N.J. Admin. Code § 5:80-3.2

Current through Register Vol. 56, No. 21, November 4, 2024

Section 5:80-3.2 - Housing projects' rate of return

(a) For all eligible loans for housing projects made by the Agency, the rate of return on its investment in the housing project, as determined by the Agency (stated equity), which can be paid or earned by the housing sponsor or its principals or stockholders, shall be determined pursuant to N.J.A.C. 5:80-3.3 and be paid on a cumulative but not compounded basis. This restriction shall apply for the full term of the Agency's loan and shall apply to return on investment earned or received upon construction and rehabilitation of the housing or from the operations of the housing or upon the sale, assignment, or lease of the housing, subject only to the applicable provisions, if any, of the Agency's rules concerning the sale of projects owned by nonprofit sponsors and transfer of ownership interests.

(b) Housing sponsors who have agreed to an annual rate of return of less than eight percent pursuant to the Agency's former governing statute, N.J.S.A. 55:14J-1 et seq. (repealed by P.L. 1983, c. 530), may request a one-time increase in the rate that shall be calculated pursuant to N.J.A.C. 5:80-3.3(f) upon meeting the following criteria:

1. The housing project has funds, including development cost escrows (DCE) or community development escrows (CDE), operating, savings and investment accounts, and all other funds, accounts, and escrows of the project, of an amount equal to three months of operating expenses (for senior citizens projects) or six months of operating expenses (for family projects), which includes debt service and reserve payments of the Agency-approved annual budget in effect at the time of the request and after deducting the following from the amount of available funds:

i. Debt service arrearages;

ii. Current unpaid invoices;

iii. Fully-funded tax, insurance, reserve for repair and replacement and all other escrow accounts except the DCE and CDE;

iv. The amount of anticipated or proposed repairs or capital improvements; and

v. Any other current obligation of the project.

2. The housing project has been current in all escrow and debt service payments for the three fiscal years prior to the request.

3. The requirements at (b)1 and 2 above need only be met at the time the sponsor seeks approval of the increased rate of return. Once the sponsor qualifies and receives approval of the increased rate of return, future distributions of return on equity shall be governed by the rules at 5:80-3.4.

(c) Housing sponsors who meet the criteria in (b) above shall be granted an increase in the annual rate of return subject to the following conditions:

1. The increased rate of return shall be prospective only, which includes the year in which the sponsor applies;

2. Payment of a $3,500 processing fee;

3. Payments of the increased return on equity shall be subject to this subchapter; and

4. Amendments will be made to the appropriate mortgage documents to reflect the conditions in (c)1 and 3 above.

N.J. Admin. Code § 5:80-3.2

Amended by 49 N.J.R. 3423(c), effective 10/16/2017