City of Trenton

CITY OF TRENTON Douglas H. Palmer, Mayor

DEPARTMENT OF HOUSING AND ECONOMIC DEVELOPMENT Jerome C. Harris, Acting Director

POLICY AND PROCEDURE GUIDE FOR HOUSING DEVELOPMENT

1996 rev. 1997 rev. 2005 rev. 2006 rev. 2007 rev. 2009

2 TABLE OF CONTENTS

Introduction 3

I. Role of the City of Trenton in Housing Development 4 A. The Department of Housing and Economic Development 4 B. Other City Departments 6

II. Developer Selection and Developer Responsibilities 7 A. Opportunities for Established Developers 8 B. Designated Nonprofit Development Entities 10 C. Emerging Development Entities 11

III. The Development Process 12 A. Housing Proposal and Concept Formulation 12 B. Site Control/Use of City-Owned Properties 14 C. Project Planning and Design 15 D. Approvals 16 E. Financing 17 F. Construction 20 G. Marketing and Outreach 22

IV Miscellaneous Programs 24

A. Homeowner Grant and Loan Program 24 B. Rehabilitation Program 26 C. Façade Program 27

3 INTRODUCTION

The City of Trenton, as the elected government of the city, has a clear responsibility to address the needs of all its citizens, including the housing needs of its residents. That commitment has led to the creation of an ambitious housing program to meet the needs of its low and moderate income citizens, and at the same time bring in market rate housing that will increase the tax base. This program represents a partnership with a wide variety of nonprofit and for-profit development organizations and financial institutions. Through this program, over 1700 units of affordable housing have been started in Trenton since 1991, including new construction and substantial rehabilitation, housing for sale, for rent, and for the city’s special needs population.

While the Department of Housing and Economic Development is the City’s key arm to create housing, other departments of City government also make significant contributions, particularly the Department of Inspections and the Department of Public Works. The Department also works closely with Federal and State agencies, in particular the United States Department of Housing and Urban Development, The United States Department of Environmental Protection, the New Jersey Department of Community Affairs, the New Jersey Department of Environmental Protection and the New Jersey Housing and Mortgage Finance Agency, and with the active lending community engaged in financing affordable housing.

The purpose of this guide is to provide, for developers and others concerned with the development of housing in Trenton, both an overview of the housing development process, as well as the conditions and standards established by the Division of Housing Production for housing developers seeking to work with the City to address the community’s housing needs. Housing development is a complex process. Therefore, it is impossible in such a guide as this to identify every issue that may arise and specify the City’s position on each issue. This guide should be considered a framework, within which the ongoing discussion that is essential to successful housing development can take place.

4 I. THE ROLE OF THE CITY OF TRENTON IN HOUSING DEVELOPMENT

The affordable housing development process in the City of Trenton is based on a partnership between the public sector, nonprofit and for-profit development organizations, and private industry, particularly the financial industry. Without the full engagement of all three, successful housing development is not possible.

The public sector plays a central role in the city’s affordable housing program. While local government is at the forefront, the city works closely with State and Federal agencies to further the success of its efforts. Similarly, while the Division of Housing Production is the city’s lead agency in this area, other agencies of city government also play important roles. Their responsibilities are also briefly summarized in this section.

A. The Department of Housing & Development In addition to its responsibilities within city government, the Department of Housing and Development acts under city ordinances as the city’s Redevelopment Agency, subject to the authority of the City Council. The powers provided by the New Jersey redevelopment law can be and are actively exercised to further the city’s community development efforts. Examples of this process are:

● Sale of city-owned buildings and vacant land at nominal or below-market prices for construction and rehabilitation of housing ● Use of eminent domain powers to acquire properties needed for neighborhood revitalization ● Selection of developers of city-owned properties through Requests for Proposals ● Granting of tax abatements, including long-term payment in lieu of real estate taxes for rental developments, to increase the financial viability and affordability of housing developments  Partnering For-profit developers with Trenton City HOME – the city’s nonprofit development agency

The Department is divided into three operating divisions:  Planning  Economic Development  Housing Production

5 The Division of Planning is responsible for city planning activities, providing staff services to the Planning Board, Zoning board of Adjustment, Landmarks Commission and the Project Application Review Committee. The Division is also responsible for preparing zoning amendments, designating redevelopment areas and preparing redevelopment plans.

The Division of Economic Development is responsible for fostering, encouraging and enhancing job growth and business retention. The Division manages the city’s award winning Brownfields Program and Urban Enterprise Zone Program. Consequently, it is the point of contact for local, State and Federal business programs administered by the State of New Jersey Economic Development Authority, the Department of Commerce and Economic Development, U.S. Small Business Administration. The Division coordinates census data collection for the city and also promotes tourism and culture to highlight Trenton’s historic past as a framework for its renaissance. The Division is also responsible for furthering the development of industrial, commercial and retail development in the city.

