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Understanding UHAC

A Guide to the Uniform Housing

Affordability Controls for Administrators

of Affordable Housing

Understanding UHAC

A Guide to the Uniform Housing Affordability

Controls for Administrators of Affordable

Housing

Published by:

NJ Council on Affordable Housing (COAH)

101 South Broad Street

PO Box 813

Trenton, NJ 08625-0813

(609) 292-3000

www.nj.gov/dca/affiliates/coah

Lucy Vandenberg, Executive Director

February 2010

This manual was authored by Marc Leckington and Randall M. Gottesman, President, of

Community Grants and Planning, Inc. and created with the assistance of a team of

experienced housing administrators from around the State, who provided many of the

model documents referenced throughout this handbook. The New Jersey Department of

Community Affairs (DCA), COAH and the HMFA would like to extend a special thanks

to the following individuals:

Sharon Clark

Arlyne DeSena

Tom O’Keefe

Frank Piazza

Table of Contents

Foreword 1

Introduction 3

Options and Requirements 3

Applicability of UHAC Regulations 4

Items of Note for the Experienced Administrator 5

Overview of the Affordable Housing Process 7

Additional Background on the Council on Affordable Housing and

the COAH Process 9

Roles & Responsibilities 11

The Municipality and Municipal Housing Liaison 11

Administrative Agents 15

Owners 21

FAQs 21

Determining Affordable Sales Prices and Rent 25

Development Considerations and Compliance Issues 25

Determining Maximum Initial Sales Price 26

Determining Resale Prices 29

Determining Initial Rents 31

Determining Rent Increases 34

FAQs 34

Affirmative Marketing 37

Creating a Plan 37

Developing an Advertisement 40

Implementing an Affirmative Marketing Plan 41

FAQs 41

Establishing and Managing an Applicant Pool 45

The Initial Application Process 45

Referral for Counseling Services 46

Random Selection 46

The Applicant Pool 48

Matching Households to Available Units 50

Contacting Applicants 51

The Resale Process 52

FAQs 53

Certifying Households 57

The Application for Certification 57

The Applicant Interview 58

Determining Household Income 59

Determining the Percentage of Affordability 61

Approving or Rejecting a Household 63

Confidentiality and Protection against Identity Theft 63

FAQs 64

Legal Instruments, Control Periods and Enforcement 69

Declarations of Covenants, Conditions and Restrictions, Deeds Restrictions, Deeds,

Recapture Mortgages and Recapture Mortgage Notes 69

Controls on Ownership Units 76

Controls on Rental Units 78

Enforcement 79

FAQs 82

Foreword

This manual provides guidance on the administrative tasks required to place and maintain

households in affordable housing units throughout New Jersey. This manual serves as a

guide to implementation of UHAC, adopted on December 20, 2004, and applies to units

created under the New Jersey Fair Housing Act, also known as the “Mount Laurel”

doctrine, the rules of the New Jersey Council on Affordable Housing (COAH) and those

units created under certain New Jersey Department of Community Affairs (DCA) and

New Jersey Housing and Mortgage Finance Agency (HMFA) programs.

Although Understanding UHAC often explains UHAC procedures by separating the

different policies and procedures between ownership and rental units, there are many

universal policies and procedures for creating and maintaining affordable housing that are

common among all types of restricted units:

 Determining Sales Prices and Rents. The Chapter on setting sales prices and rents

is applicable to all types of restricted units, including buy-downs, accessory

apartments, ECHO units, etc.

 Affirmative Marketing. Municipalities must affirmatively market all types of

affordable housing, unless specifically exempted (such as occupied units to be

rehabilitated under a COAH-approved rehabilitation program).

 Certifying Households. The explanation of policies and procedures for certifying

households for the purchase or lease of affordable housing can be applied to all

types of COAH-eligible affordable housing.

This manual was created with the assistance of a team of experienced affordable housing

administrators from around the State, who provided many of the model documents

referenced throughout this manual. TheNew Jersey Council on Affordable Housing, the

New Jersey Department of Community Affairs and the New Jersey Housing and

Mortgage Finance Agency would like toextend a special thanks to this team of dedicated

and experienced professionals.

Foreword

Introduction

Understanding UHAC is intended to supplement the Uniform Housing Affordability

Controls (UHAC) (N.J.A.C. 5:80-26.1 et seq.) as published in December of 2004 by the

New Jersey Housing and Mortgage Finance Agency (HMFA). This manual looks at the

regulations from the perspective of implementation. Its objective is to help affordable

housing providers, including municipalities, Municipal Housing Liaisons, Administrative

Agents, developers, affordable housing sponsors, owners, property managers and

landlords manage affordable housing units in accordance with UHAC more efficiently.

This manual also references model documents for Administrative Agents, which includes

documents compiled from experienced affordable housing administrators as well as all

UHAC appendices. All model documents referred to in this manual are available on the

Council of Affordable Housing’s (COAH) website for Administrative Agents at

www.nj.gov/dca/coah/administrators/administrators.shtml. Please visit this website

often for up-to-date information on implementing the Uniform Housing Affordability

Controls.

Options and Requirements

While the vast majority of the roles, responsibilities and procedures described in this

manual are based strictly on the regulations of the Uniform Housing Affordability

Controls (N.J.A.C. 5:80-26.1 et seq.) and therefore mandatory in order to maintain

compliance with the COAH, there are many areas of flexibility. Whenever the Uniform

Housing Affordability Controls present the municipality with options for local

implementation, the corresponding text in this manual is

marked with the Local Option icon (see Icon Key). In

some cases, the municipality will wish to decide how a

Local Option will be handled. In others, the municipality

may leave it to an Administrative Agent to write their

own procedures within applicable UHAC regulations. In

either case, procedures should be formalized in the

municipality’s Operating Manual and made part of the

agreement between a municipality and anAdministrative Agent.

For example, UHAC requires Administrative Agents to use a random selection process

for filling a vacant unit. However, there is great flexibility in how that can be

accomplished while still complying with UHAC regulations. A municipality may wish to

Introduction

ICON KEY

Required

Component

Local Option

standardize the random selection process across all of its restricted housing projects by

writing a series of procedures into the municipality’s Operating Manual. Alternatively, the

municipality may wish to allowAdministrative Agents to develop their own procedures.

The Required Component icon is used in Sections of this manual to highlight roles,

responsibilities and procedures that must be strictly followed. For instance, it is the

responsibility of the Municipal Housing Liaison to compile reporting data from each local

Administrative Agent and submit it to COAH. This responsibility is marked with a

Required Component icon to signify that this responsibility cannot be delegated and must

be performed by the Municipal Housing Liaison.

Applicability of UHAC Regulations

Units Seeking COAH Credit

It is vital for anyone involved in the administration of restricted units to have a clear

understanding of when the UHAC regulations apply. The first consideration is whether

the units are receiving COAH credit in a municipal Fair Share Plan. As a general rule of

thumb, all units receiving COAH credit, or intended to receive COAH credit, must meet

UHAC requirements, regardless of the funding source for the units. The exception to

this rule is for those units that are specifically exempted by COAH’s Third Round rules

(N.J.A.C. 5:94) from certain provisions of UHAC.

Except for the control periods, UHAC regulations apply to affordable housing units

“regardless of the date on which the units were created.” (N.J.A.C. 5:80-26.1) Therefore,

UHAC procedures relating to affirmative marketing, random selection of applicants, and

household certification, for instance, all apply regardless of the date the units came into

service.

Any units in a Plan that, prior to October 1, 2001, received substantive certification from

COAH (N.J.A.C. 5:93-9.17), a Court judgment of compliance, or were governed by a

grant agreement or contract will have its control period governed by the applicable

substantive certification (N.J.A.C. 5:93), judgment or grant agreement or contract.

For all other units, including units in a certified Plan amended on or after October 1,

2001, Administrative Agents should utilize the controls periods and documents provided

in thecurrent UHAC.

Units Not Seeking COAH Credit

If units are not seeking COAH credit, then it is important to identify the project’s

financing sources to determine whether UHAC applies. Specifically, before any prices are

set, rents established or marketing begun, it should be determined if the project was

financed by any State, Federal or private subsidies. The presence of these funds may

affect several aspects of the administration of these units, including but not limited to:

 Selection of households for placement into restricted units.

 Income limits and calculation of income.

 Annual recertification of tenant households.

In addition, a project’s use of some State or Federal funds may also exempt the units

from various UHAC regulations governing bedroom distribution, and setting sales prices

and rents.

In addition to units seeking COAH credit under the Fair Housing Act (including units

funded through Regional Contribution Agreements), UHAC also applies to the following

types of units:

 Units receiving financing from the New Jersey Department of Community

Affairs’ (DCA) Balanced Housing Program, unless financed through

HMFA’s Home Express Program; and

 Units receiving financing from HMFA’s MONI or UHORP Programs.

UHAC exempts units under the following programs:

 Federal LIHTC Program;

 Federal HOME Program;

 HUD 202 Program;

 HUD 811 Program;

 HUD HOPE VI Program; and

 Federal Home Loan Bank, Affordable Housing Program.

Itemsof Note for the Experienced Administrator

Readers already familiar with the administration of affordability controls under COAH,

DCA or HMFA programs may find this Section of interest. This Section highlights

changes to UHAC since it was first adopted on October 1, 2001.

Operating Manual

The new UHAC requires that “the Administrative Agent shall create and publish in plain

English… a written Operating Manual….setting forth procedures for administering”

affordable housing units. This Operating Manual may be written by the municipality for

all of its Administrative Agents, or the municipality may elect to have each of its

Administrative Agents create an Operating Manual. All Operating Manuals must be

approved by COAH (N.J.A.C. 5:80-26.14(b)). See Chapter 1 of this manual.

Bedroom Distribution

New developments are no longer required to include one-bedroom units (N.J.A.C. 5:80-

26.3). See Chapter 2 of this manual.

Very Low-income

The new UHAC rules specify that “at least 10 percent of all low- and moderate-income

[rental] units shall be affordable to households earning no more than 35 percent of [the

regional]median income.” (N.J.A.C. 5:80-26.3) See Chapter 2 of this manual.

Random Selection

The random selection process has been more clearly defined (N.J.A.C. 5:80-26.2). See

Chapter 4 of this manual.

Asset Test

The new UHAC requires an asset limit test for eligibility for an applicant that owns a

home with no mortgage. (N.J.A.C. 5:80-26.16(b)3). See Chapter 5 of this manual.

Length of Control Periods

The new UHAC rules specify that “[e]ach restricted unit shall remain subject to the

requirements of this subchapter until the municipality…elects to release the unit from

such requirements. Prior to…[this, the unit] must remain subject to the

requirements…for a period of at least 30 years…” Units located in high-poverty census

tracts must remain Deed Restricted until the municipality elects to release the units from

the affordability controls, but for a period of at least 10 years (N.J.A.C. 5:80-26.5(a)). In

the past, location in an Urban Aid municipality was thecriteria that defined whether Deed

Restrictions lasted minimally 10 or 30 years. See Chapter 6 of this manual.

Preservation of Affordable Units

In the event that a municipality elects to end the Deed Restriction on a unit after the

minimum control period expires, the proceeds from the unit must be used to create one

new affordable unit for every unit released from affordability controls (N.J.A.C. 5:80-

26.5(g)).See Chapter 6 of this manual.

Recapture Provisions

At the time of initial occupancy and upon each successive sale, a Recapture Mortgage is

issued reflecting the difference between the restricted sales price and the market-rate sales

price, with the proceeds to go to either the municipality or the State, as applicable, to

create new affordable housing opportunities at the termination of the affordability control

period (N.J.A.C. 5:80-26.5(c)). See Chapter 6 of this manual.

Enforcement Provisions

Clarification has been provided on the roles of the Municipal Housing Liaison and

Administrative Agent and specific enforcement mechanisms have been provided

(N.J.A.C. 5:80-26.18). See Chapter 6 of this manual.

Foreclosure Provisions

While not a new provision, the latest UHAC clearly specifies that affordability controls

remain in effect despite the entry and enforcement of any judgment of foreclosure

(N.J.A.C. 5:80-26.5(e)). See Chapter 6 of this manual.

Overview of the AffordableHousing Process

In order to better understand the functions and responsibilities of the municipality,

Municipal Housing Liaison, and Administrative Agent, it is helpful to first review the

basic steps in administering affordable units. This Section describes the different ways in

which COAH, DCA, and HMFA units are created and then provides a general overview

of the housing administration process for all units.

The Creation of Affordable Units

COAH units

The local Planning Board adopts a Housing Element as part of the Municipal

Master Plan as required by the New Jersey Municipal Land Use Law (MLUL).

The local Planning Board also adopts a Fair Share Plan in which the municipality

outlines how it will address its constitutionally mandated obligation to provide its

fair share of affordable housing units.

The governing body endorses the Housing Element and Fair Share Plan and

proposes ordinances that enable affordable housing development. The

governing body, if it so chooses, may adopt a development fee ordinance to

cover the costs of implementation of its affordable housing obligation, including

allowable administrative costs to administer the affordable units.

The municipality petitions COAH for substantive certification of its Housing

Element and Fair Share Plan and upon being granted certification, is protected

until 2015 from a builder’s remedy lawsuit alleging exclusionary zoning practices.

The municipality adopts its Fair Share Ordinance, which includes affirmative

marketing provisions, within 45 days of the grant of certification. The ordinance

incorporates by reference the Affirmative Marketing Plan, which must be

approved by COAH. The municipality also creates the position of Municipal

Housing Liaison by ordinance and appoints a municipal employee who has been

approved by COAH. COAH also approves any Administrative Agent and

Operating Manual.

DCA Balanced Housing units or HMFA MONI/UHORP units

Municipal representatives meet to plan the municipality’s strategy for providing

affordable housing within the community. An application is submitted for

DCA Balanced Housing funds or HMFA MONI/UHORP funds. A contract is

executed, designating an Administrative Agent approved by DCA or HMFA, as

applicable, to oversee the administration of affordability controls on the

restricted units. DCA or HMFA must approve the Administrative Agent.

The municipality adopts an Affirmative Marketing Ordinance consistent with

UHAC affirmative marketing requirements. The ordinance incorporates by

reference the Affirmative Marketing Plan, which must be approved by DCA or

HMFA, as applicable.

The Administration of Affordable Units

The administration process is the same regardless of the type of unit. The

municipality hires or appoints a Municipal Housing Liaison to serve as the contact

person for the users of affordable housing, the contracting Administrative Agent, if

any, the developers and affordable housing sponsors who create affordable housing

in the community, owners, property managers and landlords, and COAH. This

liaison attends State-sponsored training on the administrative processes for creating

and maintaining affordable housing units.

The Municipal Housing Liaison may perform all administrative functions for

affordable housing throughout the municipality, or may oversee a contract with an

Administrative Agent approved by COAH, DCA or HMFA, as applicable, to

perform these functions.

