An Act establishing a pilot program to incentivize the construction of affordable tiny homes, supplementing P.L.1983, c.530 (C.55:14K-1 et seq.), and making an appropriation.

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

1. The Legislature finds and declares that:

a. The construction of affordable, tiny homes could provide viable housing options for residents who are struggling financially and for the State's homeless population.

b. In 2013, an estimated 610,000 people in the United States slept without shelter on any given night and more than 3.5 million people experience homelessness in the United States each year.

c. According to a report from the National Low Income Housing Coalition, for every 100 households of renters in the United States that earn "extremely low income" (30 percent of the median household income or less), there are only 30 affordable apartments available.

d. Despite laudable efforts by all levels of government, private individuals, nonprofit organizations, and charitable foundations to end homelessness, the number of homeless persons in New Jersey is unacceptably high. The State's homeless population, furthermore, includes a large number of families with young children, youth, veterans, the elderly, and employed persons.

e. Fiscal and social costs of homelessness are high for both the public and private sectors.

f. A myriad of factors contribute to homelessness, including a shortage of affordable housing, a shortage of jobs that pay wages and benefits sufficient to support a family, high property taxes, and rising utility costs.

g. Ending homelessness should be a joint goal for State and local government and this pilot program is a significant step toward achieving that goal.

2. As used in this act:

"Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to section 4 of P.L.1983, c.530 (C.55:14K-4).

"Applicant" means a nonprofit organization or municipal housing authority.

"Commissioner" means the Commissioner of Community Affairs.

"Eligible project" means a housing development consisting of tiny home dwelling units owned and operated by an applicant.

"Executive director" means the Executive Director of the New Jersey Housing and Mortgage Finance Agency.

"Housing development" means development undertaken for the purpose of creating one or more residential units, for occupancy under lease by persons who shall occupy such units as their usual and permanent residence, together with any structures or facilities appurtenant or ancillary thereto.

"Pilot municipality" means a municipality selected by the executive director to participate in the pilot program pursuant to subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), that agrees to participate in the pilot program.

"Pilot program" means the "Tiny Home Pilot Program" established in the New Jersey Housing and Mortgage Finance Agency pursuant to subsection a. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Tiny home dwelling unit" means a permanent dwelling place or domicile for occupants and having interior floor space not in excess of 300 square feet.

"Very low-income family" or "very low-income individual" means a family or individual whose annual income does not exceed 30 percent of the median family or individual income for the area, as determined by the federal Department of Housing and Urban Development, and that qualifies for low-income housing under the standards promulgated by the Council on Affordable Housing pursuant to the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.).

"Very low 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 occupied or reserved for occupancy by households with a gross household income equal to 30 percent or less of the median gross household income for households of the same size within the housing region in which the housing is located.

3. a. The executive director, in consultation with the commissioner, shall establish in the agency the "Tiny Home Pilot Program," to encourage the development of tiny home dwelling units.

b. (1) The executive director shall select for participation in the pilot program not less than one, but not more than two municipalities in each of the northern, central, and southern regions of the State. In selecting the pilot municipalities, the executive director may consider the comparative homeless population of the municipality, the percentage increase in the homeless population over the prior five years, the municipality's expressed interest in participating in the pilot program, the level of anticipated financial and other participation of municipal economic development agencies, the existence of preexisting agreements between the municipality and applicants willing to construct tiny home dwelling units in accordance with this pilot program, and the municipality's willingness to temporarily suspend applicable zoning restrictions to permit development in accordance with this pilot program.

(2) Upon receipt of a resolution by the governing body of a pilot municipality agreeing to participate in the pilot program the executive director shall collaborate with each pilot municipality on the procedures to be implemented to effectuate the purposes of the pilot program.

c. (1) (a) Under the pilot program, the executive director shall award grants to applicants for the construction of eligible projects within pilot municipalities.

(b) An applicant shall agree to rent each tiny home dwelling unit at an affordable price, as determined by the executive director.

(c) Each tiny home dwelling unit shall be rented to a very low-income family or individual that qualifies for very low-income housing.

