Title
Dept./ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing (X) Amending
Type of Service: Private Sale/Redevelopment/Subordination Agreement
Purpose: An Agreement entering into a Fourth Amendment to the Agreement for Sale and Redevelopment of Land to permit financing necessary for the following: (i) construction of two (2) buildings consisting of sixteen (16) affordable housing units through rehabilitation and new construction, including six (6) affordable housing units on Block 364, Lot 27 and ten (10) affordable housing units along with approximately 1,900 square feet of commercial and community space shall be located on that portion of the Property located at 650-656 Springfield Avenue and identified on the official Tax Map of the City as Block 364, Lot 1.05 on the City’s official tax maps (the “650 Springfield AH Project”) (ii) construction of forty-two (42) market rate residential units, located on that portion of the Property know as 704-708 South 17th, 701-707 South 16th Street, and 709-717 South 16th Street and identified on the official Tax Map of the City as Block 364, Lots 1.01, 1.02, and 1.03 (the “RISE Project”); and (iii) construction of eighteen (18) market rate residential units within one (1) building located on that portion of the Property known as 712-722 South 17th Street and identified on the official Tax Map of the City as Block 364, Lot 1.04 (the “FNA Project” and together with the 650 Springfield AH Project and the RISE Project, the “Project”).
Entity Name: 650 Springfield Ave Urban Renewal, LLC, 41 19th Ave Urban Renewal, LC, and RISE REO Urban Renewal, LLC
Entity Address: 61 Deans Lane, Monmouth Junction, New Jersey 08852
Sale Amount: $0.00
Cost Basis: ( ) $ PSF ( ) Negotiated (X) N/A ( ) Other:
Assessed Amount: $0.00
Appraised Amount: $0.00
Contract Period: Not Applicable
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale ( ) Grant ( ) Sub-recipient (X) n/a
List of Property:
(Address/Block/Lot/Ward)
704-708 South 17th Street/Block 364/Lot 1.01/South Ward
701-707 South 16th Street/Block 364/Lot 1.02/South Ward
709-717 South 16th Street/Block 364/Lot 1.03/South Ward
712-722 South 17th Street/Block 364/Lot 1.04/South Ward
650-656 Springfield Avenue (aka 724-736 South 17th Street)/Block 364/Lot 1.05/South Ward
710 South 17th Street/Block 364/Lot 27/South Ward
Additional Information:
Resolution 7R2-g(AS) adopted on April 19, 2017, authorized the Private Sale/ Redevelopment Agreement.
Resolution 7R2-g(AS) adopted on July 22, 2020, authorized the First Amendment to Agreement for Sale of Land and Redevelopment.
Resolution 7R2-d(as) adopted on April 20, 2022, authorizing subordination and Second Amendment to Agreement for Sale of Land and Redevelopment.
Resolution 7R2-a(s) adopted on May 16, 2023, authorizing subordination and Third Amendment to Agreement for Sale of Land and Redevelopment
body
WHEREAS, on April 19, 2017, the City Municipal Council (the “Municipal Council”) adopted Resolution 7R2-g(as) authorizing the City to enter into and execute the certain “Agreement for the Sale of Land and Redevelopment by and between the City of Newark, as a Redevelopment Entity, and the 650 Springfield Entity, as Redeveloper” (the “Original RDA”), to develop that portion of the Property formerly known as : 650-656 Springfield Avenue, 709 South 16th Street, 711 South 16th Street, 713 South 16th Street, 715 South 16th Street, 717 South 16th Street, 708 South 17th Street, 712 South 17th Street, 714-716 South 17th Street, 718-722 South 17th Street, 724-726 South 17th Street, and 55 19th Avenue, and formerly identified on the City’s Official Tax Map, respectively, as Block 364, lots 21, 9, 10, 11, 12, 13, 28, 26, 24, 22, 29 and 1 (the “Original Redevelopment Parcels“), and designating the 650 Springfield Entity as redeveloper of the Original Redevelopment Parcels; and
WHEREAS, the City and 650 Springfield Entity subsequently executed the Original RDA on or about May 1, 2017, pursuant to which the 650 Springfield Entity agreed to, among other things, develop the Original Redevelopment Parcels by constructing thereon a multi-phased mixed-income housing development, consisting of 115 total units, inclusive of (i) approximately 59 affordable housing units for families with low and moderate incomes; (ii) approximately 56 residential units for mixed-income housing; and (iii) associated parking and outdoor space (the “Original Project”); and
WHEREAS, on July 22, 2020, the Municipal Council adopted Resolution 7R2-g(as) authorizing the City to enter into and execute a First Amendment to the Original RDA (the “First Amendment”) with the 650 Springfield Entity and the FNA Entity, to amend and update the Original Project description and to permit the FNA Entity, which is an affiliate of the 650 Springfield Entity, to develop a portion of the Original Project, as amended; and
