LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 3990
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: AUGUST 30, 2023
SUMMARY
Synopsis: Establishes Nonprofit Housing Construction and Rehabilitation Pilot
Program to facilitate affordable housing construction; appropriates
$25 million.
Type of Impact: Time-limited State cost increase.
Agencies Affected: Department of Community Affairs.
Office of Legislative Services Estimate
Fiscal Impact Duration of Pilot Program
State Cost Increase $25 million plus administrative expenses
Potential State Revenue Increase Indeterminate
 The Office of Legislative Services (OLS) concludes that the bill will result in an increase in
costs to the Department of Community Affairs associated with providing grant funding to
eligible nonprofit entities to construct or rehabilitate dwelling units for low- to moderate-
income households through the Nonprofit Housing Construction and Rehabilitation Pilot
Program. The bill appropriates $25 million for the purposes of the pilot program.
 The bill is also expected to result in increased administrative costs to the Department of
Community Affairs associated with promulgating rules and regulations, establishing a grant
application process and selecting grant recipients, and preparing reports concerning the pilot
program.
BILL DESCRIPTION
This bill would establish the Nonprofit Housing Construction and Rehabilitation Pilot Program
for the purpose of providing grant funding to eligible nonprofit entities to be used for dwelling unit
construction or rehabilitation for low- or moderate-income households.
The bill would require the Department of Community Affairs to provide grant funding made
available through the program to not less than two, and not more than four eligible nonprofit
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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entities. The department would establish an application process for participation in the program,
and select eligible nonprofit entities on the basis of experience and capacity to efficiently and
satisfactorily carry out construction and rehabilitation projects for low- or moderate-income
households. An eligible nonprofit entity that participates in the program would be required to
expend the funding provided to it for the purposes of the program within five years of grant
issuance, or repay the unspent funding to the department.
Each dwelling unit construction or rehabilitation that is substantially funded through the
program would provide a municipality with one credit towards its prospective fair share affordable
housing obligation if the constructed or rehabilitated dwelling unit is initially occupied by a low-
or moderate-income household, and contains provisions for living, sleeping, eating, sanitation, and
cooking, and reasonable living space as specified in the bill.
The bill requires the department to submit certain reports to the Governor and the Legislature
on the success of the program, challenges faced, and recommendations on whether to extend the
program and the utility of doing so.
The bill appropriates $25 million from the General Fund to the Department of Community
Affairs for the implementation of the program.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that the bill will result in an increase in costs to the Department of
Community Affairs associated with providing grant funding to eligible nonprofit entities to
construct or rehabilitate dwelling units for low- to moderate-income households. The bill
appropriates $25 million for the purposes of the pilot program. However, the OLS is unable to
predict the amounts that will be provided to each of the two to four eligible nonprofit entities for
the construction or rehabilitation of a dwelling unit for a low- to moderate-income household. The
OLS is also unable to predict the extent to which an eligible nonprofit entity will engage in new
construction or rehabilitation projects with grant funds, or the magnitude of rehabilitation efforts
that will be necessary to complete rehabilitation projects.
The OLS notes the bill does not specify whether the construction of new housing units under
the pilot program will be multi-family housing or single-family housing. However, according to
a 2020 report from the Metropolitan Policy Program at the Brookings Institution concerning multi-
family housing construction costs in the United States, many factors translate into different per-
unit construction costs, including sizes, architectural styles, land values, building materials,
building codes, and zoning requirements. For new construction, the report estimated that a low-
rise building with up to 50 units would cost approximately $150 to $225 per square foot, and that
a mid-rise building with up to 200 units would cost approximately $175 to $250 per square foot.
The federal Bureau of Labor Statistics’ CPI Inflation Calculator suggests that from January 2020
to June 2023 those two cost ranges would increase to $177 to $266 and $207 to $296, respectively.
The United States Census Bureau notes that, in 2022, the median size of multifamily housing units
built for sale was 1,311 square feet, resulting in projected per unit costs of $232,047 to $348,726
for units in low-rise buildings, and $271,377 to $388,056 for units in mid-rise buildings.
Therefore, if every grant dollar were to be dedicated to new construction, then the bill’s $25 million
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appropriation could result in the production of between 64 and 107 multifamily housing units,
based on State grant funding alone, without any nonprofit entity or purchaser contributions to unit
construction. Assuming, however, that each unit meets only the minimum definition for being
substantially funded through the pilot program, at 20 percent of project costs, the bill’s $25 million
appropriation could result in the production of between 322 and 538 multifamily housing units.
The OLS further notes that a Habitat for Humanity chapter in Maryland reports that a Habitat
for Humanity house costs approximately $135,000 to $165,000 to build. If all dwelling units were
built under those expectations, approximately 757 to 925 dwelling units could be substantially
funded through the pilot program with the bill’s $25 million appropriation. In New Jersey, Morris
Habitat for Humanity (serving Morris and Middlesex Counties and the Greater Plainfield area)
reported completing or continuing construction on 41 homes in 2021, and completing 87 home
repairs, and spending $2.1 million on home building. The report from Morris Habitat for Humanity
does not, however, provide information on the overall costs of a newly constructed single-family
home.
The bill also provides for the Department of Community Affairs to collect unspent grant
funding from eligible nonprofit entities after a period of time to be determined by the department.
To the extent that eligible nonprofit entities that were issued grant funding pursuant to the bill do
not spend the monies within the allotted time, the department may experience an indeterminate
revenue increase.
The bill is also expected to result in increased administrative costs to the Department of
Community Affairs associated with promulgating rules and regulations, establishing a grant
application process and selecting grant recipients, and preparing reports concerning the pilot
program.
Section: Local Government
Analyst: Abigail Stoyer
Associate Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).