To stimulate the redevelopment of underutilized properties and catalyze future development opportunities in strategic urban areas, the Board of the New Jersey Economic Development Authority (EDA) approved an expansion of its Real Estate Impact Fund. Originally created as a pilot program to provide early capital to private developers, the Fund will now offer a public component, allowing Urban Aid municipalities and eligible local redevelopment agencies or county improvement authorities to also qualify for low-interest financing.
The EDA established the Real Estate Impact Fund in 2014 to fill a marketplace need given the unique challenges associated with securing early project financing, particularly for developments in urban markets. The Fund aims to revitalize underutilized properties in Urban Aid municipalities by providing upfront construction capital that smaller-scale commercial or mixed-use development projects may need to advance. The public component of the Fund was crafted based on discussions with community stakeholders that emphasized a need for a similar type of flexible loan product to advance the ultimate development of properties that are currently owned by a municipality, local development agency or county improvement authority.
“By turning underutilized properties into viable development sites, the expanded Real Estate Impact Fund will help pave the way for private investment and the creation of new job opportunities in targeted communities across New Jersey,” said EDA Chief Executive Officer Melissa Orsen.
The expanded Fund will enable Urban Aid municipalities, local redevelopment agencies or county improvement authorities to qualify for low-interest loans of up to $750,000 for certain project costs, including: title, survey, environmental studies and remediation, market and development impact analysis, demolition and debris removal, site boundary security, and marketing the site for sale. To be eligible, the property must be owned by the applicant, lien free, and, viable for mixed-use or commercial development, with proper zoning. Applicants will be required to provide a plan for the end-use of the site.
In addition to the new public component of the Fund, the program remains available to for-profit and non-profit developers and business entities with demonstrated experience in successfully completing real estate development projects. These applicants may be eligible for financing of up to $3 million. The EDA Board acted today to lower the owner equity requirement related to the private component of the Fund from 20 percent to 10 percent, excluding grants or developer fees. Small and mid-size development projects, typically not exceeding a total project cost of $15 million, are eligible. Qualified projects include mixed-use (residential and minimum 20 percent commercial); retail; office; industrial; entertainment venues; associated parking garage structures, and/or land acquisition/assemblages for development. Projects can be either new construction or substantial rehabilitation.
During the Fund’s pilot phase, the EDA provided $1.27 million in financing to East Grand Associates Urban Renewal Associates, LLC to support a 55,463-square-foot commercial development on the site of a former New Jersey Transit bus maintenance facility in Elizabeth. The $17 million project, led by Jacobs Enterprises, is currently under construction and will include a 25,000-square-foot Foodtown supermarket in an area of the city that has been characterized as a “food desert.” As the first major chain grocery store to locate east of Routes 1 & 9 in the city, the new Foodtown will improve access to fresh, healthy, and affordable for more than 50,000 residents. The project was supported by a mix of private and public funding sources, including $4.8 million through the Economic Redevelopment and Growth program.
Orsen noted, “The benefit of the East Grand project to the residents of Elizabeth is clear. We look forward to supporting more transformative projects through the Real Estate Impact Fund that will promote healthy, strong communities.”Related Articles: