land resources are more valuable to NJHMFA if they enable housing production in high-cost and high-opportunity areas.
• Overlapping populations served: The institution will have the greatest interest in a partnership if the populations it serves overlaps with populations likely to live in the proposed affordable housing development. Universities may have overlapping populations—low-income students—but they will often prefer exclusive housing, which would not be LIHTC-eligible.
• Locational assets: Partnering with an institution in a smart growth, high-opportunity area may allow NJHMFA to build affordable housing in markets that are otherwise too costly because of their locational assets.
D. Advancing Agency Strategic Planning
New Jersey needs an updated statewide planning effort. The State Plan, maintained by the Office of Planning Advocacy (OPA), has not been fully revised since 2001. In terms of affordable housing planning, there is no state housing plan and municipal housing plans are no longer centrally reviewed and approved since the Council on Affordable Housing became defunct in 2015.100
NJHMFA cannot independently address all of these planning challenges, but it can play a role in initiating and facilitating a statewide strategic housing plan. In collaboration with DCA, NJHMFA should develop a strategy to streamline housing needs analysis, stakeholder outreach, and resource allocation. This improved, collaborative planning process should include several elements.
1. Align NJHMFA strategic planning with DCA’s HUD Consolidated Plan development.
Although developing a state housing plan requires staff resources, improvements to interagency collaboration should help each agency expend planning resources more efficiently. Rhode Island provides one example of how to achieve this. In Rhode Island, responsibility for administering affordable housing programs is split among several agencies, although the division of responsibility is different than in New Jersey. For example, RIHousing—the HFA—oversees HUD programs, unlike NJHMFA. Rhode Island recently chose to use the required HUD Consolidated Plan process as an opportunity to integrate planning across several entities. In collaboration with the state Office of Housing and Community Development—which oversees federal
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Photo credit: NJHMFA 2019
Community Development Block Grants and state-level grant programs—RIHousing has streamlined outreach and planning for three documents: the five-year HUD Consolidated Plan; the Analysis of Impediments to Fair Housing Choice, also based on HUD guidelines; and a statewide Strategic Housing Plan.
Because HUD already requires states to produce five-year Consolidated Plans, this cycle offers a foundation for additional planning. The Consolidated Plan includes substantial information about several key programs but does not permit much customization and is not designed for public consumption. By partnering with DCA as it develops the New Jersey Consolidated Plan, NJHMFA could efficiently combine planning resources and create a public-facing document to outline statewide housing priorities going forward.
2. Leverage NJHMFA’s role as a convener.
Public leadership is best demonstrated in the hard work of bringing together various stakeholders to achieve a common goal. NJHMFA’s role is not limited merely to the annual funding of housing projects. Rather, NJHMFA is also responsible for convening regular meetings with municipal governments and housing developers to form a long-term plan toward expanding housing opportunities for all New Jersey residents. As a state agency, NJHMFA can be relied upon to promote broad public interests instead of representing parochial or disparate ones.
Convening regular meetings throughout each year that seek participation from interested parties serves three purposes. First, it offers the Agency an opportunity to lay out a comprehensive, strategic vision that other parties can rally around. Second, it establishes a culture of collaboration and a sense of shared ownership in the goals that the Agency pursues. Third, it helps the Agency build a coalition behind new policies that require actions from the state legislature.
The notice-and-comment process for the revision and adoption of the QAP already establishes a formal means through which the public can participate in how NJHMFA addresses housing affordability. Capitalizing on this, NJHMFA can expand its scope; developers who are directly affected by the changes in the QAP are the most likely entities to respond, and the comments reach the Agency only in the middle of its deliberation process. A more collaborative approach would proactively seek participation from various stakeholders throughout the year. NJHMFA should pursue the following tasks to fulfill its role as a convener:
• Invite people to the table. Initiating a collaborative process requires NJHMFA to take the first step in a multi-year, dynamic process.
• Set the expectation for regular meetings with stakeholders by hosting a quarterly working group. Repetition and practice are fundamental to developing new norms.
• Establish a platform, such as public forums or listening sessions, through which municipalities and counties interested in housing development can connect with and learn from each other.
• Initiate tenant engagement surveys. While our field research did not uncover any innovations in this area by HFAs, NJHMFA has the opportunity to test new, broader ways to include stakeholders in its decision-making process. The City of London’s Public Housing Agency has built out an extensive program for tenant engagement which could be used as a model for tenant engagement in LIHTC buildings in New Jersey.101
Washington State Housing Finance Commission (WSHFC) offers an example of public leadership. It convenes a monthly working group between city, county, and state agencies that fund affordable housing developments. The working group enables the agencies to streamline their funding applications and coordinate a cohesive message when lobbying the state legislature. WSHFC also hosts the HFAs in Oregon and California biannually to share best practices from each state.
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More than 500,000 renters in New Jersey are housing cost-burdened, thousands are without homes entirely, and countless live in inadequate or unsafe homes that threaten their families’ health and well-being. NJHMFA is a key player in solving this housing crisis. The Agency has access to powerful Low Income Housing Tax Credits and other financing tools, has built expertise working directly with developers and other stakeholders, and possesses the seeds of a statewide housing planning effort through its ongoing revision of the Qualified Allocation Plan.