For new projects, it is important for the Municipal Housing Liaison and the

Administrative Agent to meet with the developers and affordable housing sponsors

to review applicable regulations at the earliest point of contact in the processing of

the project (for example, when application is made to the local Planning Board or

after a Zoning Board approval) and to secure written acknowledgement of the

requirement that no restricted unit may be offered to any person other than a

household certified by the Administrative Agent. At this time, it should be

determined which parties are responsible for which tasks. The initial sales prices,

bedroom distribution, affordability average, low- and moderate-income split of

units, and the very low-income set-aside (rental projects) should also be reviewed,

unless already determined by an affordable housing financing source. It is

recommended that the Municipal Housing Liaison review the affordable housing

provisions of any Master Deed and Public Offering, for consistency with COAH

and UHAC regulations, before they are recorded and submitted to DCA for

approval.

The Municipal Housing Liaison serves as an initial point of contact for unsolicited

calls to the municipality about affordable housing and refers the caller to the

Administrative Agent.

Subject to the approval of COAH and the municipality, the Administrative Agent

creates and publishes an Operating Manual pursuant to UHAC. It is recommended

that a uniform Operating Manual be developed for all affordable units within the

municipality.

The Administrative Agent implements the Affirmative Marketing Plan. If provided

by ordinance and specified as part of the project approval by the Planning Board or

Zoning Board, the municipality may delegate to the developer or affordable

housing sponsor the responsibility for placing an advertisement in the newspaper,

placing a broadcast ad on radio or television and implementing the other marketing

strategies.

The Administrative Agent serves as the initial point of contact for all inquiries

generated by the affirmative marketing efforts and sends out pre-applications to

interested callers.

The Administrative Agent, the developer or the affordable housing sponsor will

accept these returned pre-applications for a specific period of time, for example, 30

to 90 days. At the end of this time period, all applications will go to the

Administrative Agent where these applications will be randomly selected, through a

lottery, to create a pool of applicants.

The Administrative Agent pre-qualifies applicants in the applicant pool for income

eligibility and sends either a rejection letter to those over income or a preliminary

approval letter to those who appear income-eligible.

When a unit becomes available, the Administrative Agent will interview the

applicant households and proceed with the income qualification process. Applicant

households seeking for-sale units must obtain a mortgage pre-approval. The

Administrative Agent must notify applicant households in writing of certification or

denial within 20 days of the determination. Once certified, households are further

screened to match household size to bedroom size and whether they are interested

in for-sale or rental units.

Certified households that are approved for a for-sale affordable housing unit will

work with the Administrative Agent to secure a mortgage in a timely fashion and

obtain homeownership counseling if required or desired. The Administrative Agent

will prepare a Deed, the Recapture Mortgage and Note, and Appendix J and should

attend the closing for each unit. The filing and recording of documents is the

responsibility of the Buyer’s attorney, but the Administrative Agent may also elect

to file the documents. Once all documents are filed and recorded, and returned to

the Administrative Agent for inclusion in the file, the Administrative Agent will

process a release of the original documents.

Certified households that are approved for a rental affordable housing unit will sign

Appendix K and any other applicable documents, which are held in the applicant

file and obtain budget counseling if required or desired. Applicants will then make

an appointment with the leasing agent. Applicant households seeking rental units

proceed with a credit check, which is generally conducted by the developer,

affordable housing sponsor or landlord. If approved, the applicant will sign the

lease, pay the first month’s rent and the security deposit and receive the keys.

The certified household moves in to the affordable ownership or rental unit.

Additional Background on the Council on Affordable

Housingand the COAH Process

A brief history of the Council on Affordable Housing, the process of and requirements

for certifying a municipality’s Housing Element and Fair Share Plan and how the

Municipal Housing Liaison and Administrative Agents fit into this process can be found

on COAH’s websitefor Administrative Agents.

Roles & Responsibilities

Responsibilitiesof theMunicipalityandtheMunicipalHousingLiaison,the

AdministrativeAgentandOwners

There are three roles that are critical to the success of each municipality’s ongoing

compliance and monitoring of affordable housing units: the

municipality/Municipal Housing Liaison, Administrative

Agent and Owners. The municipality has the flexibility to

delegate certain responsibilities related to the administration

of affordable units. While the municipality may delegate many

tasks, the municipality is ultimately responsible for ensuring

that all activities are completed in accordance with all

applicable rules, and, if necessary, seeking legal enforcement

of Declarations of Covenants, Conditions and Restrictions and Deed Restrictions.

The Municipal Housing Liaison must be a paid employee or an appointed

representative of the municipality. The duties of the Municipal Housing Liaison

cannot be subcontracted or delegated to another individual or consultant. The

municipality may subcontract the Administrative Agent’s duties to an Administrative

Agent, including a consultant, developer, affordable housing sponsor or owner

providing administrative services, if approved by COAH or the applicable State

Agency. These three critical roles, their responsibilities and inter-relationships are

explained in more detail in the remainder of this Chapter.

TheMunicipality andMunicipalHousing Liaison

UHAC makes a clear distinction between the rolesand responsibilities of the municipality

and those of the Municipal Housing Liaison. While the municipality is given the task of

taking most legal actions and setting policies, the Municipal Housing Liaison is

responsible for communicating with the Administrative Agents, developers, affordable

housing sponsors, owners, property managers, landlords, COAH and the public.

Responsibilities of the Municipality

The municipality is ultimately responsible for ensuring that affordability controls are

established and maintained on restricted units, and, if necessary, seeking legal

Chapter

Three key

positions:

Municipality/

Municipal Housing

Liaison,

Administrative

Agent and Owner

enforcement of Declarations of Covenants, Conditions and Restrictions and Deed

Restrictions. Additional municipal responsibilities that relate to the administration of

affordability controls include:

Hire or appoint a local staff person to serve as the municipality’s

Municipal Housing Liaison. The Municipal Housing Liaison must be a paid

or appointed employee of the municipality. The duties of the Municipal

Housing Liaison cannot be contracted or delegated to another individual or

consultant. COAH must approve the appointment of the Municipal Housing

Liaison. Municipalities may share the services of a Municipal Housing Liaison.

Hire or appoint one or several entity(ies) to serve as the Administrative

Agent(s) of all restricted units. See the Section Who can serve as an

Administrative Agent? later in this Chapter.

Assume legal responsibility for all functions and duties of the Municipal

Housing Liaison and Administrative Agent(s).

Develop and distribute an Affirmative Marketing Plan. The creation and

implementation of an Affirmative Marketing Plan is described in Chapter 3.

Adopt ordinances necessary to facilitate various aspects of affordable

housing administration. The use of a regional preference, delegation of

administrative responsibilities, incorporation of affirmative marketing

provisions and enforcement, all require the establishment of a local ordinance. The

municipality must also ensure that no existing ordinances conflict with policies set

forth in UHAC. Other ordinances include:

 Identical Heat Source Requirement. Affordable housing

developments that combine market-rate and affordable units must all

utilize the same type of heating source. It is suggested that language on

this requirement be made part of each ordinance that is adopted to set

maximum sales prices and rents for each affordable housing

development.

 Maximum Sales Prices and Rents. The municipality must establish

maximum sales prices and rent by local ordinance for each affordable

housing project. Maximum sales prices and rents should be set according

to the affordability to a hypothetical household earning a percentage of

median regional income. In addition, each project must also meet

affordability average requirements. More information on how to

determine sales prices and rents is provided in Chapter 2.

 Affordability Control Periods. A municipality may elect to release the

affordability controls on all units in a specific area, but only after the

minimum control periods set forth in UHAC have passed and the

municipal Master Plan reflects the decision to release the units.



 Continuing Certificate of Occupancy. A continuing certificate of

occupancy or a certified statement from the local Building Inspector is

required upon the first transfer of title of an affordable unit following the

expiration of the applicable minimum control period (N.J.S.A. 5:80-

26.10).

 Affirmative Marketing. A municipality may elect to delegate to the

developer, affordable housing sponsor or owner the responsibility for

placing an advertisement in the newspaper, placing a broadcast ad on

radio or television and implementing the other marketing strategies. Such

delegation must be part of the project approval by the Planning Board or

Zoning Board.

 Enforcement. A municipality should consider providing enforcement

mechanisms by ordinance, for example, fines for the illegal rental of

units.

Retain or designate legal counsel. Legal counsel will assist the municipality

with developing, administrating, and enforcing affordability controls.

With the assistance of the Municipal Housing Liaison, and any

Administrative Agent(s), prepare and submit an Operating Manual to

COAH for approval. More information on the Operating Manual can be

found later in this Chapter.

Develop a system to prevent unauthorized rental of for-sale affordable

units. The municipality will establish a system to prevent Owners of for-

sale units from utilizing these units as rental property.

Provide all reasonable and necessary assistance in support of the

Administrative Agent’s efforts to ensure compliance with the housing

affordability controls.

Responsibilities of the Municipal Housing Liaison

All municipalities with substantive certification from COAH, and those that are actively

seeking substantive certification, are required to hire or appoint a Municipal Housing

Liaison. Municipalities that receive financing from the DCA’s Balanced Housing Program

or the HMFA’s MONI or UHORP Programs must also hire or appoint a Municipal

Housing Liaison. The Municipal Housing Liaison is responsible for coordinating all the

activities of the municipal government as it relates to the creation and administration of

affordable housing units. The role of the Municipal Housing Liaison is, therefore, critical

to continued success in administering affordable housing units.

The primary purpose of the Municipal Housing Liaison is to ensure that all

affordable housing projects are established and administered according to COAH

and UHAC regulations as outlined in an Operating Manual. It is important for the

municipality to dedicate an individual to this position who has adequate resources,

skills and experience to effectively manage all applicable activities of Administrative



Agents, developers, affordable housing sponsors, owners, property managers, and

landlords. The duties of the Municipal Housing Liaison shall include the following

duties, and may include the responsibilities for providing administrative services as

described in the next Section under, Responsibilities of the Administrative Agent. The

following duties that may not be contracted out include:

Monitor the status of all restricted units in the municipality’s Fair Share

Plan. Regardless of any arrangements the municipality may have with one or

more Administrative Agents, it is the Municipal Housing Liaison’s responsibility

to know the status of all restricted units in their community. The Municipal Housing

Liaison should develop a system to be notified by the Administrative Agent about

foreclosures, resales and any threats to the affordability controls of the units in the

municipality.

Serve as the municipality’s primary point of contact for all inquiries

from the State, Administrative Agents, developers, affordable housing

sponsors, owners, property managers, landlords and interested

households. The Municipal Housing Liaison will serve as the municipality’s primary

point of contact on affordable housing issues. Interested applicants should be provided

with information on the types of affordable units within the municipality and, where

applicable, the name of the Administrative Agent that manages the units and the contact

information for the Administrative Agent.

Once a municipalityselects their Municipal Housing Liaison, contact information for that

person must be provided to COAH, along with a certified copy of the ordinance creating

the position of Municipal Housing Liaison, if not already on file with COAH, and a

certified copy of the governing body’s resolution appointing the Municipal Housing

Liaison.

For municipalitieswith units financed by DCA’s Balanced Housing Program or

HMFA’s MONI or UHORP Programs, the contact information of the Municipal

Housing Liaisonmust also be provided to DCA and/or HMFA.

Compile, verify and submit annual reporting. Administrative Agents are

responsible for collecting much of the data that is ultimately included in an

annual COAH monitoring report. However, it is the Municipal Housing

Liaison’s responsibility to collect and verify this data and consolidate it into the annual

report to COAH. Any requests from COAH for additional information or corrections

will be directed to theMunicipal Housing Liaison.

Coordinate meetings with Administrative Agents and Developers/Affordable

Housing Sponsors/Owners. When a new affordable unit or series of units is in

the planning process, the Municipal Housing Liaison should coordinate and

attend a meeting between the Administrative Agent and the developer/affordable

housing sponsor/owner. The developer, affordable housing sponsor or owner may serve

as their own Administrative Agent, if they meet the applicable requirements and are

approved bythe municipality and COAH or the applicable State Agency. The purpose of

Under some forms of government, the Chief Executive has the authority to make appointments and in that case

a letter will suffice.



this initial meeting is to develop a clear division of labor between the parties and to

transmit any components of the Operating Manual – including copies of all COAH-

related local ordinances-- that have already been adopted by the municipality.

Provide Administrative Services, unless those services are contracted out.

The responsibilities for providing administrative services are described in the

next Section under, Responsibilities of the Administrative Agent. If the

Municipal Housing Liaison provides administrative services, in addition to submitting an

ordinance creating the position of Municipal Housing Liaison and a resolution appointing

the Municipal Housing Liaison for approval, COAH also requires submission of a

resume, statement of qualifications and a statement of intent to attend any continuing

education opportunities provided by COAH, as well as indication of the types of

units/programs that will be administered.

Administrative Agents

Who can serve as anAdministrative Agent?

The UHAC provides municipalities with much flexibility in how it fills the role

ofAdministrative Agent. One or more of the following approaches can be used

to distribute the Administrative Agent’s responsibilities:

 The municipality (through a designated employee, department, board or

committee, etc.) may serve as the Administrative Agent for some, or all, of

the restricted units. The Municipal Housing Liaison can also serve as an

Administrative Agent.

 The Fair Housing Act grants the HMFA the authority to act as an

Administrative Agent for willing municipalities; it is also the designated

default Administrative Agent where no appropriate Administrative Agent

exists. To achieve this statutory directive, HMFA created the Housing

Affordability Service (HAS), the state “Administrative Agent” that is

operated and managed by HMFA. The municipality can contract with the

HAS to administer restricted units. Under HAS, many of the administrative

duties are performed by the developer, owner, property manager or landlord

as delineated in a contract between HAS and the developer, owner, property

manager or landlord. HAS provides final certification of applicants as well as

enforcement and oversight. HAS also markets available units onNew Jersey

Housing Resource Centerat www.njhousing.gov

 The municipality can directly contract with a consultant to administer all or

some of the restricted units in their municipality. There are several

requirements regarding the use of consultants. See Contracting with an

Administrative Agentin this Chapter.

 The municipality is also permitted to contract with the developer, affordable

housing sponsor or owner of restricted units to perform the Administrative

Agent functions. As mentioned above, there are several requirements

regarding the use of consultants, developers, affordable housing sponsors or



owners for Administrative Agent services. See Contracting with an

Administrative Agentin this Chapter.

Responsibilities of the Administrative Agent

The primary responsibility of the Administrative Agent is to establish and enforce

affordability controls and ensure that units in their portfolio are sold or rented, as

applicable, to eligible households.Administrative Agents must:

Secure written acknowledgement from all developers, affordable housing

sponsors, owners and tenants that no restricted unit can be offered or in

any other way committed to any person other than a household duly

certified by the Administrative Agent. It is recommended that the Municipal Housing

Liaison review the affordable housing provisions of any Master Deed and Public

Offering, for consistency with COAH and UHAC regulations, before they are recorded

and submitted to DCA for approval.

