A rendering of the upgraded façade at Zion Towers, a 268-uniy property at 515 Elizabeth Ave. in Newark — Courtesy: Inglese Architecture + Engineering
By Joshua Burd
L+M Development Partners and Prudential Financial have secured financing to preserve and renovate a government-subsidized housing complex in Newark’s South Ward.
The developers announced Tuesday that they had closed on a package of loans and other funding sources for Zion Towers, a 268-unit property at 515 Elizabeth Ave., following an agreement to extend the complex’s Section 8 contract by 11 years. The pact with the Department of Community Affairs brings the contract to 20 years, paving the way for the developers to launch $20 million in upgrades to the apartments and common areas.
The repairs to the “severely neglected building” will begin immediately, stakeholders said.
“This preservation project will substantially update the safety and quality of Zion Towers while ensuring affordable housing opportunities for families and residents with special needs for the long term,” said Charles A. Richman, executive director of the New Jersey Housing and Mortgage Financing Agency. “The building rehabilitation will be transformative for residents and will significantly improve their quality of life as well as the overall vitality of the South Ward neighborhood.”
In a news release Tuesday, L+M and Prudential noted that the DCA nearly terminated the Section 8 contract entirely before the joint venture acquired Zion Towers in late 2017 and began to rehabilitate to the property. Refinancing for the repairs is provided by several sources:
- Loans from the HMFA and Citi Community Capital
- The award of 4 percent Low Income Housing Tax Credits from the HMFA and tax credit equity from Wells Fargo Bank NA
- Subsidy loans from HMFA through the Sandy Special Needs Housing Fund and Money Follows the Person Housing Partnership Program, as well as from Citi Community Capital
- A payment in lieu of taxes agreement with the city of Newark
Zion Towers is also under an HMFA regulatory agreement guaranteeing affordability for the next 30 years, the news release said.
“Keeping housing affordable for Newark residents through preservation, new construction and rent limitations is one of the most important priorities of my administration,” Mayor Ras J. Baraka said. “The rehabilitation of Zion Towers by L+M and Prudential is a significant step toward that goal as is their partnership to preserve and modernize Georgia King Village. L+M and Prudential continue to demonstrate their dedication to equitable growth in Newark.”
L+M and Prudential, two of the partners behind the high-profile Hahne & Co. and Walker House projects in downtown Newark, have also focused on projects in the outer wards. The partners in 2016 acquired and preserved the Georgia King Village complex, investing $39.5 million in apartment renovations, building-wide system upgrades and improvements to the exterior and common spaces.
The project also received financing from HMFA, helping ensure that all 422 units remain affordable to individuals or families earning no more than 60 percent of the area median income.
“Our work in the outer wards is focused not just on revitalizing distressed properties but also ensuring that those living there can stay there,” said Jeffrey Moelis, managing director, preservation at L+M. “Just as it’s been at Georgia King Village, the key to a successful turnaround at Zion Towers will be continuing the open communication and close working relationship with our residents as essential repairs continue.”
All told, L+M has preserved 8,300 affordable units over the past 9 years, with development costs totaling $2.4 billion and a host of projects in New York City.
The $20 million renovation at Zion Towers will provide every apartment with new a kitchen and bathrooms, L+M said, along with renovations to common areas and the building structure. The firm will also overhaul the heating and air conditioning system.
To date, the team has repaired and replaced hot water boilers, repaired showers to eliminate building-wide leaks and installed a new security camera system. The complex was in need of immediate repairs when L+M and Prudential spent more than $7 million to acquire the property, prompting them to perform immediate capital improvements.
The companies have also partnered with Collaborative Support Programs of New Jersey to provide supportive services and outreach for 12 one-bedroom units that are targeted for mental health special needs residents, the news release said. These apartments are funded by the Sandy loan.