Our research and interviews in New Jersey and other states show how NJHMFA can expand its efforts, increasing its volume of housing production and serving a broad population with diverse needs. But the state’s needs outstrip what NJHMFA can accomplish alone. As a banking institution, NJHMFA generally achieves its goals with tax credits, loans, and incentivedriven policies. To fully solve the housing crisis, other steps must be taken. For example, municipalities must reform zoning policies to meet their fair share housing obligations; the legislature must allocate more funds for housing development; and the federal and state governments must ensure families have opportunity to build economic security through more direct housing assistance and other policies promoting economic prosperity for the many.
Ultimately, NJHMFA is well-positioned to innovate and to lead New Jersey forward. We recommend ways the Agency can do so by making changes to the QAP, embracing the creative use of other financing tools, and initiating interagency partnerships and planning. These changes will promote variety and choice of housing for New Jersey’s residents, encouraging smart growth that gives more families access to opportunity.
Our recommendations are grounded in the understanding that every unit of housing an HFA has created or will create is someone’s home. Housing affordability is about assuring that all New Jerseyans, regardless of their wage, ability, geography, or life experiences, can secure a safe, decent, dignified home for themselves and their loved ones. That they have meaningful choice in where they work, play, raise a family, share in community, and grow old. While our state’s needs outstrip what NJHMFA can accomplish alone, the urgency of need also calls on NJHMFA to continue pushing the boundaries of what is possible and on NJHMFA’s partners in the state to support the Agency in its mission. We believe an affordable home for each and every New Jerseyan is possible.
Conclusion
Photo credit: NJHMFA 2019
Appendix 1: Recommendations for the State of New Jersey
The main recommendations in Part II of this report would enable NJHMFA to expand affordable housing production and help the Agency allocate resources more efficiently. However, as previously noted, even substantial policy innovation by NJHMFA would leave significant unmet need. Solving New Jersey’s affordable crisis will require aggressive action and significant additional funding from the federal and state governments.
The range of possible statewide actions to improve housing affordability in New Jersey is broad and includes policy changes both on the supply side (e.g., new grants or tax credits for affordable housing developers) and on the demand side (e.g., more funding for housing assistance vouchers and expansion of the social safety net). The following list is a subset of these many possible policy changes. These recommendations are directed primarily at the governor, legislature, and other agencies. They focus on several areas where (a) reforms would help NJHMFA better achieve its mission using the tools identified in the main report, (b) policy change is supported by research and/or best practices in other states, and (c) there is some evidence of political support such that there is a possible window of opportunity to achieve reform in the near term.
1. Establish a state housing tax credit.
For much of 2019, the governor and the legislature have debated reforms to the state’s economic development tax credits.102 During this debate, some advocates have pushed the state to establish a state housing tax credit, which would offer developers a state-level resource akin to the federal LIHTC program.103 The legislature should seize this opportunity.
A substantial improvement in housing affordability will require moral and fiscal leadership from the State of New Jersey. Information collected from developers and NJHMFA makes clear: one of the largest impediments to building more affordable housing is a scarcity of “gap financing” to complete a developer’s capital stack. A state tax credit offers one way to inject this much needed capital. Like LIHTC, a state housing tax credit has drawbacks and benefits. It is generally more economically efficient for a government to directly invest in affordable housing. Because of its political popularity, LIHTC, however, has the advantage of broad political appeal, spurring new housing production while avoiding large, direct government spending outlays.
At least 17 states have some form of state housing tax credit. In some cases, the state tax credit is bifurcated from LIHTC while in other cases it may serve as gap financing for LIHTC projects. If the legislature adopts a state housing tax credit, NJHMFA should be consulted in its development and charged with its implementation, given the Agency’s expertise with LIHTC.
2. Incorporate affordable housing into plans for Transit-Oriented Development
Governor Murphy has made transit-oriented development (TOD) an area of focus within his administration’s economic development strategy.104 In 2018, the Governor signed a law requiring NJ Transit to advance a TOD strategy, and NJTransit recently hired an administrator to head these efforts.105 As this effort continues, the state should ensure affordable housing is a key component of the TOD strategy, including through partnership with NJHMFA.
New Jersey can learn from other states’ TOD efforts. For example, Washington State’s HFA works with the state transit agency as well as county and city governments to coordinate both funding for affordable housing and application cycles. The agencies will typically put out a single consolidated Request for Proposals (RFP) for development around a transit site that will be pre-funded with sources of funding from the different agencies. This saves significant time and energy for interested developers and allows them to begin work immediately after successfully winning the RFP.
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Appendices
Much of Washington’s transit-oriented development work is made easier due to state legislation mandating Sound Transit, the major transit agency, to offer the first right of refusal to nonprofit developers of affordable housing when selling surplus property. The so-called “80-80-80” rule (H.B. 2382), requires 80% of the land sold by the agency to be offered to developers willing to designate 80% of the units as affordable to families making 80% of Area Median Income. Prior to this legislation, Sound Transit was legally required to get full market value for sold properties. The Murphy Administration and the New Jersey legislature should explore similar arrangements with NJTransit.
3. Replenish the Special Needs Housing Trust Fund and provide soft financing for supportive housing.
Created in 2005 and depleted since 2011, New Jersey’s Special Needs Housing Trust Fund provided capital financing in the form of loans, grants, and investments, to developers for acquisition and rehab of supportive housing units. This Fund had explicit priorities for populations served, location, available amenities, and design, which mirrored the priorities in the Supportive Housing Cycle of the QAP. The proceeds of this Fund could not be used for operating subsidies or for supportive services.
