Title
Dept./ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing (X) Amending
Type of Service: Private Sale/Redevelopment/Subordination Agreement
Purpose: An Agreement to subordinate the City’s Reverter Rights by entering into a Second Amendment to the Agreement for Sale and Redevelopment of Land and a Subordination Agreement in order to permit financing necessary for the construction of two (2) buildings consisting of sixteen (16) affordable housing units through rehabilitation and new construction, together with approximately 1,900 square feet of commercial and community space and four (4) buildings consisting of sixty (60) market rate residential rental units.
Entity Name: 650 Springfield Ave Urban Renewal, LLC and 41 19th Ave 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)
55 19th Avenue/Block 364/Lot 1/South Ward
709 South 16th Street/Block 364/Lot 9/South Ward
711 South 16th Street /Block 364/Lot 10/South Ward
713 South 16th Street/Block 364/Lot 11/South Ward
715 South 16th Street /Block 364/Lot 12/South Ward
717 South 16th Street/Block 364/Lot 13/ South Ward
650-656 Springfield Avenue/Block 364/Lot 21/South Ward
718-722 South 17th Street/Block 364/Lot 22/South Ward
714-716 South 17th Street/Block 364/Lot 24/South Ward
712 South 17th Street/Block 364/Lot 26/South Ward
708 South 17th Street/Block 364/Lot 28/South Ward
724-726 South 17th Street/Block 364/Lot 29/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.
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WHEREAS, pursuant to Resolution 7R2-g(AS) adopted on April 19, 2017, the Mayor of the city of Newark and the Deputy Mayor/Director of the Department of Economic and Housing Development were authorized to enter into and execute an Agreement for the Sale and Redevelopment of Land (the “Agreement”) with 650 Springfield Ave Urban Renewal, LLC, 61 Deans Lane, Monmouth Junction, New Jersey 08852 (the “Redeveloper”) for the sale of land owned by the City of Newark (the “City”) located at 55 19th Avenue, 709 South 16th Street, 711 South 16th Street, 713 South 16th Street, 715 South 16th Street, 717 South 16th Street, 650-656 Springfield Avenue, 718-722 South 17th Street, 714-716 South 17th Street, 712 South 17th Street, 708 South 17th Street, and 724-726 South 17th Street and identified on the Official Tax Map of the City of Newark, as Block 364, Lots 1, 9, 10, 11, 12, 13, 21, 22, 24, 26, 28, and 29 (the “ City Properties”), for a purchase price of One Hundred Seventy-Five Thousand Twelve Dollars and Zero Cents ($175,012.00) for the construction of approximately (115) units of mixed-income housing with parking and outdoor space (the “Project”); and
WHEREAS, subsequently the City adopted Resolution 7R2-g(AS) on July 22, 2020, authorizing the Mayor of the city of Newark and the Deputy Mayor/Director of the Department of Economic and Housing Development to enter into and execute a First Amendment to Agreement for Sale of Land and Redevelopment (the ”First Amendment”) to update the project description, as defined in the First Amendment; permit the development of a portion of the Project, by 41 19th Ave Urban Renewal, LLC, an affiliate of Redeveloper (together, the “Redevelopers”); and include Redevelopers’ owned properties as part of the Project (collectively “Properties”); and
WHEREAS, such sale was authorized pursuant to N.J.S.A. 40A:12A-8(g), and the South Ward Redevelopment Plan, and N.J.S.A. 40A:12-13, which requires that such conveyance be subject to the condition that title to the Properties revert back to the City in the event of a Default as defined in the Agreement and/or First Amendment (th e“Reverter Right”); and
WHEREAS, the Redevelopers have secured construction financing from GOLDMAN SACHS BANK USA, a New York chartered bank and its successor(s) and assignee(s) (“GS”), in the approximate principal amount of $2,155,248.00, and Redevelopers may secure additional loans in the approximate aggregate principal amount of $2,700,000.00 from GS, at GS’s sole and absolute discretion (each, a “GS Loan”), and permanent financing from A&S CAPITAL LLC, a Florida limited liability company, its successors and/or assigns (“A&S”, and together with GS, the “Lenders”) in the approximate aggregate principal amount of $2,891,208.00 (“A&S Loan” and together with the GS Loans, the “Loans”), to develop the Project, which Loans will be evidenced by Promissory Notes and will be secured by Mortgages on the Properties; and
