LRRP – What Can I Expect?
Repairs done through the LRRP program must meet all applicable federal, state and local requirements.
Landlords must agree to lease repaired units to low-to-moderate-income (LMI) households. For-profit rental property owners are required to comply with these provisions for one year. Non-profit rental property owners must comply with these unit affordability requirements for five years. If the owner fails to meet these requirements, LRRP funds must be repaid. The LRRP grant is forgiven when the occupancy requirements are met for either the one (1) or five (5) year compliance period of the property.
Landlords are required to enter into a grant agreement which includes covenants confirming that the landlord agrees to comply with the obligations and program requirements. The covenant is recorded against the property for the term of compliance, i.e. either one year for for-profit owners or five years for non-profit owners.
Once a landlord’s application has been selected for review, the information they provided on the application is verified. The steps below show how each factor is verified and how the LRRP program proceeds.
Appropriate documentation is required from landlords to verify the ownership of the property. Types of ownership may include sole proprietors, corporation, limited liability company (LLC), partnership, joint venture, and non-profit organization. Rental housing units in mixed-use properties (i.e., a property that has both residential rental units and commercial/retail space) may be considered, but LRRP funds cannot be used to repair the non-residential units or convert the commercial/retail space to residential rental units.
A title search is performed to confirm the ownership of the property. If the title cannot be verified or there are questions regarding ownership, applicants may be asked to provide additional documentation to validate title to the real property or perform curative work required to confirm ownership.
2. Damage and Scope of Work
Data from state and federal sources, or other documentation demonstrating the unit was damaged by Superstorm Sandy, is used to verify storm damage.
Damage assessments by the LRRP Construction Manager are used to validate completed repairs and to assist in developing a scope of work to document needed repairs eligible for LRRP funds in compliance with local, state, and federal building requirements
Owners of rental housing properties that are deemed substantially damaged (i.e., sustained more than 50 percent damage of the property’s assessed pre-storm value) and are located in a flood plain are required to elevate the property.
Owners of rental housing properties that had more than 75 percent damage may be required to reconstruct the property. Because this program is primarily targeted to those units in need of repair, not reconstruction, properties that need to be reconstructed are considered on a case-by-case basis.
If the repair costs exceed the $50,000 maximum per unit LRRP funding, the owner has to provide the additional funding needed to repair the unit(s) in accordance with federal, state and local building codes.
3. Award Calculation
The LRRP program is intended to fill the gap between the cost to repair the unit(s) and other sources of funding the landlord may have received to repair their property. Any amounts the landlord received from insurance, SBA loan funds, or a non-profit entity for repairs are subtracted from the total cost of repairs to determine the LRRP award amount, unless those funds were used to make some repairs to the damaged unit(s). If the funds available, including the maximum LRRP funds, are not sufficient to repair the unit(s), the landlord will be required to identify additional sources of funds.
4. Grant Award Signing
All landlord funds required to complete the construction must be identified to complete the full scope of the repairs.
5. Construction Process
Some landlords may have completed some or all of the repairs to their property prior to the date of application. Other landlords have to select a construction contractor to complete the rehabilitation or reconstruction work for their property. Construction contractors must be licensed and registered to do business in the State of New Jersey, and may not be barred by HUD to do business on federally funded projects.
The following services are provided by the LRRP Construction Manager and the New Jersey Department of Environmental Protection (DEP) at no cost to the landlord:
- Cost Estimate – Estimated Cost of Repair
- Lead Paint and Asbestos Assessments
- Federally Mandated Environmental Review
Landlords are responsible for hiring professionals directly to design the repairs to their property and to engage a general contractor to complete the repairs to their property. LRRP funds can be disbursed after the grant award signing for work completed prior to the date of application. The balance of the LRRP grant is disbursed upon completion of the project.
For any unit that is being rehabilitated using funds from the LRRP, there are a minimum set of construction standards for rental housing that must be met prior to tenant occupancy. The goal of the LRRP Minimum Housing Rehabilitation Standards is to maintain consistency among contractors, define the extent of work that the program requires when a unit is rehabilitated and ensure that the work completed meets governing codes and quality standards. These standards apply to all counties, but do not act exclusive to local, township, county or state building or housing codes, standards or ordinances that may also apply. Download the LRRP Minimum Housing Rehabilitation Standards.