The Division of Housing Production is the arm of the Department with direct responsibility for furthering housing development. The Division is responsible for setting housing priorities, assembling and coordinating financial resources and providing technical support services to nonprofit and for-profit housing development entities. It acts as an advocate for affordable housing within and outside City government, using its resources to facilitate the approval process for affordable housing development in the public and private sectors. The mission of the Division is to improve the city’s housing stock by fostering the construction and rehabilitation of housing, to address the full range of the community’s needs and to ensure that new housing in the city revitalizes and stabilizes the city’s neighborhoods. The primary responsibilities of the Division’s staff include:

● Assessment of housing needs ● Coordination of housing production activities ● Evaluation and selection of housing sites ● Provision of technical services relating to the development of housing, including reviewing housing proposals, development and operating budgets and plans; identifying potential funding sources; preparing financing applications for affordable housing developments; and monitoring all subsidized projects ● Development of plans and targets for affordable and market rate housing development ● Provision of technical assistance to developers and non-profit organizations seeking to build or rehabilitate housing in the City ● Securing funds, in particular capital subsidy funds, from public and private sources to further the development of affordable housing

6 ● Administering grant and loan programs to provide assistance for the construction and rehabilitation of rental and for sale housing; and to assist low and moderate income homeowners to address emergency needs, remove code violations and improve their properties ● Provide staff services to Trenton CityHome Corporation, Inc., a nonprofit housing development entity established to fill gaps in the city’s affordable housing production system.  Administering the City’s Regional Contribution Agreement Funds and HOME Program Funds

The Division maintains a housing development pipeline, at any given time moving as many as forty separate projects along the development process, from conception to completion. Once a housing proposal has been submitted to the City, and approved, a project coordinator from the Division is assigned to the project. It is the responsibility of the project coordinator to maintain constant contact with the developer, in order to address any problem that may arise during the course of the development process and where necessary to intervene and advocate on behalf of the developer with City or other public agencies to ensure timely processing of development applications.

B. Other City Departments

In addition to the Department of Housing and Development, other departments of City government make significant contributions to moving the city’s affordable housing ventures forward:

Department of Inspections: The Department of Inspections is responsible for the enforcement of all building codes including review of building plans, issuance of building permits and certificates of occupancy, and on-site inspection during construction. This Department works closely with the Department of Housing and Development to demolish unsafe structures, inspect housing projects for compliance with applicable codes and ensure that they move through the process of review and approval in a timely fashion.

Department of Public Works: The Department of Public Works, which includes the City’s Water Utility and Sewer Utility, works closely with the Department to coordinate the installation or upgrading of infrastructure systems needed by housing developments. Improvements in water distribution systems have been coordinated with neighborhood redevelopment efforts and street improvements have been tied to specific housing developments.

Department of Health and Human Services: The Department of Health and Human Services, whose responsibilities include services to the City’s homeless and

7 other special needs population, works closely with the Department to identify the housing needs of this population, and, to determine how best to meet those needs.

Department of Recreation, Natural Resources & Culture: The Department of Recreation, Natural Resources & Culture works with the Department to address open space and recreational needs related to housing development and neighborhood revitalization efforts, as well as issues of civic aesthetics such as the placement of street trees.

Staff of the Division of Housing Production work to coordinate the activities of all city agencies with respect to housing developments but there are many instances where a developer will be expected to deal directly with certain key city agencies.

II. DEVELOPER SELECTION AND DEVELOPER RESPONSIBILITIES

The City of Trenton is eager to support any legitimate, capable, and reasonable effort to produce housing to meet the needs of the city’s residents. In so doing, the city does its best to ensure that, once a decision is made to move forward with a housing development, the development will move from planning to construction to occupancy.

That objective logically leads to preference being given to developers, both for-profit and non-profit, with established track records. However, in order to provide opportunities for start-up developers, the city maintains a program for locally based development entities seeking the chance to demonstrate that they have the ability to perform as effective housing developers.

Developers seeking to produce affordable housing in Trenton typically fall within one of the following categories:

● Community-based or area wide nonprofit development corporations with established capabilities and experience ● Experienced for-profit developers ● Emerging locally-based nonprofit or for-profit development corporations

The Division accommodates all of these categories by addressing them in ways that maximize the likelihood of successful development efforts. With the exception of the procedure for designated nonprofit development entities described below, the city looks for comparable levels of competence and performance on the part of nonprofit and for-profit entities, when offering them the opportunity to develop affordable housing in the city.

8 A. Opportunities for Established Developers

The Division offers three paths for for-profit or nonprofit developers with substantial track records to participate in the city’s affordable housing program, the Request for Qualification Process, Request for Proposal process, and the Developer Initiated process.

1. Request for Qualification Process

An RFQ, or Request for Qualifications is a process to solicit professional services. Similar to an RFP solicitation, the request includes the general scope of work and it asks that development teams respond with their qualifications as applies to the specific scope of work. Unlike an RFP solicitation, an RFQ does not ask for cost at the point of the initial submission. The solicitation usually includes a scoring criteria. The selection process includes the following steps:  Review Committee outlines evaluation criteria for the review of submissions based on the scoring criteria contained in the solicitation  Committee recommends highest-scoring proposer to the Department Director  Recommendation to Trenton City Council  City Council authorizes award

2. Request for Proposal Process

Whenever the City has taken the initiative to assemble land or buildings for development, the opportunity to develop the property is offered publicly through a Request For Proposal or RFP procedure. The procedure for designated nonprofit entities, discussed below, represents an exception to this rule. This procedure provides an objective and competitive framework for developer selection, and ensures that the selection will be grounded in merit, reflected in the experience of the developer and the quality of the developer’s proposal. The selection process includes the following steps:

 Drafting and internal review of the RFP  Issuance of the RFP to prospective developers. In addition to advertisement of the RFP, copies of the RFP (or a notice regarding the RFP) are sent to organizations with which the city is familiar. Depending on the complexity of the project, and the nature of the proposal requirements, proposals are generally due within 4 to 6 weeks of issuance of the RFP.  Pre-proposal conference and site visit. Depending on the nature of the project, attendance may be made mandatory for prospective developers.  Establishment of a review committee. With projects of particular neighborhood or community significance, the review committee will often include neighborhood representatives, as well as city officials.  Review of proposals

9  Interview of finalists. Depending on the number of proposals received, and their relative merit, this step may be foregone at the city’s discretion.  Recommendation to Trenton City Council. In the case of major development projects, a presentation to City Council by the developer being recommended may be required.  Designation of the developer by City Council.

