NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2493-17T1
IN THE MATTER OF THE APPLICATION OF ALLENWOOD TERRACE APARTMENTS, LP FOR NINE PERCENT LOW-INCOME HOUSING TAX CREDITS FROM THE 2017 SENIOR CYCLE.
Submitted February 25, 2019 – Decided March 20, 2019
Before Judges Messano and Rose.
On appeal from the New Jersey Housing and Mortgage Finance Agency, LIHTC Application No. 2017-B.
Day Pitney, LLP, attorneys for appellant Allenwood Terrace Apartments, LP (Sarah Sakson Langstedt and Craig M. Gianetti, of counsel and on the briefs).
Gurbir S. Grewal, Attorney General, attorney for respondent New Jersey Housing and Mortgage Finance Agency (Melissa H. Raksa, Assistant Attorney General, of counsel; Jeet M. Gulati, Deputy Attorney General, on the brief).
PER CURIAM Allenwood Terrace Apartments, LP (Allenwood) appeals from a
December 19, 2017 final agency decision of the New Jersey Housing and
Mortgage Finance Agency's (HMFA) Tax Credit Committee (TCC), denying its
application for Federal low-income housing tax credits (LIHTC) for its senior
affordable housing project in Wall Township. Allenwood argues the TCC's
decision was arbitrary, capricious, and unreasonable primarily because
Allenwood's "clerical" errors were "easily corrected" and disqualification was
"grossly disproportionate to the minimal harm."
We reject Allenwood's contentions and affirm substantially for the reasons
set forth in the TCC's comprehensive and well-reasoned written decision, which
"is supported by sufficient credible evidence on the record as a whole." R. 2:11-
3(e)(1)(D). We add the following comments to give context to the TCC's
decision.
Our review of agency determinations is limited. In re Stallworth, 208 N.J.
182, 194 (2011). Indeed, "[i]n administrative law, the overarching informative
principle guiding appellate review requires that courts defer to the specialized
or technical expertise of the agency charged with administration of a regulatory
system." In re Virtua-West Jersey Hosp. Voorhees for a Certificate of Need,
194 N.J. 413, 422 (2008). "Consistency with that principle demands that an
A-2493-17T1 2 appellate court . . . should not disturb an administrative agency's determinations
or findings unless there is a clear showing that (1) the agency did not follow the
law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the
decision was not supported by substantial evidence." Ibid. Further, we defer to
"[a]n administrative agency's interpretation of statutes and regulations within its
implementing and enforcing responsibility. . . ." Wnuck v. N.J. Div. of Motor
Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (alteration in original)
(citation omitted).
New Jersey's Fair Housing Act, N.J.S.A. 52:27D-301 to -329.9, charges
the HMFA with the responsibility of establishing "affordable housing programs
to assist municipalities in meeting the obligation . . . to provide low and
moderate income housing." N.J.S.A. 52:27D-321. As part of that responsibility,
the HMFA administers the Federal government's low-income housing credit
program, 26 U.S.C. § 42, which "provides an incentive for the construction and
rehabilitation of low[-]income rental housing by lowering its overall cost
through the use of tax credits to developers and owners of qualified rental
projects." In re Adoption of 2003 Low Income Hous. Tax Credit Qualified
Allocation Plan, 369 N.J. Super. 2, 11 (App. Div. 2004).
A-2493-17T1 3 The Federal regulations require the HMFA to adopt a "qualified allocation
plan" (QAP). 26 U.S.C. § 42(m)(1)(A). Accordingly, each year the HMFA
establishes a QAP that includes funding cycles and the amount of credits
available in each cycle. See N.J.A.C. 5:80-33.1 to -33.38. The application
process commences with a self-implemented scoring system, requiring each
applicant to complete a self-score sheet with the application. N.J.A.C. 5:80-
33.14. Based on those self-determined rankings, the HMFA then examines the
applications of the projects "that rank sufficiently high to receive credits."
N.J.A.C. 5:80-33.14.
