Corporate buyers received discounted state tax credits, while the auction proceeds will be divided between affordable-housing obligations and workforce housing.
TRENTON, NJ – New Jersey has sold $40 million in state tax credits to corporate buyers through a new auction program intended to generate money for affordable and workforce housing.
The New Jersey Housing and Mortgage Finance Agency announced the completed sale July 27 and said another $59.6 million in credits will be offered this fall.
The transaction is not a direct award of $40 million to housing developments. Corporations purchase credits at a discount and may use their face value to reduce either New Jersey Corporate Business Tax or Insurance Premium Tax obligations.
The agency said the average spring-auction price was 87 cents for each $1 of tax credit. Applying that average to the $40 million sold would imply approximately $34.8 million in auction revenue, although the agency did not disclose the final proceeds total.
The buyers were described only as several corporations. Their names, individual purchases and winning bid prices were not included in the announcement.
How the housing money will be divided
Half of the auction revenue will be used to help municipalities meet affordable-housing obligations. The other half will support middle-income workforce housing.
Projects receiving the money will also be paired with federal 4% Low-Income Housing Tax Credits administered by the state agency.
The state program is intended to finance:
- Affordable housing for households earning less than 60% of the area median income
- Workforce housing for households earning between 80% and 120% of the area median income
The announcement did not identify projects, municipalities, unit counts or a schedule for awarding the spring-auction proceeds. It therefore does not guarantee that any of the money will be allocated to Morris County.
Fall auction begins in October
The next auction is scheduled to open at 9 a.m. Friday, Oct. 16, and close at 5 p.m. Monday, Nov. 30. The agency lists $59,555,000 in available credits.
Businesses must bid at least 80 cents for each $1 of credit. Once approved, credits may be applied against qualifying state taxes, and unused credits can be carried forward for seven tax periods.
The state may auction no more than $100 million in credits annually and plans to continue the program through 2030.