Upon designation, the city will offer the selected developer an exclusive rights agreement, or option, to the property or properties that are the subject of the RFP.

A successful response to an RFP must show substantial expertise and possess strong organizational and financial resources with which to carry a project from its conceptual stage to occupancy. In most cases, the RFP will require the developer to provide a conceptual sketch of the proposed development, as well as a preliminary pro forma and marketing plan. The developer must identify the development team that will carry out the project as a part of their housing proposal. The developer must take full responsibility for all phases of development, including documentation of the following criteria:

 Adequate financial resources to ensure timely project completion  Capacity to prepare full architectural and engineering drawings, including all submissions to the City and other agencies for approval  Ability to perform all site and building investigations, including identification of subsurface conditions and determination of any remedial actions necessary  Ability to package all financing elements, including obtaining all necessary construction and permanent financing  Ability to construct or rehabilitate the project, including all necessary streetscape and landscape improvements  Ability to effectively market and sell or rent completed units. With respect to rental projects, ability to provide and sustain high quality of management, maintenance and services to tenants.

Through the RFP process, the city seeks to identify development entities, which can move forward on their own, without undue intervention or technical support by city staff. It is worth noting that on more than one occasion, the city has awarded important development opportunities to nonprofit developers in direct competition with experienced, well-known, for-profit developers.

3. Developer Initiated Process

All developers seeking an opportunity to build or rehabilitate affordable housing in Trenton should take the initiative and submit a proposal to develop land or buildings that they have acquired using their own resources. The City welcomes such proposals and will review to determine consistency with the city’s goals for its

10 housing and neighborhood revitalization activities. The city will support the proposal in two ways:

 The city will make available city-owned land or buildings on a non-competitive basis to that developer, where that developer has already acquired adjacent land or buildings privately, and where the addition of the city-owned land or buildings will significantly enhance the quality of the development, or further improvement of the neighborhood.  The City will use its powers of eminent domain to acquire, at the developer’s expense, missing or out parcels, where the city has determined that inclusion of those parcels is essential to the success of the development, or the revitalization of the neighborhood.

B. Designated Nonprofit Development Entities

As a matter of policy, the city is committed to supporting those nonprofit development entities, particularly those with strong roots in the community or a particular neighborhood, with demonstrated ability to complete complex housing developments in a timely and cost-effective manner.

Based on this policy, the city will create housing development opportunities on a negotiated basis for qualified nonprofit developers without an RFP or other competitive process. To that end, Division staff will meet regularly with qualified nonprofit developers to explore development opportunities and to frame joint development projects consistent with the organization’s mission and capabilities and with the City’s policies and priorities.

The city will also work with these nonprofit developers to come up with innovative strategies to address the housing needs of the community. Including the creation of revolving funds for property acquisition or rehabilitation, lease-purchase programs, and other cost-effective methods of responding to the community’s housing needs.

All nonprofit developers undertaking housing projects through this route must meet all of the criteria for development capability listed above under [A] Opportunities for Established Developers.

C. Emerging Development Entities

Both for-profit and nonprofit developers with minimal housing development experience are likely to require extensive administrative and technical experience from the Division throughout the development process. This assistance generally includes guiding a developer through the approval process, reviewing development

11 and operating budgets, identifying potential funding sources, preparing financing applications and assisting in the preparation of site plan and zoning applications.

While the Division is eager to work with fledgling development entities, staff has only limited resources to provide technical assistance. The Division must therefore be selective in the number of emerging developers it selects. To the extent that resources permit, the Division will identify small-scale developments (generally 1-5 units) to serve in essence as start-up opportunities, enabling the developer to obtain the experience that will enable them to undertake larger and more complex projects in the future. This is in line with the Division’s interest in local economic development and individual self-sufficiency. Therefore, recipients of this assistance must be Trenton based businesses/residents. The Division also requires that all emerging developers of housing, to the greatest extent feasible, provide job training, employment, and contracting opportunities to Trenton residents especially low and very low income residents. All emerging developers must maintain appropriate documentation that demonstrates compliance with these requirements.

Any developer participating in this program must agree to participate in such training and organizational development activities that the Division determines to be necessary in conjunction with carrying out their initial development project or projects.

Development Criteria

 1-4 units – Must demonstrate knowledge of development process.  At least one unit developed in the last five years – need to provide a development portfolio  Units have to be for market rate homeownership, i.e. no subsidy  City will provide city-owned units at nominal cost  Commitment to creating quality units through innovation and creativity  Selection will also be based on developer’s use of high quality design elements not usual in inner-city developments e.g. sustainable features like hardiplank, hardwood floors, recycled materials etc. For 5+ units - Partnership with entity with track record.

III. THE DEVELOPMENT PROCESS

Creating housing is a complex and risky process. Success requires many diverse and complex elements to come together perfectly. At each stage in the development process the developer has responsibilities that must be carried out. This section will focus on the key stages of the process.

The stages in the housing development process are overlapping, not sequential. A developer who does not begin the process of seeking

12 building plan approval from the Department of Inspections before receiving all financing commitments will unduly and unreasonably delay the project. A developer who does not begin marketing units until construction is complete will not only delay occupancy, but may sabotage the project beyond repair. Except for emerging developers (see II[C] above), all developers are expected to have adequate financial resources to move forward on pre-development activities in an efficient manner prior to receipt of financing commitments.

