DOWNTOWN TRENTON REDEVELOPMENT PROJECT MOVES FORWARD WITH LOW-COST FINANCING FROM EDA
TRENTON, N.J. (July 31, 2006) – A valuable resource available through the New Jersey Economic Development Authority (EDA) to stimulate investment and economic growth in low-income areas of the state achieved a major milestone this month with the closing of financing to move forward an important downtown Trenton redevelopment project.
The EDA, through its New Jersey Community Development Entity (NJCDE), finalized a $5.3-million loan to Matrix East Front Street Urban Renewal Associates, LLC, a unit of the Matrix Development Group. The loan was part of the permanent financing obtained by Matrix to purchase and complete a 66,500-square-foot building in downtown Trenton formerly known as Liberty Commons. It was the first financing to close resulting from a $125-million allocation to the EDA under the federal New Markets Tax Credits program.
“This tax credit program generates a significant amount of capital that is being made available to businesses and community development projects in distressed areas of New Jersey,” said EDA Chief Executive Officer Caren S. Franzini. “The loans are offered at a very attractive interest rate and terms and are a great addition to the full box of financing tools offered by the EDA to reinvigorate communities and encourage new urban investments.
“In this case, an important project that had stalled was put back on track with the help of the low-interest New Markets loan, which is great news for the City of Trenton,” she said. “It resulted in a major financial institution – Wachovia Bank – moving its southern New Jersey headquarters to the state capital and helped reinforce the commitments of Governor Corzine and Mayor Palmer to revitalize New Jersey’s downtown districts.”
New Markets loans, which can range up to $10 million, must be used for fixed-asset financing such as building construction, renovations, real estate acquisitions, and equipment purchases and may also include a working capital component. Developers, businesses and nonprofit organizations may apply for the financing for commercial, industrial or mixed-use projects.
Matrix acquired the property at 32 East Front St. in October 2005 from the Economic Development Corporation for Trenton. The EDA funds were used to replace existing public funding commitments made by the EDA, the Capital City Redevelopment Corporation and the New Jersey Redevelopment Authority to the building’s original developer. The loan was made for 10 years at a fixed interest rate of 3 percent, with interest-only payments due for the first seven years.
“The EDA’s commitment to stimulate economic development in downtown Trenton, and the drive and vision of Mayor Palmer, attracted my partners and me to pursue this investment opportunity,” said Matrix Development Group Executive Vice President and Chief Financial Officer Donald M. Epstein. “The use of the New Markets Tax Credits program gave us the ability to move quickly and consolidate various outstanding existing public funding obligations to the project into one comprehensive financing package that allowed us to meet Wachovia’s very tight occupancy needs.”
Wachovia has leased 43,500 square feet of office space on the top three floors of the five-story structure. In addition to the office space on the upper floors, the first floor offers up to 10,000 square feet of prime retail space with access from the street and within the building. It also features an adjacent parking garage. When fully leased, the building is expected to provide work space for 300 full-time jobs.
The New Markets Tax Credits program was enacted in December 2002 as part of the Community Renewal Tax Relief Act and is administered by the U.S. Department of Treasury through the Community Development Financial Institutions Fund. It offers a seven-year, 39-percent federal tax credit for investments made through community development entities, which use the capital derived from the tax credits to make loans to or investments in businesses and projects in low-income communities. There are eligible areas in more than 175 New Jersey municipalities located throughout the state’s 21 counties.
The EDA prepared its tax credit program application in partnership with the New Jersey Housing and Mortgage Finance Agency and the Casino Reinvestment Development Authority. NJCDE investors U.S. Bancorp Community Development Corporation and iCapital Finance, Inc. committed the investment capital that helped the NJCDE create its loan program.
Those interested in applying for funds should call (609) 777-4898. Applications are also available online at www.njeda.gov.
The EDA is an independent, self-sustaining state financing and development agency that works to promote economic growth, job creation and the revitalization of New Jersey’s communities with financing assistance, technical support and entrepreneurial training, and real estate development activities.