Newark is the largest and most populous city in the most densely populated state in the U.S. It has a rich history dating to colonial days, a highly diverse population that has fostered a vibrant mix of cultural traditions, and sits in the heart of the broader New York metropolitan area. It has also seen more than its share of challenges, offering a classic example of the economic decline and blight that affected many large cities in the latter decades of the 20th century.
Today, Newark is experiencing a renaissance. Poets, musicians, actors, artists and intellectuals are moving from New York City and around the world to converge and collaborate with long-time local creative residents. The City of Newark is pushing the limits of its new narrative—to be known as a competing “livable city.” This urban cultural rebirth is gaining national attention, as evidenced by our joining the list of potential locations for Amazon’s second headquarters. Talented creatives, young professionals, entrepreneurs and real estate developers are capitalizing on the revitalization of Newark—but this attention brings risk to the multiple struggling populations that call Newark home.
The Newark Community Economic Development Corporation (NCEDC) is the primary economic development catalyst for the city. It is organized to retain, attract and grow businesses, enhance small and minority business capacity, and spur real estate development throughout the city’s 20 diverse neighborhoods. One of the NCEDC’s key current focus areas is to plan real estate developments that continue to serve the makers, creatives and artists who fuel the city’s unique culture. We know the classic story: Once a city’s market shows signs of economic and cultural reawakening, populations with deeper resources from neighboring areas engage as “urban pioneers.” The creative populations are then priced out of the same city they helped to make desirable. The NCEDC is working in partnership with the Mayor and the City of Newark’s EHD, and private developers, to prevent this from happening as Newark continues its resurgence.
For the emerging buildable market, the availability of funding sources makes it extremely challenging for property owners or developers to adequately rehabilitate properties to serve the valuable makers and creative population. Here is where the City of Newark, through the NCEDC, is playing a key role.
To illustrate how the city is working with private partners, we highlight two flagship developments, well underway in the planning phases, that will focus on affordable spaces intended to support and retain Newark’s creative resources.
Seaview Development Corp, a private real estate development firm based in New York, is proposing to build an 81-unit mixed-income, mixed-use project in Newark’s Central Ward, titled Makers Village.
The project centers on the restoration of the Krueger-Scott Mansion, which has been vacant for at least 30 years. The mansion was built in the late 1800s by a German immigrant who became a highly successful local beer merchant; it was later home to Louise Scott, founder of the Scott School of Beauty and one of the first African-American woman millionaires in the city. The legacy of the Krueger-Scott mansion as a home to entrepreneurs has inspired the idea of creating a nonprofit center serving the residents of Newark.
The proposed plan is to build an entrepreneurship center utilizing the mansion along with affordable loft commercial shops for makers. The development will also maintain an urban greenhouse farm and a commercial kitchen for chefs, which will be available to the public to rent or for chefs to host open events. A maker will be able to lease an apartment plus loft space for $1800 per month, enabling a start-up to affordably conduct light manufacturing within the space. The redevelopment plan entailed rezoning to allow for light manufacturing, residential and mixed uses specific to the Krueger-Scott project.
The total development cost will be approximately $30 million; the city is subsidizing the development with $9 million in support via sources such as a new market tax; historic tax credits, a redevelopment area bond, and affordable housing trust funds. Since the Makers Village project was announced, other developments within the immediate area with significant social and economic impact have sprouted up. It is important to note that these projects require deep subsidy by the City of Newark, the State of New Jersey and Federal funding. The projects must create a feasible return on investment in order for investors and the City of Newark to fund.
505 Clinton Avenue
The City of Newark is sponsoring another arts-focused development project along the Clinton Avenue artist corridor. The 27 live/work lofts mixed-use project will maintain another 2,000 square feet of retail and performance space for artists, poets and the community.
The development site is the former Clinton Trust Company, a stately building that also sat abandoned for decades. The building’s historic facade will be saved for this project with modern construction attached. Phase II of the project will contain performance studios and a gallery space at the cellar level. The total project cost is $8.5 million, which is being totally funded by the City of Newark and the Newark Community Economic Development Corporation as redeveloper. The project, conceived by Mayor Ras J. Baraka, is intended to revitalize the South Ward neighborhood and serve as an anchor of culture and the community. The project will also maintain a Trust ownership for the local creative population. Most developments that provide an economic good to the low- to moderate-income populations require at least 10-15% subsidy within the capital stack in order to make these projects financially feasible.
The City of Newark has faced the challenge of standard affordable housing development policies not adequately addressing creative low- and moderate-income populations. To obtain the city’s and NCEDC’s support, development proposals must leverage the unique talents of the creative class, as they were the original stabilizers of the “Newark Renaissance.” This is a space whereby investments can generate reasonable returns. Subsidies provided by local, State and Federal governments are leveraged as funding sources that decrease risk to investment institutions and individuals to support the dual goals of financial feasibility and economic and social vitality.
Photo: Conceptual rendering of the Makers Village project. ©Makerhoods.org.
This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.