Create and adhere to an Operating Manual. All Administrative Agents are

required to follow the policies and procedures of an Operating Manual, as

applicable to the scope of services they have been contracted to perform. As

appropriate, the Operating Manual should also be available in other languages. See The

Operating Manual at the end of this Chapter for more information on the requirements

of this important document.

Implement the municipality’s Affirmative Marketing Plan. The

Administrative Agent, the developer, affordable housing sponsor or owner

could be responsible for implementing the Affirmative Marketing Plan

adopted by the municipality. At the first meeting with the Municipal Housing Liaison,

Administrative Agent, and developer/affordable housing sponsor/owner this

responsibility should be discussed. Affirmative marketing includes conducting regional

outreach and advertising for available affordable units. Advertising costs may also be

delegated to the developer, but this must be established by ordinance and a condition of

approval of the Planning Board or Zoning Board.

Accept applications from interested households. In response to marketing

initiatives or by referral from the Municipal Housing Liaison, interested

households will contact the Administrative Agent. The Administrative Agent

will supply applicants with applications, provide additional information on available units

and accept completed applications.

Conduct random selection of applicants for resale or rental of restricted

units. The Administrative Agent is responsible for conducting the random

selection in accordance with the Affirmative Marketing Plan and any related

local ordinances, and as described in the Operating Manual. In order to maintain an open

and fair process, all households eligible for inclusion in the random selection should be

informed of the date and time that the selection will take place. Refer to Chapter 4 for a

complete explanation of random selection.



Create and maintain a pool of applicant households. This includes reaching

out to households in the applicant pool to determine continued interest and/or

changes in household size and income. Creation and maintenance of an

applicant pool is described further in Chapter 4.

Determine eligibility of households. The task of collecting application

materials and documentation from applicant households and analyzing it for

eligibility is the responsibility of the Administrative Agent. A written

determination on a household’s eligibility must be provided within twenty (20) days of the

Administrative Agent’s determination of eligibility or non-eligibility. Whether or not the

household is determined to be eligible for a unit, it is the Administrative Agent’s

responsibility to secure all information provided by the

household in individual files and to maintain strict confidentiality

of all information regarding that household. The Administrative

Agent is required to ensure that all certified applicants execute a

certificate acknowledging the rights and requirements of owning

or renting an affordable unit, in the form of Appendix J or K of

UHAC, as applicable. Refer to Chapter 5 for a complete

description on certifying households.

Establish and maintain effective communication with owners, property

managers and landlords. Owners, property managers and landlords of

restricted units should be instructed and regularly reminded that the

Administrative Agent is their primary point of contact. The Administrative Agent shall

immediately inform all owners, property managers and landlords of any changes to the

Administrative Agent’s contact information or business hours. The Administrative Agent

must create and distribute annual mailings to all Owners of affordable units reminding

them of the rights and requirements of owning an affordable unit (N.J.A.C. 5:80-

26.18(d)4). Landlords and property managers must place a notice in all rental properties

annually informing residents of the rent increase for the year and the contact information

for the Administrative Agent (N.J.A.C. 5:80-26.18(d)3).

Owners should be instructed to immediately contact the Administrative Agent in the

following circumstances:

 If they are considering or have decided to selltheir home.

 In the event they wish to refinance their mortgage or take out a home equity loan

and, consequently, will be seeking a subordination of their mortgage.

 If they are seeking an increase in the sales price of their unit due to capital

improvements.

 If they are seeking a hardship waiver to allow them to rent their unit.

Property managers and landlords should be instructed to immediately contact the

Administrative Agent:



Households must be

notified in writing

about their eligibility

within 20 days of the

Administrative

Agent’s

determination.



 Immediately upon learning that an affordable rental unit will be vacated.

 Forreview and approval of annual rental increases.

Preserve affordability controls during the sale of restricted units.

Immediately upon being notified of an Owner’s intent to sell their property, the

Administrative Agent should inform the Owner of their role in the marketing

and sale of the home. The Administrative Agent is responsible for extinguishing the

affordability controls with the Seller and re-establishing them with the Buyer. The

Administrative Agent shall be responsible for providing closing attorneys/agents with the

appropriate legal instruments. Refer to Chapter 6 for more information on enforcement.

Ensure cancellations of Recapture Mortgages are effectuated. It is the

Administrative Agent’s responsibility to ensure that Recapture Mortgages are

cancelled at the conclusion of the control period when the Recapture Mortgage

is satisfied. If the Recapture Mortgage is being cancelled due to a sale of the property

during the control period, then the Administrative Agent may wish to cancel the original

Recapture Mortgage only after the Recapture Mortgage with the new Owner has been

recorded.

Send out annual mailings about restrictions. Administrative Agents must

annually mail to all Owners of affordable housing units a reminder of their rights

and responsibilities as Owners of an affordable unit.

Provide annual notification of maximum rents. Each year when COAH

releases its low- and moderate-income limits, rental households must be notified

of the new maximum rent that may be charged for their unit. The

Administrative Agent’s contact information must be included on such notification in case

the tenant is being overcharged.

Ensure unit has Continuing Certificate of Occupancy at transfer. To help

ensure a healthy and safe living environment for all families, the Administrative

Agent is responsible for requesting an inspection or a certified statement from

the local Building Inspector at the first sale after the expiration of the minimum

affordability control period.

Serve as the custodian of all legal documents. The Administrative Agent is

responsible for maintaining originals of all legal instruments for the units in their

portfolio. Throughout the duration of a unit’scontrol period, the Administrative

Agent shall maintain a file containing its affordability control documents. This includes,

but is not limited to, the recorded Declarations of Covenants, Conditions and

Restrictions, Deed Restrictions, Deeds and Recapture Mortgages, as well as Recapture

Mortgage Notesand Appendices J and K.

Serve as point of contact on all matters relating to affordability controls.

It is recommended that the Administrative Agent develop a system to be

notified by lenders when a unit is at risk of foreclosure. In the event of a

foreclosure, the Administrative Agent should work with the foreclosing institution to



ensure that the affordability controls are maintained. The Administrative Agent should

seek the counsel of the municipality’s attorney on legal matters that threaten the durability

of the affordability controls.

Provide annual activity reports to Municipal Housing Liaison for use in the

annual COAH monitoring report. The Administrative Agent is responsible for

collecting the reporting data on each unit in their portfolio. To minimize the

impact of this task, it is strongly suggested that the Administrative Agent familiarize

themselves with the latest reporting forms and ensure that each data element is collected

sometime during the initial processing of the applicant. Please visit COAH’s website for

the latest reporting forms.

Maintain and distribute information on HUD-approved Housing Counseling

Programs. More information on housing counseling requirements is provided

in Chapter 4.

The Operating Manual

While UHAC includes many mandatory provisions, there are a number of discretionary

policies and procedures that may be established by each municipality. An Operating

Manual should set forth the standards that will be used by all Administrative Agents of

affordable units within amunicipality. Municipalities have the option to write all or some

of the Operating Manual and allow the Administrative Agent(s) to complete the balance.

By standardizing many of the minimum criteria at a municipal level, the municipality will

be able to effectively regiment the experience of a household in its pursuit of affordable

housing. This may prove to be especially valuable to municipalities that have multiple

Administrative Agents representing a variety of affordable housing choices. All local

COAH-related ordinances must be provided to the Administrative Agent in order to

ensure their compliance with choices, such as regional preference, when creating their

Operating Manual.

At a minimum, the Operating Manual must clearly describe the procedures and

policies for the following:

 Affirmative marketing.

 Random selection of interested applicants for available units. What level of

verification will be completed on applicants before the lottery process -- pre-

applications or only full applications? Will the pool of applicants be re-

randomized each time a unit is available?

 Standards for reviewing applicant household eligibility and certifying applicant

households.

 Procedures for establishing and maintaining long-term controls of restricted

units.

 Enforcement of restrictions placed on affordable units.



 Releasing restricted units promptly at the conclusion of their control period.

 Approach to determining fair market value to determine the Recapture Mortgage

Note amount.

Contracting with anAdministrative Agent[5:80-26.14c-e]

As described earlier in this Section, the Administrative Agent’s responsibilities can be

achieved through several different approaches. However, unless the Administrative Agent

is an employee of the municipality, an agreement must be written to formalize the

relationship. UHAC establishes several new requirements for contracting with

Administrative Agents.

All contracts and subcontracts regarding the Administrative Agent’s duties are

subject to the review and approval of COAH for units receiving COAH credit,

to DCA’s Division of Housing for Balanced Housing financed units or to

HMFA for MONI or UHORP financed units. A change in Administrative Agents must

similarly receive approval from the applicable State Agency.

The following documents must be submitted for review prior to municipal approval of

eachAdministrative Agent:

 Documentation which demonstrates that the private entity’s purposes include

the provision of housing services and housing counseling and the promotion

of the principles underlying the Federal Fair Housing laws, and that the

private entity has knowledge of and familiarity with the New Jersey Fair

Housing Act and its implementing rules.

 Evidence of history of successful management of restricted affordable

housing units, particularly those produced as a result of the New Jersey Fair

Housing Act or through a Mount LaurelCourt settlement.

 Representations and warranties from the private entity that, if the entity

serves as Administrative Agent with respect to restricted units in which it has

a pecuniary interest, the entity shall not allow the pecuniary interest to

compromise in any way its administration of the controls set forth in UHAC.

 A locally-approved, but unsigned, draft of a services agreement, which must:

 Clearly define the responsibilities of the Administrative Agent;

 Require that the Administrative Agent prepare an Operating Manual in

accordance with UHAC and/or follow all applicable locally-written

polices, procedures and ordinances;

 Grant the Administrative Agent the power to discharge and release legal

instruments on behalf of the municipality;



 Affirm that the Administrative Agent will comply with Federal Fair

Housing laws and the NJ Fair Housing Act and;

 Require all persons handling the day-to-day Administrative Agent

responsibilities to attend all applicable training opportunities offered by

COAH;and

 Warrant that an Administrative Agent’s pecuniary interest in a project will

not compromise their administrative duties (N.J.A.C. 5:80-26.14(e)3).

 Documentation of the private entity’s capacity to undertake the duties of an

Administrative Agent.

 A statement of intent to attend any continuing education opportunities

provided by COAH.

 Indication of the types of units/programs to be administered under the

contract for services.

 Such other relevant documents from a specific applicant as required by the

municipality to justify approval as an Administrative Agent.

Owners

Owners of For-sale Units. Once affordability controls are in place and measures have

been taken by the Municipal Housing Liaison to prevent the illegal sale or rental of the

unit, there are no reporting responsibilities required of the Owner. Owners should,

however, read annual mailings from the Administrative Agent, and cooperate with any

and all requests for information from either the Municipal Housing Liaison or the

Administrative Agent.

Owners of Rental Developments. Open and direct communication between the

Owners of rental developments, the Municipal Housing Liaison and the Administrative

Agent is essential to ongoing administration of affordability controls. Although the

Administrative Agent is required to serve as the primary point of contact with

households, the Owner must provide the Municipal Housing Liaison and Administrative

Agent with information on vacancies. Owners of rental developments are also

responsible for working with the Administrative Agent to ensure that the Municipal

Housing Liaisonhas all necessary information to complete the annual COAH reporting.

As described earlier in this Chapter, Owners of rental developments also may serve as the

Administrative Agentfor their units if approved by the appropriate State Agency.

FAQs

Question: Who can serve as the Administrative Agent?

Answer: The Administrative Agent position can be filled several ways. The municipality

can designate a municipal employee such as the Municipal Housing Liaison to perform

this function for all or some of the restricted units in their municipality or directly contract

with the HMFA’s Housing Affordability Service a consultant. The municipality is also

permitted to contract directly with a developer, affordable housing sponsor, or owner of

restricted rental units to perform the Administrative Agent functions. Developers,

affordable housing sponsors and owners that have been contracted to perform these

functions are further permitted to subcontract all or part of these services to a consultant,

property manager orlandlord. COAH must approve each entity providing administrative

services for the municipality.

Question: My municipality is still protected by its Round II certification and continues to administer and

monitor its restricted units; however, we do not have an Operating Manual. Are we still required to

prepare one? When is it due?

Answer: Yes, all municipalities maintaining compliance with, or seeking, substantive

certification from COAH are required to comply with UHAC, including preparation of

anOperating Manual. Municipalities currently working on Round III Plans should submit

an Operating Manual along with their petition for Round III substantive certification or

with COAH monitoring.

Question: Our municipality is already working with consultants, property managers and landlords that

are serving asAdministrative Agents. Is there any guidance for bringing these relationships into compliance

with UHAC?

Answer: COAH encourages municipalities to bring its existing relationships with

Administrative Agents into compliance with UHAC as soon as possible. It is suggested

that an Operating Manual be written to ensure that the allocation of responsibilities

between the municipality and the Administrative Agent(s) covers all necessary duties and

is fully compliant with UHAC.

Question: Is there any guidance or advice from COAH on determining when an Operating Manual

and/or application should be available in other languages?

Answer: Review the municipality’s Affirmative Marketing Plan to determine which

populations are least likely to participate in your affordable housing program(s)? If these

households are non English speaking, then, certainly, whenever feasible, translation of

relevant documents into the applicable language(s) should be done. Another alternative to

translating all documents into one or more additional languages is to advertise in those

languages in periodicals catering to those population groups, and explain that assistance

during the application process may be provided upon their request. Both the translation

of documents and the services of an interpreter may sometimes be provided at minimal

or no cost by various social service non-profit organizations focusing on providing

services to these various population groups.

Question: Who pays for the Municipal Housing Liaison’s salary?

Answer: Payment of the salary and fringe benefits of the Municipal Housing Liaison is

the responsibility of the municipality. However, municipalities that collect development

fees may pay the Municipal Housing Liaison’s salary out of the Affordable Housing Trust

Fund as an administrative expense, subject to COAH’s rules at N.J.A.C. 5:94-6 and a

COAH-approved Spending Plan.

Question: Does UHAC or COAH provide any cap on charges for Administrative Agent services?

Answer: No. COAH suggests that municipalities solicit multiple bids to help ensure that

pricing is competitive and compare the services to be provided.

Question: How long must the Administrative Agent keep files on applications for affordable housing

units and certified Owners/tenants of affordable housing units?

Answer: Pursuant to N.J.A.C. 5:80-26.14(a)8, N.J.A.C. 5:80-26.15(c) and N.J.A.C. 5:80-

26.17 current records must be maintained by the Administrative Agent and outdated

records must be given to the municipality for safe-keeping. A file must be created and

maintained on each restricted unit for its control period.

