How Newark became a hotbed of cookie

How Newark became a hotbed of cookie-cutter, multifamily housing

Monday, December 05, 2005

BY IAN T. SHEARN

Star-Ledger Staff

In the summer of 1972, Alfred Faiella took a summer job in the Newark tax collector's office.

In a city that had been ravaged by riots five years earlier, his responsibility was to help with the onslaught of 1,110 foreclosure notices before he returned to Seton Hall Law School to get his degree.

Twenty-six years later, Mayor Sharpe James asked him to come back and do something about all those foreclosed properties, which had grown to more than 4,000. As director of Housing and Economic Development, Faiella devised a plan to offer developers land for $1 square foot, as opposed to auctioning it.

"Make it attractive enough," he said, "and developers are the greatest people in the world."

Soon, cookie-cutter houses were shooting up all over Newark, most designed by the same architect, carrying two floors of living space atop a garage and rear apartment. Between 2000 and 2004, the city issued 6,346 residential building permits -- almost triple the amount issued the previous five years. Most were for multifamily houses.

"It's a formula from the turn of the century," said Dennis Gale, an urban planning expert at Rutgers University, recalling the triple-decker row houses of New England, where immigrants used one floor for their parents and rented out the third floor.

Taking advantage of government-backed mortgages, banks working with the developers came up with financing arrangements that allowed purchasers to put little or no money down. Buyers were given five-year tax abatements, with rental income from the property intended to cover mortgage payments.

The real success of the program, Faiella said, can be seen in the new homes in less-desirable neighborhoods, particularly the South and Central wards.

That's no accident, Faiella claims. He said he told developers, "If you don't develop in the South and Central wards, you don't get the North or East wards."

But the program has critics.

The nearly identical multifamily "snout homes" are going up without any semblance of planning, they say.

"What's going on in Newark is troublesome compared to other cities," said Roland Anglin, director of the New Jersey Public Policy Research Institute. "The houses are going up very quickly. There seems to be shoddy work. Ten years from now, these buildings are going to be ugly."

In addition, Anglin said some nonprofit organizations in Newark are upset because they "are not part of the deal." New York City, he said, works predominantly with nonprofit organizations, which give the city better returns on the sale of its properties.

The liberal use of tax abatements for market-rate housing is "characteristic of Newark and very few other places," said Anne Babineau, a land-use attorney for Wilentz, Goldman & Spitzer in Woodbridge. "Usually five years is not enough to make a difference," she said. The sole purpose of the tax abatement, she said, is to induce people to buy.

This no longer seems to be a problem. New homes are fetching $500,000 and $600,000 in questionable neighborhoods. And many are being sold pre-construction.

Even with the prospect of rental income, the affordability of the homes may be an illusion, some critics say.

"I see people buying houses on very thin ice," said Raymond Ocasio, executive director of La Casa de Don Pedro, a Newark-based community development group that builds affordable housing. "They are using every trick in the book to make housing affordable."

Ocasio said new owners are charging upwards of $1,000 a month in rent, then often illegally converting the space behind the garage for an additional apartment to gain income to cover their mortgage.

Add it all up, Ocasio said, and the city's lack of planning is headed for disaster.

"The train is running crazy out there," he said, "and we're trying to figure what kind of tracks there should be."