FEBRUARY 26, 2013
Urban Land Institute
Property Tax Appeals and Financial Opportunities
Presented by a Challenging Market: Using the Tax
Appeal Process and Understanding Tax Abatements
and Incentives to Navigate a Down Market
Partnership for Action
State, County
and Local
Partners
Lt. Governor
Kim Guadagno
New Jersey
Business
Action Center
New Jersey’s Bank
 Financing small and mid-sized businesses
 Administering State tax incentives to retain and grow jobs
 Revitalizing communities through redevelopment initiatives
 Supporting entrepreneurial development
Focus – Urban Redevelopment
City of Newark
Courtyard by Marriott Newark Downtown
 In September 2012, Tucker Development’s $35 million Courtyard by Marriott
became the first hotel in Newark’s downtown in over four decades.
 Adjacent to the Prudential Center, the 150-room hotel includes 14,000 square feet
of street-level retail; last November, it was announced that Joe’s Crab Shack would
occupy nearly 5,400 square feet.
 The development project generated an estimated 175 construction jobs and will
create between 50-75 permanent jobs through the hotel and retail operations.
Courtyard by Marriott Newark Downtown
Financing Sources
Economic Redevelopment & Growth Grant
$6.58 million
Redevelopment Area Bonds
$6.56 million
Recovery Zone Facilities Bonds (Essex County)
$4.73 million
Equity*
$10.0 million
First Mortgage
$15.6 million
*State Pension Fund
Courtyard by Marriott Newark Downtown
Without Incentives
With ERG and Hub
Market Range
Equity IRR
8.06%
11.10%
15%-20%
Cash-on-Cash Yield
6.18%
6.97%
8%-10%
 Based on the expected generation of $28.5 million of incremental direct annual
gross income, hotel occupancy and sales taxes over 20 years, and a 75% rebate of
eligible taxes, there were deemed to be adequate funds to support the
reimbursement of taxes to the project.
 Present value of the Net Positive Benefit to the State totals $19.45 million.
Teachers Village
 RBH Group is developing this $149 million retail, educational and residential project
in downtown Newark, which will include 205 residential units, pre-marketed to
Newark teachers; three charter schools and a daycare facility totaling 100,000
square feet; and, more than 20 on-street retail establishments.
 The first phase of a larger development, Teachers Village will result in an estimated
450 construction jobs and 460 new permanent jobs.
 The project was financed through a complex series of public and private
investments that helped get major financial institutions to back the project after
more than three years of negotiations.
Teachers Village
Financing Sources
Urban Transit Hub Tax Credit
Economic Redevelopment & Growth Grant
Redevelopment Area Bonds
$39.45 million
$20.5 million
$5.265 million
New Markets Tax Credits
$38.9 million
Public Loans (CRDA, BCDC, City)
$12.0 million
Community Development Block Grant
$2.0 million
Senior Debt
$31.7 million
Equity
$12.7 million
Teachers Village
Without Incentives
With ERG and Hub
Market Range
Equity IRR
-6.04%
9.11%
15%-20%
Cash-on-Cash Yield
5.58%
7.25%
8%-10%
 Although the potential returns appear to be below market-acceptable levels, RBH
Group expressed a willingness to move forward because Teachers Village is the first
phase of additional development the company plans as part of the overall SoMa
Newark redevelopment plan.
 In addition to the project site, RBH owns 5.9 million square feet of adjacent land,
representing approximately $100 million in land purchased. RBH expects to make
significant progress on additional phases in the next five to seven years, with the
entire plan executed in the next 10 to 12 years.
 Present value of the Net Positive Benefit to the State totals $7.4 million.