NJCC’s holistic approach brings change to Newark

Newark’s one movie theater was on the verge of closing its doors for good.

In stepped New Jersey Community Capital — the state’s largest community development financial institution — and investment partners followed. They turned the failing theater into a 12-screen movie complex that helped spur growth and development along the long-blighted Springfield Avenue corridor.

That was one example of NJCC investing in the state’s largest city and elsewhere, using a portion of $45 million in New Market Tax Credits the organization got last year.

The 16-year-old NMTC program was designed to increase the flow of capital to businesses and low income communities by providing tax incentives to private investors. Those receiving allocations seek out qualifying projects in low income communities and work with investors who are willing to invest in these projects in return for a seven-year tax incentive. 

NJCC looks for qualifying projects through its existing lines of business, including Community Loan Funds of New Jersey’s lending program, local partners and through its community advisory board.

“It goes to that whole holistic approach to community,” said Daniel Arndt, lending team leader for NJCC. “We don’t want to just invest in one project. We want one project to kick off another.”

Since the NMTC program was authorized in the Community Renewal Tax Relief Act of 2002, NJCC has received $215 million that has been or will be invested in communities throughout New Jersey, creating retail, art and residential space, schools and jobs in distressed communities.

Newark projects include Audible, the old Hahne & Co. building, Teachers Village, Rutgers Business School and North Star Charter School, among others.

“Newark, quite honestly, has been able to take advantage of NMTC,” said NJCC Chief Operating Officer Marie Mascherin, citing its investment in the Rutgers Business School as the beginning of downtown Newark’s Broad Street revitalization. “We take a holistic approach to community revitalization. One of the benefits of NMTC is that it serves as a catalyst. Residents should have the opportunity for economic growth. That’s really what it comes down to if you drill it down.”

Several Newark charter schools have also reaped the benefits of NJCC’s investments.

In 2005, it allocated tax credits that helped secure Prudential Financial’s investment in the Marion P. Thomas Charter School.

“It was the tax credits that made this an attractive investment project for Prudential,” said Rev. Garvey Ince, executive director at Friends of MPTCS. “Without the allocation, we are not sure that this would have been the case.  Friends was a relatively new entity at that time and did not have any assets with which to collateralize the investment. At the end of the seven years, Prudential forgave a portion of the debt and there was a significant amount of equity assessed when the deal had to be refinanced.”

Friends of MPTCS was eventually able to acquire 14 blighted lots from the city and develop them into educational space. 

“New Markets Tax Credits could be characterized as the gift that keeps on giving,” Ince said. “NMTC have allowed many not-for-profit and for-profit entities in urban cities like Newark in need of renewal to activate projects that have turned once-blighted space into usable community space. This provides both a visible enhancement as well as increasing the property value of private citizens who then purchase homes in those areas.”

L+M Development Partners has invested heavily throughout Newark with projects like the Hahne’s mixed-use redevelopment.

“A complicated project like Hahne’s required an extremely complex financing structure and, if it were without any of its pieces, it would have been impossible,” said Jonathan Cortell, a vice president at L+M. “We strongly believe that participation by local institutions such as Rutgers, Prudential, as well as NJCC, makes Hahne’s a special project that has been catalytic for the city of Newark on a variety of levels. The engagement by these institutions means that the building’s true impact expands beyond the property boundaries.”

NJCC President Wayne Meyer said the organization has used the NMTC program in areas like Newark’s Fairmount, University Heights and downtown neighborhoods.

“Each NMTC project allows NJCC to not only work collectively with the city, neighborhood stakeholders and mission-aligned investors and funders, but also support economic development projects and small businesses that create jobs and opportunities for local residents, increase educational opportunities and provide vital services to the Newarkers who need them most,” Meyer said. “Through these intentional and strategic efforts, NJCC and our partners help affect meaningful neighborhood change, retaining community assets while creating new ones.”

The program expires this year, but NJCC’s Arndt expects Congress to renew. “It has bipartisan support but we’ll be out next year banging the drums,” he said.