WHEREAS, the City, the 650 Springfield Entity, and the FNA Entity subsequently executed the First Amendment on or about August 21, 2020, pursuant to which, the City, the FNA Entity, and the 650 Springfield Entity agreed to, among other things: (1) expand the Original Redevelopment Parcels to include the following additional properties which were formerly known as: 710 South 17th Street, 47-53 19th Avenue, 45 191h Avenue, 43 19th Avenue, 41 19th Avenue, and 707 South 16th Street, and which were formerly identified on the official City Tax Map as Block 364, Lot 27 and Lots 2, 6, 7, 8, and 30, respectively (the “Redeveloper Parcels” and together with the Original Redevelopment Parcels, the “Amended Redevelopment Parcels”), (2) designate the FNA Entity and the 650 Springfield Entity as redevelopers of the Amended Redevelopment Parcels, (3) amend the Original Project Description to include the First Amended Redevelopment Project (defined below), and (4) to permit the FNA Entity to construct a portion of the First Amended Redevelopment Project; and
WHEREAS, thereafter, the 650 Springfield Entity and the FNA Entity acquired and assembled the entirety of the Amended Redevelopment Parcels, and subsequently subdivided the Amended Redevelopment Parcels into the Property, which consists of the following six (6) lots:
• 704-708 South 17th Street is now identified on the official City Tax Map as Block 364, Lot 1.01;
• 701-707 South 16th Street is now identified on the official City Tax Map as Block 364, Lot 1.02;
• 709-717 South 16th Street is now identified on the official City Tax Map as Block 364, Lot 1.03;
• 712-722 South 17th Street is now identified on the official City Tax Map as Block 364, Lot 1.04;
• 650-656 Springfield Avenue (aka 724-736 South 17th Street) is now identified on the official City Tax Map as Block 364, Lot 1.05;
• 710 South 17th Street is now identified on the official City Tax Map as Block 364, Lot 27
; and
WHEREAS, the FNA Entity owns that portion of the Property commonly known 704-708 South 17th Street, 701-707 South 16th Street, 709-717 South 16th Street, and 712-722 South 17th Street and respectively identified on the official Tax Map of the City as Block 364, Lots 1.01, 1.02, 1.03, and 1.04 (the “Original FNA Property”); and
WHEREAS, the 650 Springfield Entity owns that portion of the Property commonly known as 710 South 17th Street and 650-656 Springfield Avenue (aka 724-736 South 17th Street), and identified on the official Tax Map of the City as Block 364, Lots 27 and 1.05, respectively (the “650 Property”); and
WHEREAS, pursuant to the First Amendment, the FNA Entity and the 650 Springfield Entity agreed to undertake the acquisition, assembly, design, financing, construction, ownership and operation of (i) sixteen (16) affordable housing units through rehabilitation and new construction along with approximately 1,900 square feet of commercial and community space (the “Original 650 Springfield AH Project”), located on what is now the 650 Property, and (ii) three (3) buildings consisting of sixty (60) market rate residential rental units located on what is now the Original FNA Property (the “Original FNA Project” and together with the Original 650 Springfield AH Project, collectively, the “First Amended Redevelopment Project”); and
WHEREAS, on May 2, 2017, the Municipal Council adopted Resolution 7R2-C (s/as) authorizing the City to contribute (i) $200,000.00 from its Community and Economic Development Trust Fund and (ii) $300,000.00 from its allocation of HOME funds from the United States Department of Housing and Urban Development to the 650 Springfield Entity toward the development of affordable units for the Original Project; and
WHEREAS, due to the amendment to the Original Project, as set forth in the First Amended RDA, to consist of the development of the First Amended Redevelopment Project, including the Original 650 Springfield AH Project, on September 2, 2020, the Municipal Council adopted Resolution 7R2-g amending Resolution 7R2-C (s/as) authorizing the City to contribute $500,000.00 from its allocation of HOME funds, from the United States Department of Housing and Urban Development, to the 650 Springfield Entity to use in connection with that portion of the Original 650 Springfield AH Project consisting of the development of six (6) deed restricted affordable rental units for use and occupancy by households earning 50% or less of Area Median Income (“AMI”), out of the sixteen (16) total affordable units to be constructed as part of the Original 650 Springfield AH Project, on that portion of the 650 Property located at 710 South 17th Street and identified on the official City Tax Map as Block 364, Lot 27, which the 650 Springfield Entity has since completed; and
WHEREAS, on August 19, 2020, Municipal Council adopted Ordinance 6PSF-e granting a twenty-five (25) year Tax Abatement and authorizing the execution of a financial agreement with the FNA Entity setting forth terms and conditions of a tax abatement for the Original FNA Project; and
WHEREAS, in furtherance of Ordinance 6PSF-e, the City and the FNA Entity entered in that certain financial agreement, dated April 29, 2021 (the “Original Financial Agreement”), which set forth the terms and conditions of a tax abatement for the Original FNA Project; and
WHEREAS, on April 20, 2022, the Municipal Council adopted Resolution 7R2-d(as) authorizing the City to enter into and execute a Second Amendment to the Original RDA (the “Second Amendment”) with the FNA Entity and the 650 Springfield Entity for the purpose of amending certain provisions of the Original RDA as a condition for financing by certain lenders for the financing and development of certain portions of the Property, and to further amend the description of the First Amended Redevelopment Project; and
