Friday, April 21, 2006

Development Briefs

From the Star Ledger:
Windy Acres agreement reached

After months of talks under the watchful eye of the state Council on Affordable Housing, Clinton Township and developer Pulte Homes say they have a new deal for the Windy Acres site.
...
Number one looks like last year's tentative agreement, roughly halving the size of the proposed 911-unit development. Pulte could build 365 age-restricted homes and 90 affordable units on the old farm just east of Lebanon Borough. It would provide land for 60 more affordable homes.
...
If that effort fails, the second option gives the Michigan-based developer the choice of building 58 high-end "McMansions" on 1.5-acre lots with individual septic systems.

If Pulte decides against that project, Clinton Township would be required to buy the 292-acre property, with a formula based on the current value of the 58 building lots. That figure is subject to appraisals, but Councilman Kevin Cimei, who helped negotiate the deal, estimated it would be about $18 million.


From the Record:
N. Arlington OKs development

Over the jeers of residents, the Borough Council voted 4-2 Wednesday night to sign an agreement with a developer to build 1,625 residences along Porete Avenue.

Cherokee EnCap will build the homes and 50,000 square feet of retail along the road, which is in the shadow of a landfill and is home to warehouses and light industrial businesses.

But many of the business owners don't want to leave and have vowed a court battle if the town condemns their properties for the Arlington Valley project.

From the Jersey Journal:
Lofts proposed for E. Newark

A developer is proposing constructing between 700 and 800 loft apartments, as well as commercial space, at the First Republic industrial complex on Passaic Avenue.

The mammoth site, which is currently leased to a number of commercial tenants, houses several four-story brick structures that date to the mid-1800s.

Mayor Joseph R. Smith said preliminary plans call for commercial space to occupy the first two floors. The $100 million project would roll out over a span of three to five years, he added.

Several other developers have also expressed interest in the site and have presented plans for projects including two-family houses, a hotel and a big-box home improvement store.


From the Jersey Journal:
Developer's $22.7M to fill Bayonne budget shortfall

For the second year in a row, Bayonne will look to a developer to help bail it out of a budget crunch.
...
BLRA Executive Director Nancy Kist said the authority expects to get the $22.7 million from the developer of Bayonne Bay at the Peninsula at Bayonne Harbor, formerly known as the Military Ocean Terminal. The city would use that money to further develop infrastructure at the Peninsula.

BLRA commissioners voted earlier this month to conditionally designate the D.R. Horton/Trammel Crow Residential partnership to build 1,769 units of "age-restricted" and "age-targeted" housing on 32.7 acres at the Peninsula's southern border.

The deal is still being negotiated but Kist said she was "fairly certain we'll be able to close on the sale of the property and deliver the money to the city" by June 30.

33 Comments:

Anonymous Anonymous said...

...and each of the above mentioned developments will sell for $600k

4/21/2006 06:48:00 AM  
Blogger bairen said...

Wonder what will happen to all those displaced businesses and their workers.

I think anything labeled affordable housing should have some kind of clause to reduce flipping.

4/21/2006 07:02:00 AM  
Blogger bairen said...

I like how Windy Acres deal hinges on sewer line permits. How ironic.

4/21/2006 07:08:00 AM  
Blogger Metroplexual said...

bairen said...

"I think anything labeled affordable housing should have some kind of clause to reduce flipping."

They do. In the deed there is usually a covenant that only allows the property to be sold at CPI adjusted amounts in the future. No speculation would be allowed under that circumstance unless there was hyperinflation.

4/21/2006 07:25:00 AM  
Blogger Metroplexual said...

Grim,

I got a call from the editor of the record (a Fred Snellfac?) saying that they will use my letter.

4/21/2006 07:28:00 AM  
Blogger Shailesh Gala said...

Unrealtor: In your previous post you were debunking housing shortage.

Look what is happening in Clinton on Windy Acres. The township does not want 900+ normal houses for families, but wants 60+ McMansions, 350+ adults only and 150+ low income housing. In my opinion, this is pure discremination for normal family with kids, who can afford to buy houses at market price. A normal sigle family if available for about $400K, many middle class can afford. But no town wants to allow that kind of houses.

Do your research first on what is demand/supply situation in NJ and then talk about shortage issue. All other issues that contributed to price rises are same for all parts of the country. Just the restrictions here in NJ (also CA) are different then most other areas.

We have to accept the fact that at present Young families are unwelcome by Towns.

4/21/2006 07:43:00 AM  
Blogger grim said...

Metro,

Thanks for writing it, I'm glad to hear they are going to print your letter. I hope they print some of the other letters as well.

Thanks,
jb

4/21/2006 08:18:00 AM  
Blogger Metroplexual said...

Shailesh Gala,

I can tell you from personal experience, planning board members do the math everytime a subdivision comes through. The math goes something like this # of lots times 2 (kids) times $10,000/yr (conservatively). That house will only start paying for the kids when

#1 it is a McMansion and/or
#2 it is age restricted.

This is one of the reasons that municipalities favor large lot sizes. It becomes a price of entry that is built into the even higher cost of the McMansion. I am of the opinion that the wrangling between the municipality and the builder over the types of housing which does not include modest types that are non age-restricted may end up getting them sued, because that is clearly discriminatory.

