Establishes "Entry-Level Home Production Incentive Act of 2026"; provides project gap financing for low- to middle-income housing development; appropriates $300 million.

S3410

SENATE, No. 3410

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 9, 2026

Sponsored by:

Senator� TROY SINGLETON

District 7 (Burlington)

Senator� ANGELA V. MCKNIGHT

District 31 (Hudson)

SYNOPSIS

���� Establishes �Entry-Level Home Production Incentive
Act of 2026�; provides project gap financing for low- to middle-income housing
development; appropriates $300 million.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
providing project gap
financing for low- to middle-income housing development, supplementing chapter
14K of Title 55 of the Revised Statutes, and making an appropriation.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� P.L.��� , c.��� (C.�������
) (pending before the Legislature as this bill) shall be known and may be cited
as the
�Entry-Level Home Production Incentive Act of
2026.�

���� 2.� The Legislature finds and
declares that:

���� a.� A combination of factors,
including rising home prices, persistently elevated mortgage rates, and a
limited housing inventory, have severely eroded the ability of many people,
particularly middle-income young adults, to afford to purchase their first
home;

���� b.� A limited availability of
sufficient financing options for developers of low-, moderate-, and
middle-income housing has restricted the ability of many development projects
for those of modest incomes;

���� c.� The need to address the
financing shortfalls experienced by many developers is central to the objective
of increasing the supply of housing; and

���� d.� It is necessary and in the
public interest for the Legislature to establish a dedicated fund to bridge
certain shortfalls in development financing, thereby assisting in the
development of low- to middle-income housing.

���� 3.� As used in P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill):

���� �Agency� means the New Jersey
Housing and Mortgage Finance Agency established pursuant to P.L.1983, c.530
(C.55:14K-1 et seq.).�

���� �Area median income� means the
median gross household income for households of the same size within the
housing region in which the housing is located, as determined pursuant to the
rules and regulations adopted by the agency.�

���� �Authority� means the New
Jersey Economic Development Authority established pursuant to P.L.1974, c.80
(C.34:1B-1 et seq.).�

���� �Cost of development� means
the consideration given, valued in money, whether given in money or otherwise,
for the materials and services which constitute the development and includes
all costs associated with the structural components within a property developed
pursuant to P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill), and any soft costs associated with a development project if
permitted by rules and regulations adopted by the agency or authority, as
applicable.

���� �Fund� means the �Entry‑Level
Home Development Fund,� established within the agency pursuant to subsection b.
of section 4 of P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill).�

���� �Government-restricted
municipality� means a municipality in this State with a municipal
revitalization index distress score of at least 75, that met the criteria for
designation as an urban aid municipality in the 2019 State fiscal year, and
that, on the effective date of P.L.2020, c.156 (C.34:1B-269 et al.), is subject
to financial restrictions imposed pursuant to the �Municipal Stabilization and
Recovery Act,� P.L.2016, c.4 (C.52:27BBBB-1 et seq.), or is restricted in its
ability to levy property taxes on property in that municipality as a result of
the State of New Jersey owning or controlling property representing at least 25
percent of the total land area of the municipality or as a result of the
federal government of the United States owning or controlling at least 50 acres
of the total land area of the municipality, which is dedicated as a national
natural landmark.

���� �Industrialized or modular
building� means any building of closed construction, including, but not limited
to, modular housing that is factory-built, single-family, and multi-family
housing, including closed-wall, panelized housing, as well as other modular,
nonresidential buildings.� �Industrialized or modular building� shall not
include any structure subject to the requirements of the National Manufactured
Home Construction and Safety Standards Act of 1974 (42. U.S.C. s.5401 et seq.).

���� �Low- to middle-income housing�
means housing affordable according to federal Department of Housing and Urban
Development or other recognized standards for home ownership and rental costs,
and reserved for occupancy pursuant to the rules and regulations adopted by the
agency, by households with a gross household income not exceeding 120 percent,
of the area median income, unless a different percentage is specified pursuant
to subsection a. of section 4 of P.L.��� , c.��� (C.������� ) (pending before
the Legislature as this bill).�

���� �Minority� means a person who
is:

���� (1)� Black, which is a person
having origins in any of the black racial groups in Africa;

���� (2)� Hispanic, which is a
person with origins in Mexico, South or Central America, or the Caribbean
Islands, regardless of race;

���� (3)� Asian American, which is
a person having origins in any of the original peoples of the Far East,
Southeast Asia, Indian subcontinent, Hawaii, or the Pacific Islands; or

���� (4)� American Indian or
Alaskan native, which is a person having origins in any of the original peoples
of North America.

���� �Minority business� means a
business which is: (1) a sole proprietorship owned and controlled by a
minority; (2) a partnership or joint venture owned and controlled by minorities
in which at least 51 percent of the ownership interest is held by minorities
and the management and daily business operations of which are controlled by one
or more of the minorities who own it; or (3) a corporation or other entity
whose management and daily business operations are controlled by one or more
minorities who own it, and which is at least 51 percent owned by one or more
minorities, or, if stock is issued, at least 51 percent of the stock is owned
by one or more minorities.

