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Holland Gardens Housing to be Razed, Reimagined

November 23, 2020/in Downtown, header, Latest News, News /by Ron Leir

Area will feature new library branch, other amenities

Jersey City’s Holland Gardens public housing site is to be reshaped into a mixed-use, mixed-income development that will accommodate a new public library branch and businesses.

On Nov. 4 the Jersey City Housing Authority board of commissioners endorsed adding a home ownership component, a public library branch, and commercial rental space to a new high-rise mixed-income development for the area.

The JCHA plans to tear down the 76-year-old, 3.3-acre Holland Gardens complex at 15th Street and Jersey Avenue. A new project on the same footprint would preserve the existing 192 public housing apartments and supplement them with a combination of “affordable” condominium units and market-rate rental apartments.

The single structure design concept

This proposal — still several years in the making — comes 13 months after the JCHA adopted a “right of return” policy for tenants who will be temporarily relocated during the demolition and new construction.

According to the JCHA, the physical condition and aging mechanical systems have rendered the site’s five low-rise buildings “increasingly difficult and costly to maintain, rendering it nearly obsolete,” leading to a “decreased quality of life” for its residents.

Based on an evaluation of the site in summer 2019, Kitchen & Associates, the JCHA’s consulting architects, concluded it would cost $21 million to undertake capital repairs needed just to keep the property afloat.

Instead, the Collingswood, NJ firm recommended the site be razed and replaced with new infrastructure that would blend public housing units and market-rate apartments. The JCHA agreed with this assessment.

Just west of Holland Gardens stand two luxury high-rise developments, Soho Lofts and Cast Iron Lofts. Around the corner is the old St. Lucy’s Church and homeless shelter, will soon be transformed into a new, 20-story residence and a nearby new five-story homeless shelter.

As Kitchen puts it in a 2019 “visioning plan” for the future of Holland Gardens, being dwarfed by these nearby developments “… further exacerbates the sense of isolation and disconnect with its new neighbors … and … presents the challenge for how to redevelop the Holland Gardens site in a manner that will fit into this new community while also meeting the needs of existing residents.”

The answer, for Kitchen and the JCHA, is new construction, which, they say, would ensure the preservation of all existing 192 apartments while upgrading non-compliant, under-sized units, providing additional on-site parking and strengthening tenant amenities and services.

As an end to that means, the JCHA proposes to readapt the site by increasing its density. The existing development consists of five low-rise buildings with a total of 192 units.

Kitchen has proposed two construction scenarios, each sharing a common denominator: a three-story podium accommodating off-street parking — one space for every two units — plus a mix of non-residential uses and housing along its perimeter.

The first scenario calls for a single L-shaped building rising up to 22 stories above the podium with residential units from the fourth to 22nd floors. Also provided under this scenario would be:

  • Private indoor and outdoor amenity space on the fourth floor and on the roof
  • Apartments on the second and third levels plus three-story townhomes along the Erie Street frontage
  • Amenity space for daycare, healthcare, senior center, computer center, etc., along Jersey Avenue
  • Main residential lobby entrance via 16th

The second scenario proposes the extension of 15th Street through the site to Erie Street, thereby creating a new pedestrian corridor and access to the main lobby. Key features would include:

  • Twin residential towers rising above the podium, up to 20 stories, between Jersey Avenue and Erie Street
  • A six-story structure containing 30 or more for-sale residential condominium lofts along the south side of the 15th Street connector. “At least half of these units would be affordable and available to low-income, moderate-income and work-force housing eligible residents with the remainder being market-rate for-sale units,” according to the JCHA resolution endorsing the concept
  • Space reserved in the mid-rise building for “… a branch of the Jersey City Public Library, which would include community space and a resident services office and commercial rental space suitable for a supermarket, and/or bank or other similar commercial enterprise,” the JCHA resolution says.

Holland Gardens is one example of JCHA’s efforts to diversify its housing stock and advance opportunities for affordable home ownership, said JCHA Executive Director Vivian Brady-Phillips. Another “very successful” example, she says, is Dwight Street Homes in Greenville.

The multiple structure design concept including 15th street

There, the authority has sold 46 of the 52 two-family townhome units to low- and moderate-income families, she said, since the initiative began in the 1990s,.

“Now more than ever, housing affordability is a critical issue across the nation,” Brady-Phillips said. “It’s my hope that other public housing authorities will follow our lead by working closely with their municipalities and community partners to provide the resources necessary for residents to thrive.”

