A plan by 260 Washington St Urban Renewal LLC, which was approved for up to $49.8 million in Aspire tax credits, calls for building 207 apartments and 4,000 square feet of ground-floor retail space at 260-272 Washington St. in Newark. — Courtesy: The Hanini Group/Shift Capital
By Joshua Burd
The state has lent its support to three projects that will create or renovate a combined 728 apartments in Newark, Camden and Morristown — most of them for lower-income renters — after awarding nearly $121 million in tax credits under a new gap financing program.
The subsidies, which were approved Wednesday by the Economic Development Authority, include up to $49.8 million for a planned 23-story tower at 260-272 Washington St. in Newark. Plans by The Hanini Group LLC and Shift Capital call for 207 apartments, 67 of which will be affordable, plus 4,000 square feet of ground-floor retail space to help transform a site that is two blocks west of Broad Street.
Meantime, the EDA approved up to $46.5 million in tax credits to co-applicants Hudson Valley Property Group and Hearthstone Housing Foundation, which plan to embark on a massive update of a 321-unit tower in Camden. In Morristown, a garden-style apartment complex built in the 1940s will be rehabilitated with the help of up to $24.6 million in tax credits.
The authority’s board voted to support all three projects through the Aspire program, which was created under the New Jersey Economic Recovery Act of 2020 — signed by Gov. Phil Murphy in January 2021 — providing gap financing for mixed-use, transit-oriented projects. The proposals represent a combined $338 million in investment in the three municipalities.
“The three projects approved today embody the values on which the Aspire program is based and will help to advance the ERA’s goal of a stronger, fairer economy by encouraging investment in communities that have long been overlooked,” Murphy said in a prepared statement. “High-quality housing for New Jersey families is in high demand, and it’s exciting to see transit-oriented development and affordable housing prioritized.”
According to the EDA, the developers behind the Newark project will demolish the site’s existing buildings but will retain the historic façade at 260-266 Washington St. The firms received both preliminary and final site plan approval prior to their application and are slated to begin demolition in the coming weeks, with construction to follow in late summer.
The tax credit award for what will be known as The Metropolitan equates to 45 percent of eligible project costs of $110.7 million, the EDA said. Chris Murphy of Murphy Schiller & Wilkes LLP represented the joint venture as tax credit counsel in connection with the Aspire application and award.
“The Aspire program, along with support from the city and state, allows us to lean into our mission to create spaces, like The Metropolitan, that contribute to the downtown fabric and better serve the community by providing critical affordable housing in the core of the city,” said Samer Hanini, managing partner of Hanini Group, on behalf of The Metropolitan partners, Hanini Group and SHIFT Capital. “This support helps us create the next chapter for The Metropolitan, as we look to blend the building’s history with its future development.”
The Camden property at 433 North 7th St. is a fully occupied, 21-story high-rise built in the 1960s and requiring major updates “on account of both the building’s age and deferred maintenance on account of previous owners,” the EDA said. Hudson Valley Property Group and Hearthstone Housing Foundation are now slated to proceed with the $103.5 million rehab of what’s known as Northgate I Apartments, including significant upgrades to each unit, common areas and the grounds that will enhance the building while also preserving the long-term affordability for residents.
Hudson Valley Property Group is a Manhattan-based developer focused on affordable housing, while Hearthstone is an affiliate of the nonprofit Hearthstone Housing Foundation. The authority noted that the partnership also plans to complete remediation to address environmental conditions, including lead-based paint, lead in water, perchloroethylene in groundwater, underground storage tanks, asbestos and water intrusions.
The Morristown property, Manahan Village, is now in line for an overhaul by an affiliate of Englewood Cliffs-based Orbach Affordable Housing Solutions LLC, which will rehab and preserve the affordability of 200 existing units at 33 Clyde Potts Drive and 6-10, 14 and 9-21 Flagler St., the EDA said. The Morristown Housing Authority currently owns the site but has executed a $20 million ground lease with Orbach, which was approved for the tax credit alongside the Morristown Community Development Corp.
Orbach has told state officials it will renovate individual units while updating exterior and common spaces for the three-story buildings. It also plans to add handicapped parking spaces and additional curb cuts above the ADA requirements, while planting additional shade trees and renovating the community room and management office, with completion slated for late 2024 or early 2025.
“The new Aspire program is catalyzing a series of mixed-use, transit-oriented, mixed-income and affordable housing projects that advance important economic and social goals established by Governor Murphy,” said Tim Sullivan, the authority’s CEO. “The governor set forth his strategy focused on attracting investments to underserved communities and revitalizing our urban centers and places served by transit early in his administration, and it’s exciting to see these thoughtful development projects unfolding in places where they will matter most for local residents.”
The EDA began accepting applications last year and issued its first Aspire award in February, while the projects in Camden, Newark and Morristown are the first residential developments approved under the program. The authority on Thursday noted that more than 80 percent of the 728 units that will be supported by the approvals are designated as affordable and target households making 60 percent or less of the area median income.
The EDA added that the amount of Aspire tax credits a project is eligible to receive is a percentage of the project’s eligible costs, subject to a cap that is determined by location, other financing available and other aspects of the proposal. Most projects are eligible for tax credits up to $42 million, but projects that meet specific criteria may receive tax credits up to $60 million, while those that meet certain parameters can qualify as “transformative projects,” which may receive tax credits up to $350 million.
To be eligible for Aspire program tax credits, a project must be located in an area designated by the ERA legislation and meet minimum size and cost thresholds, the authority said. Program rules also include requirements to ensure that communities where projects are located participate in and benefit from the economic growth the project generates, among other requirements.
