Title
Dept/ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Execute a Deed Restrictive Affordable Housing Agreement for HOME ARP Funds Grant
Purpose: To authorize the execution of a Deed Restrictive HOME ARP Affordable Housing Agreement with New Community Homes Development LP, for the construction of a new four-story apartment building consisting of forty (40) one-bedroom units and eighty (80) two-bedroom units, with eleven (11) of such units to be subsidized by the City and designated as HOME ARP Program Units to serve households who are homeless, indigent or at risk of being homeless (as defined in 24 C.F.R. §91.5 as part of the HOME-ARP Program) having annual incomes of 30% or less of Area Median Income as determined using the standards set by the Department of Housing and Urban Development for the HOME ARP Program upon real property located at 202 South Orange Avenue (Central Ward) of the Tax Map of the City of Newark, County of Essex, State of New Jersey (Block 242, Lot 1) (Central Ward), which Project shall be a part of the City’s First Amendment to the Central Ward Redevelopment Plan, adopted on August 17, 2005, by Ordinance No. 6PhS+FE(s), as amended to date.
Entity Name: New Community Homes Development LP
Entity Address: 233 West Market Street, Newark, New Jersey 07103
Grant Amount: $3,600,000.00
Funding Source: Federal HOME ARP Program Funds
Contract Period: HOME ARP Program Funds must be expended within forty-eight (48) months from the date of adoption.
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale (X) Grant ( ) Sub-recipient ( ) n/a
List of Property:
(Address/Block/Lot/Ward)
202 South Orange Avenue (Central Ward) of the Tax Map of the City of Newark, County of Essex, State of New Jersey (Block 242, Lot 1) (Central Ward)
Additional Information:
body
WHEREAS, the City is a participating jurisdiction with the United States Department of Housing and Urban Development (“HUD”) that has received approval to receive a block grant from HUD under the Home Investment Partnerships Program enacted under Title II of the Cranston-Gonzalez National Affordable Housing Act (Title II, Pub. L. 101-625, approved November 28, 1990, 104 Stat. 4094-4128, 42 U.S.C. 12701-12839) and the HOME Program regulations codified at 24 C.F.R. Part 92, as amended by the “2013 HOME Final Rule” at 24 C.F.R. Part 92 (Complete Rule) (together, the “HOME Program”); and
WHEREAS, the HOME Program has, among its purposes, the strengthening of public-private partnerships to provide more affordable housing, and particularly to provide decent, safe, sanitary, and affordable housing, with primary attention to housing for very low income and lower income households in accordance with the HOME Program. The HOME Program funds are used by the City, as a participating jurisdiction, to carry out multi-year housing strategies through acquisition, rehabilitation, and new construction of housing for target income persons and families; and
WHEREAS, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (Pub. L. 117-2) (“ARP”) into law which, among other things, appropriated $5 billion to communities across the U.S. to provide housing, services and shelter to individuals experiencing homelessness and other vulnerable populations. These funds were allocated by formula to participating jurisdictions that qualified for funding through the HOME Program from HUD. This special round of HOME Program funding is called the “HOME ARP Program”; and
WHEREAS, as part of the HOME ARP Program, HUD awarded the City HOME ARP Program funds under Section 3205 of ARP pending the completion of grant requirements, which include planning, community and stakeholder consultation, and a needs analysis. Furthermore, the City’s HOME ARP Allocation Plan, as amended (the “Plan”), describes how the City intends to distribute HOME ARP Program funds and address the needs of the qualifying populations as defined in Notice CPD-21-10 issued by HUD on September 13, 2021, as modified (the “CPD Notice”). This Plan has been submitted to and approved by HUD for review and acceptance; and
WHEREAS, the City is responsible for ensuring that HOME ARP Program funds it receives from HUD pursuant to this special funding and then distributes to third parties by way of loan, grant or other conveyance (collectively, the “HOME ARP Funds”) are used in accordance with the requirements of the HOME Program, as supplemented by the HOME ARP Program; and