As of the most recent posting on the JCHA website, applicants to buy a home in the Dwight Street project are eligible if their annual income amounts to between 60% and 80% of the area median income as follows: for three in a household, $43,440 to $57,920; for four, $48,240 to $64,320; and for five, $52,140 to $69,520.

JCHA has gone the route of “mixed-finance public housing” — mixing public, private and non-profit funds to reshape and modernize several of its existing public housing sites at Montgomery, Lafayette and Duncan Gardens for residents with different income levels, she said.

Generally speaking, under guidelines set by the U.S. Department of Housing and Urban Development, individuals or families qualify to live in public housing apartments like Holland Gardens if they earn between 50% and 80% of the county’s annual median income, $76,900. They pay 30% of their adjusted monthly income in rent.

People living on limited income can also explore access to federal Section 8 rent vouchers, issued through the JCHA, which tenants can transfer to different locations where private landlords will accept them.

Another type of Section 8 rent subsidy with a different funding stream is targeted to specific public housing sites.

On Oct. 21, the Jersey City Municipal Council adopted an inclusionary zoning ordinance that would require residential developers to allocate 20% of the total number of apartments for affordable housing in return for the city granting height and density variances.

Given that demand for these types of rental assistance is high and because of shrinking federal housing resources, vacancy rates at the city’s public housing sites are generally close to zero.

“We serve 15,000 people spread over 7,100 units,” Brady-Phillips said, including 4,600 residents holding Section 8 vouchers accepted by 1,700 landlords with multiple properties. As of last month, there were 12,792 on a public housing wait list and 8,980 on a wait list for Section 8, she said.

Where will Holland Gardens tenants go while the site is razed and a new complex is built? No blueprint has yet been announced, but Brady-Phillips said the JCHA is meeting with tenants on a quarterly basis to provide planning updates on their rights under the federal Uniform Relocation Act to alternative lodging during the construction.

“Relocation … is not anticipated to begin until summer of 2022 at the earliest,” according to the JCHA website.  Tenants are to be “… notified in writing at least 120 days in advance of the move-out date.”

The project timetable – including the process for soliciting and designating a redevelopment partner – was pushed back a year due to COVID-19, according to Brady-Phillips. By spring 2021, JCHA plans to circulate a request for qualifications in order to create a pool of prospective developers by next summer. The authority will then issue a request for proposals next fall and select a developer by the end of 2021.

How long the new project will take to complete remains to be seen.

Salem Lafayette gets a New Landlord with New Ideas

November 9, 2020/in Bergen Lafayette, header, Latest News, News /by Aaron Morrill

Last week the Salem Lafayette houses in Bergen Lafayette got a new owner, Camber Property Group. Self described as “an emerging leader in New York City mixed income and workforce housing development,” I seized on the opportunity to interview its Principal, Rick Gropper and find out what all the fuss was about.  Affordable housing is as hot a topic as there is in Jersey City.

Some will remember that in September the project was the site of a police-involved shooting.  The sprawling apartment complex is located at  21, 25, 27, 31 and 33 Monticello Avenue; 4 and 8 Madison Avenue; and 834 and 838 Grand Street.

Here’s the interview.

 

AM: Can you tell us a little bit about your company and your background?

Gropper: Sure. Camber Property Group was founded in 2016, primarily to focus on affordable housing. My background, and my partner Andrew Moelis’s background, is in affordable housing in New York City. That’s kind of like the starting point. And one thing that we’ve done for our whole career is look for innovative solutions to problems. And one problem that we’re trying to solve is how to preserve and create new affordable housing for people who need it the most. That’s kind of the stepping-stone on which we founded the company and have grown it. So, how can we do affordable housing better? How can we think about developing communities that people feel a part of and feel proud of to call their home? Over the past four, almost five, years we’ve bought almost 6,000 units of affordable housing and developed housing throughout the city. And in each of those communities, we’ve kind of applied that approach to the development, the construction, the ownership, and are thrilled to bring that to New Jersey. I actually, I grew up in New Jersey.

AM: So, when you say the city, you’ve done most of your work in New York City, is that correct?

Gropper: Yes. Of the nearly 6,000 units that we’ve built and acquired the vast majority are in New York City. A small portion are on Long Island.

