Title
Dept./ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Subordination Agreement/Reverter
Purpose: Resolution of the City of Newark, in the County of Essex, State of New Jersey authorizing the execution of an Agreement to subordinate the city’s rights of reverter by entering into a subordination agreement with Merchants Bank of Indiana as lender and NMA Owners Urban Renewal LLC as borrower in order to permit financing necessary for the redevelopment of an affordable rental or for-sale housing project.
Entity Name: NMA Owners Urban Renewal LLC
Entity Address: 2 Park Avenue, 23rd Floor, New York, New York 10016
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)
47-55 Washington Street/Block 34/Lots 9, 10, 11:35, 12 and 30/Central Ward
65 Central Street/Block 35/Lot 29/Central Ward
Additional Information:
Ordinance 6PSF-d(s) adopted on August 30, 2022, authorized the Sale/Redevelopment Agreement.
body
WHEREAS, pursuant to the City of Newark (the “City”) Ordinance 6PSF-d(s), adopted on August 30, 2022, the Mayor and the Deputy Mayor/Director of the Department of Economic and Housing Development of the City were authorized to execute on behalf of the City an Agreement for the Sale and Redevelopment of Land with The Newark Museum Association (“NMA” or the “Redeveloper”) (the “Redevelopment Agreement") for the purchase by NMA of certain property owned by the City of Newark and located in the City, which is commonly referred to as the Newark Museum Property, Newark, New Jersey and more specifically delineated in the description made a part of this Resolution as Exhibit A, being the same parcels defined as the “Project Parcels” in the Redevelopment Agreement, (collectively, the "Property") to be redeveloped by the NMA Owners Urban Renewal LLC (“Sub-Redeveloper” or the “Borrower”) as the designated “Sub-Redeveloper” consented to by the City pursuant to the Redevelopment Agreement; and
WHEREAS, the Redeveloper acquired the Property from the City and the Sub-Redeveloper acquired the Property from the Redeveloper and will construct significant improvements to the Property for the purpose of creating affordable or for-sale housing (the “Project”); and
WHEREAS, such sale was authorized pursuant to N.J.S.A. 40A:12-13 which requires that such conveyance be subject to the condition that title to the Property revert back to the City under Section V.4. of the Agreement in the event of a Default as defined in Section V.1. of the Agreement (collectively, the “Right of Reverter”); and
WHEREAS, the Sub-Redeveloper has secured construction financing from Merchants Bank of Indiana (the “Lender”) in the approximate principal amount not to exceed $65,000,000.00 (the “Loan”), to develop and complete the Project, which Loan will be evidenced by a Promissory Note in the principal amount of the Loan, and will be secured by a Mortgage on the Property (“Mortgage”); and
WHEREAS, as a condition of the above Loan, the Lender has requested that the City subordinate the Right of Reverter to the rights of the Lender with respect to the Mortgage and Loan; and
WHEREAS, pursuant to N.J.S.A. 40:60-51.2, “Any municipality is authorized and empowered, by resolution of the Governing Body thereof, to waive, release, modify or subordinate any terms, covenants, conditions, limitations or reverters imposed in sales and conveyances of lands as to the erection, alteration or demolition of buildings or any other use to be made of land heretofore imposed by said municipality to accomplish the purposes for which such lands were sold and conveyed either at public or private sale including those set forth pursuant to Section 21 of P.L.1971, c. 199 (C.40A:12-21), but only after public hearing held before such governing body, of the holding of which notice describing the lands in question, and the terms, covenants, conditions, limitations or reverters to be waived, released, modified or subordinated, and, if to be modified or subordinated, describing the manner in which the same shall be modified or subordinated, shall first have been given by advertisement published once each week for two weeks in a newspaper published in said municipality or, if no newspaper be published therein, then in a newspaper circulating in such municipality, provided, however, that the power herein granted shall not be exercised to impair any vested or contractual rights of third parties”; and
WHEREAS, a subordination by the City shall ensure that the development and construction of the Project continues and completion remains financially feasible for the benefit of the City and its residents; and
WHEREAS, the Mayor and/or his designee 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 that the City execute and deliver the Subordination of Right of Reverter in favor of the Lender for recording on the Property thereby subordinating the City’s Right of Reverter contained therein to that of the rights of the Lender with respect to the Mortgage and Loan, so as to develop, construct and complete the Project.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized, empowered and directed to enter into, execute, deliver and record a Subordination of Right of Reverter with and in favor of the Merchants Bank of Indiana, the Lender, and with NMA Owners Urban Renewal, LLC, the Borrower and Sub-Redeveloper, in a form substantially similar to the Subordination Agreement attached hereto as Exhibit B, or such other form reasonably acceptable to the parties, related to the Property, to permit the development of the Property and construction of the Project as affordable rental housing.
2. Notice in accordance with N.J.S.A. 40:60-51.2 of the subordination of the City’s Right of Reverter to the Lender’s mortgage with respect to the Property has been duly given by publication as required by law and the holding of a public hearing on said resolution at a Meeting of the Municipal Council on December 10, 2024, in the Council Chamber located at City Hall, 920 Broad Street, Newark, New Jersey.
3. The Deputy Mayor/Director of the Department of Economic and Housing Development shall place filed copies of the fully executed Subordination of Right of Reverter with the Office of the City Clerk.
STATEMENT
This Resolution authorizes the Mayor of the City of Newark and/or designee, the Deputy Mayor/Director of the Department of Economic and Housing Development to subordinate the City’s Right of Reverter through the execution, delivery and recording of the Subordination of Right of Reverter, in accordance with N.J.S.A. 40:60-51.2, to enable the Redeveloper to obtain financing necessary for the development of the Property as an affordable rental housing Project.