���� �Program� means the �Entry-Level
Home Production Incentive Program,� established pursuant to subsection a. of
section 4 of P.L. , c.��� (C.������� ) (pending
before the Legislature as this bill).

���� �Project financing gap� means
the part of the total cost of development, including reasonable and appropriate
return on investment, that remains to be financed after all other sources of
capital have been accounted for, including, but not limited to, developer
contributed capital, which shall not be less than 20 percent of the total cost
of development, and investor or financial entity capital or loans for which the
developer, after making all good faith efforts to raise additional capital,
certifies that additional capital cannot be raised from other sources;
provided, however, that for a redevelopment project located in a
government-restricted municipality, the developer contributed capital shall not
be less than 10 percent of the cost of rehabilitation.� Developer contributed
capital may consist of cash, deferred development fees, costs for project
feasibility incurred within the 12 months prior to application, property value
less any mortgages when the developer owns the project site, and any other investment
by the developer in the project deemed acceptable by the agency or authority,
as provided by regulations promulgated by the agency or authority, as
applicable.� Property value shall be valued at the lesser of either: (1) the
purchase price, provided the property was purchased pursuant to an arm's length
transaction within 12 months of application; or (2) the value as determined by
a current appraisal.

���� �Women�s business� means a
business which is: (1) a sole proprietorship owned and controlled by a woman;
(2) a partnership or joint venture owned and controlled by women in which at
least 51 percent of the ownership is held by women and the management and daily
business operations of which are controlled by one or more women who own it; or
(3) a corporation or other entity whose management and daily business
operations are controlled by one or more women who own it, and which is at
least 51 percent owned by women, or, if stock is issued, at least 51 percent of
the stock is owned by one or more women.

���� 4.� a.� There is established
in the New Jersey Housing and Mortgage Finance Agency a program to be known as
the �Entry-Level Home Production Incentive Program� for the purpose of
allocating moneys made available by the �Entry‑Level Home Development
Fund� in order to fund the project financing gaps of development projects that
include low- to middle-income housing though production assistance pursuant to
paragraph (1) of this subsection, and the provision of infrastructure loans
pursuant to paragraph (2) of this subsection.�

���� (1)� The agency shall provide
project financing gap funding through production assistance in the form of gap
grants of up to:

���� (a)� $40,000 per unit of
low- to middle-income housing
; and

���� (b)� $70,000 per unit of low-
to middle-income housing, if the housing is occupied or reserved for occupancy
by households with a gross household income not exceeding 100 percent, of the area
median income.�

���� (2)� The New Jersey Economic
Development Authority shall provide project financing gap funding through an
infrastructure loan, as a one- to three-percent fixed-rate loan for up to 20
percent of project costs, for a development project, if no fewer than 20
percent of the dwelling units in the development project consist of low- to middle-income
housing.

���� b.� There is established in
the New Jersey Housing and Mortgage Finance Agency a fund to be known as the �Entry‑Level
Home Development Fund� for the purpose of providing the moneys necessary for
the �Entry-Level Home Production Incentive Program,� established pursuant to
subsection a. of this section.� At the request of the Chief Executive Officer
of the authority, the agency shall, on an annual basis, provide no less than
one-third of the moneys annually appropriated to the fund to the authority for
the provision of infrastructure loans pursuant to paragraph (2) of subsection
a. of this section.�

���� c.� The agency or authority,
as applicable, shall not provide project financing gap funding through the
program to any development project unless:

���� (1)� the developer commits to
occupancy requirements that shall comply with rules and regulations adopted by
the agency, which shall require the initial purchaser of a low- to middle-income
housing unit to occupy the unit for no less than five years, or pay a penalty
to the agency of $10,000; and

���� (2)� the dwelling units in the
development project that are initially sold as low- to middle-income housing
units shall be reserved for occupancy as low- to middle-income housing for no
less than 10 years following initial occupancy, in accordance with the rules
and regulations adopted by the agency.

���� d.� The agency or authority,
as applicable, shall prioritize project financing gap funding through the
program to a development project that:

���� (1)� is within a municipality
that has adopted an ordinance to establish overlay zoning, allowing small-lot
duplexes, triplexes, or townhome development, in accordance with the provisions
of the model ordinance adopted by the agency pursuant to subsection a. of
section 5 of P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill);

���� (2)� is a women�s business or
a minority business;

���� (3)� satisfies the energy
efficiency standards adopted by the rules and regulations of the agency; or

���� (4)� is an industrialized or
modular building.

