Still clutching a subtly racist flyer someone spread through the upper east side neighborhood, neighbors of a proposed affordable housing development raised their objections at a City Council meeting last week, saying they were never notified of the project and feared its impact on their quality of life in an area city planners claim has become blighted over the last decade.
The 47-unit facility is proposed for Avenue E and East 45th Street.
While many residents raised serious concerns about the impact on parking it might have on streets where parking is already a problem, the most serious question involved money: how much the city was getting from the development of the land in tax revenues, and whether the moderate rents offered by the facility would steal away renters from existing two-family houses in that neighborhood, which currently go for market rate rents.
“When are going to stop giving away the store and say, we can’t afford this?” — Brian A. Gajewski
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While the flyer provided mostly inaccurate information, the project – which won approval of the Bayonne Planning Board last February – would provide a mix of affordable and market rate rental units, as well as retail space, at a property at 732 Avenue E near 45th Street.
Riled by the flyer, angry residents flooded into the council chambers to confront City Council members at the regular meeting on May 18. They demanded to know if the city was allowing the construction of a low-income housing project.
“We are not building low-income housing for those who don’t appreciate or can’t afford to pay the rent,” said Larry Regan, president of Regan Development, the company that will oversee construction and will manage the apartment complex.
Prior to the meeting, Regan told the Bayonne Community News that his company has been involved in several other projects in Bayonne, including the conversion of the former Maidenform building – a historic landmark – into senior housing.
“We still own and manage that building,” he said. “We’ve been there 10 years and they are a nice group of people who live there.”
The company also was responsible for renovations to the former YMCA on East 22nd Street.
“This is our third development in Bayonne,” he said.
This property is part of the city’s scattered site redevelopment, and a site that was previously approved by the Planning Board in 2008 for a similar project that would have constructed luxury condominiums there.
The site is one of the series of properties along Avenue E near the New Jersey Turnpike exit that the city is seeking to have upgraded. Two properties adjacent to this site are part of a proposed park expansion.
Because of its location near the light rail station, John Fusa, the city planner, said it is ideal for transit oriented development, which would provide affordable rentals to people who work nearby.
Regan said he originally proposed to have all affordable level rentals, which would be geared towards working people earning from between $20,000 to about $60,000 a year.
City officials, however, convinced him to offer some market-rate rentals as well as provide six units to accommodate veterans at a lower rate.
Six units will be set aside for residents whose family includes someone suffering from multiple sclerosis. These units will be rented with the assistance of UCP of Hudson County, a group Regan’s company has partnered with before. The building would also have a small retail store and first floor off-street parking with one spot for each of the rental units.
A sweetheart deal?
The deal will require a 30-year tax abatement, as well as the use of $3.2 million from the city’s Affordable Housing Fund. An abatement agreement usually requires developers to pay an annual amount to the city in lieu of regular property taxes.
The problem for some of the residents was the fact that the city would receive only $8,000 to $10,000 more in revenues the first year more than the existing taxes on the vacant lot.
The lot currently generates about $20,000 in overall taxes that include city, county, and school taxes. Under the PILOT (payment in lieu of taxes) agreement, the affordable housing portion of the site would receive $23,000 the first year. The store portion would not be abated and would generate $5,000 to $7,000 in taxes to the city.
Without the abatement, the city estimates the development would generate more than $100,000 in property taxes each year. But Regan said this is based on the original condo development proposal. Unabated rental properties, he said, would generate about $60,000 in taxes. The abated development will generate about half the taxes, he said, but would see an annual increase of 3 percent towards the rental units until the PILOT ends, at which point the property will pay full taxes again.
But Brian A. Gajewski, who lives within two blocks of the proposed project, called it a “sweetheart deal” for the developer that the city cannot afford, and said that the benefits of the project will not make up for the hardship in parking and other possible problems.
“When are we going to stop giving away the store and say we can’t afford this?” he asked.
City Council President Terrence Ruane said that the economy has stopped development, and that the city is offering these incentives in order to help draw other development into the area.
Regan said his firm is putting in about $300,000 of its own capital into the project, as well as declining other financial options that it would be entitled to in order to meet the state requirements for the financing.
Business Administrator Steve Gallo said that banks are not loaning money, so financing for projects has to be done through programs such as the one the state is offering.
Hard costs for construction of this development are estimated at about $9 million, Regan said, although other costs will likely make that figure higher. The construction would make use of union labor, including subcontractors. While financing is being done through a state program connected to the transportation hub, the development would make use of $3.2 million from Bayonne’s Affordable Housing Trust Fund – money that the state requires new development to set aside towards development of affordable housing in Bayonne.
Unfortunately, the use of the money has a time limit, and the city needs to use the money by the end of this year or have it confiscated by the state.
“We have to use this money or lose it,” said Joe Waks, director of municipal services.
Gallo said the $3.1 million is not taxpayers’ funding, but from the Affordable Housing Trust Fund, a fund that the state requires developers to contribute to as part of the state’s affordable housing laws – or they must renovate existing housing.
By the end of this year, the state – under a proposal by Gov. Christopher Christie – plans to take those funds that have not been used for affordable housing.
Gallo said this kind of project is the only thing the funds can be used for, and this project is one of three residential projects the city hopes to get jump started this year. The city is working with the developer of the Avenue E Maidenform building to get it on track for residential development, as well as the previously stalled Waterford development in the Bergen Point section of the city.
Crime, litter, and other objections
Many raucous residents jeered the council at intervals, some even shouting out “liar” when city officials attempted to make their case, especially about the tax abatement. Some said they would prefer to have the property remain a vacant lot rather than generate possible parking and other problems.
Some residents were unconvinced by the argument that it will not be a low-income housing project, and others said the light rail station has caused problems with litter and crime.
Margaret Torres said litter is a huge problem in the area, and that she and others have complained about it and it still continues to be a problem.
Police Chief Robert Kubert admitted that there was a spike in crime when the station first opened about 10 years ago, but that by putting patrols on the trains and continued monitoring, the crime rate has dropped significantly.
Washington Flores asked about the retail store and pointed out that the area already has four convenience stores that might be negatively affected by the project.
Former Councilman Gary La Pelusa, who sat on the Planning Board when the project was first proposed as a condo development, said he voted against it back then.
“I thought it was too large for the neighborhood and even though you tell me this is less high, I still think it’s too large,” he said.
Fusa, however, said the city’s Master Plan – created in 2000 – envisioned this kind of construction near the rail stations.
Competition with two-family home rentals?
Underlying the criticism is another economic situation. Many of the two-family houses in the area offer rentals at significantly higher rates than this project would charge – partly because of the nearby access to the light rail. Some fear that affordable apartments might lure their tenants away when many of these homeowners use the rent from their tenants to subsidize their mortgages.
Rents in the new facility would run from $500 to $900 based on a renter’s income. A number of residents held up copies of the Bayonne Community News saying that there are already more than 70 market-rate rentals advertised.
“This is an unrealistic fear,” Gallo said during a later interview. “The people who are renting from those homes at $1,500 to $1,900 are not going to meet the income requirements for this development. These units are going to be filled up quickly, and then everything will be back to the way it is now.”