For two years, Newark Mayor Ras Baraka has promoted an expansive vision of urban redevelopment, one that would extend beyond the usual tax abatements for downtown complexes to reinvigorate struggling outer neighborhoods.
“We must take action to help families stay in their homes, and promote a strong, safe and growing community,” Baraka said in launching the effort shortly after his election in 2014.
In a message that drew attention around the state and nation, Baraka pledged to use redevelopment tools often turned against minority neighborhoods for their benefit. He particularly focused on a novel use of eminent domain, which allows government to acquire property for a public purpose, to protect homeowners from foreclosure.
New Jersey housing prices still have not recovered to prerecession levels, and Baraka acknowledged that Newark faces particular problems. Many local homeowners are “underwater” on their mortgages, owing more than the properties are worth. Meanwhile, rents are rising as real-estate investors buy up foreclosed properties.
“The same way we’re going to use eminent domain to develop properties, we should be able to use eminent domain to keep people in their homes,” Baraka told a housing forum in July 2015.
Yet by the time the city council enacted a major piece of Baraka’s program on Thursday, a “model neighborhood initiative” for part of the West Ward, it scarcely mentioned home retention, much less eminent domain. Instead, it authorized redevelopment projects in the target area, with the details to be worked out with developers.
Linda Fisher, a Seton Hall University law professor who studies the impact of foreclosures on Newark neighborhoods, said she was struck by the plan’s “glaring silence on residents keeping their homes.”
As the council voted 6-0 to approve the redevelopment plan, city officials and residents continued to talk past each other, with the most vociferous exchanges concerning the approval of more tax abatements near the city’s center. Councilman Augusto Amador, who chaired the session, offered a grittier assessment of what “model neighborhood” redevelopment means for West Ward housing.
“All we are doing is eliminating a ton of properties that are idle, that nobody pays property taxes on, that we provide city services to the residents because we get calls,” Amador said.
Residents with opinions about the neighborhood’s future development “should wait until there’s a project in place that’s been negotiated with redevelopers and they bring it in” for approvals, he said.
“That’s not not what’s been articulated by the mayor over the past two years,” said Trina Scordo, executive director of New Jersey Communities United, a locally based housing advocacy group. “It’s a real letdown.”
Her group favors using eminent domain to acquire underwater home loans from mortgage holders, something the council approved after Baraka’s election. But Councilman John Sharpe James noted that following through would trigger a well-funded legal challenge from big players the financial industry.
“There is no clear-cut path to taking over a toxic mortgage from a bank,” he said. “It was considered out in California,” he said, but officials in cities there feared the legal fight might jeopardize housing funds. Neighboring Irvington dropped its eminent domain plan after Mayor Wayne Smith lost a reelection bid.
Even if the council is reluctant to use eminent domain, Newark should do something, said resident Andrew Inweh. The model neighborhood initiative, from the Hoboken consulting firm Phillips Preiss Grygiel, only mentioned the city’s foreclosure problems as a prelude to the redevelopment plan, he said.
“The Mayor promised he was going to help us keep our homes, yet there’s no mention of that in this entire plan,” he said.
Inweh lives in the South Ward, the next area slated for the “model neighborhood” approach. With his mortgage also underwater, he said he fears the city’s plan for his area will also ignore residents who are trying to remain.
“I talk to a lot of people, and Newarkers feel they they’re getting priced out of Newark,” he said.
As approved by the council, the West Ward plan acknowledges redevelopment will force out some current residents from the target area, 21 blocks between West Side Park and South Orange Avenue. The Baraka Administration did not respond to questions about how many residents might be affected.
As laid out in the plan, the city or its agencies will be responsible “for assisting in the relocation of all occupants displaced by a condemnation action.” Costs will be “negotiated between the redeveloper and the City or its redevelopment agency… on a project-by-project basis,” the plan says.
“As a former teacher, I have witnessed the destructive effect dislocations can have on schoolchildren,” said resident Leah Owens, a Communities United member. Among the properties targeted, “some are underwater (on mortgages) and some of them are still occupied,” but that is not mentioned in the plan, she said.
Newark is wrestling with the same issues facing many communities across the country, said Christopher Niedt, director of Hofstra University’s National Center for Suburban Studies. Choosing his words carefully, and interspersing them among long pauses, Niedt acknowledged the new ordinance does not reflect Baraka’s previous statements on the issues.
“This is the standard redevelopment strategy of trying to knock down portions of a neighborhood and start over,” he said.
“Residents should be asking questions of their elected officials,” Niedt said, because “too few of the details and the long-term vision for the redevelopment area have been made clear.”
The city is pursuing other ways to provide or keep affordable housing, said Baye Adofo-Wilson, the deputy mayor for housing and economic development.
New Jersey Community Capital, a housing organization with an office in the city, has been perhaps the nation’s most successful nonprofit at obtaining troubled mortgages sold off by federally supported agencies. NJCC then attempts to work with homeowners to lower “underwater” mortgages to market value, so they can afford the payments.
Normally, the agencies such as Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corp.) sell their nonperforming loans to financial institutions or venture capitalists who foreclose on them.
“The underwater mortgages are contributing to blight,” as the borrowers or the note-purchasers fail to maintain properties, Adofo-Wilson said. Newark officials and NJCC are convinced the Federal Housing Administration to approve more sales of troubled mortgages to them, he said.
The city is also “working on a strategy where 20 percent of the units that are built are affordable,” Adofo-Wilson said. “There are affordable housing units that are coming up, there are affordable housing units that are being renovated.”
On at least one landmark point, the model neighborhood redevelopment plan is more forthcoming than other statements by the city. It touts a site known to generations of New Jerseyans for a 60-foot beer bottle as an engine for job growth in the West Ward.
The former Pabst brewery complex straddling the Irvington border is just outside the designated area. But the property offers a potential site for a supermarket and other business, according to the plan.
Over the past decade, Niedt said, Milwaukee has succeeded with an eerily similar project, the redevelopment of a former Pabst complex into a “gateway to downtown,” including apartments, offices and university facilities.
But Newark’s Pabst planning has dropped from sight since the city requested proposals in December, noting groundwater contamination on the site. Adofo-Wilson did not respond to questions about progress in evaluating proposals.