Hartz Mountain Industries was able to do it. Atlantic Realty was able to do it. So why can’t Lloyd Goldman?
Goldman, the owner of two pieces of land on First Street in downtown Jersey City, is pressuring the city to renegotiate the terms of a development agreement he struck in 2006. Under the terms of the original agreement, Goldman would be allowed to build a residential rental development at 110 First St. and another residential property at 111 First St.
Goldman, a landowner who will partner with developers to build these projects, wants to break ground on his 110 First St. site this year.
But he has told city officials that he and various business partners have been unable to obtain financing for the mixed-income 110 First St. project because his agreement requires him to include 25 affordable housing units in the 452-unit development. In recent months his representatives have met with the city’s attorney to try to get these affordable housing units removed from the project. The removal of these units from the development, Goldman and his representatives have argued, is necessary to obtain financing and move the 110 First St. project forward.
‘There needs to be will on the part of the developer and the belief that this is the right thing to do.” – Susanne Byrne
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“That’s hard to believe, because these sorts of developments happen all over the country and especially in New Jersey,” said Kevin Walsh, staff attorney with the Fair Share Housing Coalition, a statewide affordable housing advocacy organization based in Cherry Hill. “There are tens of thousands of examples [nationally] of housing for lower income folks being built next to market-rate housing.”
Walsh suggested that Goldman and his business partners may be having difficulty obtaining financing for other reasons and are “blaming the affordable housing mandate as the reason why so that they can avoid building something they never wanted to build in the first place.”
One public official also said that insufficient collateral could also be a bigger deal-breaker for lending institutions than the inclusion of the affordable housing units.
Jersey City’s Corporation Counsel William Matsikoudis, who has met with Goldman and his business partners, however, said this is not the case and said the affordable housing mandate is a legitimate stumbling block to the project.
“The six year delay in building, the fact that I personally talked to several partners who walked away…and talking to others with significant development knowledge convinced me it’s likely true” that Goldman has had legitimate problems with financing due to the inclusion of the affordable units, Matsikoudis said.
Goldman’s deal
At the center of the debate are two sites on First Street that were once 110 First St. and 111 First St. Both properties are owned by Goldman and the latter property was once home to the ill-fated 111 First St. artists’ studios.
Both buildings were eventually torn down. Today, 110 First St. is a vacant lot, while 111 First is home to a heap of bricks that once housed the old arts space. The residential housing planned for the two locations has been stalled for the last six years. Goldman is now trying to renegotiate the terms of settlement reached with the city that would allow him to develop these two sites.
More than 10 years ago Goldman waged a bitter legal battle to evict and otherwise remove artists from the 111 First St. lofts, which had been home to artists’ studios since the 1980s. After the last of the artists had moved out, Goldman then fought an equally bitter legal battle with the city for the right to demolish 111 First, which he wanted to redevelop, but which the city said was an historic property.
Goldman and the city eventually settled. Goldman was allowed to demolish 111 First St. and develop both the 110 and 111 properties in exchange for numerous concessions to the city. Among the agreements Goldman made was that he would include 25 affordable housing units in his 35-story development at 110 First St. and contribute $2.5 million to the affordable Housing Trust Fund. (Separate affordable housing units and artists’ lofts are planned for the new 111 First St. development.) The planned development at 110 First St. would have a total of 452 units, including 427 market rate apartments. The 110 First development has already received a tax abatement from the city and has also received site plan approval.
Where there’s a will…?
Goldman has claimed that he and his business partners have had difficulty obtaining financing for the 110 development, and that the required 25 affordable housing units are the reason the project has not been able to get financing.
He has now asked the city to remove this requirement from the project. In exchange he said he will contribute another $2.5 million to the Affordable Housing Trust Fund, which would likely be used to help build affordable housing units elsewhere in the city, not downtown where Goldman’s First Street sites are located.
Two weeks ago, the City Council flatly rejected this proposal and told Matsikoudis to go back to the negotiating table. Matsikoudis has said the inclusion of affordable housing units will prevent Goldman from breaking ground at the 110 First site this year.
But how plausible is Goldman’s argument?
In Secaucus, a 116-unit development recently built by Hartz Mountain Industries on Meadowlands Parkway, includes 23 units of affordable units. The remaining units are market rate housing. Elsewhere in Secaucus, Atlantic Realty, a subsidiary of the Fraternity Meadows development firm, has for years been building Xchange at Secaucus Junction. Once completed, Xchange will eventually include a total of 2,081 rental housing units, with 230 apartments set aside for affordable housing.
Like Goldman’s project, these developments target renters of mixed incomes. These projects, and others, have been able to obtain financing, despite the inclusion of affordable housing units that represent 10 to 12 percent of the total number of apartments being built.
Some housing advocates who have worked in the industry for several years maintain that the inclusion of affordable units in a development project can actually increase financing options.
“Banks have an obligation under the [federal] Community Reinvestment Act to invest in these sorts of developments and often look for these sorts of opportunities so they can demonstrate compliance with the law,” Walsh noted.
One common financing option, according to Susanne Byrne, executive director of the York Street Project in downtown Jersey City, is to have Section 8 vouchers attached to a development. A federally funded program, Section 8 enables qualified low-income residents to rent or buy market-rate housing with the assistance of a government-back cash voucher.
Other financing options are also available.
“There’s this belief out there that you can’t do it. You can’t do it downtown, you can’t do it on the waterfront. Financing depends on what collaborations you’re able to establish and what populations you’re looking to serve,” said Byrne. “There are for-profit developers that do affordable housing. It’s not just non-profit developers who do this. But there really needs to be will on the part of the developer and the belief that this is really the right thing to do.”
According to Matsikoudis, Goldman has stated that several developers have walked away from the project because they would lose money on the affordable units, an argument one Secaucus official echoed:
“Over at Xchange, I can’t believe they are getting back in rent what it took to build the affordable units.”
E-mail E. Assata Wright at awright@hudsonreporter.com.