Relevant Model Documents

Checklist for Approval of Municipal Housing Liaison

Ordinance Creating Position ofMunicipal Housing Liaison

Resolution Appointing a Municipal Housing Liaison

Checklist for Approval of Administrative Agent

Resolution Authorizing Contract with Administrative Agent

Contract for the Provision ofAdministrative Agent Services

Unit Inventory Form

All model documents referred to in this manual are available on COAH’s for

Administrative Agents at www.nj.gov/dca/coah/administrators/administrators.shtml.

Please visit this website often for up-to-date information on implementation of the

Uniform Housing Affordability Controls.

DeterminingAffordable

Sales Pricesand Rent

Development Considerations and Compliance

Issues

There are several regulations in UHAC that must be considered from the development

perspective before the sales prices and rents of individual units can be calculated. These

requirements should be discussed at the first meeting between the Municipal Housing

Liaison, Administrative Agent and developer/affordable housing sponsor. The following

is a summary of the requirements for ownership and rental projects. It is important to

note that assisted living residences as well as units constructed with HMFA’s MONI or

UHORP Programs are not subject to the bedroom distribution and affordability average

requirements. Instead they must maintain compliance with applicable Agency policies,

guidelines and regulations. However, UHAC regulations must be followed in order for

the units to be eligible for COAH credit in a certified Fair Share Plan.

Bedroom Distribution. UHAC includes several regulations on the distribution

of unit sizes for affordable ownership and rental developments.

 The combined number of efficiency and one-bedroom units may be no greater

than 20 percent of the total low- and moderate-income units;

 At least 30 percent of all low- and moderate-income units must be two-bedroom

units;

 At least 20 percent of all low- and moderate-income units are three-bedroom

units; and

 The remainder, if any, may be allocated at the discretion of the developer.

This regulation does not apply to units built with HMFA’s MONI or UHORP funds,

unless also seeking COAH credit. Assisted living facilities and affordable age-restricted

units are not held to these bedroom distribution standards. For affordable age-restricted

units, the number of age-restricted low- and moderate-income bedrooms must be equal

to or greater than the number of affordable age-restricted units within the development.

Chapter



In other words, the average bedroom size in an age-restricted development must be equal

to or greater than one bedroom per unit. For example, if the overall age-restricted

development is 25 percent efficiencies, and 50 percent one-bedroom units, and 25

percent two-bedroom units, that equals an overall development bedroom size of exactly

one bedroom per unit. The age-restricted development can meet this standard by

creating all one-bedroom units or by creating a two-bedroom unit for each efficiency unit,

or any other combination that will equal a minimum of one bedroom per unit.

Failure to properly calculate, or otherwise comply with the bedroom distribution

requirement mayresult in the loss of COAH credits.

Pricing by Household Size. Initial sales prices and rents are based on targeted

“model” household sizes for each size home as determined by the number of

bedrooms. With the exception of assisted living facilities, initial sales prices and

rents must adhere to the following rules. These maximum sales prices and rents are based

on COAH’s Annual Regional Income Limits Chart at the time of occupancy:

 A studio shall be affordable to a one-

person household;

 A one-bedroom unit shall be affordable to

a one- and one-half person household;

 A two-bedroom unit shall be affordable to

a three-person household;

 A three-bedroom unit shall be affordable to a four- and one-half person

household; and

 A four-bedroom unit shall be affordable to a six-person household.

The above rules are only to be used for setting initial sales prices and rents. They are not

guidelines for matching household sizes with unit sizes. See Chapter 4 for information on

matching household sizes with unit sizes. For assisted living facilities, a two-bedroom

unit shall be affordable to a two-person household or to two one-person households.

Additionally, the pricing of age-restricted units may not exceed affordability based on a

two-person household.

Determining MaximumInitial Sales Price

The maximum sales price for an ownership unit is determined by first calculating the

amount that an appropriately sized household can afford for housing expenses at various

income ranges. Several related expenses (homeowner insurance, private mortgage

insurance (PMI), association fees and taxes) must then be subtracted from the

household’s maximum monthly contribution toward housing expenses to arrive at the

maximum monthly mortgage payment. The calculated mortgage amount, a five percent

down payment, and the current lending rate must be used to arrive at the maximum sales

price.



Size of Unit

Household Size

Used to

Determined

Max Sales/Rent

Studio/Efficiency 1

1 Bedroom 1.5

2 Bedrooms 3

3 Bedrooms 4.5

4 Bedrooms 6

COAH has developed two MS Excel® spreadsheets, the General Sales Price Calculator

and the Age-Restricted Sales Price Calculator, to assist Administrative Agents, developers,

and affordable housing sponsors with the task of calculating initial maximum sales prices

for ownership units. Guidance on using these spreadsheets is included later in this

Section.

Additional Regulations for an Ownership Development

In addition to UHAC regulations in the previous Section entitled Development

Considerations and Compliance Issues, ownership developments must also comply

with the following UHAC regulations:

Division of Units: Low- and Moderate-income. In each affordable ownership

development, at least50 percent of all affordable units must be affordable to low-

income households. The remaining affordable units must be affordable to

moderate-income households. This regulation does not apply to units built with or

HMFA’s MONI or UHORP funds, unless also seeking COAH credit.

Affordability Average. Each affordable development must achieve an

affordability average of no more than 55 percent of the regional median income

for restricted ownership units. In achieving this affordability average, moderate-

income ownership units must be available for at least three different prices for each

bedroom type, and low-income ownership units must be available for at least two

different prices for each bedroom type. This regulation does not apply to units built with

HMFA’s MONI or UHORP funds unless also seeking COAH credit. Calculation of the

affordability average is explained in the next Section entitled Using the COAH Sales

Price Calculators and isalso available on COAH’s website for Administrative Agents.

Maximum Initial Sales Price. The maximum initial sales price of restricted

ownership units within each affordable development shall be affordable to

households earning no more than 70 percent of the regional median income.

Condominium/Homeowner Association Fees. UHAC requires that Owners of

affordable units and Owners of market-rate units be charged identical

condominium or homeowner association fees and/or special assessments.

However, affordable housing developments subject to a municipal ordinance adopted

before October 1, 2001 may be exempt from this regulation if the ordinance establishes

differing association fees or special assessments for market-rate and affordable unit

Owners. Condominium or homeowner association fees and increases must be considered

when determining the maximum sales price and applicant’s eligibility. Municipalities that

collect development fees are also permitted to use funds for an Affordability Assistance

Program that subsidizes condominium and homeowner association fees and/or special

assessments.

Using the COAH Sales Price Calculators

Given the annual changes in COAH income limits, it is imperative that Administrative

Agents use the latest version of the spreadsheets from COAH’s webpage

(http://www.nj.gov/dca/coah/administrators/administrators.shtml).



Whether the Administrative Agent calculates the number by hand or uses a Sales Price

Calculator, the following data must be collected and accurately reported:

 Annual mortgage rate. The current year-to-date average Federal

Reserve H.15 conventional mortgages rate of interest must be used when

generating the maximum sales price. This information is available on the Federal

Reserve website at http://www.federalreserve.gov/releases/h15/ . The correct

figure to use is located in the rightmost column of the last row on the table found

on the above website.

 Monthly Condominium or Homeowner Association fees, if

applicable.

 Property tax rate and equalization ratio. Both can be obtained from

the Municipal Tax Assessor or website links pointing to data maintained by the

Divisions of Taxation and Local Government Services. However, it is best to

check with the Municipal Tax Assessor for the most current information.

The Sales Price Calculators for Age-Restricted and Non Age-Restricted developments are

already programmed with values for several other components of the calculation. These

values include a rate for private mortgage insurance (PMI), mortgage term, and down

payment. The pre-defined figures included in the spreadsheet will be updated periodically

to reflect changes in lending trends and market conditions.

Figure

. Screenshot from theGeneral SalesPriceCalculator. Valuesin non

shaded cells must be used to

determine anaccurate maximum salesprice. Shaded cells canbeedited by the user.

The next section of the General Sales Price Calculator helps confirm compliance with the

affordability average and breakdown of units into income categories.

Figure2. Screenshot from the General Sales Price Calculator. Complete the shaded cells. Note that the percentage of affordability can be

adjusted. However, the development must not exceed the required affordabilityaverage of 55 percent.

Once the Pricing Strategy section is complete, the spreadsheet will generate the

affordability average, maximum sales prices and maximum mortgage amounts for each

unit type.

The initial sales price for an ownership unit must be approved by the responsible

Administrative Agent before marketing of the unit may begin. In the cases where a

developer, affordable housing sponsor or owner is serving as their own Administrative

Agent, it is strongly suggested that the pricing calculations be reviewed with the Municipal

Housing Liaison, as the municipality is ultimately responsible for COAH compliance of

all affordable units.

Determining Resale Prices

Calculating the maximum resale price (MRP) for an ownership unit involves applying the

annual percentage increase corresponding with each calendar year since the Seller bought

the house. No increase is permitted during the balance of the calendar year immediately

after the sale. A Resale Price Calculator has been created by COAH to assist with this

calculation and is available on COAH’s website for Administrative Agents. By selecting

the proper county and inputting the year the home was purchased, along with the price

the current Owner paid for the home, the calculator will determine the MRP for the

home. The spreadsheet also includes a calculation to determine the maximum amount a

homeowner may refinance, which requires the approval of the Administrative Agent.

Figure 3. Screenshot from the Resale Price Calculator. Complete the required shaded cells. The year and purchase price of the current

Ownershould beused to calculatethe resale price.

Upon entry of the required information, the Resale Calculator will generate the maximum

sale price and maximum refinance amount. Annual percentage increases permitted by

COAH will also be displayed. Depending on the size of the user’s computer monitor, it

may be necessary to “scroll down” to view this information. Upon determining a

maximum resale or refinance amount, the calculator sheet should be printed and placed in

the appropriate property file(s).

Figure4. Screenshot fromtheResale Price Calculator. The calculator will generatethe

maximum sale price aswell asthe maximum refinanceamount (up to95 percent ofthe

maximum resaleprice).

Requests for Increases in Maximum Sales Price. The Seller of an ownership unit may

ask the Administrative Agent to increase the sales price of their home beyond the

maximum sales price under limited circumstances. UHAC states that only those

improvements “that render the unit suitable for a larger household or that add an

additional bathroom” can increase the calculated maximum sales price. In no event shall

the maximum sales price of an improved housing unit exceed the limits of affordability

for the larger households. Additionally, the purchase of a central air conditioning system

installed subsequent to the initial sale and not included in the initial sales price may be

made a condition of the resale provided the price, subject to a 10-year straight-line

depreciation. For example, a 10 percent reduction in value each year since installation,

may be approved by the Administrative Agent. In this instance, the approved value of

the central air conditioning does not increase the resale price, but is listed as a separate

item on the HUD 1 form.

Options or upgrades purchased at the time of the initial sale are not considered part of

the initial sales price and therefore do not affect the value or sales price at the time of

resale. Unless otherwise approved by the Administrative Agent, the purchase of any

property other than central air conditioning shall not be made a condition of the unit

resale.

Determining Initial Rents

Determining the initial rent on a new affordable housing project is very similar to the

process of determining a maximum sales price with one exception -- a utility allowance

for renter-paid utilities is subtracted from the household’s maximum monthly

contribution toward housing expenses. Several MS Excel® spreadsheets have been

created by COAH to calculate initial rents and are available on COAH’s website for

Administrative Agents. An explanation of how to use the calculators is included later in

this Section.

Additional Regulations for a Rental Development

In addition to UHAC regulations covered earlier in this Chapter in the Section

Development Considerations and Compliance Issues, rental projects must also comply

with the following UHAC regulations:

Split Between Low- and Moderate-income Rental Units. At least 50 percent

(of the affordable units within each bedroom distribution (unit size) must be

low-income units and at least 10 percent of the affordable units within each

bedroom distribution must be affordable to households earning no more than 35 percent

ofthe regional median income. The remainder of the affordable units must be affordable

to moderate-income households. This regulation does not apply to assisted living

residences or units built with HMFA’s MONI or UHORP funds, unless also seeking

COAH credit. COAH regulations exempt Low-Income Housing Tax Credit projects

from this regulation.



Affordability Average. The average rent for all affordable units cannot exceed

52 percent of the regional median income. At least one rent for each bedroom

type must be offered for both low-income and moderate-income units. This

regulation does not apply to assisted living residences or units built with HMFA’s MONI

or UHORP funds, unless also seeking COAH credit. The COAH Initial Rent Calculator,

discussed below, includes a feature for determining the affordability average.

Maximum Rent. The maximum rent of restricted rental units within each

affordable development shall be affordable to households earning no more than

60 percent of the regional median income. This regulation does not apply to

assisted living residences or units built with HMFA’s MONI or UHORP funds, unless

also seeking COAH credit.

Using the COAH Rent Calculators

Before starting to use the COAH Rent Calculators, it is important to verify that you are

using the correct type and most recent version of the spreadsheet with the latest COAH

income limits and HUD utility allowances. Rent calculators are available for general rental

developments and age-restricted rental developments. Visit COAH’s webpage at

http://www.nj.gov/dca/coah/administrators/administrators.shtml to access the

calculators.

The Project Data section of the Rent Calculators includes some features that will help

determine the bedroom and income distribution of an affordable housing project.

Figure 5. Screenshot from COAH General Rental Calculator. After inputting in the total units and the number of affordable units, the

spreadsheet guides you through the proper distributionsfor incomeand bedroom sizes.

Another useful section of the Rental Calculator allows the user to set and allocate units in

different affordability ranges in order to ensure that the average does not exceed 52

percent. The spreadsheet will remind the user of the need to provide 10 percent of

affordable units to households earning 35 percent or less of the regional median income

as well as the need to provide a different rent for each bedroom type for low-income and



moderate- income units. The COAH calculator provides more spaces for rental

affordability percentages to allow for flexibility, but they are not required.

After determining a pricing strategy, information on utilities must be entered. This

includes the type of utility, that is, whether the heat is gas, oil or electric, and whether the

utility is included in the tenant’s rent or paid for separately by the tenant.

After all development-level data is entered into the calculator and the table for utilities is

completed, the spreadsheet will generate a series of initial rents for each unit size that is

adjusted with the proper utility allowances.

Determining Rent Increases

Annual rent increases are permitted in affordable units governed by UHAC

. Rent

increases are permitted at the anniversary of tenancy according to COAH’s Annual

Regional Income Limits Chart, available on COAH’s website for Administrative

Agents. For example, in 2006, Owners of rental property were permitted to increase

rents by four percent. These increases must be filed with and approved by the

Administrative Agent. Property managers or landlords who have charged less than

the permissible increase may use the maximum allowable rent with the next tenant

with permission of the Administrative Agent. The maximum allowable rent would

be calculated by starting with the rent schedule approved as part of initial lease-up of

the development, and calculating the annual COAH-approved increase from the

initial lease-up year to the present. Rents may not be increased more than once a

year, may not be increased by more than one COAH-approved increment at a time,

and may not be increased at the time of new occupancy if this occurs less than one

year from the last rental. No additional fees may be added to the approved rent

without the express written approval of the Administrative Agent.

