[Amended 9-13-1993 by Ord. No. 93-11]
A.
There is hereby created an interest-bearing housing trust
fund in the Summit Bank for the purpose of receiving development fees from
residential and nonresidential developers. All development fees paid by developers
pursuant to this chapter shall be deposited in this fund. No money shall be
expended from the housing trust fund unless the expenditure conforms to a
spending plan approved by COAH.
B.
If COAH determines that the Borough of New Providence
is not in conformance with COAH's rules on development fees, COAH is
authorized to direct the manner in which all development fees collected pursuant
to this chapter shall be expended. Such authorization is pursuant to this
chapter, COAH's rules on development fees and the written authorization
from the governing body to the Summit Bank.
The source of funding to administer and implement this fund and to fund
this source shall be as follows:
[Added 9-13-1993 by Ord. No. 93-11]
A.
Money deposited in a housing trust fund may be used for
any activity approved by COAH for addressing the Borough of New Providence's
low- and moderate-income housing obligation. Such activities may include,
but are not necessarily limited to: housing rehabilitation; new construction;
regional contribution agreements; the purchase of land for low- and moderate-income
housing; extensions and/or improvements of roads and infrastructure to low-
and moderate-income housing sites; assistance designed to render units to
be more affordable to low- and moderate-income people; and administrative
costs necessary to implement the Borough of New Providence's housing
element. The expenditure of all money shall conform to a spending plan approved
by COAH.
B.
At least 30% of the revenues collected shall be devoted
to render units more affordable. Examples of such activities include, but
are not limited to: down payment assistance; low-interest loans and rental
assistance.
C.
No more than 20% of the revenues shall be expended on
administrative costs necessary to develop, revise or implement the housing
element. Examples of eligible administrative activities include: personnel;
consultant services; space costs; consumable supplies and rental or purchase
of equipment.
D.
Development fee revenue shall not be expended to reimburse
the Borough of New Providence for housing activities that preceded substantive
certification.
An eligible applicant shall, upon the applicant's request and approval
by the Affordable Housing Board, receive a low-interest loan from the borough
for the purposes herein provided. The loan shall be awarded at an interest
rate to be agreed upon mutually by the applicant and the Affordable Housing
Board in accordance with the provisions of this chapter. The loan shall constitute
a lien on the subject property, and the property owners shall execute such
documentation as may be required by the Borough Attorney to ensure the appropriate
recording of said lien. The Housing Officer and the applicant will prepare
a realistic repayment schedule, which shall be incorporated in the loan documents.
In the event that the applicant does not meet the scheduled payments, the
borough will collect the principal balance of the loan, together with all
accumulated interest compounded annually at the time of the sale of the property.
The borough may increase the interest rates on delinquent loans to an amount
equal to the prime rate as published by the Wall Street Journal on the first
business day of January of the year in which the default occurs.
Based on the appropriations specified in § 285-11, loans will
be made available from the borough to eligible applicants under the terms
specified below.
A.
Rental rehabilitation. The following terms will apply
to loans made for units that are owned by households who do not qualify as
low- or moderate-income but who will agree to rent the property to low- or
moderate-income households.
(1)
The borough will make a loan to the applicant for the
total amount of the cost of rehabilitation. Although the loan will be made
to the applicant, the proceeds of the loan will be paid to the individual(s)
or business(es) who sell the material and/or labor for the project. Homeowners
who contribute sweat equity will not receive financial remuneration for their
efforts.
(2)
The interest rate will be fixed at an annual rate of
two points below prime or one point above the borough's interest rate
on bonds sold for such purpose, whichever is less, at the time the loan originates.
The interest rate on bonds will be established and made public at the time
of the sale and all prospective borrowers will be notified in writing of the
respective rates.
(3)
Payments on the loan principal will be deferred for a
ten-year period. Payments on interest will be made in equal monthly payments
during this ten-year period or until the loan is paid in full, if paid before
the end of this period. No interest will be charged after the 10th year if
the owner chooses to defer repayment in exchange for extending affordability
controls.
(4)
Repayment of the loan principal will become payable in
full at the end of 10 years unless the owner elects to continue affordability
controls. Sixty days prior to the end of the loan's ten-year life, the
borough's Housing Officer will submit a letter to the owner indicating
the date on which the loan principal will become due, when the borough expects
payment and the circumstances under which repayment may continue to be deferred.
(5)
Repayment of the loan principal may be extended beyond
the first ten-year period if and only if the owner agrees to continue renting
to a low- or moderate-income household. If the owner wants to take this option,
he or she shall notify the borough's Housing Officer in writing of his
or her intentions within 30 days of receipt of notification from the borough
that the loan principal will become due within 60 days.
(6)
If an owner plans to extend participation in the Fair
Share Program through the option listed in the preceding Subsection A(5),
he or she must sign an agreement with the borough to extend the deed restriction
and renew the lien placed on the property upon first entering the program.
The agreement will thereafter be renewable annually. Each year, at the time
of rental, the owner must demonstrate that the unit continues to be occupied
by a low- or moderate-income household.
B.
Owner-occupied, units. The following terms will apply
to units that are owner-occupied by low- or moderate-income households.
(1)
The borough will make a loan to the applicant for the
total amount of the cost of rehabilitation. Although the loan will be made
to the applicant, the proceeds of the loan will be paid to the individual(s)
or business(es) who sell the material and/or labor for the projection. Homeowners
who contribute sweat equity will not receive financial remuneration.
(2)
The interest rate will be fixed at an annual rate of
two points below prime, as published by the Wall Street Journal on the first
day of January or the borough's interest rate on bonds sold for such
purpose, whichever is less, compounded. The interest rate on bonds will be
established and made public at the time of sale, and all prospective borrowers
will be notified in writing of the respective rates. Interest is chargeable
for a period of six years unless the loan is repaid sooner.
(3)
Deferred payments on the principal and interest will
be made available to the applicant as explained below.
(4)
Repayment of the loan will not be required until the
sale of the property. At the time of sale, the unpaid principal, plus accrued
interest, shall be paid to the borough, except that no interest shall be charged
beyond the sixth year. Repayment of the loan will be required in the event
that the dwelling becomes no longer owner-occupied and is not rented to a
person or persons qualified as a low- or moderate-income household.
(5)
Prepayment of the principal balance of the loan in multiples
of $100 may be payable without penalty at any time, as may accrued interest.
Payments received shall first be credited to the payment of interest and then
to reduction of principal.
(6)
Interest shall be compounded annually, and unpaid interest
shall be added to and become a part of the principal of said loan.
(7)
Payment of the principal and interest may continue to
be deferred beyond the sale of the property if and only if the property is
sold to another low- or moderate-income household. If the owner elects this
option, the sale price must be calculated consistent with the Council's
affordability standards. The new owner will be required to continue the deed
restriction and assume the lien on the property.