6. Verification of Tenant Occupancy
Once repairs to a property are complete and the applicable local building department has provided a certificate of occupancy, the landlord is responsible for selecting and qualifying an eligible tenant(s). The landlord must follow state and federal fair housing requirements in the selection of a tenant(s). For properties with five (5) or more units, the landlord is required to implement the provisions outlined in their Affirmative Fair Housing Marketing plan submitted as part of their application. The landlord must also comply with provisions of Section 414 of the Stafford Act that provides opportunities for tenants that were displaced as a result of Sandy to occupy rental housing that was repaired or constructed using federal funds made available in the State.
The landlord must receive authorization from the State prior to executing a lease with a prospective tenant after income data for the resident is reviewed and confirmed. Eligible tenants must earn no more than 80 percent of the Area Median Income (AMI) for the county in which they reside.
Below are some common questions landlords may have for the LRRP program:
Who qualifies as a low-to-moderate income (LMI) household?
The U.S. Department of Housing and Urban Development (HUD) publishes LMI limits that represent approximately 80 percent of the Area Median Income (AMI) per county. Income limits are published for each jurisdiction and vary by household size. The 2015 income limits adjusted for household size for all New Jersey applicable counties are listed below:
2016 80% Area Median Income (AMI) Limits for the Nine Most Impacted Counties
What rents can I charge?
Rents are limited to the lesser of the market rent for the unit or the rent schedule established by the Department of Community Affairs. The following table lists the 2015 maximum rents calculated by bedroom size for all applicable counties. The methodology utilized for the LRRP program does not require that a utility allowance be subtracted from the maximum rent levels listed below:
2016 Rent Schedule for All Applicable Counties
Can I select my own tenants?
Yes. The landlord must comply with the non-discrimination requirements outlined in the Fair Housing Act. To meet the requirements of the LRRP program, the landlord must collect the required income information from each tenant and submit the information to the program for income calculation and approval.
Prior to collecting the tenant’s income information, the landlord must have the tenant sign a privacy release and consent form allowing the program to review the tenant’s information. The LRRP program will provide the release to the landlord and the landlord will submit the documentation with the tenant’s income information.
Eligible tenants (including existing tenants) must earn no more than 80 percent of the AMI for the county in which they would reside. The 2014 eligible income limits adjusted for household size for each county is listed above.
Who decides what repairs need to be made to my rental property?
The LRRP Construction Manager develops a scope of work that is the basis of the Estimated Cost of Repair (ECR) report. The landlord is responsible for incorporating the specified items referenced in the ECR report into the scope of work that is included in the contract with their construction contractor.
Can I select my own contractor to complete the construction work?
Yes. Landlords may choose to complete the scope of work by using a construction contractor of their choice. The LRRP Construction Manager makes sure that the selected contractor meets the following minimum qualifications:
- Contractor has a New Jersey Home Improvement Contractor License.
- For reconstruction of single family homes only), contractor must provide a home warranty to the property owner as required by the New Jersey DCA New Home Warranty Program.
- Contractor must demonstrate there is no debarment sanction on any individual, organization, and/or subcontractor and is not excluded from conducting business with any federal agency government-wide.
When will I receive LRRP funds?
After the grant award signing, a meeting with the LRRP Construction Manager is scheduled. The landlord receives LRRP funds as follows:
- Reimbursement: Initial payment after grant award signing reimburses the landlord for eligible costs expended prior to the date they submitted their LRRP application. Reimbursement payment does not exceed 80 percent of the total LRRP grant award.
- Construction Advance: Landlord may receive an advance payment of up to 50 percent of their remaining award after reimbursement. Advance payment and reimbursement payment together will not exceed 80 percent of the total LRRP grant award.
- Final Payment: Release of the remaining funds from the total LRRP grant award is disbursed upon completion of construction, receipt of a certificate of occupancy (or equivalent) from the local municipal building official, and successful construction closeout inspection of property by the LRRP Construction Manager.