WHEREAS, the City, the 650 Springfield Entity, and the FNA Entity executed the Second Amendment on or about June 3, 2022, pursuant to which, the City, the FNA Entity, and the 650 Springfield Entity agreed to, among other things amend and replace the description of the First Amended Redevelopment Project, and in furtherance thereof, the FNA Entity and the 650 Springfield Entity agreed to: undertake the acquisition, assembly, design, financing, construction, ownership and operation of (i) two (2) buildings consisting of sixteen (16) affordable housing units through rehabilitation and new construction along with approximately 1,900 square feet of commercial and community space located on the 650 Property, including six (6) affordable housing units on Block 364, Lot 27 and ten (10) affordable housing units on Block 364, Lot 1.05 (the “650 Springfield AH Project”), and (ii) four (4) buildings consisting of sixty (60) market rate residential rental units located on the Original FNA Property (the “Amended FNA Project” and together with the 650 Springfield AH Project, collectively, the “Second Amended Redevelopment Project”); and
WHEREAS, on May 16, 2023, the Municipal Council adopted Resolution 7R2-a(s) authorizing the City to enter into and execute a Third Amendment to the Original RDA (the “Third Amendment”) with the FNA Entity and the 650 Springfield Entity permitting certain amendments to the Original RDA as a condition for financing by certain lenders for the financing and development of certain portions of the Property, which was executed on June 29, 2023; and
WHEREAS, the FNA Entity has completed construction, has obtained certificates of occupancy, and is in the process of applying for a certificate of completion, for that portion of the Amended FNA Project consisting of forty-two (42) market rate residential units within three (3) buildings (the “RISE Project”) on a portion of the Original FNA Property identified as Block 364, Lots 1.01, 1.02, and 1.03 on the Official City Tax Map and having the following street addresses of 704-708 South 17th Street, 701-707 South 16th Street, and 709-717 South 16th Street (the “RISE Property”); and
WHEREAS, the FNA Entity has commenced construction on the remaining portion of the Amended FNA Project consisting of eighteen (18) market rate residential units within one (1) building (the “FNA Project”) on that portion of the Original FNA Property identified as Block 364, Lot 1.04 on the Official City Tax Map and having the following street address 712-722 South 17th Street (hereinafter, the “FNA Property”), and intends to complete construction on the FNA Project in or before the year 2025; and
WHEREAS, the FNA Entity has secured a permanent financing loan (the “Loan”) from CPC Mortgage Company LLC, (together with its successors and assignees the “CPC Lender”) for the RISE Project and the RISE Property; and
WHEREAS, the FNA Entity has informed the City that the CPC Lender requires the borrower under the Loan for the RISE Project to be a single purpose entity owning no other assets other than those included in the RISE Project, and to have obtained a Certificate of Completion for the RISE Project; and, in furtherance thereof, the owners of the FNA Entity established the RISE Entity, which is a single purpose entity named “RISE REO Urban Renewal, LLC”, a New Jersey urban renewal limited liability company, having offices at 61 Deans Lane, Monmouth Junction, New Jersey 08852, and the same owners and ownership structure as FNA Entity; and
WHEREAS, in order to secure the Loan, the FNA Entity desires to transfer of the RISE Project and the RISE Property to the RISE Entity, with the RISE Project and the RISE Property to continue to be operated by the RISE Entity in accordance with the substantially similar terms initially established in the Original Financial Agreement; and
WHEREAS, in order to allow the FNA Entity to secure the Loan and transfer the RISE Project and RISE Property to the RISE Entity, the Parties determined that certain amendments to the Original RDA, as amended by the First Amendment, the Second Amendment, and the Third Amendment are necessary, and now desire to enter into this Fourth Amendment to the Original RDA (as amended by the First Amendment, the Second Amendment, the Third Amendment, and this Fourth Amendment, the “Agreement”) to update the description of the redevelopment project on the Property, authorize the transfer of the RISE Project and the RISE Property to the RISE Entity (the “Transfer”), agree to review and consider for execution any documents reasonably necessary from the FNA Entity and the RISE Entity, if any, to effectuate the Transfer, subject to the review and approval of the City’s outside legal Counsel and the final approval of the City’s Corporation Counsel as well as the City’s Municipal Council, if necessary.; and
WHEREAS, such revisions are in accordance with Section VIII (4) “Modification” of the Original RDA; and