New Jersey is in the planning process to issue a new Special Needs Housing Trust Fund bond. Given the importance of, and need for, supportive housing funding as identified in this report, the Murphy Administration and legislature should prioritize the replenishment of the Trust Fund. The priorities of this fund should be designed in consultation with supportive housing developers, supportive housing advocates, and advocates who represent each of the designated special needs populations.
To serve the most vulnerable special needs populations, developers also need access to additional rental assistance and supportive service funding for supportive housing projects. In addition to replenishing the Fund, the state should consider providing additional soft funding for rental assistance and supportive services for supportive housing projects. We recommend the state make a complementary budget outlay to provide project-based rental assistance and operating funding, on top of the capital funding provided in the Special Needs Housing Trust Fund, to developments in NJHMFA’s LIHTC Supportive Housing Cycle. This could be done as a new program or as part of the state’s existing State Rental Assistance Program.
4. Coordinate recently passed housing legislation with statewide housing planning.
In 2019, the legislature and Governor Murphy took several commendable steps that will help advance affordable housing development in New Jersey. These included legislation to expand the Neighborhood Revitalization Tax Credit, to establish an Office of Homelessness Prevention under DCA, and to support municipal land banks. The state’s FY2020 budget also fully funded the Affordable Housing Trust Fund for the first time in a decade.
As DCA and other agencies implement these important new laws, it is critical their work is coordinated via a statewide housing planning effort as identified in this report. For-profit and nonprofit affordable housing developers have an acute need for the support provided by this legislation. Interagency collaboration and coordinated engagement with stakeholders will ensure funding and resources are allocated in a way that will best promote variety and choice of housing across the state.
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Appendix 2: Glossary
4% LIHTC—A Low-Income Housing Tax Credit (LIHTC) which subsidizes roughly 30% of the unit costs in an acquisition of a project and requires 50% of total development costs to be covered by bonds.
9% LIHTC—A Low-Income Housing Tax Credit (LIHTC) which subsidizes roughly 70% of new construction.
anchor institution—As defined by the Democracy Collaborative, “Anchor institutions are enterprises such as universities and hospitals that are rooted in their local communities by mission, invested capital, or relationships to customers, employees, and vendors. As place-based entities that control vast economic, human, intellectual, and institutional resources, anchor institutions have the potential to bring crucial, and measurable, benefits to local children, families, and communities.”109
area median income (AMI)—The median of a region’s income distribution. The U.S. Department of Housing and Urban Development (HUD) defines and calculates different levels of AMI for geographic areas across the country by household size. Thresholds set relative to AMI (e.g., 30% of AMI, 50% of AMI, etc.) identify households eligible to live in income-restricted housing units and the affordability of housing units to low-income households.
basis boost—An increase to the qualified basis for a LIHTC project which can be granted by the state.
bifurcated financing—When referencing financing affordable housing, bifurcated financing divides the ownership structure of a project into two distinct legal components that are financed separately. This structure is often used to more efficiently use tax-exempt bonds.
bond recycling—A financing technique that reuses tax-exempt bonds that are only needed for a short period of time from one affordable housing project to another. By prepaying the original bonds once they no longer are needed, the recycled bonds can be used for future projects without counting against a state’s limited bond volume cap again.
capital stack—The organization of all capital contributed to finance a real estate transaction.
community benefit obligations—Financial obligations of nonprofit hospitals to provide a community benefit in order to maintain their tax-exempt status.
Community Health Needs Assessments (CHNAs)—Health assessments that identify key health needs and issues through systematic, comprehensive data collection and analysis. Under the Affordable Care Act, nonprofit hospitals are required to complete CHNAs every three years.
cost-burdened—A household is considered cost-burdened by HUD when 30% or more of its monthly gross income is dedicated to housing and utilities.
eligible basis—A component of the qualified basis of a LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas.
Fair Market Rent (FMR)—Set by HUD for a geographic area on an annual basis. The FMR represents the estimated amount that property typically rents for in a given geographic area, including base rent and essential utilities. It is used as a basis for the rent levels allowable in federally-subsidized housing.
housing finance agency (HFA)—State-chartered authorities established to help meet the affordable housing needs of the residents of their states.
Housing First—An approach to homeless assistance which prioritizes offering permanent housing to individuals experiencing homelessness. As explained by the National Alliance to End Homelessness, “Housing First does not require people experiencing homelessness to address all of their problems including behavioral health problems, or to graduate through a series of service programs before they can access housing. Housing First does not mandate participation in services either before obtaining housing or in order to retain housing.”110
HUD Consolidated Plan—The HUD Consolidated Plan is a process overseen by HUD to help states and local jurisdictions assess their affordable housing and community development needs. This framework aligns and focus funding from the Community Planning and Development formula block grant programs including but not limited to the Community Development Block Grant (CDBG) Program, HOME Investment Partnerships (HOME) Program, Housing Trust Fund (HTF), Emergency Solutions Grants (ESG) Program, and Housing Opportunities for Persons With AIDS (HOPWA) Program
41
low-income household—Defined by New Jersey as a household with an income below 50% of AMI. In 2019 for a family of four the low-income AMI threshold is equivalent to an annual household income of $50,250.
Low-Income Housing Tax Credit (LIHTC)—A federal program that subsidizes the acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants. Under the program, the federal government gives state housing agencies the authority to issue credit allocations to developers who then sell the credits to investors to raise equity.
managed care organizations (MCOs)—Insurance companies that manage Medicaid benefits for states.
Mount Laurel Doctrine—Established by the New Jersey Supreme Court in the 1970s and 1980s and requires each municipality in New Jersey to provide for its “fair share” of the regional affordable housing need.