WHEREAS, the CPD Notice established requirements for funds appropriated under Section 3205 of the ARP for the HOME ARP Program and, except as described in the ARP and the CPD Notice, the regular HOME Program statutory and regulatory provisions apply to a participating jurisdiction’s use of HOME ARP Funds; and
WHEREAS, New Community Homes Development LP, a New Jersey limited partnership (the “Entity”), proposes to construct a new four-story apartment building consisting of forty (40) one-bedroom units and eighty (80) two-bedroom units that offers social support services to individual residents with special needs and other qualified low income tenants, including, among other amenities and services, a community and laundry room, job training, financial literacy and other educational courses, upon the property located at 202 South Orange Avenue (Block 242; Lot 1) (Central Ward) of the Tax Map of the City of Newark, County of Essex, State of New Jersey (collectively, the "Project"), which Project shall be a part of the City’s First Amendment to the Central Ward Redevelopment Plan, adopted on August 17, 2005, by Ordinance No. 6PhS+FE(s), as amended to date (the “Redevelopment Plan”); and
WHEREAS, the Entity has agreed that eleven (11) of the one hundred and twenty (120) rental apartment units constructed for the Project shall be designated by the City as deed restricted HOME ARP-Assisted Units to serve households who are either: (i) homeless, (ii) at risk of being homeless (as defined in 24 C.F.R. §91.5 as part of the HOME-ARP Program), or (iii) individuals or households from the other qualifying populations under the HOME ARP Program (collectively, the “HOME ARP-Assisted Units”), as determined using the standards set by HUD for the HOME ARP Program; and
WHEREAS, the Entity has agreed to construct the HOME ARP-Assisted Units in connection with the Project provided it receives funds from the HOME ARP Program from the City in order to provide it with a financial subsidy necessary for the construction of these HOME ARP-Assisted Units for the Project; and
WHEREAS, upon due adoption of a Resolution of the Municipal Council of the City of Newark, the City shall authorize, direct and empower the Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development to enter into and execute a Deed Restrictive Department of Economic and Housing Development HOME American Rescue Plan Affordable Housing Agreement with the Entity for the payment of HOME ARP Funds in the amount of $3,600,000.00 to the Entity under the HOME ARP Program in order to pay certain eligible and verifiable construction renovation costs and expenses of the Project (as defined in Title I of the Housing and Community Development Act of 1974, Section 105, the regulations under the HOME Program and HOME ARP Program, and the CPD Notice) which provided for, among other things, a twenty (20) year period of affordability and a zero percent (0%) interest rate deferred payment loan in the amount of $3,600,000.00 from HOME ARP Funds (the “HOME ARP Loan”), which such amount may be forgiven by the City at the end of the Affordability Period in the sole discretion of the City, subject to satisfaction of all of the terms and conditions set forth herein; and
WHEREAS, the Entity has secured firm commitments from senior institutional lenders and banks and/or other governmental agencies, as applicable, but requires the award of HOME ARP Funds from the City in order to bridge the funding gap for and to complete the Project and the HOME ARP-Assisted Units; and
WHEREAS, the Municipal Council determined that it is in the best interests of the City and its residents for the Project to be constructed and authorized the execution and delivery of this Agreement.
WHEREAS, the Project is also located within an area in need of redevelopment as defined under the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. (the "LRHL"), and is governed by and is to be built as part of the Central Ward Redevelopment Plan; and
WHEREAS, the Project currently has a significant funding gap that must be bridged in order to make the Project financially feasible; and
WHEREAS, N.J.S.A. 40A:12A-8(f) of the LRHL authorizes municipalities to provide grants or loans to redevelopers to provide financial assistance for the performance of redevelopment activities in order to implement redevelopment projects in accordance with redevelopment plans; and
WHEREAS, the Project qualifies for financial assistance since it is located within a redevelopment area and is being performed in order to implement an approved Central Ward Redevelopment Plan.
