Current through Register Vol. 56, No. 18, September 16, 2024
(a)
The Agency will exercise its remedies and powers under N.J.S.A. 55:14K-7b(6)
only with regard to material violations and only after reasonable notice and
reasonable opportunity to correct the violation has been provided to the
housing sponsor in accordance with the procedures set forth below.
(b) General areas in which material
violations could result in Agency action include:
1. A material violation by the housing
sponsor of the terms of any mortgage, mortgage note or regulatory agreement
between the Agency and the housing sponsor;
2. A material violation by the housing
sponsor of an agreement with the municipality under which it has been granted
tax exemption;
3. A material
violation by the housing sponsor of the Act or any rules and regulations of the
Agency;
4. A determination by the
Agency that any loan or advance from the Housing Development Fund pursuant to
55:14K-30 is in jeopardy of not
being repaid.
(c)
Specific material violations of the Act shall include, but are not limited to,
the following events, which shall generally be sufficient to give rise to the
exercise of remedies under N.J.S.A. 55:14K-7b(6) in accordance with the
procedure noted in (e) below. The time periods specified here relate solely to
initiating action under N.J.S.A. 55:14K-7b(6) and are in no way intended to
waive or supersede any time period specified in any other contract, policy or
procedure and all obligations of the housing sponsor and any rights and
remedies of the Agency with regard thereto remain unchanged.
1. Violation of a subsidy contract as
declared by HUD which is not corrected to HUD's satisfaction within the time
frame as established by HUD;
2.
Failure to submit final cost certification within seven months of substantial
completion of construction;
3.
Failure to submit a rent determination and annual operating budget at least 30
days prior to the end of the fiscal year;
4. Failure to submit the name of a qualified
management firm at least 30 days prior to the end of an existing contract or
120 days prior to initial occupancy of the project;
5. Failure to submit an accountant engagement
agreement at least 30 days prior to the end of the fiscal year and/or failure
to submit the certified annual audit within five months after the close of the
fiscal year;
6. Three months
arrears of debt service;
7. Failure
to maintain at required levels any reserve account required by the Agency in
conjunction with the operation of the project;
8. Failure to correct a physical condition
that jeopardizes the safety of tenants or the public or the integrity of any
primary building system;
9. Failure
to pay any utility bill after the receipt of written notice indicating that
service would be terminated;
10.
Failure to pay any lien or judgment, including municipal liens, which could
jeopardize the financial viability of the project.
(d) It is the obligation of the Agency to
give written notice to a sponsor that a condition exists which is of sufficient
gravity to warrant the exercise of remedies under N.J.S.A. 55:14K-7b(6). The
Agency will provide written notice of the specific material violation(s) to the
sponsor, and may suggest courses of action to correct the
violation(s).
(e) The housing
sponsor shall take the following corrective actions:
1. Within 15 days of the receipt of the
notice described in (d) above, the sponsor shall submit a statement to the
Director of Property Management of the Agency setting forth its proposal for
curing the violations indicated and a definite time schedule for the corrective
actions.
2. If the sponsor is
unable to develop a statement within 15 days, it shall submit a written request
for an extension of time to prepare the plan to the Director of Property
Management within the 15-day period.
3. The Director of Property Management may
grant extensions of time for up to an additional 30 days for submission of the
statement outlining the actions that the sponsor intends to take.
4. During the time allowed for submission of
the statement, the Agency staff shall be available to meet with the sponsor in
order to assist in the development of a program of corrective actions. If the
sponsor does not submit a proposal, then the Director of Property Management
shall propose a corrective plan to the sponsor.
5. Upon receipt of a proposal from the
sponsor, the Director of Property Management may either accept the plan or
suggest alternatives or modifications to the plan in writing to the
sponsor.
6. If the sponsor is
unwilling to accept the modifications or plan suggested by the Director of
Property Management, then the sponsor may request in writing within 10 days
that the matter be referred to the Executive Director, or his or her designee,
for decision on the plan.
7. Once
the commitments by the sponsor are accepted by the Agency, or an agreement is
reached between the Agency and the sponsor, or a decision is made by the
Executive Director, the sponsor shall implement the corrective actions within
the time period specified in the plan.
(f) Any violations of or failure to implement
the corrective plan shall be subject to the following:
1. The Executive Director shall bring the
matter of such failures and a recommendation of remedy to the members of the
Agency Board at the next regularly scheduled public meeting that will allow
sufficient time for seven days written notice to be provided to the sponsor.
The written notice shall advise that the failure to implement or abide by the
recommended corrective actions is being brought to the attention of the Agency
Board and that suspension of the sponsor may be requested.
2. The Agency Board shall hear the
information provided by the Executive Director along with any information
presented by the housing sponsor at a public meeting prior to taking any action
pursuant to N.J.S.A. 55:14K-7b(6). The Agency Board may, however, discuss the
matter at a session closed to the public if permitted by N.J.S.A. 10:4-1 et
seq.
3. The decision by the Agency
Board shall be final, subject only to review by a court of competent
jurisdiction.
(g)
Pursuant to the Act, persons appointed to administer the affairs of the project
after suspension of the housing sponsor shall only serve for a period
coextensive with the duration of the original violation giving rise to the need
for the corrections or until the Agency is assured in a manner satisfactory to
it that the violation, or violations of a similar nature, will not recur. Upon
correction of the violation in a reasonable and satisfactory manner, the
housing sponsor may submit a request to the Agency for restoration of control
back to the sponsor. The Agency will respond to such request within 30 days.
During that period in which the Agency is considering the housing sponsor's
request, the term of the persons appointed to administer the affairs of the
project will continue.
(h) The
regulations in this subchapter are intended to be in addition to other powers
and remedies which the Agency may have at law or by agreement and shall not be
deemed to abridge any other rights or remedies of the Agency or the
sponsor.
(i) Upon a vote by the
Agency Board that there is an immediate need to take action and a finding that
failure to take immediate action could jeopardize the health and safety of
tenants at the housing project or cause substantial harm to the financial
viability or physical structure of the project, the Agency may waive the
regulations set forth above and immediately implement appropriate
action.