Municipal Revitalization Index (MRI)—A tool created by New Jersey’s Department of Community Affairs which serves as the state’s measure and ranking of municipal distress. The MRI ranks New Jersey’s municipalities according to eight separate indicators that measure diverse aspects of social, economic, physical, and fiscal conditions in each locality. The MRI is used as a factor in distributing certain “need based” funds.
Permanent Supportive Housing (PSH)—A supportive housing unit where residents have leases in their own names and full tenant rights, regardless of whether they participate in support services.
pro forma–A financial statement used typically in real estate and housing which is one based on certain assumptions and projections.
qualified allocation plan (QAP)—A state plan required by the federal government for LIHTC credit allocation. The QAP defines the parameters for administration of the tax credit program in the state.
qualified contract—A bona fide contract to acquire a low-income housing tax credit property for the sum of the existing debt, adjusted investor equity, and other capital contributions less the property cash distributions.
sliding-scale point allocation—A type of incentive in the QAP that provides a progressively larger point award as performance on a desired metric improves, rather than an all-or-nothing test for awarding points. When used to encourage deeper affordability, a sliding-scale incentive could award more points to applications proposing to serve lower average income levels. As the average rent (affordable to a certain income level measured as a percentage of AMI) falls for a proposed development, its application would receive more points, up to a specified maximum.
Targeted Urban Municipalities (TUMs)—Designated by the QAP in New Jersey and refers to those urban municipalities ranked and designated by the following factors: Department of Community Affairs (DCA) Municipal Revitalization Index, housing density, population, and employment to housing ratio. NJHMFA publishes annually a list of municipalities which are designated as TUMs.
universal design principles—Architectural principles that promote the accessibility and usability of housing units, buildings, and public spaces for all people with a diverse range of abilities, sizes, and needs without the need for adaptation.
very low-income (VLI) household—Defined by New Jersey as a household with an income below 30% of AMI. In 2019 for a family of four the very low-income AMI threshold is equivalent to an annual household income of $30,150.
volume cap—The maximum amount of LIHTC and tax-exempt bonds each state can allocate annually.
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Appendix 5: Framework for Evaluating NJHMFA Partnerships with Anchor Institutions
44
Endnotes
1 NJHMFA, “NJHMFA 2018 Annual Report,” 2019, https://www.njhousing.gov/2018annualreport/.
2 National Low Income Housing Coalition, “Out of Reach 2019,” 2019, https://reports.nlihc.org/sites/default/files/oor/ OOR_2019.pdf.
3 Estelle Sommeiller and Mark Price, “The New Gilded Age: Income Inequality in the U.S. by State, Metropolitan Area, and County” (Economic Policy Institute, July 19, 2018), https://www.epi.org/publication/the-new-gilded-age-income-inequality-in-the-u-s-bystate-metropolitan-area-and-county/.
Stephen Stirling, “Segregated N.J., a Look at How Race Still Divides Us,” NJ.com, June 27, 2016, https://www.nj.com/news/2016/06/segregated_nj_a_look_at_how_race_still_divides_us.html.\\uc0\\u8221{} {\\i{}NJ.Com}, June 27, 2016, https://www.nj.com/news/2016/06/ segregated_nj_a_look_at_how_race_still_divides_us.html.”,”plainCitation”:”Estelle Sommeiller and Mark Price, “The New Gilded Age: Income Inequality in the U.S. by State, Metropolitan Area, and County” (Economic Policy Institute, July 19, 2018
4 Kate M. Kelly, “19% of New Jerseyans Spend More Than Half of Their Income on Housing Costs,” Monarch Housing, March 25, 2019, https://monarchhousing.org/2019/03/25/19-of-new-jerseyans-spend-more-than-half-of-their-income-on-housing-costs/.
5 ATTOM Data Solutions, “U.S. Foreclosure Activity Drops to 12-Year Low in 2017,” ATTOM Data Solutions, January 16, 2018, attomdata.com/news/foreclosure-trends/2017-year-end-u-s-foreclosure-market-report/.
6 Fair Share Housing Center, “Mount Laurel Doctrine,” accessed December 27, 2019, http://fairsharehousing.org/mount-laurel-doctrine/.
7 Fair Share Housing Center, “Mercer County Court Upholds Fair Housing Obligations in Major Win for Working Families,” March 9, 2018, http://fairsharehousing.org/blog/entry/mercer-county-court-upholds-fair-housing-obligations-in-major-win-for-worki/.
8 Colleen O’Dea, “Costs Outpace Wages in NJ, More Households Can’t Afford Basic Necessities,” NJ Spotlight, October 22, 2018, https://www.njspotlight.com/2018/10/18-10-21-costs-outpace-wages-in-nj-more-households-cant-afford-basic-necessities/.
9 National Low Income Housing Coalition, “Out of Reach 2019.”
10 US Census Bureau, “2013-2017 ACS 5-Year Estimates,” The United States Census Bureau, accessed January 5, 2020, https:// www.census.gov/programs-surveys/acs/technical-documentation/table-and-geography-changes/2017/5-year.html.
11 Pew Charitable Trusts, “Household Expenditures and Income,” March 30, 2016, http://pew.org/1VBBiDF.
12 Jonnelle Marte, “3 out of 4 Economists Predict a U.S. Recession by 2021, Survey Finds,” Washington Post, August 19, 2019, https://www.washingtonpost.com/business/2019/08/19/out-economists-predict-us-recession-by-survey-finds/.