Generally, an LIHTC applicant bears the burden of ensuring its
application is "clear, unambiguous, and complete in all respects at the time of
submission." N.J.A.C. 5:80-33.11(b). Further, the regulations explicitly
mandate the applicant's responsibilities when seeking an LIHTC award:
The applicant assumes the full burden of disclosing with certainty in its application how it shall obtain and maintain site control. The application shall set forth with specificity by what means each parcel of the project's real property is to be acquired if such acquisition has not yet been perfected; applications shall not indicate alternate means of acquisition for any particular parcel. For all forms of site control, a copy of the current owner's recorded deed (or equivalent) shall be submitted as supporting documentation.
[N.J.A.C. 5:80-33.12(c)(2)(ii) (emphasis added).]
A-2493-17T1 4 Defects in an application may be cured within forty-eight hours of
submission. N.J.A.C. 5:80-33.11(c)(1). However, "[a]pplicants that utilize the
cure period in N.J.A.C. 5:80-33.11(c)(1) . . . shall have one point per each defect
cured deducted from the application's score." N.J.A.C. 5:80-33.15(a)(22)
(emphasis added).
On April 27, 2017, Allenwood submitted its application to the HMFA,
seeking a $1.4 million tax credit for the 2017 Senior Cycle. See N.J.A.C. 5:80-
33.5. Fourteen competitors applied for tax credits; Allenwood's proposal was
one of seven to self-score the maximum of ninety points.
However, Allenwood omitted from its application the property's recorded
deed. The HMFA permitted Allenwood to cure the deficiency within forty-eight
hours, but advised that a failure to do so "may result in a reduced point score
and/or disqualification of the application." The following day, Allenwood
submitted the deed via email to the HFMA.
During its August 24, 2017 meeting, the TCC deemed Allenwood's
proposal "ineligible, due to financial infeasibility[,]" and further noted the
project was deducted one point for failing to include the deed with its
application. As a result, Allenwood scored eighty-nine points, whereas the four
A-2493-17T1 5 projects that received LIHTC awards each scored the maximum ninety points.
Accordingly, the TCC denied Allenwood's application.
Thereafter, Allenwood requested reconsideration of the TCC's decision.
See N.J.A.C. 5:80-33.22(c). In particular, Allenwood argued it demonstrated
"site control" for its project because it had previously submitted an American
Land Title Association (ALTA) survey with its loan application and, as such,
the HMFA had an "equivalent" of Allenwood's deed "on file." Allenwood
claimed "a [one-]point deduction for a hyper[-]technical provision where the
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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2493-17T1
IN THE MATTER OF THE APPLICATION OF ALLENWOOD TERRACE APARTMENTS, LP FOR NINE PERCENT LOW-INCOME HOUSING TAX CREDITS FROM THE 2017 SENIOR CYCLE.
Submitted February 25, 2019 – Decided March 20, 2019
Before Judges Messano and Rose.
On appeal from the New Jersey Housing and Mortgage Finance Agency, LIHTC Application No. 2017-B.
Day Pitney, LLP, attorneys for appellant Allenwood Terrace Apartments, LP (Sarah Sakson Langstedt and Craig M. Gianetti, of counsel and on the briefs).
Gurbir S. Grewal, Attorney General, attorney for respondent New Jersey Housing and Mortgage Finance Agency (Melissa H. Raksa, Assistant Attorney General, of counsel; Jeet M. Gulati, Deputy Attorney General, on the brief).
PER CURIAM Allenwood Terrace Apartments, LP (Allenwood) appeals from a
December 19, 2017 final agency decision of the New Jersey Housing and
Mortgage Finance Agency's (HMFA) Tax Credit Committee (TCC), denying its
application for Federal low-income housing tax credits (LIHTC) for its senior
affordable housing project in Wall Township. Allenwood argues the TCC's
decision was arbitrary, capricious, and unreasonable primarily because
Allenwood's "clerical" errors were "easily corrected" and disqualification was
"grossly disproportionate to the minimal harm."
We reject Allenwood's contentions and affirm substantially for the reasons
set forth in the TCC's comprehensive and well-reasoned written decision, which
"is supported by sufficient credible evidence on the record as a whole." R. 2:11-
3(e)(1)(D). We add the following comments to give context to the TCC's
decision.
Our review of agency determinations is limited. In re Stallworth, 208 N.J.