The development process may be broken down into the following seven areas:

 HOUSING PROPOSAL AND CONCEPT FORMULATION  SITE CONTROL/USE OF CITY-OWNED PROPERTIES  PROJECT PLANNING AND DESIGN  APPROVALS  FINANCING  CONSTRUCTION  MARKETING AND OUTREACH

A. Housing Proposal and Concept Formulation

The City of Trenton welcomes all housing proposals. At the same time, not all ideas for housing projects are good ones. Some may be good in concept, but impossible to execute. Turning the initial idea into a sound development concept, before commitments have been made and money spent, is the crucial first step in the development process. At a minimum, a sound development concept must incorporate the following principles:

 The development must be responsive to the needs of the community or the housing market.  The form, density, and configuration of the development must be appropriate for the needs of the population to which it is directed; and  The target population and development configuration must be appropriate for the site and neighborhood within which it is proposed to be located.  The concept has to be cost-effective.

The development concept may be framed by the Division and accepted by the developer, or framed by the developer and approved by the Division. In either case, there must be mutual agreement that the concept is feasible and appropriate. This can be the result of the RFP process, or the outcome of a negotiated process, generally arising from one or more meetings between the developer and Division staff. Such meetings are actively encouraged, as a way of brainstorming the

13 available development alternatives, and fostering good communication between the city and the developer. All developers should have a preliminary development budget at the concept stage. Once the development concept has been established, an application for assistance must then be completed by the developer, providing the following information about the proposed housing project:

 The number of units: number and type of buildings, new construction or rehabilitation, etc.)  The development team  Utilization of city-owned property, if applicable  Preliminary pro forma, including sources and uses of funds  Financial assistance from the city, if applicable, - direct financing, tax abatement, or city support of federal or state financing, such as Balanced Housing Program funds, CHOICE, HOME, RCA, UHAP, FHLB.  Preliminary operating pro forma, if applicable.  Permit process timeline – planning/zoning board, inspections

Where projects are initiated through the RFP process, the developer’s proposal, which incorporates all of the above information, is considered the application for assistance. A copy of the application form is attached to this Guide.

A project coordinator will be assigned to the project by the Division at this point. In many cases, the project coordinator may be assigned to the project before the concept has been finalized, in order to participate in the process from the beginning.

Following the submission, staff reviews the application (or proposal) and meets with the developer to review the application, and resolve any concerns and/or questions staff may have relative to the application. This initial meeting or meetings also serves to review the strategy that will be pursued by the developer and the city to move the project forward, including the approach to be used to obtain necessary capital subsidy funds, the division of responsibilities in that and other areas, and the framing of a project schedule to move the project through the remaining stages of development.

If needed, the developer is referred to the Project Application Review Committee (PARC). PARC is a committee, which includes representatives of all city agencies involved with the development review and approval process, including Housing & Development, Inspections, Public Works, the Sewer and Water utilities, and the like. The purpose of this meeting is to provide the developer with information about all planning, zoning, historic preservation, environmental and construction issues that will need to be addressed in the course of developing the project, thereby ensuring that the developer is aware of all of the approvals that

14 must be obtained, and the requirements of each. It is expected that the developer will meet with PARC as soon as possible.

While the city will support any housing proposal, which has reached this stage, it, is the responsibility of the developer to secure all required approvals to develop the project. The Division cannot substitute its efforts for those of a competent and responsible developer, and cannot guarantee that every proposal will come to fruition.

B. Site Control/Use of City-Owned Properties

Housing development in Trenton generally takes place on land acquired by the city, either as a result of tax foreclosures, the gift program or negotiated acquisition for purposes of redevelopment. Where feasible, the city can make available city-owned land and buildings to developers at a negotiated price.

All actions by the city to sell land or buildings to a developer, or acquire land or buildings on a developer’s behalf require approval by City Council. Once the staff has agreed to reserve city-owned properties for a housing development, City Council through an ordinance, will grant the developer an exclusive right to purchase the properties. The development right is generally granted for a six-month period, with provisions for renewal assuming reasonable progress is being made by the developer toward construction.

For applications to State or Federal agencies, the city will provide the developer with appropriate documentation of site control, as well a provide access to the property as needed. In return, the city will provide a resolution of support and/or letter of support from the Mayor, if applicable.

In addition, the city will negotiate a disposition agreement (if the site is in a redevelopment area) or a contract of sale with the development entity to be executed before the close of the option period. Please note - the actual conveyance of the property to the developer does not occur until immediately before closing on the construction financing and the start of construction. The city will entertain requests to convey property earlier, if there are compelling reasons to do so. C. Project Planning and Design

Good planning and design are essential to the success of a housing development. Good planning is impossible except through a process that brings the city, the developer, and the community together.

The Division will work with the developer in designing the project to ensure that it is consistent with the City’s planning and development objectives, and that the architectural design is compatible with the surrounding neighborhood. In the case of

15 a large-scale development, or a development in a highly sensitive or prominent location, the developer should plan on a series of design review meetings, before the site plan and design are finalized. In the course of design, the developer should address all on-site and significant off-site improvements, including streetscape treatment, fencing, treatment of adjacent units and open spaces, as well as any infrastructure improvements, including streets, sewer lines, storm drainage, or water distribution upgrading.

Any infrastructure issues should be identified early and discussed at the PARC meeting.

The developer should exercise great care in selection of the architect for the project. While the city will not require the developer to select a particular architect, or select from a list of approved architects, the developer is urged to find an architect who is licensed in New Jersey, and has extensive experience in the design of housing projects in urban settings, preferably with prior experience in Trenton. If the architect selected by the developer does not appear to have adequate qualifications, staff may recommend an association with another architectural firm to ensure that the project is designed and built according to the building code and in a timely manner.