13 National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2013 NCSHA Annual Survey Results,” 2015; National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2017 NCSHA Annual Survey Results” (Washington, D.C., 2019).
14 NJHMFA, “Adopted 2019-20 Qualified Allocation Plan (QAP),” April 18, 2019, https://www.state.nj.us/dca/hmfa/media/download/tax/qap/tc_qap_proposed_2019_2020.pdf.
15 Social Security Administration, “SSI Recipients by State and County, 2018 - New Jersey,” 2018, https://www.ssa.gov/policy/ docs/statcomps/ssi_sc/2018/nj.pdf.
16 PolicyMap, “Estimated Percent of Civilians Age 18 and Older Who Are Veterans in Poverty between 2013-2017,” November 24, 2019, https://policymap.com/maps?i=9959224&btd=4&period=2014-2018&cx=-96.90554365538753&cy=37.983372158489956&cz=3.
17 PolicyMap, “Point-in-Time Estimate of Homeless Population in January 2018,” accessed November 24, 2019, https://policymap.com/maps?i=9905500&btd=241&period=2018&cx=-96.90554365538753&cy=38.080725732734976&cz=3.
18 The Sentencing Project, “The Sentencing Project, State-by-State Data,” 2017, https://www.sentencingproject.org/ the-facts/#map?dataset-option=SIR.
19 The Annie E. Casey Foundation, “2018 New Jersey Profile - Transition-Age Youth in Foster Care,” November 13, 2018, https:// www.aecf.org/m/resourcedoc/newjersey-fosteringyouthtransitions-2018.pdf.
20 National Conference of State Legislators, “Supporting Older Youth in Foster Care,” accessed November 24, 2019, http://www. ncsl.org/research/human-services/supports-older-youth.aspx.
21 PolicyMap, “Opioid Use Hospitalizations, per 100,000 People,” November 24, 2019, https://policymap.com/ maps?i=9966752&btd=2&period=2017&cx=-96.90554365538753&cy=38.080725732734976&cz=3; PolicyMap, “Opioid Overdose Deaths per 100,000 People,” accessed November 24, 2019, https://policymap.com/maps?i=9967003&btd=4&period=2017&cx=-96.90554365538753&cy=38.080725732734976&cz=3.
22 “Supportive Housing Needs in the United States,” Corporation for Supportive Housing, n.d., https://www.csh.org/supportive-housing-101/data/.
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23 “LIHTC Allocations – 2010-2019, ” Data from New Jersey Housing and Mortgage Finance Agency, 2019.
24 New Jersey Department of Labor and Workforce Development, “Population and Labor Force Projections for New Jersey: 2010 to 2030,” 2013, https://www.nj.gov/labor/lpa/content/njsdc/2013WU%20PopLFProj2030.pdf.
25 Tim Evans, “Where Are We Going? Implications of Recent Demographic Trends in New Jersey.” (New Jersey Future, September 2017), https://www.njfuture.org/wp-content/uploads/2017/09/New-Jersey-Future-Demographic-Trends-by-Age-September-2017. pdf.
26 Joint Center for Housing Studies of Harvard University, “Housing America’s Older Adults 2019,” October 16, 2019, harvard. us7.list-manage.com/track/click?u=32bdef9ad4f5c24e42bebf634&id=d99ba6d97d&e=7d779e42da.
27 Union of Concerned Scientists, “US Coastal Property at Risk from Rising Seas (Story Map Series),” accessed January 5, 2020, https://ucsusa.maps.arcgis.com/apps/MapSeries/index.html?appid=cf07ebe0a4c9439ab2e7e346656cb239.
28 Irina Ivanova, “Climate Change Could End Mortgages as We Know Them,” CBS News, November 8, 2019, https://www. cbsnews.com/news/climate-change-could-end-mortgages-as-we-know-them/.
29 National Housing Trust & Freddie Mac Multifamily, “Opportunity Incentives in LIHTC Qualified Allocation Plans,” 2018, https:// mf.freddiemac.com/docs/Opportunity_Incentives_in_LIHTC_Qualified_Allocation_Plans.pdf.
30 NJHMFA, “Adopted 2019-20 Qualified Allocation Plan (QAP).”
31 American Planning Association, “APA Policy Guide on Smart Growth,” April 14, 2012, www.planning.org/policy/guides/adopted/smartgrowth.htm.
32 NJHMFA, “NJHMFA Board,” accessed December 6, 2019, https://www.njhousing.gov/dca/hmfa/about/board/.
33 Housing and Community Development Network of New Jersey, “County-Based Homeless Trust Funds Fact Sheet,” 2017, https://www.hcdnnj.org/assets/documents/homeless%20trust%20fund%202017%20fact%20sheet.pdf.
34 Housing and Community Development Network of New Jersey, “Thriving Together: The Economic Impact of NJ’s CDCs at 30 Years,” October 2019.
35 Ed Gramlich, “Advocates’ Guide: Qualified Allocation Plan” (National Low Income Housing Coalition, 2014), https://nlihc.org/ sites/default/files/2014AG-259.pdf.
36 Tim Evans, “Moving Affordable Housing Out of High-Poverty Areas,” New Jersey Future (blog), May 23, 2017, https://www. njfuture.org/2017/05/23/lihtc-changes/.
37 john a. powell, “Opportunity-Based Housing,” Journal of Affordable Housing & Community Development Law 12, no. 2 (2003): 188–228.