182, 194 (2011). Indeed, "[i]n administrative law, the overarching informative
principle guiding appellate review requires that courts defer to the specialized
or technical expertise of the agency charged with administration of a regulatory
system." In re Virtua-West Jersey Hosp. Voorhees for a Certificate of Need,
194 N.J. 413, 422 (2008). "Consistency with that principle demands that an
A-2493-17T1 2 appellate court . . . should not disturb an administrative agency's determinations
or findings unless there is a clear showing that (1) the agency did not follow the
law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the
decision was not supported by substantial evidence." Ibid. Further, we defer to
"[a]n administrative agency's interpretation of statutes and regulations within its
implementing and enforcing responsibility. . . ." Wnuck v. N.J. Div. of Motor
Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (alteration in original)
(citation omitted).
New Jersey's Fair Housing Act, N.J.S.A. 52:27D-301 to -329.9, charges
the HMFA with the responsibility of establishing "affordable housing programs
to assist municipalities in meeting the obligation . . . to provide low and
moderate income housing." N.J.S.A. 52:27D-321. As part of that responsibility,
the HMFA administers the Federal government's low-income housing credit
program, 26 U.S.C. § 42, which "provides an incentive for the construction and
rehabilitation of low[-]income rental housing by lowering its overall cost
through the use of tax credits to developers and owners of qualified rental
projects." In re Adoption of 2003 Low Income Hous. Tax Credit Qualified
Allocation Plan, 369 N.J. Super. 2, 11 (App. Div. 2004).
A-2493-17T1 3 The Federal regulations require the HMFA to adopt a "qualified allocation
plan" (QAP). 26 U.S.C. § 42(m)(1)(A). Accordingly, each year the HMFA
establishes a QAP that includes funding cycles and the amount of credits
available in each cycle. See N.J.A.C. 5:80-33.1 to -33.38. The application
process commences with a self-implemented scoring system, requiring each
applicant to complete a self-score sheet with the application. N.J.A.C. 5:80-
33.14. Based on those self-determined rankings, the HMFA then examines the
applications of the projects "that rank sufficiently high to receive credits."
N.J.A.C. 5:80-33.14.
Generally, an LIHTC applicant bears the burden of ensuring its
application is "clear, unambiguous, and complete in all respects at the time of
submission." N.J.A.C. 5:80-33.11(b). Further, the regulations explicitly
mandate the applicant's responsibilities when seeking an LIHTC award:
The applicant assumes the full burden of disclosing with certainty in its application how it shall obtain and maintain site control. The application shall set forth with specificity by what means each parcel of the project's real property is to be acquired if such acquisition has not yet been perfected; applications shall not indicate alternate means of acquisition for any particular parcel. For all forms of site control, a copy of the current owner's recorded deed (or equivalent) shall be submitted as supporting documentation.
[N.J.A.C. 5:80-33.12(c)(2)(ii) (emphasis added).]
A-2493-17T1 4 Defects in an application may be cured within forty-eight hours of
submission. N.J.A.C. 5:80-33.11(c)(1). However, "[a]pplicants that utilize the
cure period in N.J.A.C. 5:80-33.11(c)(1) . . . shall have one point per each defect
cured deducted from the application's score." N.J.A.C. 5:80-33.15(a)(22)
(emphasis added).
On April 27, 2017, Allenwood submitted its application to the HMFA,
seeking a $1.4 million tax credit for the 2017 Senior Cycle. See N.J.A.C. 5:80-
33.5. Fourteen competitors applied for tax credits; Allenwood's proposal was
one of seven to self-score the maximum of ninety points.
However, Allenwood omitted from its application the property's recorded
deed. The HMFA permitted Allenwood to cure the deficiency within forty-eight
hours, but advised that a failure to do so "may result in a reduced point score
and/or disqualification of the application." The following day, Allenwood
submitted the deed via email to the HFMA.
During its August 24, 2017 meeting, the TCC deemed Allenwood's
proposal "ineligible, due to financial infeasibility[,]" and further noted the
project was deducted one point for failing to include the deed with its
application. As a result, Allenwood scored eighty-nine points, whereas the four
A-2493-17T1 5 projects that received LIHTC awards each scored the maximum ninety points.
Accordingly, the TCC denied Allenwood's application.
Thereafter, Allenwood requested reconsideration of the TCC's decision.
