Council reviews Fairmount Hotel mortgage discharge and tenant relocation plan ahead of vote

City officials on Monday reviewed a resolution that would amend and forgive loan notes and discharge a city-held mortgage tied to the Fairmount Hotel, a senior-affordable housing property at 2595 Kennedy Boulevard in Ward B. Director of the Division of Community Development Daja Anderson told the council the property’s grant restrictions ended in November 2024 and that a balloon repayment of about $20,000,000 is currently recorded as due to the city.

The proposal before council would authorize amendments and forgive the notes made by the Fairmount Hotel to the city and authorize discharge of the mortgage recorded against the property, Anderson said. She described the property’s earlier grant history and said the city’s Community Development Block Grant (CDBG) rules typically create non-interest-bearing loans that mature as a balloon payment at the end of a restricted period.

Anderson told council the Fairmount property previously received three funding streams, “totaling in the ballpark of slightly over a million dollars,” and that those restricted periods ended in November 2024. She said the balloon repayment mechanism is normally intended to give the city leverage to negotiate continued affordability with an owner.

James “Jim” McCann, an attorney with Connell Foley representing the ownership entity, described the owner’s relocation plan for tenants while renovation work proceeds. McCann said the owner has operated the low-income senior housing project for more than 25 years and that there is no plan to permanently remove residents. He summarized the three relocation options being offered: temporarily move residents to about eight vacant units inside the building at no rent increase; allow tenants to move in with family with no rent charged while off-site; or, if a tenant chooses, relocate to certain market-rate units in a recently built Bayonne building while paying the same rent they pay now. McCann said the plan is overseen by the New Jersey Housing and Mortgage Finance Agency (NJHMFA), which is providing financing for the renovation and enforces state relocation rules.

Council members pressed for details about timing and tenant impacts. One councilmember said the council needs clear answers on how long each apartment renovation would take; McCann estimated unit-level renovation “probably around 3 months,” while saying the entire building renovation — including replacement of old elevators and repointing historic masonry — could take about a year. Councilmembers also said they had previously heard resident complaints at a prior meeting and asked whether the developer had met with tenants; McCann replied he and his client had met with many residents and said “many, many of the residents are fully now in. They understand the relocation plan, and they’re in support of it.”

Council members sought written proof of enforcement mechanisms and remedies if the developer fails to follow the relocation plan. Councilmember questions included whether the developer would pay to pack and store residents’ possessions and who enforces commitments in the financing documents. Anderson and McCann said those financing and oversight documents — including NJHMFA requirements — would be consulted and that staff would provide more information ahead of the scheduled Wednesday vote. Anderson also said DCD provided the council with a copy of the relocation plan and that she had received community concerns but no evidence that seniors were being forced from the property.

Discussion points recorded in the meeting included the scope of required repairs (kitchen and bathroom upgrades, window replacement, elevator replacement, and masonry repointing on a historic structure), the presence of approximately 8–10 vacant units that could be used for temporary relocation, and the developer’s representation that rents will not increase for relocated tenants once they move back into renovated units. Council members asked the administration to confirm whether the developer will cover packing and storage costs and to identify the enforcement remedies written into the financing documents.

No formal vote on the resolution was recorded during the caucus; staff indicated more documentation and answers would be provided before the next scheduled council vote. The resolution appears on the council docket as the item authorizing amendment and forgiveness of notes and discharge of the mortgage related to 2595 Kennedy Boulevard (Fairmount Hotel).