38 NJHMFA, “Adopted 2019-20 Qualified Allocation Plan (QAP).”
39 National Housing Trust & Freddie Mac Multifamily, “Opportunity Incentives in LIHTC Qualified Allocation Plans.”
40 Kirwan Institute for the Study of Race and Ethnicity, “Overview of the Ohio 2018-2019 USR Opportunity Index” (The Ohio State University, October 27, 2017), https://ohiohome.org/ppd/documents/USR-Opportunity-Index.pdf.
41 Carolina K. Reid, “Rethinking ‘Opportunity’ in the Siting of Affordable Housing in California: Resident Perspectives on the Low-Income Housing Tax Credit,” Housing Policy Debate 29, no. 4 (July 4, 2019): 645–69, https://doi.org/10.1080/10511482.2019.1582 549.
42 Reid.
43 Ingrid Gould Ellen and Keren Mertens Horn, “Points for Place: Can State Governments Shape Siting Patterns of Low-Income Housing Tax Credit Developments?,” Housing Policy Debate 28, no. 5 (September 3, 2018): 727–45, https://doi.org/10.1080/10511482. 2018.1443487.
44 Corianne Scally, Amanda Gold, and Nicole DuBois, “The Low Income Housing Tax Credit: How It Works and Who It Serves” (Urban Institute, July 2018).
45 Michigan State Housing Development Authority, “Low Income Housing Tax Credit Program: 2017-2018 Qualified Allocation Plan,” accessed January 5, 2020, https://www.michigan.gov/documents/mshda/mshda_li_qap_2017_2018_qap_final_528708_7.pdf.
46 Oregon Housing and Community Services, “State of Oregon 2019 Qualified Allocation Plan,” November 7, 2019, https://www. oregon.gov/ohcs/HD/MFH/LIHTC/QAP/2019-QAP-Final.pdf.
47 National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2013 NCSHA Annual Survey Results”; National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2014 NCSHA Annual Survey Results,” 2016; National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2016 NCSHA Annual Survey Results,” 2018; National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2017 NCSHA Annual Survey Results.” 2019.
48 “Inclusionary Housing,” Pub. L. No. Ordinance No. 188163, § 01.120, 30 Portland City Code (2016), https://www.portlandoregon.gov/citycode/article/707200. Portland City Code 30.01.120.
49 State of Washington Department of Revenue, “Low-Income Housing Valuation Guide: Property Tax Assessment of Multifamily
46
Low-Income Housing Properties,” September 2008, https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/Prop_Tax/Low-IncomeHousingValuationGuide.pdf.
50 South Carolina Housing Finance and Development Authority, “Low-Income Housing Tax Credit Program: 2020 Qualified Allocation Plan,” http://www.schousing.com/library/Tax%20Credit/2020/2020%20QAP%20to%20Governor.pdf;
Tennessee Housing Development Agency, “2019-2020 Qualified Allocation Plan,” https://www.novoco.com/sites/default/files/atoms/ files/tennessee_draft_2019-2020_qap_091218.pdf.
51 Oregon Housing and Community Services, “State of Oregon 2019 Qualified Allocation Plan”; Virginia Housing Development Authority, “Qualified Contract Request Procedure,” October 25, 2018, https://www.vhda.com/BusinessPartners/MFDevelopers/LIHTCProgram/LowIncome%20Housing%20Tax%20Credit%20Program/VA%20Qualified%20Contract%20 Request%20Procedure-%20FINAL.pdf.
52 National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2013 NCSHA Annual Survey Results”; National Council of State Housing Agencies, “Factbook: State HFA Factbook: 2017 NCSHA Annual Survey Results.”
53 NJHMFA, “Adopted 2019-20 Qualified Allocation Plan (QAP).”
54 Maryland Department of Housing & Community Development, “Multifamily Rental Financing Program Guide: Attachment to Maryland Qualified Allocation Plan for the Allocation of Federal Low Income Housing Tax Credits,” February 14, 2019, https:// dhcd.maryland.gov/HousingDevelopment/Documents/lihtc/NEW-Final2019MDMFRentalFinancingProgramGuideSignedbyGovernor2-13-2019.pdf;
Washington State Housing Finance Commission, “2019 Qualified Allocation Plan,” https://www.novoco.com/sites/default/files/atoms/ files/washington_2019_final_qap_2018.pdf; South Carolina Housing Finance and Development Authority, “Low-Income Housing Tax Credit Program: 2020 Qualified Allocation Plan.”
55 Maryland Department of Housing & Community Development, “Multifamily Rental Financing Program Guide: Attachment to Maryland Qualified Allocation Plan for the Allocation of Federal Low Income Housing Tax Credits.”
56 Washington State Housing Finance Commission, “2019 Qualified Allocation Plan.”
57 NJHMFA, “Adopted 2019-20 Qualified Allocation Plan (QAP).”
58 Tony Hannigan and Suzanne Wagner, “Developing the ‘Support’ in Supportive Housing” (Center for Urban Community Services, 2003), https://www.csh.org/wp-content/uploads/2011/12/Tool_DevelopingSupport_Guide.pdf.
59 CSH, “Optimizing Qualified Allocation Plans for Supportive Housing 2018-2019,” May 3, 2019, https://www.csh.org/2019/05/ optimizing-qualified-allocation-plans-for-supportive-housing-2018-2019/.
