Jones Lang LaSalle
CITY OF NEWARK IS FIRST MUNICIPALITY TO USE INNOVATIVE LAW TO SPUR REDEVELOPMENT IN CENTRAL BUSINESS DISTRICT
NEWARK, N.J. (January 19, 2006) - The redevelopment of a 37-story former office building in downtown Newark that will result in the city's first market-rate apartments in 40 years is being made possible with bonds issued by the New Jersey Economic Development Authority (EDA) and the first-time implementation of a new creative financing vehicle designed to help municipalities attract new development and ratables into their communities.
The property, known as "Eleven80" because of its 1180 Raymond Blvd. address, is being redeveloped into 317 luxury high-rise rental residences that will offer more than 30 distinctive floor plans, including studios, one-bedroom units with dens, and two-bedroom apartments with private terraces. It will also include a ground-floor retail component. The project is expected to be the impetus for continued revitalization of the city's central business district.
The EDA is the conduit issuer of $7.9 million in bonds, which are part of a complex financing package being used by Cogswell Realty Group to renovate the now vacant building in the heart of Newark's central business district. The 30-year, taxable bonds, purchased directly by MMA Financial, LLC, recently closed at a fixed interest rate of 6.50 percent.
The city and the developer are taking advantage of the Redevelopment Area Bond Financing Law (RAB), which was enacted in 2002 with the strong support of the New Jersey State League of Municipalities and the EDA, said Authority Chief Executive Officer Caren S. Franzini.
"The law provides municipalities with a mechanism for financing the up-front costs associated with local redevelopment projects in designated redevelopment areas, like infrastructure improvements, and land acquisition and demolition costs," she said. "It's a great new tool for the economic development toolbox that is likely to be used more as the concept becomes more widely known."
Since 1974, the EDA has provided $1.68 billion in financing assistance to 477 projects in Newark, creating an estimated 17,000 new jobs and 24,000 construction opportunities that have supported $2.2 billion in total public/private investments, Franzini noted. "Our financing assistance to projects in the City of Newark represents approximately 10 percent of the funding that the EDA has provided to support projects throughout the entire state," she said, "but this is the first RAB financing that we have completed in Newark or anywhere else in the state."
The RAB financing law amended the Long-Term Tax Exemption Law (N.J.S.A. 40A:20-1) to allow PILOTs (payments in lieu of taxes) to be structured to match debt service on the bonds. Thus, the developer makes PILOT payments to the city on the value of improvements to the property, enabled by a tax abatement on the property for those improvements. The city then passes along the payments to a trustee, which uses these PILOTs to make the debt-service payments on the bonds.
The city approved its redevelopment plan under the Local Redevelopment Housing Law in November 1998 and later designated 1180 Astro Urban Renewal Investors, an urban renewal entity and wholly owned affiliate of Cogswell Realty Group, which has developed other Newark sites. The Local Financing Board approved the project in July 2005.
Other financing sources contributing to the $108-million project are Bank of America, the Federal National Mortgage Association ("Fannie Mae"), the Prudential Insurance Company of America, the New Jersey Housing Mortgage Finance Agency, the Amelior Foundation and owner equity.
"This was an extremely complex business transaction and the EDA was able to understand this complexity," said Cogswell Realty Group Chief Executive Officer Arthur Stern. "This has truly been a pioneering effort by all of the parties involved in the financing of this project."
With more than 100,000 people commuting into the city each day to work and another 45,000 people connected with nearby educational institutions, Cogswell Realty believes there is a strong market potential for housing in downtown Newark, Stern said. When Cogswell Realty purchased the building it determined that it was no longer suitable for the modern office user, but perfect for residential purposes. And Newark was desperate for housing within its central business district.
Stern said the project is a natural progression from the New Jersey Performing Arts Center, which the EDA helped finance and develop and which set the city's revitalization efforts in motion in the late 1990s. Newark Business Administrator Richard Monteilh agrees.
"This is the first of several new redevelopment efforts we are working on that are critical to repopulating the downtown district," Monteilh said. "The project is already beginning to spawn increasing interest in Newark's downtown from other developers."
The structure at 1180 Raymond Blvd. across from Military Park was built in 1930 and designed in an art deco style. It was originally constructed as a commercial office building and was used by a number of prominent New Jersey law firms until becoming vacant in the 1990s.
The new design incorporates a variety of apartment types, upscale finishes and an array of amenities, Stern said. The units will be affordably priced with rents ranging from $1,175 per month for a studio to $2,300 for a two-bedroom apartment, Stern said.
Living unit features will include individual washers and dryers, walk-in closets and granite finishes. Other features of the building will include a health club, a business center and lounge, a four-lane bowling alley and a media center. The lobby will be fully restored to its original condition. Security will be provided and there will be a valet parking service.
Ground floor retail establishments may include a bookstore, a deli/grocery, a restaurant and a drug store.
The EDA is an independent, self-sustaining state financing and development agency that works to promote economic growth, job creation and the revitalization of New Jersey's communities with financing assistance, technical support and entrepreneurial training, and real estate development activities.