AM: And tell me what brought you and your partner, Andrew, to this business? What was your background? What was Andrew’s background?

Gropper: My background is in sociology and economics. And from there I went to grad school for real estate development. Andrew’s background is similar. And I think both of us were drawn to the field because we’re able to bring skills to bear, to solve a common problem that improves the common good, that creates a common good, which is affordable housing for people who need it the most. And I think our backgrounds and the age of our company is such that we can bring our energy and creative approach and an innovative approach to the development and acquisition of affordable housing.

AM: Let me ask you about that. What makes you a different kind of owner of Section 8 housing from the prior owner or from your typical owner?

Gropper: The prior owner of Salem, Lafayette Apartments did a great job in owning the asset. And they really have over the past 20 years done an extraordinary job of maintaining it as one parent. Camber brings an innovative approach, and that means combining financial engineering and financial solutions with design and ownership solutions to engineer a capital stack that introduces private equity in this acquisition.

We introduced private equity with conventional debt, and that’s something that’s relatively new to affordable housing. So, we have long-term investors in this transaction. So, our plan is to own it for the long term and to add technology to the building so we can manage it. We can assure that it’s as environmentally sustainable as possible using the latest technologies, sensors, computer programs for the heating system, LED light fixtures and reduce the carbon footprint of these buildings and do that in a way that really improves the value of the asset and impacts the quality of life for the residents.

AM: And can you tell us how a typical renter at Salem Lafayette would see a difference once you take over?

Gropper: When we take over, we’re planning to roll out online bill payment and online work order processing. And our management company will track the work orders to make sure that the building staff is on top of all of the physical conditions, that that repairs are completed in a timely fashion, and that the residents are satisfied with the work that has been completed. We’re also going to be undertaking a capital improvement program at all of the buildings to improve energy efficiency. So, we’ll install LED light fixtures and low flow plumbing fixtures where they don’t exist already. And we’ll be adding laundry rooms as well as improving the common areas of the buildings.

AM: Can you be more specific?

Gropper: Sure. When we acquire new buildings, we look to install common amenities in under-utilized spaces of the buildings. So, we’re planning to create a new community room at one of the buildings. We’re also planning to repurpose outdoor spaces where it’s possible to create new courtyards for residents to enjoy.

AM: You mentioned ownership structure. For those of us not familiar with how Section 8 housing is usually owned, how is bringing in private equity different from the normal ownership structure?

Gropper: So, Section 8 housing has been traditionally created using debt. In addition to that, there are some transactions that combine debt with tax credit equity. And one of the things that we’ve done over the past years has been introduce private capital into the ownership of Section 8 buildings. So, with Section 8, HUD pays a market rent. The tenants pay 30% of their income towards rent, and from an investor’s perspective it’s a very safe, de-risked cash flow. From a tenant’s perspective and an owner’s perspective, it’s great because it provides security. So if a tenant were to lose their job, HUD picks up that share of the rent. If a tenant’s income is $0 because they lost their job, HUD pays the whole rent. So, it’s a great safety net for the residents. And it ensures that no resident is paying more than 30% of his or her income towards rent. From an owner’s perspective it is a very safe investment, and that has attracted investors to Section 8 housing. In contrast, traditional Section 8 housing is created using public funds or quasi-public funds.

AM: So we think of private equity as wanting to get a large return on their investment. What do you say to people who would hear that private equity is involved and say well, they’re going to be milking this for all they can to get outsized returns?

Gropper: Over the past 10 or so, years, there’s been a shift within real estate and private equity towards impact investing where institutional investors are interested in putting their money into affordable housing, where they’re getting a risk-adjusted return. Knowing that affordable housing is a relatively safe investment, that it sustains downturns. And at the same time, they’re contributing to a social good. So, they are allowing people like us to buy affordable housing, to improve it, to responsibly own it, and also to make a reasonable risk-adjusted return on their investment. So, from that perspective, it’s a win-win because you have institutional-grade investors who have a significant amount of capital to put into these assets, and we’re able to buy, to preserve, to create, units of affordable housing throughout the area and package those together.

AM: What would you tell investors that their risk-adjusted return might be if you can share that on something like this.

Gropper: On an investment like this, in our case we have long term capital that is realistic on what their return requirements are. Investors are willing to put money in for the long term knowing that it’s a very safe investment. So, they are doing better than stocks and bonds. But they also don’t have that same risk as a market-rate apartment in New York City especially in light of the COVID pandemic.

