Each year the Newark Regional Business Partnership (NBRP), presents an annual real estate Market Forecast, presenting a detail, informative and comprehensive analysis of Newark’s Real Estate market to its members. This years presenter included the President of NJEDA Timothy Lizura and Real Estate Economist for Studley, Heidi Learner. Following the forecast, was a panel discussion presented by the several major developers transforming the downtown in Newark. Frank Giantomasi, Genova Burns Giantomasi Webster was the moderator of the panel discussion of the game changing projects built and on the horizon including Ron Beit, RBH Group; Marc Berson, Fidelco Group; Wasseem Boraie, Boraie Development; Frank Ferruggia, McCarter & English, LLP; and Michael Sommer, Advance Realty Group.
The presentation began with Timothy Lizura, President and COO New Jersey Economic Development Authority (EDA). As president and chief operating officer of the EDA, Mr. Lizura ensures production efficiency, quality and service and implements practices, policies and procedures that allow for maximum utilization of NJEDA’s asset. Mr. Lizura outlined several significant project funded by the NJEDA in addition important role the EDA has played for 6 years in partnership with the city of Newark. He informed the audience, he was, pleased with the amounts of investments and trajectory of Newark’s real estate market. Mr. Lizura said, “Over the last 5 years, the EDA has assisted with over 1.5 Billion dollars in investment Newark, a fairly substantial number resulting in 5,500 Construction jobs and 1,800 permanent jobs at a turning point where we can get to a critical mass where the real estate market can take off on its own momentum”.
Mr. Lizura continued to say the following during his presentation; “About 90 days ago the governor, signed the Economic Opportunity Act of 2013. What that did was to take the EDA’s long standing five existing economic programs, Business Employment Incentive Program (BEIP), Business Retention and Relocation Assistance Grant Program (BRRAG), and Urban Transit Hub Tax Credit Program (UTHTC), GROUT `and combine them into two concise programs that are easier to manage. The Grow NJ programs that targets Business incentives program for growing jobs, and the Economic Redevelopment Growth (ERG) primarily for developers. For the first time ever there are some areas within the state that are not eligible for incentives, which allows for better targeted development centers density. The other programs takes the economics of the suburban and urban areas and adds more incentives for distress areas.
The changes in the EDA programs are important in that the new comprehensive incentives make investments in downtowns like Newark attractive for development opportunities. Under the ERG there are two programs, one being the traditional TIFF financing, take the incremental taxes that a project generates can be quantified and captured and provided back to the project in the form of a subsidies, developers gets improved returns to do the project, and now for the first time there is a residential component in the EDA tool kit. Traditionally residential development doesn’t generally have incremental taxes to quantify and capture on a residential project. To achieve this incentive, by utilizing similar calculations used in the tax credit feature in the HUB, and tax credit replaces the otherwise non existing incremental taxes subsidy, with a residential tax credit that can stimulate the development of 24/7 vibrant communities, such as downtown Newark.
Since the rollout of the residential incentive program, the EDA has approved several key Newark projects that use this new incentive, one such project is RBH Group, Ron Baits second development project on four corners, transformative in the center of downtown’s business district, and a couple of weeks ago the approval of 15 Washington St, an Art Deco building, that is to be developed into Rutgers University Graduate housing. Rutgers has been great partner in using and applying for higher education trust fund money and the residential tax credit was the last component to move that project forward. There have been two nodes that have received the majority of these investments, one has been the Central Business District, and that is bounded by, The Prudential Arena and extends to the Teacher Village,included is the Marriott, Tucker Development project, Indigo Hotel, Dinosaur BBQ, four corners, and Panasonic, that is a cluster of significant development. The other development cluster is around Broad Street, which includes Cablevision, NJPAC residential project, 15 Washington, Prudential headquarters, Rector Street Shaq project, Military Park which will create a major amenity in the area. For the first time from 15 Washington St and the Prudential headquarters we are finally making the connection, of the university district and military park is key to the long term redevelopment and long term sustainability of the city of Newark”.
The conclusions from Tuesday breakfast was with the aid of new powerful state incentive programs and momentum from commercial development, they said the city’s pipeline of housing projects is both growing and showing early signs of drawing new residents to its downtown. “The next phase of Newark is about getting more people living and working downtown. By 2017, the city aims to have 5,000 new residents and another 5,000 new people working around its central business district.