Dear CAI-NJ Members:
The New Jersey Housing and Mortgage Finance Agency (HMFA) has recently proposed rules that will significantly impact common interest communities (associations) across New Jersey and will undoubtedly make condominium units more expensive for those whose communities include low and moderate-income affordable housing units.
We urge you to review and comment on HMFA’s proposed rules concerning Housing Affordability Control Rules. Your input is crucial to ensure that the interests of our community associations are represented. The rules proposed would have the following impacts:
- Capping of Fees on Affordable Units: The proposed rules will place a cap on an association’s ability to assess affordable housing units, thus requiring all other units’ common expense assessments and special assessments to be increased to subsidize the affordable units. Capping these fees would significantly hinder an association’s ability to meet financial obligations, leading to fiscal and safety concerns.
- Limitation on Special Assessments: The rules provide that special assessments may only be assessed against affordable units if the purpose of the assessment directly benefits that unit. This language is vague and uncertain as to what “benefit” entails. At a minimum, however, it suggests that if an assessment is needed to replace all the roofs in a community, that only the roof to the affordable unit’s building can be assessed to that owner, leading to further subsidizing by the market-rate owners. In condominiums this approach apparently ignores that the common elements are owned by all owners, and thus all owners are “benefited” when the common elements are repaired or replaced.
- Associations Must Calculate Affordability Caps: The rules provide that an affordable owner is not required to pay maintenance fees above an amount that would bring its total housing costs above 33% of its eligible income level, meaning that an association would be responsible for calculating each unit’s housing payment, insurance payment, tax payment, and income eligibility level! Worse, it appears that in calculating housing costs, it is the income of an affordable owner at the time of purchase that continues to be used when determining whether maintenance fees exceed the 33% threshold notwithstanding how long the unit has been owned or how much the income of the affordable owner has increased.
- Assessments Can Only Be Based on Square Footages: The rules would provide that all assessments in every association must be calculated based upon square footages, meaning that every association with affordable housing units that do not currently assess based upon square footages may be required to amend its master deed and declaration to provide for such formula unless a narrow exception is met.
- Extension of Controls: The rules provide that if a municipality wishes to make an agreement with an affordable housing owner to extend the period of the controls beyond what is in the master deed or declaration, it can do so without the consent of the association and the market owners. This means that if a master deed currently provides that the affordable owners pay 1/3rd of the assessments of the market-rate owners, the market-rate owners would now be required to continue that subsidy for upwards of another 40 years (70 years in total) without consenting to that extension.
CAI-NJ’S Legislative Action Committee is currently preparing formal comments that will be submitted to HMFA objecting to these new rules. A subsequent e-mail will be sent to all CAI-NJ Members including a copy of those comments. In addition, CAI-NJ hosted a webinar on Wednesday, September 3rd, at 11:00 a.m. during which information regarding these rules was presented as well as the opportunity to ask any questions. The webinar is available for viewing on the CAINJ webinar library.
We encourage you to submit your comments to NJ HMFA by September 19th to ensure your voice is heard. Your participation is vital in shaping regulations that affect our communities. Comments should be submitted via e-mail to Jim Peasco, Senior Legal Research Analyst, at jpeasco@njhmfa.gov. Your comments should reference “Proposal Number PRN 2025-086.”
Thank you for your attention to this important matter.
Steve Mlenak, Esq., 2025 CAI-NJ President, and Matthew Earle, Esq., NJ-LAC Chair