(2) The executive director shall manage the pilot program in consultation with the commissioner to most effectively increase affordable housing options in the State. The executive director shall administer the pilot program for three years following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

(3) Grant awards totaling $1.65 million shall be awarded by the executive director to applicants during each year the pilot program is in operation.

d. In addition to any additional information required by the executive director, an applicant seeking a grant under the pilot program shall submit an application to the agency that shall include the following information:

(1) the approximate number of tiny home dwelling units the applicant has the capacity to construct through funding from grants;

(2) a detailed description of the construction to be completed, including, but not limited to, the applicant's ability to outfit the tiny home dwelling units with energy efficient features or equipment capable of minimizing residential utility costs throughout the life of the structure;

(3) the anticipated rental price of each tiny home dwelling unit to be constructed; and

(4) any relevant experience in successfully carrying out accountability and reporting requirements involved in the proper administration of grant funds.

e. The executive director shall establish options designed to make tiny home dwelling units affordable for very low-income families and very low-income individuals. The executive director shall also coordinate with community organizations, homeless groups, and public agencies to establish rental assistance programs for tiny home dwelling units. The executive director may make temporary loans, with or without interest, but with such security for repayment as the executive director deems reasonably necessary and practicable, to ensure affordable rental prices are available to very low-income families and very low-income individuals for tiny home dwelling units.

f. A pilot municipality shall receive two credits toward the fulfillment of its fair share housing obligation pursuant to P.L.1985, c.222 (C.52:27D-301 et al.) for each tiny home dwelling unit constructed within the municipality in accordance with the pilot program.

4. Any eligible project that conforms to the standards and requirements of P.L. , c. (C. ) (pending before the Legislature as this bill) and the regulations promulgated pursuant thereto is hereby declared to be a public work in furtherance of the housing policy of this State, and any contribution of property, money, or services in furtherance of such pilot program by the agency or by a unit of local government shall be deemed an expense or cost incurred in furtherance of a public purpose.

5. The executive director shall annually report to the Governor and the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), regarding the allocation of the moneys appropriated pursuant to section 7 of P.L. , c. (pending before the Legislature as this bill). The report shall include, but not be limited to, the municipalities selected to participate in the pilot program, the importance of the financial incentive in the decision by applicants to construct developments consisting of tiny home dwelling units, the percentage increase of affordable housing availability within the State resulting from the pilot program to the date of the annual report, and the extent to which the homeless population of this State has diminished as a result of the proliferation of developments consisting of tiny home dwelling units.

6. The executive director of the New Jersey Housing and Mortgage Finance Agency, in consultation with the Commissioner of Community Affairs, shall promulgate rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to carry out the purposes of this act. The rules and regulations shall include special human habitation, use, and occupancy standards for tiny home dwelling units.

7. There is appropriated from the General Fund the sum of $5 million to the New Jersey Housing and Mortgage Finance Agency in the Department of Community Affairs for the purposes of effectuating the provisions of this act. The moneys may also be expended for appropriate and reasonable administrative expenses incurred in the administration of the project by the agency.

8. This act shall take effect immediately.

STATEMENT

This bill creates the "Tiny Home Pilot Program" as a three-year pilot program to assist residents struggling financially and the State's homeless population with acquiring housing through the construction of small, affordable homes.

This bill requires the Executive Director of the New Jersey Housing and Mortgage Finance Agency in the Department of Community Affairs to select municipalities in three regions of the State to participate in the pilot program. The executive director must also manage the pilot program to award grants to qualified applicants for the construction of housing developments consisting of homes no greater than 300 square feet of interior floor space. As part of the program, the executive director must establish options, including rental assistance programs, designed to make tiny home dwelling units affordable for very low-income families and very low-income individuals. Any municipality participating in this pilot program will receive two credits toward the fulfillment of its fair share housing obligation for each tiny home dwelling unit constructed within its borders.

This bill appropriates $5 million from the general fund, of which the executive director would distribute $1.65 million during each of the three years the pilot program is in operation to qualified applicants for the construction of housing developments consisting of tiny homes. The executive director would be required to promulgate rules and regulations necessary to carry out the purposes of the bill. In addition, the executive director would be required to submit an annual report to the Governor and Legislature detailing the pilot program's progress in increasing affordable housing options and reducing the State's homeless population.

In 2013, an estimated 610,000 people in the United States slept without shelter on any given night and more than 3.5 million people experience homelessness in the United States each year. Both the private and public sector suffer the fiscal and social costs of homelessness. Despite laudable efforts by all levels of government, private individuals, nonprofit organizations, and charitable foundations to end homelessness, the number of homeless persons in New Jersey remains unacceptably high. This pilot program would help address the issues of homelessness plaguing this State by providing viable housing options for residents who are struggling financially and for the State's homeless population.