WHEREAS, the Deputy Mayor/Director of the Department of Economic and Housing Development determined that the Project is in the best interest of the City and recommends entering into a Fourth Amendment to Agreement for Sale and Redevelopment of Land.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Mayor of the City of Newark and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development are hereby authorized to enter into and execute a Fourth Amendment to the Agreement for Sale and Redevelopment of Land, in substantially the form attached hereto as “Exhibit A,”, to enable the Redevelopers to obtain permanent financing for the RISE Project portion of the following Redevelopment Projects: (i) construction of two (2) buildings consisting of sixteen (16) affordable housing units through rehabilitation and new construction, including six (6) affordable housing units on Block 364, Lot 27 and ten (10) affordable housing units along with approximately 1,900 square feet of commercial and community space shall be located on that portion of the Property located at 650-656 Springfield Avenue and identified on the official Tax Map of the City as Block 364, Lot 1.05 on the City’s official tax maps (the “650 Springfield AH Project”) (ii) construction of forty-two (42) market rate residential units, located on that portion of the Property know as 704-708 South 17th, 701-707 South 16th Street, and 709-717 South 16th Street and identified on the official Tax Map of the City as Block 364, Lots 1.01, 1.02, and 1.03 (the “RISE Project”); and (iii) construction of eighteen (18) market rate residential units within one (1) building located on that portion of the Property known as 712-722 South 17th Street and identified on the official Tax Map of the City as Block 364, Lot 1.04 (the “FNA Project” and together with the 650 Springfield AH Project and the RISE Project, the “Project”) and further defined within the First Amendment to Agreement for Sale of Land and Redevelopment, Second Amendment to Agreement for Sale and Redevelopment of Land, Third Amendment to Agreement for Sale and Redevelopment of Land, within the South Ward, which is necessary for the completion of the Project.
2. The Mayor of the City of Newark and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development are hereby authorized to enter into all necessary documents to effectuate this amendment and the Transfer of the RISE Property from the FNA Entity to the RISE Entity in a form that is subject to the review and approval of the City’s Outside Legal Counsel and the approval of the City’s Corporation Counsel.
3. All other terms and conditions of the Agreement for Sale and Redevelopment of Land authorized by and entered into pursuant to Resolution 7R2-g(AS) adopted on April 19, 2017, shall remain in full force and effect.
4. All other terms and conditions of the "First Amendment to Agreement for Sale of Land and Redevelopment" authorized by and entered into pursuant to Resolution 7R2-g(AS) adopted on July 22, 2020, shall remain in full force and effect.
5. All other terms and conditions of the "Second Amendment to Agreement for Sale of Land and Redevelopment" authorized by and entered into pursuant to Resolution 7R2-d(AS) adopted on April 20, 2022, shall remain in full force and effect.
6. All other terms and conditions of the "Third Amendment to Agreement for Sale of Land and Redevelopment" authorized by and entered into pursuant to Resolution 7R2-a(S) adopted on May 16, 2023, shall remain in full force and effect.
7. The Deputy Mayor/Director of the Department of Economic and Housing Development shall place a filed copy of this Resolution, the fully executed Fourth Amendment to Agreement for Sale and Redevelopment of Land with the Office of City Clerk.
STATEMENT
This Resolution authorizes a Fourth Amendment to the Agreement for Sale and Redevelopment of Land to enable the Redevelopers to obtain permanent financing for the RISE Project portion of the following Redevelopment Projects: (i) construction of two (2) buildings consisting of sixteen (16) affordable housing units through rehabilitation and new construction, including six (6) affordable housing units on Block 364, Lot 27 and ten (10) affordable housing units along with approximately 1,900 square feet of commercial and community space shall be located on that portion of the Property located at 650-656 Springfield Avenue and identified on the official Tax Map of the City as Block 364, Lot 1.05 on the City’s official tax maps (the “650 Springfield AH Project”) (ii) construction of forty-two (42) market rate residential units, located on that portion of the Property know as 704-708 South 17th, 701-707 South 16th Street, and 709-717 South 16th Street and identified on the official Tax Map of the City as Block 364, Lots 1.01, 1.02, and 1.03 (the “RISE Project”); and (iii) construction of eighteen (18) market rate residential units within one (1) building located on that portion of the Property known as 712-722 South 17th Street and identified on the official Tax Map of the City as Block 364, Lot 1.04 (the “FNA Project” and together with the 650 Springfield AH Project and the RISE Project, the “Project”) and further defined within the First Amendment to Agreement for Sale of Land and Redevelopment, Second Amendment to Agreement for Sale and Redevelopment of Land, Third Amendment to Agreement for Sale and Redevelopment of Land, within the South Ward, which is necessary for the completion of the Project.