N.J. Admin. Code § 5:13-1.12

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

Section 5:13-1.12 - Rents and charges

(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.

N.J. Admin. Code § 5:13-1.12

Amended by R.1988 d.571, effective 12/19/1988.
See: 20 N.J.R. 2425(a), 20 N.J.R. 3123(a).
Substituted "shall" for "will" in (a); added (b).
Recodified from 5:13-1.14 by R.1997 d.253, effective 6/16/1997.
See: 29 N.J.R. 965(b), 29 N.J.R. 2653(a).
Former N.J.A.C. 5:13-1.12, List of nonapplicants, recodified to 5:13-1.10.
Amended by R.1997 d.265, effective 7/7/1997.
See: 28 N.J.R. 3852(a), 29 N.J.R. 2813(b).
Added (a)1 through 5.
Amended by R.2004 d.363, effective 10/4/2004.
See: 36 N.J.R. 2603(a), 36 N.J.R. 4439(a).
Added (c).