Tonight at City Hall, sometime after 6 p.m., the Municipal Council will vote on a deal that would expand and preserve affordable housing at Newport. The deal is item 4.9 on this agenda: https://cityofjerseycity.civicweb.net/Portal/MeetingInformation.aspx?Org=Cal&Id=335

Background

30 and 40 Newport Parkway are two buildings built in the Newport section of Downtown in 1988. The property received a state tax abatement that is expiring in 2028. As one of the terms of this abatement, 160 income-restricted affordable housing units were included within the property, for the term of the abatement. Now that the abatement is expiring, Lefrak, the owners of the property have made a deal with the city that would expand the number of income-restricted affordable units to 178 and reduce the income levels on many of the units. About 116 units that are currently set aside for households below 80% of Area Median Income (AMI) would in the future be reserved for households making 30% or 50% of area median income.

In return, the owners are seeking a new, 30-year tax abatement from the city. They would continue to make payments to the city in lieu of taxes. In fact, the payments would grow from the current $2 million annually to a projected $4 million per year, according to an independent third-party financial analysis commissioned by the city from NW Financial.

Affordable Housing is a Societal Obligation; If We Want Affordable Housing We Must Subsidize It

Judging from their campaign slogans and election speeches, every politician in the city seems to recognize the dire need for affordable housing set aside for very-low and low-income families in Jersey City. However, building and preserving affordable housing is costly, and these same politicians are much cagier about how to pay to create that affordable housing. In many cases, they seem to propose unsubsidized affordable-housing schemes that will choke housing supply and raise rents, making our city less affordable overall, while creating disappointingly little affordable housing. Such unsubsidized schemes have helped make cities like Boston and San Francisco the #1 and #3 most expensive cities in the United States.

Housing economists and housing experts instead call for fully subsidizing affordable housing production via tax abatements and other city financing tools like the ones proposed here [1]. In fact, a recent study found that a voluntary incentive scheme for affordable housing produces over three times more affordable housing per subsidy dollar than an affordable housing mandate, because developers will apply for incentives to build affordable housing where the financial conditions are most conductive to efficient application of the subsidy [2]. And this abatement case is a perfect example: in a building that’s already been built, costs to convert the units to be affordable are much lower than in a new building with huge upfront construction costs. In the case of 30 and 40 Newport, the developer only needs to finance renovation of the units, while in the case of a newly built building, the developer would need to finance new construction of the units and require a bigger subsidy to make it financially feasible.

Call to Action

Unfortunately, the council vote to introduce this ordinance was not unanimous, with two council members voting against and one abstaining. If you can, please consider attending this council meeting tonight to urge the council to vote in favor of the ordinance.