FAQs

Question: What should homeowner insurance be based on?

Answer: Homeowner insurance should be based on replacement value, not the

maximumresale price.

Question: Does COAH require design standards for affordable housing units?

Answer: COAH does not require any additional design standards above what is required

by municipal zoning. COAH does recommend, however, that the affordable housing

units be identical to the market-rate units within the same development and that

affordable units be integrated with market-rate units in a development. Certain financing

sources, such as DCA’s Balanced Housing Program, the Low-Income Housing Tax

Credit Program, and the Federal Home Loan Bank, Affordable Housing Program do

require specific design standards.

Question: Is there a cap on fees related to parking, pets, and amenities?

Answer: There is no cap on fees related to parking, pets, and amenities as they are outside

the maximum sales price or rent calculations and are considered optional services.

However, the fees for optional services must be the same for affordable units as for

market-rate units. For example, pool privileges cannot be free to market-rate unit

households and an extra expense for affordable unit households. Affordable unit

Owners must have the same access to amenities as market-rate Owners. Additionally, the

fees for optional services cannot be part of the monthly rent and cannot be charged once

the tenant has decided not to use the service.

Question: Do the utility allowances associated with rental units need to be adjusted annually in the same

way that rent increases are adjusted according to the COAH income limits?

LIHTC projects are exempt from UHAC regulations governing rent increases (N.J.A.C.5:94-7.2(B)2. LIHTC

rent increases are governed by applicable Federal regulations.

Answer: The Utility Allowance Chart published annually with COAH’s Regional Income

Limits Chart is only used when determining the initial rent. COAH units that are not

financed with Federal funds need only to apply the annual rent increase permitted by

COAH or local rent control, whichever is less. Units financed with Federal sources need

to apply the Utility Allowance annually plus the percent increase in the PMSA median

income as the basis of the rent increase.

Question: If a landlord has previously charged less than the maximum allowable rent, may the landlord

charge the full rent to a new tenant?

Answer: With the approval of the Administrative Agent, when a new tenant leases a unit

the landlord may use the maximum allowable rent, not the previously charged rent, to

calculate the annual increase.

Relevant Model Documents

Family SalesCalculator

Age-Restricted Sales Calculator

Family RentalCalculator

Age-Restricted Rental Calculator

LIHTC Rental Calculator

ResaleCalculator

HUD Monthly UtilityAllowances

COAHAnnualRegional Income LimitsChart

Illustrative Sale Prices

Illustrative Rents

All model documents referred to in this manual are available on COAH’s website for

Administrative Agents at www.nj.gov/dca/coah/administrators/administrators.shtml.

Please visit this website often for up-to-date information on implementation of the

Uniform Housing Affordability Controls.

AffirmativeMarketing

All affordable units that are governed by UHAC are required to be affirmatively

marketed using an Affirmative Marketing Plan. To ensure that affirmative

marketing is conducted properly, an Affirmative Marketing Plan, adopted by

resolution of the governing body and referenced by ordinance, requires COAH’s

approval during the substantive certification process for those units receiving COAH

credit. An Affirmative Marketing Plan is a regional marketing strategy designed to attract

households of all majority and minority groups, regardless of race, creed, color, national

origin, ancestry, marital or familial status, gender, affectional or sexual orientation,

disability, age, or number of children to housing units which are being marketed by an

Administrative Agent or a developer, sponsor, owner, property manager or landlord of

affordable housing. The primary objectives of an Affirmative Marketing Plan are to

target households who are least likely to apply for affordable housing and to target

households throughout the entire housing region in which the units are located.

The Affirmative Marketing Plan must be developed at the municipal level and

approved by COAH before it is implemented by the Administrative Agent.

Municipalities have the option of designating an employee, such as the

Municipal Housing Liaison or another staff person, to serve as the Administrative Agent

responsible for implementing the Affirmative Marketing Plan. Conducting affirmative

marketing at the municipal level ensures that all households seeking affordable housing

within themunicipality will have a uniform experience and equal opportunity to apply for

affordable housing.

Creating a Plan

The first step in creating an Affirmative Marketing Plan is to attempt to identify those

populations within the housing region that traditionally have not applied or are

anticipated to be least likely to apply for affordable housing. A municipality may wish to

consult with other municipalitiesin their housing region to share ideas and experiences in

identifying and reaching these populations. Once the underserved populations and their

respective obstacles to affordable housing have been identified, the municipality should

attempt to tailor specific marketing efforts to those populations and attempt to remove

those obstacles preventing them from applying for affordable housing.

Chapter



For example, an Administrative Agent reviews the 2000 Census and determines that a

large concentration of Polish-speaking people live and work in a municipality’s housing

region. The Administrative Agent notices that there have been few applications for

affordable housing submitted by Polish-speaking people in the past. In this instance, the

municipality should learn what might be preventing Polish-speaking people from seeking

out affordable housing opportunities. In some cases, the obstacle may be something as

simple as a language barrier that prevents them from reading marketing materials, or

maybe the majority of Polish-speaking people do not subscribe to the newspaper used to

advertise affordable housing opportunities. Therefore, the Affirmative Marketing Plan

should provide for the publication of affordable housing advertisements in the

community publication read by many Polish-speaking people. The municipality could also

consider translating and printing affordable housing applications and marketing materials

in Polish. UHAC requires municipalities to make a good faith effort to identify the

underserved populations in the housing region and to implement marketing initiatives to

reach them.

The marketing initiatives tailored to underserved populations, combined with region-wide

initiatives to the general public are at the heart of the Affirmative Marketing Plan. When

developing an Affirmative Marketing Plan, the municipality must consider the media

distribution requirements outlined in UHAC.

Affirmative Marketing Plans must include all of the following:

 Publication of at least one advertisement in a newspaper of general circulation

within the housing region.

 Broadcast of at least one advertisement by radio or television throughout the

housing region. This new requirement intends to leverage the requirement of

radio and TV broadcasters to provide free public service announcements (PSAs).

A list of regional television and radio outlets is available on COAH’s website for

Administrative Agents.

 At least one additional regional marketing strategy such as a neighborhood

newspaper, religious publication, organizational newsletter, advertisement(s) with

major employer(s), or notification through community and regional organizations

such as non-profit, religious and civic organizations.

 Although not a requirement of UHAC, COAH encourages

municipalities to list all affordable housing units in their community on

the New Jersey Housing Resource Center at www.njhousing.gov.

The New Jersey Housing Resource Center is a free service to both

Owners and administrators of affordable housing and households

seeking affordable housing opportunities.



Additional details about each marketing initiative should be written into the

Affirmative Marketing Plan and should include:

 Contact information for the entity that accepts submissions and any submission

requirements, for example, digital file, paper original only, etc.

 If the media is a periodical, how often it is published and the number of days

before publication a submission is due.

 The planned frequency at which the municipality or Administrative Agent will

follow through with this marketing opportunity. For instance, advertising in a

daily newspaper may be cost prohibitive; an ad once a month may provide the

desired results.

Once all initiatives have been written into the Affirmative Marketing Plan in sufficient

detail, the municipality should verify that the Affirmative Marketing Plan is in

compliance with the requirements ofUHAC.

To complete the Affirmative Marketing Plan, the following information must be added

for each affordable housing opportunity within the municipality:

 The address of the project and development name, if any.

 The number of units, including number of sale and/or rental units.

 The price ranges of the sale and/or rental units.

 The name and contact information of the Municipal Housing Liaison,

Administrative Agent, property manager or landlord.

 A description of the random selection method that will be used to select

applicants for affordable housing. Random selection is discussed in greater detail

in Chapter 4.

 Disclosure of required application fees, if any

Once the Affirmative Marketing Plan has been completed and

adopted by resolution of the governing body, the Affirmative

Marketing Plan must then be approved by COAH before it can be

implemented by reference in an ordinance. Municipalities seeking

substantive certification should include a copy of their Affirmative

Marketing Plan as part of their petition to COAH. As a municipality

proceeds with implementing their Fair Share Plan, new affordable

housing projects may come on line that were not originally

anticipated. In those cases, the Affirmative Marketing Plan adopted

at the municipal level will need to be revised. For instance, if the

Affirmative Marketing Plan does not contain any specific initiatives

directed towards senior citizens, the Affirmative Marketing Plan will need to be revised

before marketing can begin on a new age-restricted development.

A form to help

municipalities

set up an

Affirmative

Marketing Plan

is available on

COAH’s website

for

Administrative

Agents.

Regional Preference

Municipalities that wish to give preference to applicant households that live or

work in their COAH housing region must state this preference in the form of

an ordinance. This preference cannot be limited to families that live or work in

the host municipality – if preference is given, it must be given to all households that live

or work in their COAH housing region. COAH divides New Jersey’s 21 counties into six

housing regions as outlined on COAH’s Annual Regional Income Limits Chart.

Developing an Advertisement

UHAC includes several requirements for the actual advertisements that are

published under an Affirmative Marketing Plan. A sample advertisement is

available on COAH’s website for Administrative Agents. Specifically,

advertisements must contain the following data on each affordable housing opportunity:

 The location of and directions to the units.

 A range of prices for the housing units.

 The bedroom size(s) of the units.

 The maximum income permitted to qualify for the housing units.

 The locations of applications for the housing units.

 The business hours when interested households may obtain an application for a

housing unit.

 Application and/or credit check fees, if any.

It is also recommended that the following information be included in the

advertisements:

 Last date applications will be accepted.

 Contact number of the Municipal Housing Liaison, Administrative Agent,

property manager or landlord.

 A statement concerning the availability of credit, budget and/or homeownership

counseling services.

 If already adopted by ordinance, a statement concerning regional preference.

 COAH recommends including the following statement on all advertisements.

“Visit www.njhousing.govfor more affordable housing opportunities.”



Implementing an Affirmative Marketing Plan

As described in the beginning of this Chapter, a municipality has some flexibility in how

its Affirmative Marketing Plan is implemented. Whatever approach is chosen, UHAC

states that themunicipality is ultimately responsible for ensuring that its COAH-approved

Affirmative Marketing Plan is implemented properly. Therefore, it is strongly

recommended that Administrative Agents maintain detailed records on all marketing

initiatives.

Affirmative marketing for initial occupancy of ownership and rental units must begin at

least four (4) months before the planned completion of the project. COAH suggests that

Administrative Agents strive to maintain a pool of certified applicants sufficient for at

least two years worth of resales or vacancies. It is reasonable to assume that between 5

and 10 percent of an affordable housing portfolio will be resold or re-rented annually.

To help analyze the impact and success of various marketing initiatives, it is

recommended that the Administrative Agent ask the applicants where they learned of the

housing opportunity.

Throughout the duration of the Affirmative Marketing Plan, applications for

affordable housing must be available in several locations, including, but not

limited to:

 The county administration buildings and/or libraries for each county within the

housing region.

 The municipal administration building and library in the municipality in which the

units are located.

 The developer’s sales or rental office and/or the Administrative Agent’s offices.

 Via mail by requests from prospective applicants.

FAQs

Question: Who is responsible for making sure applications are available at the county administration

building and libraries?

Answer: Whatever entity the municipality designates to implement the Affirmative

Marketing Plan is responsible for ensuring that an adequate supply of applications exists

at these locations. Besides periodically contacting those locations to take stock, the

designated entity may wish to place a note near the last few copies of the application

alerting the reader of where to call for additional copies. A strong, congenial working

relationship with contact people within the administration buildings and libraries is

another excellent way to have an “extra” pair of eyes on all of your handouts, alerting you

when supplies are low or out. Finally, an electronic copy of the application and other key

forms (PDF, MS Word, etc.) posted on the web or available for e-mail can also help

prevent delays in getting applications to interested applicants.



Question: How often should we advertise?

Answer: Administrative Agents responsible for new developments, or newly hired

Administrative Agents, must advertise initially to create an applicant pool. For new

developments, advertising should begin four months prior to the anticipated occupancy

of the units. Advertising should continue monthly until all units are sold or rented. Once

all vacant units are filled with eligible households, the Administrative Agent can either

close the applicant pool or keep it open. If the applicant pool has sufficient eligible

households for approximately two years worth of turnover, COAH recommends that the

applicant pool be closed and applications no longer be accepted. In this case, advertising

does not need to be conducted until four months before the applicant pool is to be re-

opened. If the Administrative Agent wishes to keep the applicant pool open, they must

conduct some form of advertising on a monthly basis. However, all the components of

the Affirmative Marketing Plan do not need to be implemented every month. One

strategy can be implemented each month on a rotating basis. Chapter 4 provides more

information on random selection and applicant pool maintenance to help determine how

often advertising should be conducted.

Question: My county doesn’t have a library. How do I comply with the application availability rule?

Answer: Only 11 of New Jersey’s 21 counties have a county library (a list is included on

COAH’s website for Administrative Agents). If one or more of the counties in a housing

region do not have county libraries, applications must be made available at the county

administration building.

Question: Our affordable housing development is very small. It is unnecessary for us to conduct monthly

marketing initiatives and the number of applicants in our existing pool already exceeds the two-year rule of

thumb. Is there any way for us to maintain compliance without conducting monthly outreach initiatives?

Answer: COAH suggests that you attempt to partner with other municipalities in your

housing region to help defray time and cost or close the applicant pool and do not accept

applications until the applicant pool contains fewer applicants and affirmative marketing

is implemented.

Question: We have moderate-income units available, but not low-income units. Can we keep only the

moderate portion of the applicant pool open?

Answer: Yes. In fact, if you regularly have a type of unit that is hard to fill, you may tailor

marketing initiatives to fill that type of unit. However, households that submit

applications and are not interested or eligible for the targeted unit type must be notified

that they will not be placed in the applicant pool until it is reopened for their unit type.

Question: Are all developments required to conduct affirmative marketing, or just those with a certain

number of units, for example, more than five units?

Answer: All affordable units governed by UHAC are required to be affirmatively

marketed. If it is burdensome for a small development to conduct its own affirmative

marketing, the municipality and Administrative Agent(s) should consider conducting the

affirmative marketing for all the units within themunicipality at the municipal level, not at

the development level. An alternative is to contract with an Administrative Agent who

will do the affirmative marketing for your units as well as other units they manage.

Question: Is a regional preference permitted in UHAC?

Answer: Although not explicitly stated in the most recent version of UHAC, the regional

preference remains an option that is consistent with COAH’s methodology, which

determines the municipal fair share on a State and regional basis. For the same reason, a

municipal preference isnot permitted.

Question: As the Administrative Agent, may I charge an application fee to a potential tenant? If

so, how much can this fee be?

Answer: N.J.A.C. 5:80-26.12 is applicable only to the fee charge by the

Administrative Agent to the Affordable Housing Applicant for filing an application.

This interpretation is supported by N.J.A.C. 5:80-26.15(h)8. This requires that the

ads for Affordable Housing, both sale and rental, include the application fee, if any.

