The City Council has moved to preserve affordable housing in one of the city’s longstanding affordable housing buildings, for now. With a sunset provision deadline looming on March 26, the City Council voted unanimously on March 18 to extend its 40-year-old tax abatement agreement with the owners of Clock Tower Apartments for three more months while city lawyers investigate the legal status of the building’s federal vouchers and determine a way to keep some of the units affordable.
Located at 300 Adams St., Clock Towers was a factory producing slide rules, telescopic sights, and other precision instruments for six decades before it was converted into 173 units of low- and moderate-income housing in the mid-1970s. Today, 68 units remain subsidized through project-based Section 8 vouchers, which are tied to the apartment rather than the tenant.
Although the state law under which the units were created has expired, Hoboken has the option of continuing its abatement deal for another 10 years, which would allow the owners to pay a set amount and avoid regular fluctuating property taxes. In a March 13 memo to the City Council, Mayor Dawn Zimmer billed the extension as a chance to increase the number of affordable units in Clock Towers through a new U.S. Department of Housing and Urban Development (HUD) voucher program that has yet to be unveiled.
However, attorney Erin Law of McManimon Scotland & Baumann, the city’s redevelopment special counsel, told the City Council on March 18 that the extension was necessary to determine if Clock Towers could still legally qualify for a tax abatement at all.
“I believe there’s a significant amount of due diligence required.” – Erin Law
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With Church Towers in 2009 and Clock Towers now, there was much confusion among city officials about whether the abatements were necessary and what would happen to the affordable housing now that some of the provisions of older programs have expired.
The temporary extension for Clock Towers was amended from six months to three months to avoid a vote on the long-term extension in mid-September, at the height of the City Council election campaign.
“This is not an issue that should become an election issue,” said Councilman Tim Occhipinti. “I don’t think it’s fair to those residents that this building be put through something like that.”
Fuzzy facts
If nothing else, Law’s testimony revealed just how little the city knows about crucial pieces of affordable housing infrastructure like Clock Towers.
In response to questions from council members, Law could not specify how many of the units in Clock Towers had historically been affordable, whether municipal rent control ordinances applied to the building, or if the HUD-subsidized units would become market rate if the tax deal ended.
The issue is a longstanding one. In the 1960s and 1970s, many low-income and affordable units were built in Hoboken, some (like the Housing Authority projects) with federal subsidies, others whose owners were given a low-interest government loan to make the building affordable. Some of those latter units didn’t receive subsidies, but their owners were required to keep the rents low for a certain period of time by law.
“I believe there’s a significant amount of due diligence [to figure out the next steps],” said Law.
According to Law, that due diligence would include an investigation of the current incomes of the residents. Subsidized buildings like Clock Towers have been criticized in some Hoboken political circles for allowing individuals with high socioeconomic status to occupy below market rate units. Many of these residents met the income requirements decades ago when they moved in, and are not required to leave now that their income has increased.
As of March 18, Law told the City Council that all of the non-Section 8 units in Clock Towers were now market rate. That would appear to indicate that past affordable housing programs in the building have lapsed.
The 2004 Hoboken Master Plan lists all of the apartments in Clock Towers as affordable units under HUD Section 8 and Section 236 vouchers. Under both programs, tenants pay rent equal to 30 percent of their income, and federal vouchers cover the balance.
By 2011, according to a press release from HUD lender Love Funding, Clock Towers had 19 market-rate units along with “22 HUD Department of Community Affairs (DCA) voucher units, 64 units with rent restrictions/classes of preservation vouchers,” and the aforementioned 68 Section 8 units.
Council concerns
Some council members warned that failing to grant Clock Towers an extension on its Payment in Lieu of Taxes (PILOT) agreement would lead to the loss of its subsidized housing vouchers.
“[Clock Towers] residents would not be protected if in fact this PILOT is not extended for the six months and then subsequently extended even further or changed to a different program,” said Councilman Michael Russo, whose ward includes the complex.
However, Councilwoman Theresa Castellano said that local rent control laws explicitly state that units that came off federal subsidies were subject to rent control.
Councilman Michael Russo said the Clock Towers building management has been reaching out to the Zimmer administration for at least a year in attempts to extend its PILOT agreement, and he questioned why an extension was being requested so close to the deadline.
Got what they wanted?
Meanwhile, Councilwoman Jen Giattino downplayed the danger of ending the PILOTs, saying she didn’t think tenants in Clock Towers’ Section 8 apartments could be kicked out due to a change in property tax status.
Based on the assumption that Clock Towers’ owners no longer held a HUD mortgage on the property, Giattino questioned whether the tax abatement agreement should be extended at all.
“They got what they wanted out of the deal,” she said, “which is to have this low mortgage and have affordable housing, and now they want an extension on [their tax abatement]. That’s something that I’m not particularly comfortable with.”
However, it is not entirely clear that no HUD mortgage is in place for Clock Towers. The building was sold to Maine-based Low Income Housing Corporation in 2000, according to a Hoboken Reporter article, and in 2011, FHA lender Love Funding announced a new $20.9 million HUD loan to refinance the complex.
Councilman Peter Cunningham said part of the city’s due diligence should be making sure it was receiving all of the taxes or PILOTs that it was due from Clock Towers’ ownership.
“This really goes to a much bigger issue,” said Cunningham. “It’s not just Clock Towers, it’s Church Towers, it’s Marineview…it’s the additional amount over and above gross rents – whatever that bottom line is under contract – that should come back to the city of Hoboken, and I’m really concerned that we’re not getting what we should be getting, which could be hundreds of thousands of dollars.”
Carlo Davis may be reached at cdavis@hudsonreporter.com.