���� e.� The agency, in
consultation with the authority, shall annually prepare a report to the
Governor, and the Legislature pursuant to section 2 of P.L.1991, c.164
(C.52:14-19.1), presenting the following information with respect to the
associated year of the program:

���� (1)� the number of housing
units produced with the assistance of program support;

���� (2)� the income restrictions
provided for the housing units produced;

���� (3)� the amount of funding
extended in the form of production assistance, and as infrastructure loans; and

���� (4)� such additional
information as the Executive Director of the agency determines appropriate.�

���� 5.� a.� The Executive Director
of the New Jersey Housing and Mortgage Finance Agency shall, in accordance with
the �Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1 et seq.), adopt
rules and regulations as necessary to effectuate the provisions of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill), which rules
and regulations shall include, but shall not be limited to:

���� (1)� the publication of an
overlay zoning model ordinance to provide restrictions pursuant to paragraph
(1) of subsection d. of section 4 of P.L.��� , c.��� (C.������� ) (pending
before the Legislature as this bill); and

���� (2)� the development of energy
efficiency standards for development project prioritization pursuant to
paragraph (3) of subsection d. of section 4 of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill).

���� b.� The Chief Executive
Officer of the New Jersey Economic Development Authority shall, in accordance
with the �Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1 et seq.),
adopt rules and regulations as necessary to effectuate the provisions of paragraph
(2) of subsection a. of section 4 of P.L.��� , c.��� (C.������� ) (pending
before the Legislature as this bill).

���� 6.� There is appropriated from
the General Fund to the �Entry‑Level Home Development Fund� in the New
Jersey Housing and Mortgage Finance Agency, a sum of $300,000,000 to effectuate
the provisions of P.L.��� , c.��� (C.������� ) (pending before the Legislature
as this bill).

���� 7.� This act shall take effect
on the first day of the third month next following enactment, except the Executive
Director of the agency and the Chief Executive Officer of the authority shall
take anticipatory action necessary to effectuate the provisions of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill).�

STATEMENT

���� This bill establishes the �Entry-Level
Home Production Incentive Program� (program) in the New Jersey Housing and
Mortgage Finance Agency (agency) for the purpose of funding the project
financing gaps, as defined in the bill, for development projects that include
low- to middle-income housing.� The bill defines �low- to middle-income
housing� as housing affordable according to certain recognized standards for
home ownership and rental costs, and reserved for occupancy by households with
a gross household income not exceeding 120 percent, of the area median income,
unless the bill expressly specifies a different percentage.�

���� The project financing gap
funding required by the bill is to be provided though production assistance,
and the provision of infrastructure loans.� Production assistance is to be
provided by the agency in the form of gap grants of up to $40,000 per unit of
low- to middle-income housing reserved for occupancy by households with a gross
household income not exceeding 100 percent of the area median income, and
$70,000 per unit of low- to middle-income housing reserved for occupancy by
households with a gross household income not exceeding 100 percent of the area
median income.� The bill directs the New Jersey Economic Development Authority
(authority) to provide project financing gap funding through infrastructure
loans, as one- to three-percent fixed-rate loans for up to 20 percent of
project costs, for development projects, if no fewer than 20 percent of the
dwelling units in the project consist of low- to middle-income housing.

���� The bill establishes a fund in
the agency to be known as the �Entry‑Level Home Development Fund� (fund)
for the purpose of providing the moneys necessary for the program.� At the
request of the authority, the bill requires the agency, on an annual basis, to
provide no less than one-third of the moneys annually appropriated to the fund
to the authority for the provision of infrastructure loans.

���� The bill prohibits the
provision of project financing gap funding through the program to any
development project unless:

�

the developer commits to occupancy requirements to ensure that
the initial purchaser of a low- to middle-income housing unit is to occupy the
unit for no less than five years, or pay a penalty to the agency of $10,000;
and

�

the dwelling units that are initially sold as low- to middle-income
housing units are reserved for occupancy as low- to middle-income housing for
no less than 10 years following initial occupancy.

���� The bill requires project
financing gap funding to be prioritized for development projects that:

�

are within a municipality that has adopted an ordinance to
establish overlay zoning, allowing small-lot duplexes, triplexes, or townhome
development, in accordance with the provisions of a model ordinance adopted by
the agency through the rules and regulations adopted as required by the bill;

�

are women�s businesses or a minority businesses, as defined in
the bill;

�

satisfy energy efficiency standards adopted through rules and
regulations of the agency; or

�

consist of industrialized or modular buildings.

���� The bill requires the agency,
in consultation with the authority, to annually prepare a report to the
Governor, and the Legislature, presenting certain information, including:

�

the number of housing units produced with the assistance of
program support;

�

the income restrictions provided for the housing units produced;

�

the amount of funding extended in the form of production
assistance, and as infrastructure loans; and

�

such additional information as the agency determines appropriate.

���� The bill directs the agency
and authority to adopt rules and regulations necessary to effectuate the
provisions of the bill.� \

���� The bill requires an
appropriation of $300 million from the General Fund to the Entry‑Level
Home Development Fund in the agency.�

���� The bill is to take effect on
the first day of the third month following enactment.