NEWARK, NJ - Nearly 270 units of Section 8 housing at Zion Towers will be repaired after two big-name property owners refinanced on a deal that allows for $20 million in renovations.
L+M Development Partners and Prudential bought the South Ward property in late 2017 for $28 million, just as the state was gearing up to terminate the Section 8 contract at the “severely neglected” complex. The two companies spent more than $7 million on immediate fixes to preserve its Section 8 status when it first purchased the property.
A deal was reached with the New Jersey Department of Community Affairs to extend the Section 8 contract for Zion Towers at 515 Elizabeth Ave. for 20 years. The refinancing allows for $20 million in additional fixes for those who currently live there.
“I would like to thank L+M for taking over a building which has had decades of mismanagement by prior owners,” said South Ward Councilman John Sharpe James. “Rather than displacing South Ward residents from a building with affordable Section 8 apartments, as was done at vacant Carmel Towers, L+M will take on the heavy task of renovating every unit."
Every apartment will get new kitchens and bathrooms. There will also be renovations to the lobby and community room, roof repairs, new windows, elevator upgrades and an overhaul of the heating and air conditioning system.
The two companies have partnered with Collaborative Support Programs of New Jersey to provide supportive services and outreach for 12 one-bedroom units that are targeted for mental health special needs residents.
“Keeping housing affordable for Newark residents through preservation, new construction and rent limitations is one of the most important priorities of my administration,” said Mayor Ras Baraka, who formerly represented the South Ward as a councilman.
James, who represents the ward where Zion Towers is located, said he has received complaints about the building under its previous ownership.
“They even took all the brass fixtures off the fire hose system when they sold the building,” James told TAPinto Newark. “So whatever they could remove from the building immediately following the sale, they did. That just shows a blatant disregard for the safety of the residents.”
Property records show that Zion Towers Realty previously owned the property. The registered agent of that company was Cogency Global, Inc. which was based out of a residential property in Dayton during 2017. Cogency Global offers "reliable registered agent" services and was formerly known as National Corporate Research.
A few months before the sale, Zion Towers Realty changed its registered agent to Newark-based Radiant Property Management, state treasury records show. A voicemail seeking comment from Radiant Property Management about its involvement in Zion Towers was not returned.
It’s not uncommon for companies or individuals to use LLC’s to mask the true owners of a company. The practice happens often in Newark. One person based out of a Ramsey address has bought more than 30 properties in Newark, but the company behind the purchases remains a mystery.
Ever since Zion Towers was purchased, the heat and hot water boilers were replaced and showers were repaired to eliminate building-wide leaks. A new security camera system was also put in place, L+M and Prudential said.
L+M has been involved in several projects in downtown Newark, including the Hahne & Co. Building and the New Jersey Bell building. Prudential and L+M are also involved in a possible project at 31 Central Ave.
“Our work in the outer wards is focused not just on revitalizing distressed properties but also ensuring that those living there can stay there,” said L+M Managing Director of Preservation Jeffrey Moelis.
This is an entirely affordable housing project and will not include mixed-income housing, a spokesperson for L+M said. Zion Towers is also under a New Jersey Housing and Mortgage Finance Agency agreement, which guarantees affordability for the next 30 years.
“Access to quality affordable housing is essential to financial wellness,” said Reuben Teague, vice president of impact and responsible investing at Prudential. “Investments in affordable housing are a critical component of our work to drive inclusive economic growth here in our home city of Newark.”
Refinancing for the repairs came from New Jersey Housing and Mortgage Financing Agency (NJHMFA) and Citi Community Capital loans. The project also received an award of 4% Low Income Housing Tax Credits from NJHMFA and tax credit equity from Wells Fargo Bank.
The NJHMFA also provided subsidy loans. The city struck a payment in lieu of taxes agreement for the project too.
L+M and Prudential also purchased the George King Village, ensuring that all 422 units remain affordable there.