NEWARK, N.J. - Before the real estate boom here, the Unified Vailsburg Services Organization (UVSO) didn’t build rental housing, much less projects that mixed apartments with retail space.
The market wasn’t strong enough to support apartments without hard-to-get operating subsidies like project-based Sec. 8 vouchers. And retail space? The city had enough empty storefronts already. Instead UVSO concentrated on building affordable, for-sale homes on the many vacant lots in Newark’s Vailsburg neighborhood. UVSO is the leading community development corporation in this neighborhood, and for years the nonprofit was just about the only developer that would build there.
But over the last two years, developers building homes that will sell at market rates have crowded into the neighborhood, filling in the last vacant lots with new homes and bidding up the price of property.
With the cost of living in the neighborhood beginning to rise, this year UVSO came up with a bold new plan to build hundreds of units of rental and for-sale housing along with commercial space. “It’s a time of a lot of hope and optimism,” said Mike Farley, executive director of UVSO. Newark used to be one of the most blighted cities in the country, with thousands of abandoned properties, ranging from burned-out homes with broken windows to empty lots scattered among the neighborhood’s aging single-family houses.
As recently as 2003, up to 5 percent of the buildings in Newark had been abandoned by their owners, according to experts like Alan Mallach, research director of the National Housing Institute in Montclair, N.J.
But after years of work by city officials and neighborhood nonprofits to repair these neighborhoods, the private market is returning to Newark. Downtown, private developers just finished turning a crumbling, historic office building into 317 luxury, high-rise apartments at eleven80, where tenants pay about twice the city’s average rents.
Out in the neighborhoods, UVSO recently paid $200,000 for a large, decrepit single-family home that would have sold for half that price in 2000, Farley said.
People want to sell their land, but they have a premium price,” said Gerard Joab, senior program director for Multi-City LISC, based in Newark. “We are a victim of our own success.”
The real estate boom is even making it difficult to get vacant and abandoned properties from the city. The city’s portfolio of abandoned property is rapidly shrinking, and officials are seizing few new properties despite the state’s tough Abandoned Properties Rehabilitation Act, a cluster of laws that allow local governments across the state to quickly take possession of blighted buildings. In today’s hot real estate market, when the city warns the owner of a burned-out building to clean the site or lose the property, that owner is now likely to rehabilitate the structure or tear it down and build a new house or even condominiums in its place.
That’s great news for the city. Buildings that had been dangerous wrecks for years are being quickly returned to productive use, at practically no cost to the city. But it’s frustrating for affordable housing developers, who had hoped to use the laws to obtain buildings for affordable housing.
UVSO helped create the housing boom in Vailsburg a few years ago when it partnered with the Franklin Group, based in Paterson, N.J., to build the 23 houses in the Vailsburg Scattered Site Project. They were the first market-rate homes built in the neighborhood in decades and they sold for $265,000 apiece in 2004, an unheard-of price at the time. Now the same homes sell for as much as $400,000.
This local nonprofit plans to benefit from the boom it started. UVSO’s five-year plan calls for developing 100 new, affordable rental apartments. In particular, UVSO plans to target the boarded-up apartments above the existing stores now open on South Orange Avenue, the neighborhood’s main retail strip. The group plans to partner with existing owners to develop and manage these apartments, in addition to developing new mixed-use projects and new two- to six-family homes that include rental apartments.
The plan also calls for 100 new for-sale units. Both the rental and the for-sale units will be offered at prices affordable to the low- and moderate-income households that already live in the neighborhood. The average income in Vailsburg is just 60 percent of the area median.
“I don’t think that because the market goes up it means the end of affordable housing,” Joab agreed. “It might bring shopping back, and help the businesses in the neighborhoods… We can make the commercial pay for some of the residential that’s above it.”
Newark’s revival is bringing new attention to some big plans that once seemed almost impossible. Local Initiatives Support Corp., a New York City-based nonprofit that supports housing and community development, is now working with the city on the beginning of a plan to redevelop 450 acres on the edge of the city around the Home Depot store that recently opened there. This plan, if it proceeds, would eventually result in the creation of 3,000 to 5,000 new units of housing.