Current through Register Vol. 56, No. 18, September 16, 2024
(a)
The rent schedule approved by the Authority shall be adequate to pay all
necessary and reasonable expenses including, but not limited to, the cost of
operation and maintenance, reserves for replacement, vacancy and other
contingencies, payment in lieu of taxes, mortgage interest and amortization
payments, mortgage insurance premiums and dividends on investments.
1. If a project is financed by governmental
agency that regulates rent increases, rent increases shall not exceed those
allowed by that governmental agency and approval of the rental schedule by that
governmental agency shall be deemed to constitute approval by the
Authority.
2. If a project is not
financed by a governmental agency that regulates rent increases, or is no
longer financed by such a governmental agency because the mortgage to that
agency has been satisfied, no rent increase shall be valid or effective unless
and until approved by the Authority in accordance with
5:13-1.3(a)3.
i. An application for a rent increase
submitted by a housing sponsor to the Authority shall include proof of service,
by personal delivery or mail, to all tenants of notice of the application for
an increase and of their right to submit written comments regarding the
proposed increase to the Department of Community Affairs, Division of Codes and
Standards, PO Box 802, Trenton, NJ 08625-0802.
3. Except as otherwise provided in (a)4
below, no increase shall be allowed if the resultant rents would exceed the
rents in effect for the same units in the project at any time in the previous
12 months by more than the combined percentage of (a)3i and ii below:
i. The percentage increase in the Consumer
Price Index for rent and utilities for the most recently preceding 12-month
period for which information has been published by the United States Department
of Labor; plus
ii. Either of:
(1) The percentage, up to a maximum of 12
percent annually, needed to fund operating deficits, debt service arrears or
reserves for repair and replacement incurred at the housing project during the
preceding 12 months, provided that no part of the rent increase includes an
amount allocated towards providing a return on equity to the sponsor;
or
(2) The percentage, up to a
maximum of six percent annually, needed to offset an inability to provide a
return on equity and to offset operating deficits, debt service arrears or
reserves for repair and replacement delinquencies incurred during the preceding
12 months, if all or a portion of the requested assistance is intended to pay
return on equity.
iii.
For purposes of (a)3ii(1) and (2) above, payments made for debt service shall
be deemed to be payments of return on equity to the extent that the initial
principal amount of the mortgage(s) exceeds the greatest of:
(1) The initial principal amount of the
initial permanent mortgage(s), adjusted in accordance with the Consumer Price
Index for rent and utilities;
(2)
The initial principal amount of the most recent mortgage to a governmental
agency that regulated rents, adjusted in accordance with the Consumer Price
Index for rent and utilities; or
(3) The amount required to satisfy all
existing mortgages and any other liens and abate all housing, construction,
fire and health code violations previously cited by State or local enforcement
agencies.
4.
The Authority shall only approve rent increases in amounts exceeding those
determined in accordance with (a)2 above after public hearing and upon a
finding that any such increase is necessary in order to assure the continued
viability of the project by allowing the housing sponsor to pay all necessary
and reasonable expenses, as set forth in (a) above. The Authority shall ensure
that effective notice of the public hearing is given to the affected tenants
and to any persons known to be representative of their interests.
5. In lieu of approving annual increases in
accordance with (a)2, 3 and 4 above, the Authority may, at any time, enter into
regulatory agreements with housing sponsors that will allow the maintenance, in
perpetuity, of a range of affordability in the project that, to the greatest
extent feasible and consistent with project viability, most nearly equals or
exceeds that existing at the time of the execution of the regulatory
agreement.
(b) The
amount of payment in lieu of taxes approved by the Authority shall be the
maximum amount, not exceeding the statutory maximum, that is, the greater of
the tax on the property on which the project is located for the year in which
the undertaking of the project is commenced or 15 percent of the annual gross
shelter rents, that can be paid without endangering or impairing the viability
of the project. The payment in lieu of taxes shall be in an amount less than
the statutory maximum during any year in which such lesser amount is necessary
for project viability.
(c) No
housing sponsor shall institute a system of submetering or other means of
billing tenants for actual utility usage, including gas, electricity, water and
sewerage utilities, or other energy usage, without first obtaining the approval
of the Authority to do so. The housing sponsor shall give effective notice of
any application for approval to institute such a system to all tenants who
would be affected thereby. No approval of such a system shall be given unless
the housing sponsor demonstrates that, as part of the proposal, that the
proposed means of measuring usage and allocating costs would be technically
valid and that rentals would be reduced in an amount commensurate with
anticipated savings in utility or other energy charges to the housing
sponsor.