Does the federal government allow reimbursement of costs used to rebuild or repair my home?
On July 30, 2013, the federal government issued a notice in response to the various requests from the State of New Jersey to allow for reimbursement of landlords of costs they have already expended to repair, rebuild, and mitigate their rental properties. The completion of the repairs and the cost must be confirmed by the LRRP Construction Manager, and an environmental review must be completed by the New Jersey Department of Environmental Protection before reimbursement funds may be disbursed.
What costs can be reimbursed?
Sandy-related construction costs incurred by a landlord prior to the date they submitted their LRRP application may be reimbursed. Rules of the reimbursement include:
- Before any LRRP funds can be provided for reimbursement to the landlord, their property must be environmentally cleared by the New Jersey Department of Environmental Protection per federal requirements.
- Construction costs must be considered within federal guidelines as “necessary and reasonable.”
- Reimbursement is limited to properties where work has been done on the same footprint that the property occupied prior to the storm.
Does the Uniform Relocation Act (URA) apply?
The Uniform Relocation Act (URA) applies when the relocation of a tenant occurs in a federally funded project, such as the LRRP program. If a tenant needs to be relocated in order to complete any of the rehabilitation or reconstruction activities, federal rules require that a tenant receive compensation for housing, moving, and the related benefits that result. Any relocation costs per the provisions of the URA are paid for in their entirety by the landlord.
If the rehabilitation or reconstruction of my property is complete must I receive notification from the LRRP program that the property can be occupied by an LMI tenant?
Landlords should not permit the occupancy of their property until a representative of the LRRP program or LRRP Construction Manager has informed them that an LMI tenant may occupy the LRRP-assisted unit. The LRRP-assisted unit(s) must remain vacant until authorized by a representative of the LRRP program to occupy or a landlord may not qualify for a LRRP grant. If the landlord attested to repair work being complete at the date of application submission, confirmed this attestation with a certificate of occupancy (or equivalent) dated between October 29, 2012 and date of application submission, and leased their repaired unit to an LMI tenant, then the unit would qualify for LRRP assistance.
Is there a requirement to provide a rental housing opportunity to a household that occupied the storm-damaged rental housing unit at the time of Superstorm Sandy?
Yes. Section 414 of the Stafford Act requires that residents of a rental property at the time of the storm must be given an opportunity to re-occupy units that are repaired using federal funds. Therefore, in order to receive LRRP assistance for their damaged unit(s), landlords must demonstrate a good faith effort to contact date-of-storm tenants who were displaced to another location to give them the opportunity to move back into the unit.
Are energy efficient and mold-resistant construction methods required?
Housing rehabilitation and reconstruction activities must be designed to achieve maximum energy efficiency to the extent achievable on a cost-effective basis. Applicants to the LRRP program can demonstrate energy efficiency through designs based on LEED, Energy Star and/or other comparable guidelines and rating systems. Construction methods should comply with local building codes and incorporate mold-resistant construction materials in the rehabilitation plans.
Should I stop work once I submit an application to the LRRP program?
Landlords are advised that it is their choice, but it is in their best interest to stop work once they submit an application to the LRRP program. The State of New Jersey advises that landlords halt their ongoing repairs so that they can maximize what can be covered by the LRRP grant funds. The State is restricted by the federal government on reimbursement after the time of application; therefore, continuing with work between the time of LRRP application and environmental clearance will make that work ineligible for the grant funds. However, it is the landlord’s decision on whether to stop work.
If I have received federal funds that resulted from a prior disaster event, can I also receive funds from the LRRP program?
Yes. However, if the federal disaster funds received previously were conditioned on the landlord obtaining flood insurance for their rental property, the landlord must attest that they have maintained the requisite flood insurance. If the landlord has not maintained the requisite flood insurance, then they will not qualify for LRRP funds. Landlords will be required to confirm that they have maintained flood insurance, if applicable, as part of their grant signing agreement.
If I receive federal disaster funds as a result of my LRRP application, must I agree to maintain flood insurance in the future?
Yes. If flood insurance is not maintained and there is subsequently another federally declared disaster, the owner of the property will not qualify for federal assistance that may be available in the future.