Obviously, there is no application fee that a developer/seller may charge to an

individual or family interested in purchasing a unit, but there will be an unknown and

unregulated mortgage application fee. Therefore, the "fee" noted in 26.15 must be

that of the Administrative Agent. Since the Administrative Agent is ultimately the

Agent of the Municipality's interests and would normally be the recipient of the

application, the Application Fee should be a reflection of the Administrative Agent's

costs associated with placing an applicant name on an affordable housing list and not

their eligibility for a particular unit. An Administrative Agent who pre-screens or

pre-qualifies Applicants will have significantly higher costs associated with taking an

application than an Administrative Agent who takes all applications for either

addition to a list or random selection without significant concern for eligibility until a

unit is available. Although COAH allows up to 5% of the rent for a unit to be

charged for a fee, it is COAH's expectation that Application Fees charged by

Administrative Agents reflect their costs associated with their procedures.

Administrative Agents are discouraged from taking by the regulatory allowance

charge of 5% of rent when it is not necessary to meet their expenses. Applications

fees required by landlords to candidates for affordable housing units may not exceed

the fees charged to market candidates in the same project. If there are

Administrative Agent application fees and/or Landlord application fees they should

be separately noted in all paid and unpaid literature seeking applications for

affordable housing.

Relevant Model Documents

Affirmative Marketing Plan

Resolution Adopting Affirmative Marketing Plan

Administrative and Affirmative Marketing Provisions in the Fair Share Ordinance

List of Regional TelevisionandRadio Broadcasters

Sample Advertisements

List of County Libraries

All model documents referred to in this manual are available on COAH’s website for

Administrative Agents atwww.nj.gov/dca/coah/administrators/administrators.shtml.

EstablishingandManaging

an Applicant Pool

The InitialApplication Process

In order for households to be part of the selection process for a vacant unit, they

must – at a minimum – be preliminarily determined as income-eligible. This process

can be accomplished through a short preliminary application (pre-application) that asks

applicants about their income and household size. A preliminary application should

only request information such as: the applicant’s current contact information, age,

gender, and relationship of all household members, annual income of all household

members, and any other information necessary for categorizing the household in the

pool of applicants. Examples include desired number of bedrooms, whether or not

the household currently lives or works in the housing region, and the type(s) of

housing in which the household is interested (sale or rental). A sample preliminary

application is available on COAH’s website for Administrative Agents.

As an alternative, Administrative Agents may wish to bypass the pre-application

entirely and require that a household submit a complete application and supporting

documentation which is evaluated for eligibility for certification before the

household is placed into the pool of applicants for available units. A full application

must meet the requirements listed in Chapter 5 – Household Certification.

All applications for affordable housing should include a front page narrative

describing the application process and income qualification requirements, and list the

income limits for the housing region in which the units are located. Applications

may need to be available in other languages based on the population of the housing

region.

A letter must be sent to all applicants once the application is received, stating that:

 The application is complete and the household has been placed into

the applicant pool, or

 The application is incomplete and the applicant must complete it

before the Administrative Agent can review the household’s income

ChapterChapter

eligibility (a policy must be established as to how many times an

application will be returned for incompleteness), or

 The application is complete, but the household is over the income

limit for the housing region, and re-application is permitted if the

income changes, or

 The application is complete, but the household does not earn

sufficient income for the units administered by the Administrative

Agent; such a letter should include a statement that re-application is

permitted if the income changes and provide a listing of referral

agencies for counseling services.

Sample letters are included on COAH’s website for Administrative Agents.

Referralfor Counseling Services

The Administrative Agent is responsible for providing housing counseling,

or providing referrals for counseling, as a part of the Affirmative Marketing

Plan and during the application process. A household is only required to

attend counseling if their monthly housing expense exceeds UHAC standards. A

HUD-approved housing counseling agency, or a counseling agency approved by the

NJ Department of Banking and Insurance, meets UHAC’s requirements for an

experienced Housing Counseling Agency. If the Administrative Agent is not

approved by HUD or by the NJ Department of Banking and Insurance, the Agent

may make referrals to one of the HUD-approved housing counseling agencies in

New Jersey. This counseling to low- and moderate-income housing applicants will

focus on subjects such as budgeting, credit issues, mortgage qualification, rental lease

requirements, and landlord/tenant law and is free of charge. A list of non-profit

counselors approved by HUD and/or the New Jersey Department of Banking and

Insurance is included on COAH’s website for Administrative Agents.

Random Selection

UHAC requires the random selection of applicants for placement in affordable

units. Random selection is a process by which households are selected for

placement in affordable housing units such that no preference is given to one

applicant over another except for purposes of matching household income and size with

an appropriately priced and sized affordable unit. The random selection process shall be

used in the following situations:

 When a new for-sale or rental development is initially occupied

 When an Administrative Agent establishes an applicant pool to fill resales

or re-rentals

UHAC provides some flexibility regarding the structure of the random selection process.

However, the process must be clearly defined in the Affirmative Marketing Plan

approved by COAH and documented in the Administrative Agent’s Operating Manual.

Below are two examples of random selection procedures.



Initial Randomization

In initial randomization, applicants are selected at random before income-eligibility is

determined, regardless of household size or desired number of bedrooms. The process

may beas follows:

 After advertising is implemented, the Administrative Agent accepts

applications for a set period of time, for example, 30-90 days.

 At the end of the period, sealed applications are selected one-by-one through

a lottery. If fewer applications are received than the number of available units,

then all eligible households will be placed in a unit. [The Administrative Agent

may also pre-qualify applicants as soon as applications are received, and only place

preliminarily income-eligible applications in the lottery, provided that applicants are notified

in writing of eligibility and non-eligibility in advance of the lottery.]

 Households are informed of the date, time and location of the lottery and

invited to attend.

 A municipal representative should also be invited to attend the lottery.

 An applicant pool is created by listing applicants in the order selected.

 Applications are reviewed for income-eligibility. Ineligible households are

informed that they are being removed from the applicant pool or given the

opportunity to correct and/or update income and household information.

 Eligible households are matched to available units based upon the type of

unit in which they are interested (for-sale or rental) and the number of

bedrooms needed (and any other special requirements, such as regional

preference or need for an accessible unit).

 If there are sufficient names remaining in the pool to fill future resales and re-

rentals, the applicant pool should be closed. Two years of turnover is a

recommended standard.

 When the applicant pool is close to being depleted, the Administrative Agent

will re-open the pool and conduct a new random selection process after

fulfilling the affirmative marketing requirements. The new applicant pool

may be added to the remaining list of applicants.

 Alternatively, for future resales and re-rentals only, the Administrative Agent

can keep the applicant pool open after the initial lottery. This procedure may

only be followed if the Administrative Agent engages in ongoing monthly

affirmative marketing efforts according to the approved Affirmative

Marketing Plan to ensure outreach to the housing region.

Randomization After Certification

In a randomization after certification process, random selection is conducted when a unit

is available, and only certified households seeking the type and bedroom size of the

available unit are placed in the lottery. The process may beas follows:

 After advertising is implemented, the Administrative Agent accepts

applications for a set period of time, for example, 30-90 days.

 All applications are reviewed and households are either certified or informed

of non-eligibility. (The certification is valid for 180 days, and may be renewed

by updating income-verification information.)

 Eligible households are placed in applicant pools based upon the type of unit

in which they are interested (for-sale or rental) and the number of bedrooms

needed (and any other special requirements, such as regional preference or

need for an accessible unit).

 When a unit is available, only the certified households in need of that type of

unit are selected for a lottery.

 Households are informed of the date, time, and location of the lottery and

invited to attend.

 After the lottery is conducted, the first household selected is given an

established number of days to express interest or disinterest in the unit. (If

the first household is not interested in the unit, this process continues until a

certified household selects the unit.)

 Applications are accepted on an ongoing basis, certified households are

added to the pool for the appropriate household income and size categories,

and advertising and outreach is ongoing, according to the Affirmative

Marketing Plan.

The Applicant Pool

Administrative Agents must maintain an applicant pool pursuant to UHAC

rules. The applicant pool must include sufficient information about each

applicant to enable the Administrative Agent to process applicants when

vacancies arise. The following information must be collected about each applicant:

 Date and time the applicant submitted an application. (Note: In cases of random

selection, the applicant pool will not be sorted in a first come, first served basis

and date and time is only used for record keeping purposes, not selection

purposes.)

 Name of the head of household.



 Number of persons in household. If the local random selection process only

includes those household sizes that are appropriate for the available units, the

Administrative Agent may wish to collect the age and sex of each household

member.

 Unit or bedroom size(s) for which the household is eligible.

 Annual income level as reported by the applicant (low- or moderate- income). It

is not required that income be verified at this time.

 The need for an accessible unit or any accessible features.

 If a regional preference is permitted, whether or not the household currently lives

or works in the hostmunicipality’s COAH housing region..

Regional Preference

COAH allows municipalities to give preference to applicants that live or work in

their COAH housing region. There are six COAH housing regions, each of

which consists of three or four counties. This preference must be adopted by

local ordinance before it may be used by Administrative Agents in the selection process.

This preference permits an Administrative Agent to fill units with applicants that live or

work in the host municipality’s COAH housing region before selecting households that

do not live or work in the host municipality’s COAH housing region. Administrative

Agents that use regional preference should maintain two separate pools of applicants. All

applicants for affordable housing with regional preference must be informed of the

preference at the time of application distribution.

Updating the Applicant Pool

An applicant pool must be regularly updated. Regularly confirming the interest and

preliminary eligibility of those in the applicant pool keeps the applicant pool current and

will expedite the filling of vacancies. For example, an applicant’s household composition

may change, which may make the household eligible for a different unit size. Such

updates increase the likelihood that households selected from the applicant pool will be

eligible for and interested in occupancy and will be of the appropriate income and

household size for a vacant unit. Periodic updating will also help ensure that the

Administrative Agent has the correct information to contact the applicant should an

appropriate unit become available.

COAH recommends that Administrative Agents periodically send verification letters to

everyone in the applicant pool, keeping copies of the letter in each applicant’s file. Such

letters generally request that the applicant send back a confirmation card or call the office

to indicate their continued interest in being in the applicant pool. Mailings to verify

interest may also state that the applicant will be removed from the applicant pool if there

is no response within a certain period of time, for example, 60 days. Letters that come

back as “return to sender” or “addressee unknown” will result in the applicant being

removed from the applicant pool. Likewise, if the Administrative Agent receives no



confirmation from the applicant, the Administrative Agent should note this in the

applicant’s file and may remove the applicant from the pool.

Record keeping is critical to maintaining the integrity of an applicant pool and ensuring

that there is compliance with all applicable fair housing and nondiscrimination laws.

Administrative Agents must maintain documentation of:

 Any changes to the applicant pool;

 Any action taken with regard to the applicant pool; and

 Any activity that occurs that affects a particular applicant.

The applicant pool should be maintained in such a way that someone reviewing it could

find an applicant on the list and determine the applicant’s precise and current status.

In addition to the documentation described above,Administrative Agents must retain the

following:

 Current applications for all applicants whose status is active in the applicant pool;

and

 The application, the initial rejection notice, the applicant’s reply to the notice, a

copy of the Administrative Agent’s final response to the applicant, and all

documentation of the reason the applicant’s name was removed from the

applicant pool.

Matching Households to Available Units

In referring certified households to specific restricted units, to the extent feasible, and

without causing an undue delay in occupying the unit, theAdministrative Agent shall strive

to:

 Provide an occupant for each unit bedroom;

 Provide children of different sex with separate bedrooms; and

 Prevent more than two persons from occupying a single bedroom.

CORRECT EXAMPLE: INCORRECT EXAMPLE:

A four-person household consisting of two

adults and two children, a boy and a girl,

would be appropriately placed in a three-

bedroom unit. Four occupants are provided

for three bedrooms, children of a different sex

are provided with separate bedrooms, and no

more than two persons occupy a single

A two-person household consisting of two

adults should not be placed in a three-

bedroom unit because an occupant has not

been provided for each unit bedroom.

In order to deviate from these standards, the

Administrative Agent must obtain written

approval from COAH. The Administrative

bedroom.

A four-person household consisting of two

adults and two children, both girls, could

appropriately be placed in a two-bedroom

unit. An occupant is provided for each unit

bedroom, the two girls may share one

bedroom, and no more than two persons

occupy a single bedroom.

It is important to remember that the

Administrative Agent cannot require an

applicant household to take an affordable

unit with a greater number of bedrooms, as

long as overcrowding is not a factor. For

example, if a single mother with a son and

a daughter requests a two-bedroom unit,

the Administrative Agent should place the

household in the applicant pool for the

two-bedroom unit. A household could be

eligible for more than one unit category,

and should be placed in the applicant pool

for all categories for which it is eligible.

Agent must demonstrate that every effort has

been made to find a household of the

appropriate size and composition and that a

hardship exists that would justify deviating

from the established standard.

Determining Income Eligibility by Affordable Unit Category

Using COAH’s Annual Regional Income Limits Chart, household eligibility for an

affordable unit category is determined using the household’s income for the

appropriate housing region and the housing category as follows:

Available to Households

with a Gross Annual:

Category of Restricted Unit

Income 80 percent or less of median Moderate-Income Unit

Income 50 percent or less of median Low-Income Unit

Income 35 percent or less of median

[for rental units only]

Very Low-Income Unit

More detailed information on how to match a household’s income to the

appropriately priced affordable unit is described in the next Chapter.

Contacting Applicants

After a unit becomes available and the Administrative Agent has selected an

applicant from the applicant pool based on the established random selection

procedures, the Administrative Agent must contact the household in writing, inform the



household that a unit is available, and attempt to schedule an interview with the

household. If the applicant does not respond to the notification of an available unit within

a specified period or time, or is not interested in the unit, the Administrative Agent may

move to the next randomly selected applicant.

TheResale Process

When an Owner of a restricted unit wishes to sell, the sale must be processed through the

Administrative Agent. At the initial date of purchase, the Owner must make a

certification regarding his or her understanding of this requirement.

Typically, the resale process begins when an Owner inquires about the maximum resale

price (MRP) of their unit. At that time the Administrative Agent should provide the Seller

with a “Notice of Intent to Sell” form and the written “Resale Procedures for Owners

Wishing to Sell an Affordable Unit”. The Owner/Seller should return the completed

“Notice of Intent to Sell” form to the Administrative Agent. The Administrative Agent

reviews the unit and any eligible capital improvements, and calculates the MRP. The MRP

is calculated by using COAH’s Resale Price Calculator, which is based on COAH's

Annual Regional Income Limits Chart. The Administrative Agent uses their current

applicant pool, which is based on a previous affirmative marketing process, or

affirmatively markets the unit and conducts random selection if there is no current

applicant pool. If the Administrative Agent maintains a pool of certified households, the

first randomly selected eligible household whose household size matches the bedroom

size of the available unit is sent a “Housing Opportunity Letter” inviting them to contact

the Buyer to view the unit. If the Administrative Agent maintains a pool of preliminarily

eligible households, the first series (five is a recommended standard) of eligible

households that match the bedroom size of the available unit are sent a “Housing

Opportunity Letter” and “Application for Certification” (including a list of required

documentation) to complete.