4/21/2006 08:21:00 AM  
Blogger Metroplexual said...

Your very welcome grim!

4/21/2006 08:22:00 AM  
Anonymous UnRealtor said...

Shailesh, there are nearly 20,000 existing homes on the market in Norhern NJ alone. The problem is not number of existing homes, but the price.

Want a cheaper house, move west towards PA. The price will always be lower.

You want everything -- good location and good price. That's not how things work.

The good locations will always cost more, relative to other areas, but ALL areas are today over-priced.

Please spare me the cries of "discrimination."

4/21/2006 09:37:00 AM  
Blogger Richard said...

inventory just keeps building folks. price declines are only a short time away. wait until all those who need to get their kids into the new schools exit the market, then it'll get even worse.

4/21/2006 10:14:00 AM  
Blogger Metroplexual said...

It is discriminatory how municipalities have employed "vasectomy zoning". The main problem is that it is legal.

4/21/2006 10:15:00 AM  
Anonymous UnRealtor said...

Here's a great post on "afordable housing":

http://thehousingbubbleblog.com/?p=529

Summary: building "affordable housing" = taxpayers paying to prop up bubble prices.

4/21/2006 10:31:00 AM  
Blogger grim said...

Exactly.

Want more affordable housing?

Eliminate the tax benefits of second homes by eliminating the mortage interest deduction on both second and vacation homes.

Then, go even further and eliminate the interest deductions of HELOCs, equity lines, etc.. Period. There needs to be tighter restrictions on rolling unsecured debt into a mortgage, etc.

I don't get to deduct my loan interest on my big Hummer (I don't actually own one). However, if I roll that debt into my mortgage, I get to write it off? Sorry, that doesn't make sense.

Lastly, drop the cap gains limit significantly. $500,000 for a married couple? Sorry, too high.

I'm sure we'd all be amazed at how much more affordable housing would be.

grim

4/21/2006 10:48:00 AM  
Blogger Metroplexual said...

As Chicagofinance has pointed out and I believe him to be correct. AMT will be hitting those owners with a second home where interest will not be deductible. The AMT patch was not renewed this year due to foot draging in DC so some people are going to have a hefty tax bill next year.

4/21/2006 12:00:00 PM  
Blogger Shailesh Gala said...

Unrealtor:
I do agree to most of your observations regarding High prices. I think they are ridiculously high. I also agree to Grim's earlier point. The Tax exemption and tax relief of cap gains have helped in increasing the prices as well. And I do also think that prices are going to come down from this highs.

The only additional point, I am trying to make is that along with all these reason, there is some truth to supply side restrictions as well. If you don't buy that argument, Fine. Probably there are no restrictions in the area where you live.

My observation is based on what many economist have written about Housing in general for NJ area. I live in central NJ, and I for one was looking buying at Windy Acres. I don't like the compromise, because they are not going to build anything for even $600K, but only build houses worth $800K onward only. Location is important, but it is also important that what is built upon that.

4/21/2006 12:15:00 PM  
Blogger chicagofinance said...

Metroplexual said...
The AMT patch was not renewed this year due to foot draging in DC so some people are going to have a hefty tax bill next year.

1:00 PM

The patch is likely to be instituted.

BUT IF NOT - it will cost all of us UP TO an additional $3,700 per family or so if you are hit with the AMT calculation!!!

MAX 13,000 x .28 = 3,640

NO JOKE

4/21/2006 01:38:00 PM  
Blogger Metroplexual said...

This comment has been removed by a blog administrator.

4/21/2006 02:07:00 PM  
Blogger Metroplexual said...

I know I am seriously thinking of more withholding because of it. But keep in mind that "W" is holding it hostage for making his tax cuts permanent. In this election year the deficit is playing a bigger role so I am not as optimistic.

Besides "W" is getting a little radioactive these days and congressmen looking to get reelected are using a ten foot pole these days and don't want to be as married to his policies as they have been. I think it will be a key wedge issue in November.

4/21/2006 02:09:00 PM  
Anonymous UnRealtor said...

FYI - there's a new post from SoCalMtnGuy @ Another F'd Borrower:

http://www.housingbubblecasualty.com

4/21/2006 02:14:00 PM  
Blogger pesche22 said...

grim the last post is shameless

4/21/2006 03:45:00 PM  
Blogger lisoosh said...

unrealtor-
The article on housing bubble blog concerns subsidizing certain professions to allow them to buy into and remain in areas. Yes this is taxpayer subsidised and yes this maintains the price bubble.

The system in New Jersey requires developers to build a certain amount of affordable housing - these are generally much smaller and with cheaper finish than regular units - in other words building houses which will be AFFORDABLE not subsidised. The price at which they can be sold is capped and the incumbents can only sell to qualified people at pre set prices, they cannot profit from them. There is absolutely no proof that the provision of these units for lower income people props up insane housing prices.

Shailesh - I agree, it is shocking how discriminatory building has become. I do believe that when all a town has left are partying singles, old people driving at 20 miles per hour the wrong way down a one way street, McMansions filled with 50 illegal aliens and the homeless, they may be forced to reconsider their policies.

4/21/2006 06:15:00 PM  
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