After putting off a decision earlier this month on what to do about a 2015 agreement with a waterfront property developer for a tax abatement, the City Council may have to give up hope of requiring affordable housing units in the city’s wealthiest neighborhoods.
Three years ago, the council required all new abated properties to set aside 20 percent of the total units as affordable.
Since then, requests for tax abatements have dried up, and the developer for one of the largest projects since the creation of the Newport development in the 1980s has asked to get out of the agreement it has already signed.
Council member Joyce Watterman, who authored the 20 percent requirement, said she is going to “fight hard” to require the new 35-story tower at Metro Plaza to live up to its commitment to provide 87 affordable housing units.
Forest City, the developer responsible for constructing this and other towers in the Metro Plaza complex near the Harsimus Cove station of the Hudson Bergen Light Rail, lost key state funding and has asked the city to do away with the abatement in order to allow them to construct only market rate units instead.
The council tabled legislation that would have allowed the end of the abatement at the May 9 meeting in order to review the circumstances behind the request.
Forest City plans to construct 12 new residential towners over the next 20 years an 18-acre site near Marin Boulevard and Second Street, close to the Newport Mall and near the waterfront.
The Jersey City Council approved a 25-year tax abatement that allowed the construction to move forward. In exchange for the tax abatement, Forest City would pay Jersey City 7 percent of its annual gross revenue from the $449 million project.
The agreement requires the new tower to set aside 20 percent of its 432 units as affordable housing under the provisions of the abatement.
Forest City wants to revert to paying conventional taxes in order to forgo setting aside affordable housing units.
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“I don’t many people who can afford to raise a family if they are paying $4,000 a month rent.” – Joyce Watterman
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Waterfront affordable housing may be a thing of the past
But Watterman said because the waterfront is so lucrative, developers are no longer seeking abatements.
It is uncertain if the 20 percent affordable housing requirement that Watterman spearheaded two years ago is discouraging developers from seeking abatements or simply that the market is so lucrative developers feel they can build without abatements.
But in either case, Watterman said the next tower in the Forest City development may be the last opportunity the city has to provide housing to people who are not wealthy.
“I don’t want to give up those 87 units,” she said. “This may be our last chance to get affordable housing in that part of the city, and I do not want to give them up.”
She said she wants to developer to seek alternative funding to the lost state dollars.
“They haven’t even tried yet,” she said. “If they had tried and couldn’t get other funds that would be a different story. I want them to try, and then come to us.”
Watterman said she had met with Abe Naparstek of Forest City, seeking to find alternative to giving up on the abatement.
A key state tax credit program for residential projects like this expired and Naparstek told Watterman financing for the second tower on the property cannot be done with only the tax abatement from the city.
The project had received, then lost, $40 million in state tax credit approved by the state Economic Development Authority, which allowed the developers to include affordable housing, officials said.
Priced out
This comes at a time when people are being priced out of the waterfront area, and opportunities to provide affordable housing are shrinking, despite a campaign pledge from Mayor Steven Fulop when he ran last November .
Watterman said she wants to hold firm on the commitment for this tower, noting that the remaining towers planned for the larger project will not be abated and will not have the 20 percent requirement.
“Those towers won’t be abated,” she said. “They can make the units in those market rate.”
She sees the loss of the 87 units as a significant blow to people who are struggling to live in what is become a very expensive part of the city.
One downtown developer, she said, is renting three-bedroom units at $4,000.
“That developer is telling me that they will allow people to raise a family there,” she said. “I don’t knowmany people who can afford to raise a family if they are paying $4,000 a month rent.”
Last year, a national real estate website rated Jersey City has one of the most expensive cities to rent a single-bedroom unit in at an average of $2,000 per month.
The first tower of the complex is a 35-story residential building already constructed on the site of the former Pep Boys auto store at a cost of about $220 million. The second tower is expected to cost as much or slightly more. Between the two initial towers the project would have brought 165 such units to the waterfront for the first time
When first projected in early 2017, market-rate rents for the building ranged from $2,325 for one-bedroom apartments to $3,500 for two-bedroom units. Rents on the affordable units will range from $954 for one-bedroom units to $1,194 for two-bedroom apartments.
Metro, also called Hudson Exchange West, represents the first large-scale plan for on-site affordable housing since Newport was constructed, city officials said.
The city council is expected to take action on the request at its May 23 meeting.
Al Sullivan may be reached at asullivan@hudsonreporter.com.