Interested households should complete the application and generally contact the

Administrative Agent for an interview. Interested eligible households are certified, and

ineligible households are noticed in writing and removed from the applicant pool.

Certified households should obtain a mortgage pre-approval based on the MRP. The

first randomly selected interested certified household from the applicant pool is invited to

view the unit and has a limited period of time in which to make an offer (three days is a

recommended timeframe). A certified interested household makes an offer. The Owner

and the certified interested household (now Buyer) execute a “Contract of Sale.” The

Administrative Agent ensures that the Deed, Recapture Mortgage, Recapture Mortgage

Note and Appendix J form are submitted as part of the closing package to the attorney

responsible for the closing or other closing agent. See Chapter 6 for a further discussion

ofLegal Instruments, Control Periods and Enforcement.

The Administrative Agent generally attends the closing to ensure that all necessary

documentation is executed and subsequently recorded in the County Clerk’s Officein the

county in which the unit is located. Annually, the Administrative Agent shall send a

mailing to the Owner of the affordable unit reminding them of the rights and

requirements of owning an affordable unit(N.J.A.C. 5:80-26.18(d)4).

FAQs

Question: What happens if a moderate-income household “walks in” (when the applicant pool is closed

and no affirmative marketing is being conducted) and I have a moderate unit available with no eligible

moderate-income households in the applicant pool?

Answer: If the Administrative Agent notices that a specific unit type is hard to fill and

few eligible households are in the applicant pool, the Administrative Agent should

conduct ongoing affirmative marketing for that unit type to ensure a steady stream of

certified households and keep the list open for that unit type. The walk-in can be added

to the list.

Question: Does COAH have any guidance for Administrative Agents that are transitioning

from a first-come, first-served waiting list system to random selection?

Answer: Once an Affirmative Marketing Plan is written and approved by COAH,

the Administrative Agent should conduct random selection with the households

currently on the waiting list. If there are not a sufficient number of applicants on the

waiting list, affirmative marketing should be conducted. Applicants currently on the

waiting list must be informed of the new procedures.

Question: Can a household living or working in the local community be given preference for

occupancy or ownership of an affordable unit over other applicants within the region?

Answer: No, local preference is not permitted. COAH only allows preference to be

given to households that live or work in the host municipality’s COAH housing

region. A local ordinance must be adopted before an Administrative Agent can use

regional preference in the selection process.

Question: I am working with an applicant household that requires an accessible unit. Do they

skip ahead on the list when an accessible unit becomes available?

Answer: UHAC does not provide any guidance on this situation. However, COAH

suggests that the Administrative Agent consider an accessible unit a unit type, just as

a unit is defined by bedroom size. Therefore, if the Administrative Agent is using

the initial randomization model, the first household on the randomized list that

requires an accessible unit should be selected when an accessible unit becomes

available. If the Administrative Agent is using the randomization after certification

model, all households of the appropriate size who are in need of an accessible unit,

would be selected, and randomized.

Question: An applicant household has a daughter that has room and board at her college. Can

they request a unit that is large enough for her to have a bedroom when she is at home?

Answer: Yes. If the household has a student away at college who is still claimed as a

dependent and maintains the parents’ address as a legal address, the student should

be counted in the household size.

Question: If an Owner of an affordable unit receives a bid on their home from the first household

selected from random selection and this offer is for less than the maximum resale price (MRP), must

the Seller accept this price or can they ask that the next household selected bid on the house in hopes

of getting the maximum resale price?

Answer: The Seller of an affordable unit does not have to accept a bid that is less

than the maximum resale price and may request that the next applicant household

bid on their unit. However, if after a number of applicant households bid on the

unit, the maximum resale price is not offered, the Seller could return to the highest

bidding household or simply reject all offers and take the unit off the market.

Sellers, however, should recognize that in some situations the resale market will not

support holding out for maximum resale price, such as the condition of the unit or

the unit in comparison to other units in the area.

Question: Do I have to place a one-person household in a two-bedroom unit if there is no one-

bedroom units available or the applicant requests a two-bedroom unit?

Answer: A household should not be placed in a unit where there is more than one

bedroom per household member. In order to deviate from these standards, the

Administrative Agent must obtain written approval from COAH. If a development does

not have any one-bedroom units, for example, the Administrative Agent should inform

one-person households that they will not be offered a unit unless there are no eligible

households with more than one person. The Administrative Agent should also refer one-

bedroom households to other Administrative Agents within the municipality or region

that offer one-bedroom units. The Administrative Agent must demonstrate that every

effort has been made to find a household of the appropriate size and composition and

that a hardship exists that would justify deviating from the established standard.

Question: I am working with an applicant household that consists of two parents and five

children. This household is applying for a three-bedroom unit. Should this household only be offered

a four-bedroom unit?

Answer: No. The administrator must strive to prevent more than two people from

occupying one bedroom, as outlined in N.J.A.C. 5:80-26.4(c), but may not force a

family to purchase or rent a larger unit as long as it does not violate municipal

regulations for over-crowding.

Relevant Model Documents

Sample Preliminary Application & Cover Letter

Letter Responding toIncomplete Application

Letter of Preliminary Eligibility & Placement in the Applicant Pool

Letter of Preliminary Non-eligibility

Sample Applicant Pool

Annual Letter Updating the Applicant Pool

List of HUD-approved Housing Counseling Agencies

Notice of Intent to Sell

Housing Opportunity Letter

Purchase Agreement

Resale Procedures for Owners Wishing to Sell an Affordable Unit

All model documents referred to in this manual are available on COAH’s website for

Administrative Agents at www.nj.gov/dca/coah/administrators/administrators.shtml.

Please visit this website often for up-to-date information on implementation of the

Uniform Housing Affordability Controls.

CertifyingHouseholds

COAH requires that before any household can purchase or lease a restricted unit, the

Administrative Agent certify the household as eligible. Certification of a household

involves the verification of two critical pieces of data: 1) Household size and composition,

including gender; and 2) The total income and assets for all household members over 18

years of age.

The Application for Certification

Whether the certification process begins after random selection and the availability

of the desired unit type or takes place prior to the applicant being placed in the

applicant pool and before units are available, it begins with the applicant completing

an application in its entirety and providing the required backup documentation. A

written application for certification should request the following information:

 The applicant’s current contact information.

 Name, age, gender, and relationship to applicant for all household

members.

 Social Security number

 Desired number of bedrooms.

 Need for an accessible unit.

 Amount(s) and source(s) of annual income for all household

members age 18 or older (including income received by adults on

behalf of minor children for their benefit).

 Amount(s) and source(s) of asset(s) for all household members age

18 or older.

Several model documents regarding the certification process are available on COAH’s

website for Administrative Agents. COAH recommends the following combination of

documents be mailed to the applicant along with theApplication for Affordable Housing:

Chapter

 Transmittal letter explaining: eligibility criteria (including income limits);

the certification process; the random selection process; and an

explanation of all forms enclosed in the package.

 Checklist of required documentation to verify income and household

composition.

 Disclosure of rights and responsibilities of affordable housing occupants

(for for-sale and rental units as applicable).

If the Administrative Agent does not accept pre-applications, but only full applications,

then these same documents should also comprise the application packages. Application

packages shall be available at various public locations as part of the municipality’s

affirmative marketing program. See Chapter 3 for details on that requirement.

Following a review of the applicant’s initial submission of his/her application materials,

the Administrative Agent may need to use other certifications or release forms. For

example, if a household member is not employed and not received any State or Federal

benefits, then the “Certification of Zero Income” and “Certification of Employment

Termination” forms should be completed by the household members. Such forms are

available on COAH’s websitefor Administrative Agents.

Once eligibility documents and data have been collected, the Administrative Agent can

begin the process of calculating the household’s income. Administrative Agents may find

an Application Review Worksheet similar to the one available on COAH’s website for

Administrative Agents as a useful tool in completing this task.

The Applicant Interview

Ideally, the prospective applicant will be available to meet with the

Administrative Agent to review the certification and random selection processes

in detail and ask any questions they may have about the project or the process.

However, scheduling time off from work may prove burdensome to the applicant.

Applicants may also have mobility issues or special needs that also pose an obstacle to an

interview. Therefore, the Administrative Agent should be prepared to complete the

certification process via telephone and mail. Clear procedures should be outlined in the

Operating Manual. However, if an interview is to be conducted, the Administrative

Agentshould achieve the following objectives:

 Confirm and update all information provided on the application.

 Explain program requirements, procedures used to verify

information, and penalties for providing false information.

 Review the applicant’s identification and financial information and

documentation, ask any questions to clarify information on the

application, and obtain any additional information needed to verify

the household’s income.



 Make sure the applicant has reported all sources for earned and

benefit income and assets (including assets disposed of for less than

fair market value in the past two years).

 Explain the requirement of obtaining a mortgage commitment in for-

sale properties.

 Explain the property’s screening procedures, such as credit checks in

rental projects.

Determining HouseholdIncome

The Administrative Agent shall require each member of an applicant household

who is 18 years of age or older to provide documentation to verify their income.

Income verification documentation should include, but is not limited to, the

following for each and every member of a household who is18 years of age or older:

 Four consecutive pay stubs, not more than 120 days old, including

bonuses, overtime or tips, or a letter from the employer stating the

present annual income figure.

 Copies of State and Federal income tax returns for each of the preceding

three tax years.

 A letter or appropriate reporting form verifying monthly benefits such as

Social Security, unemployment, welfare, disability or pension income

(monthly or annually).

 A letter or appropriate reporting form verifying any other sources of

income claimed by the applicant, such as alimony or child support.

 Income reports from banks or other financial institutions holding or

managing trust funds, money market accounts, certificates of deposit,

stocks or bonds.

 Evidence or reports of income from directly held assets such as real

estate or businesses.

Administrative Agents typically use a spreadsheet or worksheet to help calculate an

applicant’s income, similar to the one available on COAH’s website for Administrative

Agents. This summarizing document will also prove useful in the event there is an appeal

or question by the applicant concerning the calculation or during COAH monitoring

visits.

What Counts as Income

The following is a list of various types of wages, payments, rebates and credits. Those that

must be considered as part of the household’s income are listed in the Income column.

Those that are not to be considered as part of the household’s income are listed in Not



Income. Restricted units constructed with Federal funds should consult the appropriate

regulations, for example, HUD Section 42, to ensure compliance with applicable Federal

regulations.

The Asset Limit and Income from Real Estate

UHAC has new requirements concerning the eligibility of an applicant that

owns a home outright (with no mortgage or equity loan). If the applicant’s

primary residence, which is to be sold upon purchase of an affordable unit, has

no mortgage debt and is valued at or above the regional asset limit as published annually

by COAH with COAH’s Annual Regional Income Limits Chart, the household must be

determined ineligible for certification. However, if the applicant’s existing monthly

housing costs including taxes, homeowner insurance, and condominium or homeowner



INCOME

 Wages, salaries, tips, commissions

 Alimony

 Regularly scheduled overtime

 Pensions

 Social security

 Unemployment compensation

(verify the remaining number of

weeks they are eligible to receive)

 TANF

 Verified regular child support

 Disability

 Net income from business or real

estate

 Interest income from assets such as

savings, certificates of deposit,

money market accounts, mutual

funds, stocks, bonds

 Imputed interest (using a current

average annual rate of two percent)

from non-income producing assets,

such as equity in real estate

 Rent from real estate is considered

income

 Any other forms of regular

income reported to the Internal

Revenue Service

NOT INCOME

 Rebates or credits received under

low-income energy assistance

programs

 Food stamps

 Payments received for foster care

 Relocation assistance benefits

 Income of live-in attendants

 Scholarships

 Student loans

 Personal property such as

automobiles

 Lump-sum additions to assets

such as inheritances, lottery

winnings, gifts, and insurance

settlements

 Part-time income of persons

enrolled as full-time students

 Court ordered payments for

alimony or child support paid to

another household shall be

deducted from gross annual

income

association fees exceed 38 percent of the household’s eligible monthly income, the

household will be exempt from the asset limit.

An applicant must provide the Administrative Agent with a recent, certified appraisal on

the home they own unless the applicant has mortgage debt on the home or can

demonstrate that the existing monthly housing costs exceed 38 percent of the

household’s eligible monthly income, in which case the applicant is exempt from the asset

limit. However, before an Administrative Agent requests an applicant to obtain a

professional appraisal, the Administrative Agent should relay the asset limit to the

applicant to avoid any unnecessary expenses to the applicant. For instance, if homes are

commonly selling in the applicant’s neighborhood for over $250,000, it is unlikely that an

appraisal will determine a value below the asset limit. The maximum asset limit for Region

1 in 2006, for example, is $139,396.

Similarly, if an applicant owns real estate with mortgage debt, the Administrative

Agent should determine the imputed interest from the value of the property. The

Administrative Agent should deduct outstanding mortgage debt from documented

market value (a certified appraisal). Based on current money market rates, interest

should be imputed on the determined value of the real estate.

If the real estate is a rental property, the rent is considered income. The Administrative

Agent should apply the above calculation to determine the value and imputed interest on

the property, and perform a separate calculation to determine the income from rent.

After deduction of any mortgage payments, real estate taxes, property owner insurance

and reasonable property management expenses as reported to the Internal Revenue

Service, the remaining amount shall be counted as income.

Determining the Percentage of Affordability

In order to place a household in an appropriately-priced affordable unit, the

Administrative Agent must determine the maximum amount that the applicant

household can afford toward housing payments each month. This figure can be

determined by dividing the household’s verified annual income by the regional median

income for their appropriate household size. This percentage of affordability is necessary

duringinitial sales of ownership units and during initial rent-up of rental units. This figure

is then compared to the affordability ranges for which new units are being marketed (see

Chapter 2 – Determining Sales Prices and Rents). The household’s percentage of

affordability dictates the type of unit in which they can be placed in. Households should

be placed in an appropriately-sized unit that is at or below their percentage of

affordability. For instance, if one unit is designated for households at 64 percent of the

regional median income and another unit is designated for households at 60 percent of

the regional median income, a household that happens to be at 62 percent should be

offered the unit at 60 percent (at or below their range of affordability). As described in

the next Section of this Chapter, there are some situations where a household may be

offered a unit that is designated for an affordability percentage above their own.



Maximum Monthly Payments

UHAC limits the percentage of funds that a household can contribute toward housing

expenses. However, there are exceptions to this rule. If an applicant qualifies for an

exception from this rule based on the household’s current housing cost (see below), the

Administrative Agentshould strive to place the applicant in a unit with a monthly housing

cost equal to or less than the applicant’s current housing cost.