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 are hereby authorized to enter into and execute a Deed Restrictive Department of Economic and Housing Development HOME ARP Affordable Housing Agreement (the "AHA") with the Entity for Federal HOME ARP Funds in the amount of $3,600,000.00 to construct a new 4-story residential affordable housing building that will consist of one hundred and twenty (120) residential rental units (the “Project”), eleven (11) of which such units shall be subsidized by the City, designated as HOME ARP-Assisted Units and serve qualifying households who are homeless, indigent or at risk of being homeless (as defined in 24 C.F.R. §91.5 as part of the HOME-ARP Program) having annual incomes of 30% or less of Area Median Income as determined using the standards set by HUD for the HOME Program upon real property located at 202 South Orange Avenue (Block 242; Lot 1) (Central Ward) of the Tax Map of the City of Newark, County of Essex, State of New Jersey (collectively, the "Property), which Project shall be a part of the City’s Central Ward Redevelopment Plan.
2. The Entity has agreed that eleven (11) of the one hundred and twenty (120) rental apartment units constructed for the Project shall be designated by the City as deed restricted HOME ARP-Assisted Units to serve households who are either: (i) homeless, (ii) at risk of being homeless (as defined in 24 C.F.R. §91.5 as part of the HOME-ARP Program), or (iii) individuals or households from the other qualifying populations under the HOME ARP Program (collectively, the “HOME ARP-Assisted Units”), as determined using the standards set by HUD for the HOME ARP Program.
3. The Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized to establish a declaration of covenants, conditions and restrictions to ensure that the Project remains affordable for a period of twenty (20) years in accordance and consistent with the affordability standards of the HOME Program, the HOME ARP Program, the CPD Notice and all other applicable laws, regulations and guidance. Said covenants, conditions and restrictions shall run with the land and bind the Entity and any subsequent purchasers and owners, their heirs, executors, administrators and assigns and all persons claiming by, through or under their heirs, executors, administrators and assigns with the AHA for a period of twenty (20) years.
4. The Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized to establish and record a declaration of covenants, conditions and restrictions to ensure that the City shall be repaid the full amount of the HOME ARP Funds disbursed to the Entity upon the occurrence of an event of default under the AHA by the Entity by requiring the Entity to execute a separate HOME ARP Mortgage and Security Agreement and HOME ARP Mortgage Note for the full amount of funding provided to the Entity in the AHA. Said covenants, conditions and restrictions shall run with the land and bind the Entity and any subsequent purchasers and owners, their heirs, executors, administrators and assigns and all persons claiming by, through or under their heirs, executors, administrators and assigns during the term of the AHA and the City shall discharge such Mortgage and lien in connection therewith upon its issuance of a Certificate of Completion for the Project.
5. The City shall be responsible for the recordation of the final fully executed AHA and the related Mortgage and any amendments thereto in the Office of the Essex County Register’s Office.
6. The Mortgage and Mortgage Note given by the Entity in favor of the City of Newark shall ensure compliance consistent with all of the requirements of the HOME Program, pursuant to the HOME Program Statue and Regulations (24 C.F.R. Part 92) and all Application Laws and Guidance.
7. Subject to the satisfaction in the sole discretion of the City of all of the terms, covenants and other conditions set forth in the AHA and other documents and agreements executed and delivered by the Entity in connection herewith and the Project, the Mortgage Note and the Mortgage made in favor of the City shall be forgiven and discharged by the City upon the expiration of the twenty (20) year affordability period. Notwithstanding the foregoing, the loan will be required to be repaid in full at the end of the twenty (20) year affordability period or earlier if any of the terms, covenants and other conditions of the Agreement and/or other documents and agreements executed and delivered by the Entity in connection herewith and the Project have been violated and/or breached by the Entity or the Entity otherwise defaults with respect to their respective terms, covenants and/or conditions as provided therein.