AM: So, it might be higher than what they could expect from the stock market, which has traditional yielded 7 to 8%. They might be able to do a little better than that, but they wouldn’t be making the returns that they might make on an investment in luxury rental units somewhere. Is that fair to say?

Gropper: I think you can look at affordable housing using a baseball analogy. You’re generally hitting singles and doubles and doing that in a way that contributes to the social fabric, the social good.

AM: Is this considered an ESG (environmental, social and governance) investment for them?

Gropper: Exactly. Investment in affordable housing broadly falls into the ESG category.

AM: Now let’s talk about Jersey City specifically. What interested you in or brought you to Jersey City?

Gropper: So, Jersey City has been interesting to us for a good number of years. It’s got many of the same characteristics as New York City.  It’s got vibrant culture, arts, entertainment, shopping food, while also, having outdoor space and being able to access the other parts of New Jersey that are so great. And as I mentioned before, I grew up in New Jersey. So, it is nice to be able to do business in my home state.

AM: And how were you put in touch with this particular project?

Gropper: We were made aware of this opportunity through a relationship that we have. The owner of the property was looking to exit this investment and move on to other transactions.

AM: Tell me, what is the profile of your average tenant at Salem Lafayette? Is there any sort of typical tenant there?

Gropper: We haven’t had an opportunity yet to meet many residents of the buildings because we just closed on the transaction. We look forward to meeting everyone. The tenant base includes families and some individuals. But it’s mainly people who have lived in the buildings for a long time. And that is typical of the buildings that we buy in this space. You generally see minimal turnover from year to year, especially in buildings that are managed well and owned.

AM: What are the eligibility requirements for this Section 8 housing?

Gropper: For Section 8 housing residents have to income qualify. They have to earn under 50% of the area median income to move into the building. There’s a waiting list and the rent is set as a percentage of their household income. So, the rent that the tenants pay is no more than 30% of their household income, and HUD pays the difference. So, in the event that something unfortunate happens, it could be a resident who loses their employment, then that rent that the tenant pays is adjusted accordingly. So, if the tenant gets a pay increase, the rent will be adjusted. Conversely if the tenant either loses their job, or for whatever reason doesn’t make that same amount of money, then the following year there will be a downward adjustment in the tenant’s share of the rent. So, Section 8 is really a great asset to every community and it is even more important given the economic uncertainty following COVID.

AM: Now, you mentioned that there’s a waiting list. In your view as an owner and manager of Section 8 housing, do you see a way to build more of this type of housing?

Gropper: Section 8 housing is a very important resource for the entire country. Tenants sometimes have their own Section 8 voucher that they bring to a building. There are also, buildings such as this one that has a Section 8 contract attached to it. And we are looking to build more housing using that Section 8 resource. It’s especially important to build more Section 8 senior housing since seniors are on a fixed income. This population is underserved in the affordable housing world. So, the more senior affordable housing that we can create, the more opportunity for people who are of lower means, people who are retired and can age in place and afford to pay the rent.

AM: Is there an opportunity in Jersey City for you as a new investor to build more?

Camber Property Group Principal Rick Gropper

Gropper: There’s absolutely an opportunity. And some of our colleagues are here and have broken ground I believe on a few affordable housing projects that were RFP’d (request for proposal) by the city. So, I think there’s definitely an opportunity. The market in Jersey City has been very strong over the past years. And I think that there’s a need to provide affordable housing to protect the residents who have lived in Jersey City for decades and also to welcome new residents to Jersey City that are in need of housing at a reasonable rent.

AM: I think in some people’s minds there will be some skepticism as to how much you, as a company that’s seeking to make a return for its investors can actually invest in the property, and how much in the way of services you can provide, if you’re at the same time, trying to make a healthy profit for your investors. What do you say to that?

Gropper: I think with long-term capital that is realistic about the return that it expects for this type of a safe investment, you can both get to a reasonable risk-adjusted return and do right for the community, and for the residents of these buildings. I think we’ve shown that over the past years that we’re responsible and resident-focused owners and developers of affordable housing, that we make real contributions to the communities in which we serve and to the residents of the buildings that we own, and that we operate the properties in a way that improves the quality of life of the residents, but also allows us to continue buying buildings and doing what we do best.

AM: What are your priorities when you close on this transaction or when you actually assume control?