For Ownership Units. UHAC states that a certified household is not permitted to

purchase a unit that would require more than 33 percent of the verified household

income to pay principal, interest, taxes, homeowner and private mortgage insurance and

condominium or homeowner association fees, as applicable. However, at the discretion

of theAdministrative Agent, this limit can be exceeded if the applicant:

 Obtains a firm mortgage loan commitment at the higher level from a

licensed financial institution, under terms consistent with the

requirements of the New Jersey Home Ownership Security Act of 2002,

N.J.S.A.46:10B-22 et seq.; and

 Submits a certification from a non-profit counselor approved by HUD

or the New Jersey Department of Banking and Insurance that the

household has received counseling on the advisability of the loan

transaction. A household is only required to obtain a certificate of

mortgage counseling if their monthly housing expense exceeds UHAC

standards.

For Rental Units. UHAC states that a certified household is not permitted to lease a

restricted rental unit that would require more than 35 percent of the verified household

income (40 percent for age-restricted units) to pay rent and utilities. However, at the

discretion of theAdministrative Agent, this limit may be exceeded if:

 The household currently pays more than 35 percent (40 percent for

households eligible for age-restricted units) of its gross household income

for rent and the proposed rent will reduce the household’s housing costs;

 The household has consistently paid more than 35 percent (40 percent

for households eligible for age-restricted units) of eligible monthly

income for rent in the past and has proven its ability to pay;

 The household is currently in substandard or overcrowded living

conditions;

 The household documents the existence of assets, with which the

household proposes to supplement the rent payments; or

 The household documents proposed third party assistance from an

outside source such as a family member in a form acceptable to the

Administrative Agentand the Owner of the unit; and

 The household receives budget counseling.

Approving or Rejecting a Household

UHAC requires Administrative Agents to notify applicant households of their

eligibility within twenty (20) days of theAdministrative Agent’s determination.

Households with a verified total household income that exceeds 80 percent of the

regional income limit for the appropriate family size are ineligible for purchase or rental of

restricted units. A letter, similar to the one available on COAH’s website for

Administrative Agents, rejecting the household’s application should be mailed to the

household.

Similarly, households with a verified total household income that is within the income

limits, but too low to afford any of the units administered by the Administrative Agent

should be sent a letter rejecting the household’s application, and/or referring them to

housing counseling or the local Affordability Assistance Program, if available. A sample

letter is available on COAH’s website for Administrative Agents.

Households with a verified total household income of less than 80 percent should be

issued a letter certifying eligibility similar to the one included on COAH’s website for

Administrative Agents. This certification is valid for 180 days. If the Administrative Agent

is unable to place the household in a restricted unit at the conclusion of 180 days, an

extension may be granted once the household’s eligibility is verified.

Once the applicant is certified and matched to an available unit, the Administrative Agent

must secure from the applicant a signed and notarized acknowledgement of their

requirements and responsibilities in purchasing or renting a restricted unit. As

appropriate, UHAC’s Appendix J (ownership) or Appendix K (rental) should be

forwarded to the applicants.

In addition to non-eligibility based on income, the Administrative Agent may deny a

certification because of the household’s failure or inability to document household

composition, income, assets, sufficient funds for down payment or security deposit

purposes, or any other required facts and information. A household may also be

denied certification if the Administrative Agent determines that there was a willful or

material misstatement of fact made by the applicant.

Appeals

Appeals from all decisions of an Administrative Agent shall be made in writing to the

Executive Director of HMFA. The Executive Director’s written decision shall be a

final administrative action of the HMFA.

Confidentiality and Protection against Identity Theft

All information supplied by an applicant toward their certification of eligibility

must be kept in the strictest of confidence. Furthermore, at no time is the



municipality, Municipal Housing Liaison, Administrative Agent, developer, affordable

housing provider, owner, property manager or landlord permitted to release any

information concerning an applicant other than for the purpose of income qualification.

To protect against identity theft, it is suggested that Administrative Agents refrain from

placing an applicant’s social security number and/or birth date on any mailed or faxed

documents unless absolutely necessary. All extra copies or drafts of documents should be

shredded. Administrative Agents are also strongly encouraged to take necessary

precautions to prevent any computer files with personal information from unauthorized

access. At a minimum, workstations storing personal information should be password

protected and securely firewall protected from the internet.

FAQs

Question: Isit a requirementof UHAC thatAdministrative Agentsmeet with applicantsin person?

Answer: Because an applicant interview could prove to be burdensome to many

households it is not a pre-requisite to purchase or occupancy, although it is encouraged.

Administrative Agents should be prepared to conduct the household certification via

mail.

Question: With households filingtaxes through e-filing,we arehaving trouble gettingcopiesoftax returns. How

can we getcopiesof e-filed taxreturns?

Answer: According to the IRS website, transcripts of previously filed tax returns can be

ordered by completing a Form 4506-T or calling (800) 829-1040 and following the

prompts in the recorded message. There is no charge for the transcript and you should

receive it in 10 business days from the time they receive your request. Tax return

transcripts are generally available for the current and past three years

Question: How canchild support payments thataremadeincash be documented?

Answer: If the applicant is depositing the cash child support payments into a bank

account, a series of statements from that account should be used to establish a trend of

payments. If not, a notarized statement from the former spouse should be obtained to

document the income.

Question: Is it a requirement that the Administrative Agent always obtain a written statement

from the household’s employer(s) confirming their income and job status?

Answer: No. However, when evaluating overtime and other income trends, such as

bonuses, working directly with the employer is typically much more efficient and reliable

than simply evaluatingpay stubs.

Question: Are there any potential issues with selling or renting to a separated family that has a

divorce pending?

Answer: Yes, until a divorce is finalized, a spouse can make claim on a residence

purchased or rented by the other spouse. Until a divorce is finalized, it is suggested

that Administrative Agents place these types of cases on hold.

http://www.irs.gov/faqs/faq-kw31.html

Question: How can income eligibility be established for someone that may have been out of work

for two years, but had a job during the most recent tax year?

Answer: As long as the applicant is currently employed, a series of consecutive pay stubs

(at least 3 months) should be used to establish the income of an applicant in this or

similar situations.

Question: Can an applicant for a rental unit be rejected solely because they have Section 8 rental

assistance?

Answer: No. A household receiving Section 8 assistance cannot be rejected based on this

status. Discrimination such as this is illegal.

Question: Can an applicant be required to attend and graduate from a Housing Counseling

Program in order to purchase or rent a restricted unit?

Answer: No. A household is only required to attend housing counseling if their monthly

housing expense exceeds UHAC standards. Administrative Agents, however, are

required to provide housing counseling or refer applicants to an approved Housing

Counseling Program.

Question: Do households with Section 8 vouchers automatically qualify for affordable housing

under UHAC?

Answer: Yes, a Section 8 voucher is acceptable for income qualification, provided the

applicant meets the criteria of the property manager, landlord or lending institution. The

Administrative Agent must still collect income verification documentation to match the

household to an appropriately priced unit.

Question: Can an existing moderate-income tenant be moved to a low-income unit when they can

substantiate that there has been a change in their income? If so, can they bypass the random selection

process?

Answer: Yes, an existing tenant household may re-apply for a low-income unit within

the same project if they can prove a change in their circumstances. If qualified, the tenant

would be added to the applicant pool. The tenant should also be referred to the local

Affordability Assistance Program, if available.

Question: Does the Administrative Agent need to impute the value of a household’s stocks as an

asset?

Answer: Only dividends from stock count towards a household’s income. IRS Form-

1099 from the previous year should be requested from the applicant if it was not part of

their initial application.

Question: Is there a maximum cost for the credit check?

Answer: No, but the credit check is included in application fees.

Question: In order to overcome inadequate or poor credit, can an applicant have a cosigner on a

mortgage or lease?

Answer: An applicant may have a cosigner on a lease if permitted by the property

manager or landlord. However, no one outside the household, as certified by the

Administrative Agent, may cosign or otherwise be party to any financing or legal

instruments.

Question:Does UHAC set a minimum income for eligibility for affordable housing?

Answer: No, UHAC does not specify a minimum income for affordable housing units.

However, an applicant household must be able to afford the unit and must not pay more

than 33 percent for sale units or 35 percent for rental units of its monthly income (or 40

percent for age-restricted units), unless they meet the exemption criteria set forth in

N.J.A.C.5:80-26.7(b) or N.J.A.C. 5:80-26.13(b).

Question:After I certify an applicant, how long is that certification valid?

Answer: Pursuant to N.J.A.C. 5:80-26.16(b), an initial certification is valid for 180 days

and may be extended for anadditional 180 days once the household’s eligibility is verified.

Question: How do I document third-party assistance from a guarantor? For example, a relative

is providing funds toward the applicant’s purchase.

Answer: Third-party funds should be placed into an applicant’s bank account or in

escrow prior to closing. In the case of a rental unit, the applicant should demonstrate

regular deposits from third party assistance, or a notarized letter from the third party

documenting future assistance. The Administrative Agent must receive a copy of the

policy regarding guarantors from the developer, affordable housing provider, owner,

property manager orlandlord so as to assure the policy is applied consistently.

Question: If an applicant for affordable housing has a “reverse mortgage”, how does an

Administrative Agent count income from that mortgage?

Answer: An applicant for affordable housing with a “reverse mortgage” would not be

eligible for affordable housing unless that mortgage was satisfied or, at a minimum, a

contract for sale of the market unit was in place. “Reverse mortgages” require that the

mortgaged property remain the principal place of residence of the person taking the

mortgage. Since this is also a requirement of affordable housing only one such residence

can be owned or leased at any given time.

Question: For the purpose of income-qualification, what is considered part-time income of full-time

students?

 Answer: Under UHAC, part-time income of persons enrolled as full-

time students, who are reported as dependents to the IRS, is not included

in income calculations for determining eligibility. COAH recommends

stipulating in the Operating Manual the following criteria in applying this

rule:

o A full-time student is a member of the household who is

enrolled in a degree seeking program for more than 12 credit

hours per semester; and

o Part-time income is income earned on less than a 35-hour work

week.

Please note that full-time income of full-time students is included in the

income calculation.

Relevant Model Documents

Application for Affordable Housing

Certification of Zero Income

Certification of Employment Termination

Additional Documents Needed Letter

Application Review Worksheet (SCCOAH)

Application Review Worksheet (HAS)

Denial of Certification Letter

Certification of Eligibility letter

Guidelines for Homebuyers

Guidelines for Renters

IRS Form 4506-T

Appendix J of UHAC

Appendix K of UHAC

Source of Funds Letter for Down Payment and Settlement

Letter to Seller’s Attorney

Letter to Buyer’s Attorney

All model documents referred to in this manual are available on COAH’s website for

Administrative Agents at www.nj.gov/dca/coah/administrators/administrators.shtml.

Please visit this website often for up-to-date information on implementation of the

Uniform Housing Affordability Controls.

LegalInstruments, Control

PeriodsandEnforcement

Declarations of Covenants, Conditions and

Restrictions,Deed Restrictions,Deeds, Recapture

Mortgages andRecapture Mortgage Notes

Fivemajor legal instruments comprise the Uniform Housing Affordability Controls. They

are a Declaration of Covenants, Conditions and Restrictions, Deed Restriction, Deed,

Recapture Mortgage and Recapture Mortgage Note. It is important for Administrative

Agents to have a clear understanding of each of these important tools and how they work

independently and together to ensure that affordability controls are enforced and

maintained throughout the control period.

A Restrictive Covenant is a provision in a deed limiting the use of the property or

prohibiting certain uses. UHAC employs the Declaration of Covenants, Conditions and

Restrictions (“Declaration”, Appendices C-1 and C-2) and a Deed Restriction

(Appendices E-1 and E-2) to limit the use of the property in accordance with its

provisions to provide affordable housing to New Jersey residents. UHAC requires the

recordation of the Declaration for ownership projects and Deed Restriction for rental

projects as further explained below.

A Deed is a legal instrument that transfers ownership from one party to another. A Deed

can also incorporate Restrictive Covenants limiting the uses of the property.

The Recapture Mortgage is usually a second mortgage between the Buyer and an entity

related to the creation of the affordable unit and creates a lien on the property. The

Recapture Mortgage is always accompanied by a Recapture Mortgage Note, which sets

forth the terms of payment if the affordable unit is released from its affordability controls.

In all cases, UHAC requires Administrative Agents to utilize documents

substantially in the form of the model legal instruments included in UHAC

(Appendices A, B, C-1, C-2, D, E-1, E-2, F, G, H, L, M , N, O, P, and Q)

pursuant to N.J.A.C. 5:80-26.5(d) and N.J.A.C. 5:80-26.11(c). A discussion of each legal

document is included in the appropriate Section of this Chapter.

Chapter



Restrictive Covenants

Four model documents containing Restrictive Covenants are included in UHAC as

Appendices C-1 and C-2, (Declaration of Covenants, Conditions and Restrictions), and

Appendices E-1 and E-2 (Deed Restrictions to Rental Property).

The Declaration of Covenants, Conditions and Restrictions (“Declaration”) is an

agreement by the developer of the project or the homeowner association that sets forth

the Affordable Housing Covenants, thereby limiting the use of the property for the

duration of the applicable control period. The Declaration is signed by the developer or

homeowner association representative before a Notary and, just like a Deed, it is recorded

in the County Clerk’s Office of the county in which the property is located. The

Restrictive Covenants contained in a Declaration are often referred to as “running with

the land” because any subsequent purchaser takes subject to them. Therefore, if the

Restrictive Covenants are not released, their terms and conditions are passed on to

subsequent Owners. Legally, a Declaration containing Restrictive Covenants need only

be recorded once.

The Deed Restriction is an agreement by the Owner of a multi-family rental project that

sets forth the Affordable Housing Covenants, thereby limiting the use of that rental

property for the duration of the applicable control period. The Deed Restriction is

signed by the Owner before a Notary, and, just like a Deed, it is recorded in the County

Clerk’s Office of the county in which the property is located. The Restrictive Covenants

contained in the Deed Restriction also “run with the land” and any subsequent purchaser

of the rental project takes subject to them. Similar to the Declaration, if recorded

properly, the Deed Restriction need only be recorded once.

 Ownership Units (Appendices C-1 or C-2: Mandatory Restrictive Covenant on

Ownership Units - Declaration of Covenants, Conditions and Restrictions)

 Projects with Multiple Ownership Units – Condominiums: A Declaration

substantially in the form of Appendix C-1 or C-2 must be signed for each project

containing multiple ownership units where a Master Deed has been recorded.

Appendix C-1 or C-2 is typically attached to the Master Deed as an appendix, all

of which are recorded in the County Clerk’s Office of the county in which the

property lies. The Administrative Agent should ensure that the Schedule A

attached to the Declaration includes an accurate description of the unit/project,

such as location, address, whether each restricted unit is low or moderate, and

indicate the number of bedrooms in each unit. See the chart on page 74 for all