60 Indiana Housing and Community Development Authority, “State Announces Indianapolis Integrated Supportive Housing Initiative,” July 31, 2017, https://calendar.in.gov/site/ihcda/event/state-announces-indianapolis-integrated-supportive-housing-initiative/.in partnership with the City of Indianapolis , released two Request for Qualifications (RFQ
61 Washington State Housing Finance Commission, “9% Housing Tax Credit Program: 2019 Allocation List,” accessed January 5, 2020, http://www.wshfc.org/mhcf/9percent/2019AllocationList.pdf.
62 U.S. Department of Housing and Urban Development, “The U.S. Department of Housing and Urban Development Defined CoC Names and Numbers Listed by State (January 2019),” 2019, https://files.hudexchange.info/resources/documents/fy-2019-continuums-of-care-names-and-numbers.pdf;
“What Is a Continuum of Care?,” National Alliance to End Homelessness, January 14, 2010, https://endhomelessness.org/resource/ what-is-a-continuum-of-care/.as well as details the necessary parts of a Continuum of Care (CoC
63 Natalie Matthews and Stephanie Reinauer, “Understanding the Interconnectedness of HMIS Data,” (n.d.), https://nhsdc.org/ wp-content/uploads/2019/05/3.1.B-Understanding-the-Interconnectedness-of-HMIS-Data.pdf.
64 Substance Abuse and Mental Health Services Administration, “Permanent Supportive Housing – Building Your Program,” 2010, https://store.samhsa.gov/system/files/sma10-4510-06-buildingyourprogram-psh.pdf.
65 Zach Gross, Supportive Housing Institute (Indiana Housing and Community Development Authority), November 23, 2019.
66 Carrie Pilarski and Joseph Rath, “Universal Design: Moving beyond Accessibility Accommodations to a More Inclusive Environment for Everyone,” American Psychological Association (blog), November 2013, https://www.apa.org/pi/disability/resources/publications/newsletter/2013/11/inclusive-environment.
67 CSH, “Optimizing Qualified Allocation Plans for Supportive Housing 2018-2019.”
68 UI Health, “Better Health Through Housing,” accessed December 30, 2019, //hospital.uillinois.edu/about-ui-health/community-commitment/better-health-through-housing; Los Angeles County Department of Health Services, “Housing for Health,” accessed December 30, 2019, http://dhs.lacounty.gov/wps/portal/dhs/housingforhealth.
69 New Mexico Mortgage Finance Authority, “Low Income Housing Tax Credits (LIHTC),” accessed December 24, 2019, http:// www.housingnm.org/developers/low-income-housing-tax-credits-lihtc;
New Hampshire Housing, “Low Income Housing Tax Credits (LIHTC),” accessed December 24, 2019, https://www.nhhfa.org/develop-
47
er-financing/low-income-housing-tax-credits-lihtc/;
Utah Housing, “Allocation Plan & Application,” accessed December 24, 2019, https://utahhousingcorp.org/multifamily/applicationInfo;
Indiana Housing and Community Development Authority, “IHCDA Partners: Rental Housing Tax Credits (RHTC) / Tax Credit Assistance Program (TCAP),” accessed December 24, 2019, https://www.in.gov/myihcda/rhtc.htm;
Hawaii Housing Finance & Development Corporation, “Low-Income Housing Tax Credit Program,” accessed December 24, 2019, https://dbedt.hawaii.gov/hhfdc/developers/lihtc_html/.
70 Mark Willis, “A Simple Tweak to the Federal Tax Code Would Support More Affordable Housing,” The Stoop: NYU Furman Center Blog (blog), October 18, 2017, https://furmancenter.org/thestoop/entry/a-simple-tweak-to-the-federal-tax-code-would-supportmore-affordable-housin.
71 Willis.
72 Mark Willis and Luis Hernandez, “Proposed Legislation Expands Private Activity Bond Recycling,” The Stoop: NYU Furman Center Blog (blog), July 9, 2019, https://furmancenter.org/thestoop/entry/proposed-legislation-expands-private-activity-bond-recycling.
73 Anthony Richardson, Interview with authors, October 19, 2019.
74 Maria Cantwell, “Affordable Housing Credit Improvement Act of 2019,” Pub. L. No. S. 1703 (2019), https://www.congress.gov/ bill/116th-congress/senate-bill/1703/all-info.
75 Erik Hoffman, Klein Hornig LLP, Interview with authors, November 21, 2019.
76 Hoffman.
77 Brian Matt, “Stretching the 9’s, Virginia Housing Development Authority” (Virginia Housing Development Authority, February 14, 2019), https://www.ncsha.org/wp-content/uploads/Virginia-Rental-Housing-Encouraging-New-Production-2019.pdf.
78 NJHMFA, “UNIAP - Application for Financing,” accessed October 25, 2019, https://www.nj.gov/dca/hmfa/developers/uniap/#3.
79 Minnesota Housing, “Multifamily Application Instructions: Consolidated RFP and HTC Rounds 1 and 2,” April 2019, https://bit. ly/2FrLtrW.
80 Washington State Housing Finance Commission, “Combined Funders Application 2019,” 2019.
81 Connecticut Housing Finance Authority, “Consolidated Application,” 2019, http://www.chfa.org/developers/consolidated-application/.
82 Margaret Kaplan, “The State’s Role in Financing Regional Housing Priorities: Minnesota’s Consolidated RFP,” Brookings Institution (blog), April 16, 2018, https://www.brookings.edu/blog/the-avenue/2018/04/16/the-states-role-in-financing-regional-housing-priorities-minnesotas-consolidated-rfp/.