See N.J.A.C. 5:80-33.22(c). In particular, Allenwood argued it demonstrated
"site control" for its project because it had previously submitted an American
Land Title Association (ALTA) survey with its loan application and, as such,
the HMFA had an "equivalent" of Allenwood's deed "on file." Allenwood
claimed "a [one-]point deduction for a hyper[-]technical provision where the
HMFA had 'the equivalent' information was not warranted." Secondly, while
Allenwood acknowledged its "53.8% of the total tax credit developer fee was
listed as deferred[,]" it argued that deficiency was a "minor discrepancy in the
application."
During its December 14, 2017 meeting, the TCC evaluated Allenwood's
request for reconsideration, and affirmed its prior determination. In a twelve -
page written decision, the TCC surveyed the applicable law and explained its
findings. Regarding Allenwood's late-furnished deed, the TCC found:
There can be no doubt that N.J.A.C. 5:80- 33.12(c)(2)(ii) requires that a copy of the recorded deed, or its equivalent, be included in a project's [LIHTC] application. The recorded deed was not provided by [Allenwood] until after notification of the deficiency by [a]gency staff, thereby invoking the
A-2493-17T1 6 mandatory one-point deduction pursuant to N.J.A.C. 5:80-33.11(e).
....
We reject [Allenwood's] attempt to shoehorn its inclusion of an ALTA survey in a different (non-tax- credit) application submitted to a separate division of the [a]gency into satisfaction of its obligation to provide a copy of the recorded deed (or equivalent) in the tax credit application itself. . . . [I]t is not staff's responsibility to search for information, especially where, as here, the QAP directs that a specific document be included in the tax credit application . . . .
[(Emphasis omitted).]
As to its determination of financial infeasibility, the TCC acknowledged
Allenwood's concession that it proposed to defer 53.8% of the developer fee,
which is greater than the 50% cap set forth in N.J.A.C. 5:80-33.12(c)(6)(v). In
light of that concession, the TCC determined it was "not at liberty to 'interpret
away the plain meaning' of the rule by looking – as [Allenwood] would have [it]
do – to other indicia to determine whether or not the [p]roject is financially
infeasible; it is so because the plain language of the rule says it is." This appeal
followed.
On appeal, Allenwood renews the arguments it raised before the TCC. In
essence, Allenwood concedes its application was defective, but nonetheless
A-2493-17T1 7 contends the penalties imposed by the HMFA constituted an inflexible
adherence to its regulations. We disagree.
To the contrary, the HMFA acted precisely in accordance with its
regulations. See In re CAFRA Permit No. 87-0959-5 Issued to Gateway
Assocs., 152 N.J. 287, 308 (1997) ("[A]n administrative agency should follow
its own rules and regulations."). Those regulations ensure fairness among
applicants in a high-volume application process. See N.J.A.C. 5:80-33.14(a);
see also In re Tax Credit Application of Pennrose Props., Inc., 346 N.J. Super.
479, 485 (App. Div. 2002) (recognizing "[t]he program is popular and desirable
for developers of low[-]income housing and there is competition for the limited
number of awards available").
Nor do we find any merit to Allenwood's newly-minted argument that it
submitted the "equivalent" of a recorded deed by attaching a copy of its purchase
contract to the application. It is axiomatic that a purchase agreement for real
property governs the parties' agreed-to conditions prior to the transfer of title,
whereas a duly recorded deed evidences ownership of property after title has
been transferred. See N.J.S.A. 46:26A-1 to -12. Because a purchase agreement
does not evidence title to real property, it cannot be construed as the equivalent
A-2493-17T1 8 of a deed and, as such, does not satisfy the requirements of N.J.A.C. 5:80-
33.12(c)(2)(ii).
Because Allenwood failed to ensure its application was "clear,
unambiguous and complete in all respects at the time of submission[,]" N.J.A.C.
5:80-33.11(b), the TCC reasonably denied LIHTC for Allenwood's Wall
Township project. We therefore find the TCC's decision was not arbitrary,
capricious, or unreasonable on the record presented.
To the extent not otherwise addressed, petitioner's remaining arguments
lack sufficient merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Affirmed.
A-2493-17T1 9