For buildings of historic character or significance, or properties located in designated historic districts, or projects located in historically significant but undesignated areas, the Department’s Historic Preservation Specialist will advise the developer of applicable local, state and federal historic preservation standards, and work with the developer to ensure that the new housing is sensitive to and compatible with the historic character of the neighborhood.

While the Division has not adopted formal design guidelines, the city has design and planning policies affecting housing development that should be respected:

 Housing should be compatible with the neighborhood in which it is located. New construction should be comparable in massing, height, setback to existing housing in the same area. Design of front elevations, including porches and stoops, roof configurations, etc., should be compatible with surrounding buildings. Use of compatible materials, in particular brick, is encouraged.  A strong street line, particularly where the site is in a neighborhood of established physical character, should be maintained. Garages, individual driveways, and other accommodation of cars along the street frontage should be minimized, with alleys used for parking access wherever possible.  Housing for families with children should have direct access from the unit to the outdoors wherever possible. Elevator buildings, or buildings with multiple

16 units accessing corridors, are considered less desirable for family occupancy. Back yards are encouraged.  Developments with extensive or continuous street frontage should address the streetscape treatment of the frontage; i.e., sidewalk improvements, shade tree plantings. Depending on the location and character of the area other decorative elements such as decorative street lighting should be considered.  Areas along public rights of way should be attractively fenced or landscaped.

The city’s housing needs are less matters of quantity than of quality. The housing that we build today will be with us for decades, if not centuries. Developers should not seek to maximize the number of units that can be accommodated on a site, but should seek to create the most appropriately designed and planned development to foster long-term residential and neighborhood stability.

Developers are strongly encouraged to meet early in the development phase to discuss the planned housing with any neighborhood groups or civic associations in the community. Such meetings will allow the neighborhood to provide valuable input to the planning process, and will also allow the developer to hear and respond to the concerns the group may have regarding the proposed housing project. City staff will participate in these meetings to assist the developer. Developers are encouraged to build strong relationships between their organizations and representatives of residents.

D. Approvals

All housing developments require a variety of approvals before construction can take place. It is the responsibility of the developer to obtain all planning and construction approvals in a timely manner while simultaneously pursuing the financing necessary to carry out the project.

Essential city approvals include the following:

Site plan and/or subdivision approval. This approval is granted by the Planning Board with respect to all projects except for those requiring a (d) variance under the New Jersey Municipal Land Use Law, which are approved by the Zoning Board of Adjustment. All projects located in redevelopment areas are subject to review and approval by the Planning Board. All applications to either board are reviewed prior to being heard by the staff of the Division of Planning, which makes recommendations to the board having jurisdiction over the application.

Historic Preservation approval: Development of historically designated buildings, or of any buildings located in a designated historic district, require approval of the

17 Landmarks Commission for Historic Preservation. The historic preservation specialist in the Division of Planning provides staff services to the Commission.

Construction approval: Plan review for construction activity, whether new construction or rehabilitation, is the responsibility of the city’s Department of Inspections. Review of construction plans does not begin until the project has received necessary site plan or subdivision approvals.

Infrastructure: All issues relating to access to off-site water supply, sewer and storm drainage, as well as street improvements, like lighting are the responsibilities of the Department of Public Works. Again, the project coordinator will assist the developer to work with the Department of Public Works on any issues that may arise.

Periodic contact with PARC can be a valuable tool for a developer. There is no limit on the number of times that a developer can meet with PARC to review technical issues as the development concept takes form, and there is no charge for the meeting. Developers should take advantage of the opportunity to obtain such information in an informal setting before moving forward.

In addition to city approvals, projects may require a variety of other approvals at the county or state level, including Soil Erosion and Sedimentation Control permits, access permits for state highways (which include certain major city streets), environmental approvals, etc. While the city will assist the developer in identifying which approvals are needed and in obtaining those approvals, including participation in meetings with responsible state and county agencies, the ultimate responsibility for obtaining approvals lies entirely with the developer.

E. Financing

When needed, the city will work closely with developers to secure needed subsidy funds, and will continue to aggressively seek subsidy funds from all available sources, including Regional contribution Agreements, Balanced Housing Program funds, etc.

Securing project financing is a joint effort. Developers are required to participate fully in this process. While the city will file Balanced Housing Program (BHP) applications, the developer is expected to provide the city with a completed BHP application ready for review and filing (the city will assist start-up developers with BHP applications). If the city and the developer agree that the project is appropriate for a Home Loan Bank Affordable Housing Program grant, the developer is expected to prepare the application and find a willing member institution to submit the application on their behalf. Again, where needed, the city can assist a new developer in the process.

18 Except in extraordinary circumstances, developers are expected to obtain construction financing and end loans directly, although the city will provide letters of support as needed, and may recommend appropriate lenders and responsible officers which the developer may contact. Any developer who anticipates needing any substantial city assistance in this respect should make his or her needs clear at the beginning of the conceptual planning process.

Capital subsidy funds are inherently limited. Funds are not available to support all of the projects that the city, or developers, would like to pursue. The city must set priorities, and designate certain projects as having a higher or lower priority for purposes of allocating available subsidy funds. Similarly, the city may refuse to support a subsidy or tax credit allocation being sought by a developer if the city determines that the developer’s application may jeopardize a pending application, which the city considers of higher priority. Finally, the city may limit the amount of capital subsidy to any project on the basis of its judgment of what constitutes reasonable costs, as well as the degree of affordability to be provided by the proposed project.

The city may substitute one source of subsidy for another previously committed to a project during the course of project planning after consultation with the developer, if the city determines that such substitution is in the best interest of the city’s overall housing development efforts, and that the substitution will not have an adverse impact on the project.