83 Katherine Brennan, Personal communication with authors, October 23, 2019.
84 Kathryn Reynolds, Martha Fedorowicz, and Matthew Eldridge, “Why Hospitals and Health Systems Are Becoming Impact Investors” (Urban Institute, August 8, 2019), https://www.urban.org/urban-wire/why-hospitals-and-health-systems-are-becoming-impact-investors.
85 Vanessa Davis, Personal communication with authors, October 29, 2019.
86 Mercy Housing and the Low Income Investment Fund, “Innovative Models in Health and Housing,” 2017, https://www.liifund. org/wp-content/uploads/2017/08/Health-and-Housing-LIIF-Mercy-Report-2017.pdf.
87 Mercy Housing and the Low Income Investment Fund; Reynolds, Fedorowicz, and Eldridge, “Why Hospitals and Health Systems Are Becoming Impact Investors.”
88 Alison Klurfeld, Personal communication with authors, October 31, 2019.
89 Mercy Housing and the Low Income Investment Fund, “Innovative Models in Health and Housing.”
90 Arizona Health Care Cost Containment System, “AHCCCS Targeted Investments Program Sustainability Plan,” March 29, 2019, https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/az/Health-Care-Cost-Containment-System/az-hccc-target-stability-plan-20190812.pdf.
91 Robert Wood Johnson Foundation, “Building a Culture of Health: A Policy Roadmap to Help All New Jerseyans Live Their Healthiest Lives,” 2019, https://www.rwjf.org/content/dam/farm/reports/reports/2019/rwjf453404.
92 Robert Wood Johnson Foundation.
93 The Grantsmanship Center, “Top Giving Foundations: NJ,” Text, The Grantsmanship Center, accessed December 5, 2019, https://www.tgci.com/funding-sources/NJ/top.
94 Aaron R. Fichtner, New Jersey’s County Colleges, Interview with authors, November 22, 2019.
95 Michael McDonough, Raritan Valley Community College Interview, Interview with authors, January 2, 2020; Steve Rose, Passaic County Community College, Interview with authors, January 2, 2020.
48
96 Nancy Cantor, Marcia W. Brown, and Peter Englot, Rutgers University-Newark, Interview with authors, December 4, 2019.
97 Anemona Hartocollis, “At Colleges, What’s Old Is New: Retirees Living on Campus,” The New York Times, September 10, 2019, https://www.nytimes.com/2019/09/10/us/college-university-retirement-communities.html.
98 Tim Mullaney, “Belmont Village Goes Big on Intergenerational Living with University, Mixed-Use Projects,” Senior Housing News, March 4, 2019, https://seniorhousingnews.com/2019/03/04/belmont-village-goes-big-on-intergenerational-living-with-university-mixed-use-projects/.
99 Alexandra Pacurar, “The Story Behind NJ’s $426M Walkable Town Center,” Commercial Property Exclusive, February 1, 2018, https://www.cpexecutive.com/post/the-story-behind-njs-426m-walkable-town-center/.
100 Tim Mullaney, “Belmont Village Goes Big on Intergenerational Livign with University, Mixed-Use Projects,” Senior Housing News, March 4, 2019, https://seniorhousingnews.com/2019/03/04/belmont-village-goes-big-on-intergenerational-living-with-university-mixed-use-projects/.
101 CHPC New York, “Public Housing Revolution: Lessons from London,” October 18, 2019, https://chpcny.org/publichousingrevolution/.
102 Brenda Flanagan, “Progress on Tax Incentive Reforms? Maybe, Maybe Not,” NJ Spotlight, October 21, 2019, https://www. njspotlight.com/2019/10/progress-on-tax-incentive-reforms-maybe-maybe-not/.
103 Colleen O’Dea, “NJ Urged ‘to Get Creative’ on Tax Incentives, Focus on Affordable Housing,” NJ Spotlight, July 19, 2019, https:// www.njspotlight.com/2019/07/19-07-18-nj-urged-to-get-creative-on-tax-incentives-focus-them-on-affordable-housing/.
104 Matt Arco, “Murphy Wants ‘Transit Hubs’ at Major N.J. Rail Stations. Here’s His Plan.,” NJ.Com, October 1, 2019, https://www. nj.com/politics/2019/10/murphy-wants-transit-hubs-at-major-nj-rail-stations-heres-his-plan.html.
105 Emily Bader, “NJ Transit Hires Its First Chief of Real Estate, Development,” ROI-NJ, November 20, 2019, http://www.roi-nj. com/2019/11/20/industry/nj-transit-hires-its-first-chief-of-real-estate/.
106 Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute, “County Health Rankings Model,” County Health Rankings & Roadmaps, accessed November 25, 2019, https://www.countyhealthrankings.org/explore-health-rankings/measures-data-sources/county-health-rankings-model?componentType=category&componentId=4.
107 Center for Community Investment, “Why Pioneering Health Institutions Are Investing Upstream to Improve Community Health,” accessed December 23, 2019, https://centerforcommunityinvestment.org/sites/default/files/2019-07/CCI-%20Hospital%20 Motivations%20Paper.pdf.
108 Center for Community Investment.
109 “Anchor Institutions,” democracycollaborative.org, accessed January 11, 2020, https://democracycollaborative.org/democracycollaborative/anchorinstitutions/Anchor%20Institutions.
110 “Housing First,” National Alliance to End Homelessness, accessed January 11, 2020, https://endhomelessness.org/resource/ housing-first/.
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Photo credit: NJHMFA 2019
