N.J. approves $40 million in tax breaks for Newark project that will house Whole Foods

By Matt Friedman | NJ Advance Media for NJ.com
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on December 09, 2014

The developers who want to turn the former Hahne's department store into a mixed-use complex that includes a Whole Foods supermarket were awarded $40 million in tax incentives by the state Economic Development Authority today

 

TRENTON — In 2013, then-Newark Mayor Cory Booker’s administration said that a planned Whole Foods in the city’s downtown — a local triumph for Booker — would not seek state tax breaks.

But the same can’t be said for the developers who are rehabbing the century-old former department store that will house the supermarket, along with other retail, a branch of Rutgers-Newark and 160 rental housing units.

The state Economic Development Authority's board voted this morning to award the developers up to $40 million in tax credits that are aimed to grow jobs in New Jersey and improve its impoverished cities.

“This significant project will change the landscape of the neighborhood, bringing unprecedented quality housing, retail, and commercial opportunities to the heart of the downtown Newark community,” an EDA memorandum said.

The vote to award the credits — which apply to the residential portion of the development and will be given out over 10 years — had no opposition.

“A complicated deal needs all the help that we’re getting,” said Jon Cortell, vice president of development and L&M Development Partners — one of the developers.

L&M, which is based in New York City, has partnered with the Hanini Group, which is based in Newark. Combined, they own 20 percent of the company. A Goldman Sachs subsidiary owns another 5 percent. Prudential, which is building a new office tower next door with the help of state tax credits, is putting up much of the cash for the project.

Cortell said the building has been empty since the 1980s.

“Redevelopment of this building is obstructed by the fact that it’s a 400,000 square foot former department store,” he said. “It’s obsolete and needs to be recast, first and foremost, as a residential project that will bring people to Newark.”

The Whole Foods development was announced in October 2013 — just days before Booker won his seat in the U.S. Senate. Booker had been attempting to get the high end grocer to Newark since 2007.

In its memo on the project, the EDA noted that Newark “lacks adequate quality food options for its population,” with just two Pathmark stores and one planned Shoprite in a city of 278,000.

The Rutgers portion of the store will house its Department of Arts, Culture and Media. It is to provide studio, classroom and gallery space for campus arts programs.

Of the 160 units, 40 percent are considered affordable housing, according to the EDA.

Whole Foods is expected to create 200 new jobs, 140 of which would be full-time. Other retail on the site is expected to provide 120 jobs, while its construction jobs are estimated at 350. Rutgers estimates it will create 10 to 20 new jobs.

The downtown project wasn’t the only tax break for a Newark development the EDA approved today. The board also voted to award about $8.7 million in tax breaks to develop an aeroponic farm run by the startup AeroFarms at the site of the former Ballentine Brewery in the city’s Ironbound District.

The indoor farm — in which plants are grown with a nutrient-rich mist instead of soil and under LED lights instead of the sun — plans to grow 2 million pounds per year of leafy greens “in an environmentally controlled, safe and sanitary facility,” according to developer RBH Group.

“It will be the largest indoor aeroponic farm in the world, providing healthy foods to the local community as well as to other markets.

A total of $2.2 million of the tax credits will go to RBH Group, while $6.5 million will go to Aerofarms.

The project is expected to create 69 new full-time jobs with a median salary of $53,572.

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