New Jersey: Community Asset Preservation Corporation

“One of the main challenges in preserving neighborhoods everywhere is figuring out how to better establish a permanent, durable, capital pool that is more resilient than the ongoing foreclosure crisis.” — Wayne Meyer, president, New Jersey Community Capital

For New Jersey’s Community Asset Preservation Corporation, strategically purchasing existing pools of notes or REO in bulk is a straightforward approach to stabilizing neighborhoods that, if done right, can have a catalytic influence in communities hardest hit by foreclosures.

A subsidiary of the statewide CDFI New Jersey Community Capital, CAPC is in the midst of an aggressive five-year campaign to stabilize 500 to 700 residential units based on the bulk acquisition approach. CAPC determines the price it offers for these pools based on a detailed disposition plan for each property determined thorough due diligence and market assessment. CAPC seeks pools in which properties in better condition can cross-subsidize those in worse condition so it can redevelop the pools without a reliance on deep subsidy — or sometimes without subsidy at all. Local nonprofit and mission-based for-profit developer partners take on most of the actual redevelopment work, though in some cases CAPC will do the development itself. To date, it has acquired upward of 200 properties.

“How many properties do we need to create a healthier housing market?” asks NJCC president Wayne Meyer. “It all depends on what you are trying to accomplish. Here, we’re taking a targeted approach that, we think, makes a much bigger difference.”

Unlike many nonprofits, CAPC has the capital to close deals relatively quickly. The challenge is that New Jersey’s real estate market is not as weak as the market in other parts of the country, so pricing is difficult. “I was on the phone with Bank of America as I looked at a list of 74 abandoned properties in Essex County. But they were only willing to part with 3 in Orange, 5 in East Orange, and 36 in Newark,” Meyer says. It would be far easier, he adds, to simply acquire scattered properties statewide, but that won’t necessarily tip any given hard-hit neighborhood toward a stronger market.

In order to expedite disposition, Meyer says, establishing relationships with both for-profit and nonprofit partners is essential. Nonprofits, he says, have deep ties to and knowledge of the communities they serve but often lack capacity. For-profits, on the other hand, have the ability to “get us in and out” quickly.

“We’re still finding that the for-profits we work with are not the Jonathan Roses of the world,” but are often smaller companies “referred to us by the cities where we’re working,” Meyer says. New Jersey Community Capital has therefore found itself doing underwriting for for-profits — new terrain for the community lender. “The for-profits are interested in completing the project, and less interested in working on the subsidy side of things and owning the properties,” he says.

New Jersey Community Capital: CAPC

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