Gropper: So, we closed on the transaction on Friday, just a few days ago. Our priorities when we come into any new building is to meet the residents, to understand the priorities of the people who have been living in the buildings for decades, and over time to make improvements to the common areas of the buildings and to the apartments and to address any deferred maintenance — to bring to the residents our philosophy of being responsible operators and hands-on owners of affordable housing.

AM: I assume there’s a regulator that sort of looks over your shoulder to make sure that the property is being well maintained and that you’re living up to certain agreements that you have with the federal government. Would that be right?

Gropper: Yes. So, the Section 8 contract is provided by HUD, which stands for Housing and Urban Development, a federal agency. There is a lot of regulation that’s associated with affordable housing, and there are different types of regulation. In this case with HUD, we have ongoing reporting requirements. So, we provide financial information to HUD about our income, our expenses, and ongoing capital needs of the project. Then there are also, physical condition inspection requirements where HUD, every few years, evaluates each Section 8 property on a myriad of characteristics and scores each property. And in order to continue to own and operate Section 8 housing, you have to meet both a bookkeeping standard and a physical standard.

AM: And how have your buildings in New York City done when reviewed by HUD or by whatever the authority was that was regulating you?

Gropper: Our buildings in New York City have all fared very well when reviewed by HUD and also when reviewed by the local agencies with jurisdiction over the properties. And we’ve taken over some very distressed properties from long-term owners and have really turned those around. One in New York City that we closed on in December 2018 was the acquisition of 720 apartments from the New York City Housing Authority in what’s known as a “Rental Assistance Demonstration” or “RAD” transaction. And we’re now at the tail end of that renovation and have really, I think, made a very dramatic and transformative impact on the properties where we invested about $80 million in the renovation of these buildings. We replaced kitchens and bathrooms and façades, mechanical systems, electrical infrastructure. And I think we’ve done this type of work throughout New York City, where I think we now have a track record of coming into distressed opportunities and really turning the buildings around and doing right by the residents of the buildings and the communities in which we work.

AM: Wow. Well, that’s everything I always wanted to know about Section 8 housing. That’s a great primer. Is there anything you want to add that I didn’t touch on?

Gropper: Just that we’re thrilled to be in Jersey City and look forward to being good neighbors and good owner owners of this important complex.

 

News Briefs

Hudson County Community College has been named the recipient of a one-year, $850,000 investment from the JPMorgan Chase. The investment will be utilized for a program the College developed to address the challenges of the economic crisis in Hudson County that were brought about by the COVID-19 pandemic. The program is designed to provide lasting improvement in the County’s workforce ecosystem.

Mayor Steven Fulop and the Jersey City Economic Development Corporation (JCEDC) have launched the latest round of emergency funding to provide over $2.5 million in direct aid and support to Jersey City’s neediest residents, regardless of immigration status. The city will partner with  York Street, Women Rising, United Way, and Puertorriqueños Asociados for Community Organization (PACO). 

Darius Evans, age 45, of Jersey City was arrested  on Monday by The Hudson County Prosecutor’s Office in connection with the stabbing death of 39-year-old Tyrone Haskins early New Year’s morning. The charges include Murder and two counts of Possession of a Weapon for Unlawful Purposes.

Mayor Steven Fulop is joining forces with Uber to announce a new agreement that will expand residents’ access to COVID-19 vaccinations with free Uber rides to and from Jersey City vaccination sites. Phase 1B includes essential frontline workers and seniors 75 years old and over.

According to a report in the Jersey Journal, Jersey City received its first shipment of COVID-19 vaccines Monday and plans to begin vaccinating eligible residents later this week at the Mary McLeod Bethune Center.

The federal Paycheck Protection Program, which offers businesses loans that can be forgivable, reopened on January 11th. The revised program focuses first on underserved borrowers – minority- and women-owned businesses.

Jersey Art Exchange (JAX) has merged with Art House Productions effective January 2021 to help improve and expand arts education and opportunities for the Jersey City community. JAX Founder Jacqueline Arias will remain Director of the program at Art House.

Christmas trees will be collected citywide every Wednesday night throughout the month of January. Pickup resumes this Wednesday January 13th.

Keep abreast of Jersey City Covid-19 statistics here.

Governor Murphy has launched a “Covid Transparency Website” where New Jerseyans can track state expenditures related to Covid.  Go here.

 

 

 

 

 

 

 

 

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