8. The Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized to effectuate certain business terms and conditions related to the AHA, as amended, as permitted by New Jersey Law and may enter into subordination agreements, access and right of entry agreements and other relevant documents related to these fund allocations in forms subject to the approval of the Corporation Counsel. In addition, the Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized to enter into a maximum of two six month extensions of the term set forth in the AHA, as amended, and any contract timelines and milestones contained therein, provided that any contract timelines and milestones are not extended beyond the two permitted six month extensions, subject to full written disclosure (in the form of a signed memorandum to be submitted prior to adoption) to the Newark Municipal Council by the Deputy Mayor/Director of the Department of Economic and Housing Development and the approval of the Corporation Counsel.
9. Disbursement of the Federal HOME ARP Program Funds for the Project in the amount of $3,600,000.00 shall be subject to the terms and conditions set forth in the AHA, which is attached hereto and a made a part hereof.
10. The Entity must adhere to all milestones and timelines in the Project Schedule approved by the Department of Economic and Housing Development. The Property must conform to the City of Newark Design and Construction Standards Guidelines for New Home Construction, including standards for environmental sustainability and energy efficiency, as established by the Department of Economic and Housing Development. Should the Entity fail to complete the Project within the specified time frame, then the City, in its sole discretion, in addition to any other remedy available by the Agreement or as allowed by law, may direct the Entity to repay all HOME ARP Program Funds expended on the Project back to the City.
11. The term of the AHA shall be for a period of twenty (20) years from the date of adoption of this authorizing resolution by the Municipal Council. HOME ARP Funds must be expended within forty-eight (48) months from the date of adoption.
12. The Entity must remain in compliance with Municipal, State and Federal Laws including, but not limited to the City of Newark's Minority Set-Aside Ordinance (6S&Fd adopted April 5, 1995) and its Affirmative Action Plan (7Rbp adopted March 1, 1995) and Federal Executive Order 11246 (as amended by Executive Orders 1137 and 12086) with respect to the award of goods and services. The Entity has agreed to ensure that a minimum of 40% of the workers employed during the construction of the project shall be Newark residents and that 30% of all contractors, subcontractors and suppliers shall be Newark companies.
13. Units assisted with HOME ARP Program Funds must be designated upon execution of the AHA and must remain fixed HOME ARP-Assisted Units for the duration of the affordability period. Households seeking to occupy a HOME ARP-Assisted Units must be certified prior to occupancy and recertified annually consistent with the requirements of the HOME ARP Program.
14. Attached hereto is a Certification of Funds from the Municipal Comptroller of the City of Newark which states:
a) there are sufficient funds in the aggregate amount of $3,600,000.00 for the purpose set forth herein and above; and that the line appropriation of Official Budget which shall be charged as follows:
Business
Unit Dept. Div/Proj. Activity Account# Bud. Ref Amount
NW051 G23 D23D0 A 72090 B2023 $3,600,000
STATEMENT
This Resolution hereby authorizes the Mayor and/or his designee, or the Deputy Mayor/Director of the Department of Economic and Housing Development to enter into and execute a Deed Restrictive HOME ARP Affordable Housing Agreement with New Community Homes Development LP, 233 West Market Street, Newark, New Jersey 07103, for Federal HOME ARP Program Funds in the amount of $3,600,000.00 to subsidize the construction of a new 4-story residential affordable and supportive building that will consist of one hundred and twenty (120) residential rental units (11 HOME ARP-Assisted Units) upon real property located at 202 South Orange Avenue (Block 242; Lot 1) (Central Ward) of the Tax Map of the City of Newark, County of Essex, State of New Jersey, which Project shall be a part of the City’s First Amendment to the Central Ward Redevelopment Plan, adopted on August 17, 2005, by Ordinance No. 6PhS+FE(s), as amended to date. The HOME ARP-Assisted Units shall remain restricted and affordable for a period of twenty (20) years consistent with the requirements under the HOME Program (24 C.F.R. Part 92).