WHEREAS, as a condition of the above Loans, the Lenders have requested that the City subordinate its Reverter Right, within the First Amendment, the Agreement and the Deed(s), to the Mortgages; and
WHEREAS, pursuant to Section IV, (j) of the Agreement, the Reverter Right may be subordinated by the City subject to formal approval by the Municipal Council and the satisfaction of the requirements as set forth at N.J.S.A. 40:60-51.2; 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 (2) 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, the Department of Economic and Housing Development caused a notice to be advertised, including the requirements established in N.J.S.A. 40:60-51.2, in the Star Ledger on April 4, 2022 and April 11, 2022, which complies with the notice requirement of once each week for two (2) weeks; 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 making a modification to the Right of Reverter contained in the Agreement, First Amendment, and the Deed(s), by entering into a Second Amendment to Agreement for Sale and Redevelopment of Land, so as to accomplish the Project.
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 Subordination Agreement with the Lenders, and a Second Amendment to Agreement for Sale and Redevelopment of Land, with 650 Springfield Ave Urban Renewal, LLC and 41 19th Ave Urban Renewal, LLC (collectively “Redevelopers”) in the form attached hereto as it pertains to the properties located at 55 19th Avenue, 709 South 16th Street, 711 South 16th Street, 713 South 16th Street, 715 South 16th Street, 717 South 16th Street, 650-656 Springfield Avenue, 718-722 South 17th Street, 714-716 South 17th Street, 712 South 17th Street, 708 South 17th Street, and 724-726 South 17th Street and identified on the Official Tax Map of the City of Newark, as Block 364, Lots 1, 9, 10, 11, 12, 13, 21, 22, 24, 26, 28, and 29 (the “City Properties”) which were sold to Redevelopers, pursuant to Resolution 7R2-g(AS) adopted on April 19, 2017, and Resolution 7R2-g(AS) adopted on July 22, 2020, for the construction of two (2) buildings consisting of sixteen (16) affordable housing units through rehabilitation and new construction, together with approximately 1,900 square feet of commercial and community space and four (4) buildings consisting of sixty (60) market rate residential rental units (“Project”).
2. 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.
3. 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.
4. The Deputy Mayor/Director of the Department of Economic and Housing Development shall place a filed copy of this Resolution, the fully executed Subordination Agreement, and the Second Amendment to Agreement for Sale and Redevelopment of Land with the Office of 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 Reverter Rights through the execution of a Subordination Agreement and Second Amendment to Agreement for Sale and Redevelopment of Land, in accordance with N.J.S.A. 40:60-51.2, to enable the Redevelopers to obtain financing necessary for the construction of (2) buildings consisting of (16) affordable housing units through rehabilitation and new construction, along with approximately 1,900 square feet of commercial and community space and (4) buildings consisting of (60) market rate residential rental units on the properties located at 55 19th Avenue, 709 South 16th Street, 711 South 16th Street, 713 South 16th Street, 715 South 16th Street, 717 South 16th Street, 650-656 Springfield Avenue, 718-722 South 17th Street, 714-716 South 17th Street, 712 South 17th Street, 708 South 17th Street, and 724-726 South 17th Street, Newark, New Jersey, as shown on the Official Tax Map of the City of Newark, as Block 364, Lots 1, 9, 10, 11, 12, 13, 21, 22, 24, 26, 28 and 29, and further defined within the First Amendment to Agreement for Sale of Land and Redevelopment and Second Amendment to Agreement for Sale and Redevelopment of Land within the South Ward.