The city considers tax abatement a tool to be used to facilitate development of affordable housing. The city provides tax abatement to affordable housing in two ways:

 All new or substantially rehabilitated housing automatically qualify for a five- year tax abatement on the improvements (there is no abatement of the tax on the land value). No tax is paid in the first year, 20 percent of full taxes in the second year, 40 percent in the third, 60 percent in the forth, and 80 percent in the fifth. Full taxes begin in the sixth year of occupancy. An application must be filed with the city’s tax assessor within 30 days of receipt of a Certificate of Occupancy for each eligible unit. City Council approval is not required for this abatement.  Rental housing is eligible for long-term tax abatement to the extent necessary to ensure project feasibility. A payment in lieu of taxes (PILOT) at a fixed percentage of the rent roll is negotiated with city staff, generally between 3 percent and 10 percent, for a period up to thirty years. Any such agreements must be submitted to City Council for their approval.

19 Since the city rarely acts as primary lender on housing projects, the city does not underwrite projects. To the extent that the city must extract the maximum benefit to the community from limited subsidy funds, the city has a responsibility to review the budget submitted by developers to ensure that all costs are reasonable, and that subsidy funds are being used in a cost-effective manner. Among the issues that the city will review are the following:

 The reasonableness of the cost of land or buildings being acquired privately, in light of similar transactions. Prices for substantial acquisitions must be supported by “as- is” appraisals.  Developer and contractor fees should be reasonable. Where there is a single entity as developer and general contractor, the combined fee schedule should not exceed 18 percent. Where developer fees in tax credit projects exceed that level, the excess is to be retained in the project as equity.  Developer fees are at risk until project completion. To the extent that project costs exceed the budget, including budgeted contingencies, the excess will be taken from developer fees.  Where a firm with an ownership interest in the project is providing a service, such as real estate sales, or architecture, to the project, and is both receiving a percentage of the development fee and a fee for the service, the latter should be adjusted downward to reflect the firm’s anticipated development fee share.  Reasonable fees for services such as homebuyer training or community outreach can be included in pro formas, but only to the extent that they reflect the direct costs of specific services to be provided.

During the course of the review, the city may identify other issues, and may require changes to the pro forma of any development as a condition of assistance. To the extent that the city is being requested to provide tax abatement; use city funds, such as HOME funds; apply for subsidy funds, such as Balanced Housing Program funds; or otherwise endorse subsidy or financing applications for a project, the city has both the right and the obligation to ensure that those funds are used in a cost-effective manner.

F. Construction

The responsibility for inspecting construction work for compliance with all code requirements lies with the building inspectors in the City’s Department of Inspections, who are responsible for issuing building permits at the start of construction, and temporary or certificates of occupancy at its completion.

20 Developers and their contractors are expected to deal directly with the Department of Inspections with respect to all code-related matters. The Division of Housing Production has a substantial role with respect to the construction phase of housing development, and imposes specific obligations on developers and their contractors. This is particularly the case where funding is provided or administered by the city. In such cases, the Division’s staff of construction coordinators will monitor the project, and must approve all construction draws before funds are disbursed. The Construction Coordinator reviews construction plans and cost estimates for reasonableness. Where the scope of construction monitoring exceeds the in-house capabilities of the Division, the city may require the project budget to include funds to enable the city to hire qualified consulting personnel.

The project coordinator and construction coordinator assigned to a project are to be invited to all job meetings during the construction phase. The following specific policies or procedures will be followed during construction on projects in which funds administered by the city and where the Division is responsible for funds disbursement are being used:

(1) No construction may begin before a city council resolution/ordinance authorizing the project has been given to the developer and general contractor.

(2) A pre-construction meeting with the project coordinator and construction coordinator with (a) a detailed schedule of values for the construction; and (b) a final detailed sources and uses budget for the project, and schedule of values approved by the construction coordinator.

(3) The city’s policy is that, to the extent feasible, its funds be disbursed proportionate with other construction funds going into the project. Recognizing project constraints, this policy will be exercised flexibly. However, no more than 50 percent of the city funds will be disbursed, until substantial private funds have been put into the project. The only exceptions will be made when approved in writing after a written request setting forth the exceptional and unusual circumstances making it necessary.

(4) No draws showing a change in the approved budget and schedule of values will be approved without prior submission of a change order executed by the owner, architect and general contractor. The change order will be reviewed and approved by the construction coordinator prior to funding a draw.

(5) No checks will be issued “while-u-wait”. The city will make its best efforts to provide payment by the end of the week following that in which the drawdown is made, but no guarantees of turnaround are provided.

21 (6) A release of liens must be executed by the general contractor and all subcontractors prior to the final payment being released.

The city requires all developers working in the affordable housing program to provide information on their workforce composition and utilization of sub-contractors. Monthly reports, on forms provided by the Division, must be provided. While the information provided will not, except for special circumstances identified up front, affect the disbursement of funds with respect to the project under way, it may have a significant bearing on approval of the developer and/or general contractor with respect to future projects.

Although the City of Trenton does not have a formal minority or small business set aside program for developers of affordable housing, the city expects developers participating in the program, and receiving assistance of any kind from the city, to make a concerted effort to maximize opportunities for locally-based contractors, particularly minority-owned and women-owned business enterprises, and to create employment opportunities for local and minority workforce members. To the extent that programs have been established with city support for training and placement of local minority residents in the construction workforce, or to create opportunities for local and minority subcontractors, developers are expected to cooperate fully with these programs.

