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Former Major League Baseball Star Mo Vaughn Invests in Newark Housing Complexes

His Firm Secures $172 Million to Rehab Two Sites
September 6, 2018

Pictured: Maurice "Mo" Vaughn, a former MLB All-Star and current managing director at development firm Omni America USA, at Garden Spires in Newark, New Jersey. His company is renovating the affordable housing complex. Photo by Linda Moss.

Former Major League Baseball All-Star Maurice "Mo" Vaughn is taking a page from the real estate playbook of his friend, retired pro basketball star Shaquille O’Neal, by also deciding to invest in multifamily housing in Newark, New Jersey.

Omni America LLC, a development firm Vaughn co-founded, secured $172 million in mostly state funding and financing to buy and renovate two low-income housing complexes that state and local officials call "deplorable." Omni bought the sites, which have 650 units it will renovate, for about $54 million. Financing includes $43 million in tax credits from the New Jersey Economic Development Authority.

Vaughn said he was inspired by his friend, fellow Newark real estate investor "Shaq" O’Neal, who also has a special connection to New Jersey. Vaughn -- who played for the Boston Red Sox, Anaheim Angels and the New York Mets, and was the 1995 American League Most Valuable Player -- attended Seton Hall University in South Orange, New Jersey.

Vaughn recalls often driving past Garden Spires as he traveled down Interstate 280 to get to Seton Hall.

"I don’t know how many times I passed this place just going back and forth to school," he said. "I love New Jersey. It’s just great to be able to be involved. It’s a shame how long this has taken. The tenants are what’s most important ... This is something that is needed and we want to come in here and put our money where our mouth is and make things happen and get things done the right way."

O’Neal, who is from Newark, in partnership with Boraie Development LLC in New Brunswick, New Jersey, has unrelated apartment projects in the Brick City’s downtown. They are a 33-story, 370-unit complex at 777 McCarter Highway, and a 22-story, 169-unit apartment building at 1 Rector St.

"Shaq and I are friends," Vaughn said. "He’s been doing great things for a long time, so I’m going to put my name next to his."

The news marks another boost for Newark, which is undergoing an economic revival and spurt of development of both office and multifamily properties. But unlike those downtown projects, Omni's redevelopment is in Newark's Central Ward.

Omni's project, Garden Spires, is made up of two 20-story towers at 175-199 First St. built in 1963 on the 4.3-acre original site of Newark Academy. The apartment complex had been cited for 2,700 building code violations under its former owner, First King Properties LLC, according to city officials.

Omni bought Garden Spires for $43.5 million, or $77,678 a unit, according to CoStar data.

HUD seized more than $800,000 in civil penalties, for violation of lead-based paint rules and for fostering hazardous physical conditions and poor housing conditions, from proceeds of the sale of Garden Spires from its former owner, said Lynne Patton, New York-New Jersey regional administrator for the U.S. Department of Housing and Urban Development.

Omni has also acquired and will rehabilitate Spruce Spires, a complex at 717 Dr. Martin Luther King Jr. Blvd. that was built in 1920 and includes four four-story buildings and a five-story structure. The purchase price was $10.6 million, according to EDA documents.

Vaughn and Eugene Schneur, another Omni managing partner, unveiled their plans for the subsidized low-income and affordable housing complexes at a press conference Wednesday at Garden Spires. Manhattan-based Omni specializes in the development, ownership and management of affordable housing, with more than 13,000 units in New York, Wyoming, Massachusetts, New Jersey, Rhode Island, and throughout the Southeast.

In 2013, Omni expressed interest in taking over ownership, and renovating, Garden Spires. According to the mayor, in the ensuing years First King Properties was refusing to make repairs at the complex even as HUD continued to pay it Section 8 low-income rent subsidies.

To finally spur some action, the city took First King Properties and HUD to court last year, seeking to have Garden Spires declared uninhabitable, the city said. The complex had gained notoriety for its health and safety violations, including rat infestation and vacant burned-out apartments, as far back as 1999, when then-City Councilman Cory Booker, now a U.S. senator, staged a 10-day protest at the property.

The support of newly elected New Jersey Gov. Phil Murphy's administration helped remove obstacles to the redevelopment project, Baraka and Vaughn said.

Garden Spires.

The overall cost of the Garden Spires rehabilitation project is $135.3 million, which includes purchasing the property, finance fees and $50 million in renovation work, according to Schneur. The state Housing and Mortgage Finance Agency is contributing $59.3 million in financing from its Conduit Bond program.

The overall cost for Spruce Spires’ rehab is $32.2 million, which again includes the cost of buying the buildings, finance fees and $15 million in actual renovation work. The Housing and Mortgage Finance Agency awarded Omni $16.3 million in financing from its bond program.

In addition to financing from the bond program, the buildings will receive 4 percent low-income housing tax credits from that state mortgage agency, which will provide the project with $49.1 million in additional private equity, according to officials.

The state EDA has also awarded Omni $43 million in tax credits for the rehabilitation projects.

No tenants will be displaced during the renovation process, which is expected to be done by December 2019. The cost of rehabilitation per unit is $87,500 for Garden Spires and $122,000 per unit for Spruce Spires, officials said.

"It’s not cosmetic ... That’s effectively building new," said Charles Richman, executive director of the state Housing and Mortgage Finance Agency.

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