CITY OF NEWARK IS FIRST MUNICIPALITY TO USE INNOVATIVE LAW TO SPUR REDEVELOPMENT IN CENTRAL BUSINESS DISTRICT
NEWARK, N.J. (January 19, 2006) - The redevelopment of a 37-story former office building in downtown Newark that will result in the city's first market-rate apartments in 40 years is being made possible with bonds issued by the New Jersey Economic Development Authority (EDA) and the first-time implementation of a new creative financing vehicle designed to help municipalities attract new development and ratables into their communities.
The property, known as "Eleven80" because of its 1180 Raymond Blvd. address, is being redeveloped into 317 luxury high-rise rental residences that will offer more than 30 distinctive floor plans, including studios, one-bedroom units with dens, and two-bedroom apartments with private terraces. It will also include a ground-floor retail component. The project is expected to be the impetus for continued revitalization of the city's central business district.
The EDA is the conduit issuer of $7.9 million in bonds, which are part of a complex financing package being used by Cogswell Realty Group to renovate the now vacant building in the heart of Newark's central business district. The 30-year, taxable bonds, purchased directly by MMA Financial, LLC, recently closed at a fixed interest rate of 6.50 percent.
The city and the developer are taking advantage of the Redevelopment Area Bond Financing Law (RAB), which was enacted in 2002 with the strong support of the New Jersey State League of Municipalities and the EDA, said Authority Chief Executive Officer Caren S. Franzini.
"The law provides municipalities with a mechanism for financing the up-front costs associated with local redevelopment projects in designated redevelopment areas, like infrastructure improvements, and land acquisition and demolition costs," she said. "It's a great new tool for the economic development toolbox that is likely to be used more as the concept becomes more widely known."
Since 1974, the EDA has provided $1.68 billion in financing assistance to 477 projects in Newark, creating an estimated 17,000 new jobs and 24,000 construction opportunities that have supported $2.2 billion in total public/private investments, Franzini noted. "Our financing assistance to projects in the City of Newark represents approximately 10 percent of the funding that the EDA has provided to support projects throughout the entire state," she said, "but this is the first RAB financing that we have completed in Newark or anywhere else in the state."
The RAB financing law amended the Long-Term Tax Exemption Law (N.J.S.A. 40A:20-1) to allow PILOTs (payments in lieu of taxes) to be structured to match debt service on the bonds. Thus, the developer makes PILOT payments to the city on the value of improvements to the property, enabled by a tax abatement on the property for those improvements. The city then passes along the payments to a trustee, which uses these PILOTs to make the debt-service payments on the bonds.
The city approved its redevelopment plan under the Local Redevelopment Housing Law in November 1998 and later designated 1180 Astro Urban Renewal Investors, an urban renewal entity and wholly owned affiliate of Cogswell Realty Group, which has developed other Newark sites. The Local Financing Board approved the project in July 2005.
Other financing sources contributing to the $108-million project are Bank of America, the Federal National Mortgage Association ("Fannie Mae"), the Prudential Insurance Company of America, the New Jersey Housing Mortgage Finance Agency, the Amelior Foundation and owner equity.
"This was an extremely complex business transaction and the EDA was able to understand this complexity," said Cogswell Realty Group Chief Executive Officer Arthur Stern. "This has truly been a pioneering effort by all of the parties involved in the financing of this project."
With more than 100,000 people commuting into the city each day to work and another 45,000 people connected with nearby educational institutions, Cogswell Realty believes there is a strong market potential for housing in downtown Newark, Stern said. When Cogswell Realty purchased the building it determined that it was no longer suitable for the modern office user, but perfect for residential purposes. And Newark was desperate for housing within its central business district.
Stern said the project is a natural progression from the New Jersey Performing Arts Center, which the EDA helped finance and develop and which set the city's revitalization efforts in motion in the late 1990s. Newark Business Administrator Richard Monteilh agrees.
"This is the first of several new redevelopment efforts we are working on that are critical to repopulating the downtown district," Monteilh said. "The project is already beginning to spawn increasing interest in Newark's downtown from other developers."
The structure at 1180 Raymond Blvd. across from Military Park was built in 1930 and designed in an art deco style. It was originally constructed as a commercial office building and was used by a number of prominent New Jersey law firms until becoming vacant in the 1990s.
The new design incorporates a variety of apartment types, upscale finishes and an array of amenities, Stern said. The units will be affordably priced with rents ranging from $1,175 per month for a studio to $2,300 for a two-bedroom apartment, Stern said.
Living unit features will include individual washers and dryers, walk-in closets and granite finishes. Other features of the building will include a health club, a business center and lounge, a four-lane bowling alley and a media center. The lobby will be fully restored to its original condition. Security will be provided and there will be a valet parking service.
Ground floor retail establishments may include a bookstore, a deli/grocery, a restaurant and a drug store.
The EDA is an independent, self-sustaining state financing and development agency that works to promote economic growth, job creation and the revitalization of New Jersey's communities with financing assistance, technical support and entrepreneurial training, and real estate development activities.
posted by Jones Lang LaSalle NJ News Blog at 10:03 AM
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