Contractors must maintain insurance during the construction period. The general contractor must provide the project coordinator with a certificate of insurance evidencing worker’s compensation, public liability and property insurance coverage. When the City is providing direct financing, the insurance policy must name the City of Trenton as an additional insured party. The minimum standard for public liability insurance is $1,000,000/$3,000,000 and the minimum coverage for property insurance is $250,000/$500,000. The city may require, depending on the particular features of a project, that higher levels of coverage be provided. The insurance policy must provide a sixty (60) day notice of cancellation to the City of Trenton by registered mail.

Developers are also responsible for maintaining builder’s risk insurance during the construction phase and project insurance after the project has been constructed. The insurance policy is to include only the materials and equipment (1) owned by the owner of the development under construction and (2) installed or otherwise attached and forming an integral part of the described property. The comprehensive general liability coverage amount is determined on a project by project basis. When the City is providing direct financing, the City of Trenton must be named as an additional insured on the insurance policy with a sixty (60) day cancellation notice.

22 While the city does not routinely require a performance bond of the general contractor, it may do so if it is warranted by the scale and complexity of the proposed housing project. Developers should be aware that certain funding programs may require a performance bond, even in situations where the City does not make that a requirement.

G. Marketing and Outreach

The developer of a housing project is responsible for marketing the housing units being developed, either directly or by engaging the services of a qualified real estate broker and/or property management firm. An affirmative marketing plan must be filed with the Division, setting forth the manner in which the developer or its agent will carry out the marketing plan. The marketing plan must be consistent with all applicable federal, state and local civil rights provisions, including provision of information about Federal and state fair housing laws to prospective renters and homebuyers. In addition, developers are to use the Equal Opportunity logotype on all materials distributed, and to maintain a record of the marketing activities carried out.

Specific subsidy programs impose additional requirements with respect to marketing, or reporting of marketing activities. Projects using Balanced Housing Program funds must use the state’s Housing Affordability Service (HAS), which provides the developer with lists of income-qualified individuals or families, who can then be screened and interviewed by the developer for potential occupancy for available units. Affordable housing projects must comply with the affordability requirements dictated by the funding programs being used. While the term “affordable housing” has several meanings, the general meaning used by the City is housing affordable to low and moderate income persons as defined by the New Jersey Council on Affordable Housing under its authority granted by the New Jersey Fair Housing Act: A unit for sale is generally considered affordable if the household pays no more than 33% of their income for principal, interest, taxes and insurance.

Low income households are those earning fifty percent or less of the Mercer County median income, as adjusted by household size.

Moderate income households are those earning fifty to eighty percent of the Mercer County median income, as adjusted by household size.

Developers should be aware, however, that other programs have other cut-off points, or use income definitions that may vary slightly from the above. Similarly, some programs may require a specific mix of low and of moderate-income households. The developer is responsible for complying with all requirements for affordability and low/moderate income occupancy, as

23 well as for providing the appropriate bodies with documentation of compliance.

A rental unit is generally considered affordable if an income-qualified household pays no more than 30% of their income for rent, including utilities All units assisted by federal, state or local subsidy require the placement of restrictions to ensure continued affordability and occupancy of the units by low or moderate income households. The restrictions shall be recorded with the deed. The length of the deed restriction shall be determined by the subsidy program. If a project receives funding from more than one source, the most restrictive program requirement will be enforced.

While the demand for affordable housing in Trenton is great, it is not always a simple matter to achieve full occupancy of a development. Particularly with respect to housing for sale, experience has shown that while large numbers of families apply, many cannot quality for mortgage financing, while others need varying degrees of assistance to qualify. Similarly, the pool for family rental housing is deep, but many households earn too little to qualify for units which must establish minimum rents for economic feasibility, while others are disqualified because of poor credit history or behavior problems. It is essential that developers carry out a comprehensive marketing approach, using a variety of strategies to reach potential buyers or tenants:

 Outreach to community groups and neighborhood organizations  Outreach to religious and civic groups  Advertisements in local and regional newspapers, including newspapers targeting ethnic communities  Press releases  Brochures and flyers  Newsletter mailing  Television media  Public service radio announcements  Postboard notices at government buildings, religious and community organizations, and other public facilities  Neighborhood Signage

Successful developers of affordable owner-occupied housing should incorporate the ability to provide full cycle counseling to prospective home buyers in their marketing efforts, provided either in-house through staff trained for the purpose; or through real estate firms; or in conjunction with local lenders or counseling agencies. Many lenders have programs targeted to low and moderate income buyers and tenants. Although resources are limited, the City is willing to work with developers to try to develop programs to facilitate homeownership for city residents.

24 IV. Miscellaneous Programs

A. HOMEOWNER GRANT AND LOAN PROGRAM

Eligibility

Senior or disabled

Process 1. Homeowner contacts office and is put on a waiting list. All applicants are scheduled on a first-come, first-served basis. 2. Loan Advisor sends out letters to inform applicants to call to schedule an appointment Note: Disabled applicants may request a home appointment from the loan advisor.

3. Application is completed with the assistance of the loan advisor and will include the following information:

a. Name of applicant b. Address c. Proof of income d. Proof of ownership (deed) e. Name and age of all persons living in household. f. Income of all person(s) living in household. g. Proof of property taxes paid current. h. Credit report for person(s) applying for a loan subsidy i. When applicable, applicants will sign verification of employment and verification of income.

4. Preliminary eligibility of applicant will be made by the loan advisor pending verification of information.

5. Applicants applying for a deferred loan or loan subsidy will be scheduled to have their properties inspected by the City’s building, plumbing and electrical inspectors.

6. Applicants applying for a grant will not have their properties inspected by the City’s building, plumbing and electrical inspectors.

7. Upon completion of the application and inspection process the rehabilitation project will be assigned to a cost estimator.

8. The cost estimator will prepare detailed specifications and a cost estimate.

25 9. The work specifications will be delivered to the homeowner for his/her review at which time the homeowner may request changes in the specifications which, if approved by the estimator, will be incorporated into the specifications.

10. The homeowner will be allowed 30 days in which to select contractors and have bids submitted to the Division of Housing Production. Upon the expiration of 30 days all processing will cease and the project canceled unless it is determined that the cause for the delay is due to extenuating circumstances.

11. The homeowner will select two contractors of his/her choice to ensure competitive bids to provide labor, material and equipment along with required permits to complete all work described in the work specifications. The successful bidder must provide proof of a liability insurance policy currently in effect with minimum coverage of $100,000.00.

Note: If the homeowner selects a contractor who is not the lowest responsible bidder, the homeowner must be responsible for the difference between the low bid price and the accepted bid. The difference will be part or all of the first progress payment to the contractor. All bids will be reviewed for cost reasonableness (within 10% of City’s estimated costs).

Note: For loan subsidy applicants, City funds will be requisitioned after private funds have been approved.

12. A Proceed Order will be issued to the contractor with a copy to the homeowner as soon as funds have been allocated for the project.

13. Project will be monitored by the City’s cost estimator and inspected by the appropriate code inspector to ensure code compliance.

14. Progress payments will be issued by the City’s cost estimator with approval by the homeowner. Payments will be issued for satisfactorily completed work and calculated at 80% of the value with a 20% retainage.

The City’s funds will be paid out on each payment request in our amount equal to its percentage of the total development cost or in the case where home equity loan funds or the like are used, after said funds have been expended on construction costs.

26 Final payment including retainage will be issued upon satisfactory completion of all work listed on the specifications and final inspection by the cost estimator and code inspector.

15. Change orders must be signed by the homeowner, contractor and City cost estimator. It must describe the exact modification in the scope of work and any change in the contract price. The cost estimator must verify cost changes as reasonable prior to the commencement of work.

16. Upon completion of construction a final inspection will be made by the City’s cost estimator and appropriate code inspectors. The contractor must submit to the homeowner all copies of warranties and releases of liens from subcontractors and suppliers prior to final payment being released.

B. Rehabilitation Program

Over the past eighteen years, under the esteemed leadership of Mayor Palmer, and as part of his vision to make Trenton a great place to live, work and play, the City together with State and Federal Partners have created over 1600 housing units by providing financial assistance to non-profit and for-profit housing organizations to rehabilitate vacant and abandoned residential structures.

According to the 2000 Census, fifty-one percent of all residential structures in the city were built prior to 1939. The City is comprised of four wards, the North, South, East and West Wards, each is defined by very distinct neighborhoods, each with its own unique characteristics and appeal. For example, the South Trenton neighborhood is made up largely small row houses, many of which were built in the 1880s and 1890s. The neighborhoods in the West contain small row houses and twin houses as well as larger homes with architecturally distinctive features. The North Ward has a mix of housing stock, including many attractive and well-maintained residential streets occupied by homeowners with modest row houses and twins, which tend to have large front porches and small front yards. Neighborhoods in the East are characterized by a number of attractive masonry row houses from the late 19th and early 20th century, and distinctive mansions, some of which have been converted to multifamily or commercial uses. The goal is to use this rehabilitation program to safeguard, protect and strengthen the City’s rich fabric of older homes, most suitable for rehabilitation, but rapidly deteriorating due to neglect. This program is funded with Regional Contribution Agreement funds and administered through the Division of Housing Production. Eligible households must have incomes up to 80% of area median income adjusted for family size using the New Jersey Council on Affordable Housing annual income guidelines.

The Trenton RP Program will offer financial assistance to low and moderate income households to correct health and safety code violations The ultimate goal of the

27 Program is to further the Mayor’s vision and make our City a safe, decent and desirable place in which to live, work and play.

C. Façade Program

The City of Trenton believes that the creation and maintenance of attractive building facades is important to the economic health of the City. The condition, image and appearance of residential buildings play a large part in the impression which businesses, residents and visitors have of the City. Neglected residential buildings create an image of a deteriorating economic base and dissipate all investment in adjoining property. Therefore, to ensure total redevelopment and complement exterior improvements, properties next to new developments are offered incentive financing. The City’s Façade Improvement Program is an initiative to offer incentive financing to enhance the attractiveness of Trenton neighborhoods by improving the façades of residential dwellings abutting newly constructed and rehabilitated units.

This program is funded with City capital funds and administered through the Division of Housing Production. Owner-occupied units receive grants and other property owners receive forgivable loans at zero interest. The maximum amount available to any property will be determined based on the scope of the project.

The elements of the program are:

 Streetscape improvements, including sidewalk repairs, planting of shade trees, and other features  Rehabilitation of vacant boarded houses in vicinity  A façade improvement grant program  A zero interest property improvement loan program

The following eligibility criteria will be applied to owner occupants:

a) Structure must be a residential dwelling b) Owner occupant must provide evidence of clear title to the property c) Owner occupant must have adequate property insurance d) Owner occupant must be current on property taxes

The City will provide forgivable loans for exterior improvements for rental housing units. Loans will be offered at 0% interest for a six (6) year forgivable term to applicants meeting program eligibility.

28 This means that one-sixth of the loan will be forgiven over a six (6) year period. In the 7th year, the loan will be forgiven. However, if the property is sold prior to the end of the controls on affordability, part of the loan shall be recaptured.

29 The following eligibility criteria will be applied to rental property owners:

1) Property taxes must be current on the property. 2) Applicant must have adequate insurance in force on the property. 3) Applicant must demonstrate maintenance of income over the past year.