A tale of two cities: How Jersey City is getting in its own way

Credit: Melanie Hicken

By Melanie Hicken

After years of planning, longtime Jersey City chef Nicole Puzio saw her dream of opening her own restaurant quickly turn into a nightmare.

Puzio and her business partner Edward Radich thought they had dotted there i’s and crossed their t’s. Before inking the lease for their restaurant space, they met with city inspectors to determine all that would be needed to secure proper permits. But months later, they were told of a whole new set of requirements they would need to fulfill before they could open their doors.

At the end of it all, they went $500,000 over their construction budget and were forced to pay a year of rent before their restaurant finally opened to rave reviews in August 2008. Underwater from the start and facing a recession-struck local economy, the restaurant was forced to close its doors less than two years later.

“We had no cushion left to sit on by the time we opened,” said Puzio, who now works as a sous chef at Maritime Parc in Jersey City. “The town makes it so difficult to even get there. By the time you open you have nothing left. It’s absolutely ridiculous.”

Hamstrung by red tape and inefficiencies at City Hall, Puzio’s experience is one shared by many small business hopefuls who have unsuccessfully attempted to take part in the major development that has taken hold in downtown Jersey City in the past three decades.

Residential development — ranging from the renovation of the area’s historic brownstones and row houses to the construction of large mixed-use luxury towers — has thrived. But commercial development — the bars, restaurants and shops needed to complete the area’s gentrification — has been slower as high-end anchor stores have stayed away and small businesses have struggled to stay afloat.

Opening a business is a risky venture in most communities, but many in town say that City Hall bureaucracy is making the process even harder — fostering an environment where only the well-connected or savviest entrepreneurs survive and creating a reputation that is hindering commercial development.

“I think that there are people that have thought about investing dollars in Jersey City and because of our reputation of the difficulty in opening a small business, they’ve opted to go elsewhere,” said Jersey City Councilman Steve Fulop, who represents the downtown area. “The good things that are going on here: it’s happening despite government not because of government.”

Thirty years ago, downtown Jersey City — a group of neighborhoods that span roughly three square miles east of New Jersey Interstate 78 — was in many ways a community at a crossroads. Like many urban areas at the time, many of the immigrants who had once lived and worked in the area had left for the suburbs, leaving behind vacant storefronts, crumbling buildings and high crime rates.

But developers, aided by government tax breaks and transportation improvements, saw potential for change.

Driven by the area’s proximity to Wall Street and rich history, brothers Eric and Paul Silverman bought their first residential building in 1981 for $90,00. They borrowed $400,000 to renovate the building and sell its 14 units for $1.5 million.

Since then, the brothers have been behind more than a dozen Jersey City developments.

“Our formula has been trying to take dumpy run down buildings and neighborhoods and fix them up and make them beautiful,” Paul Silverman said.

Thanks to the Silvermans and other area developers, roughly 15,000 new housing units have been built downtown in the past three decades, according to city officials, attracting high-income professionals and families drawn to the city’s tree-lined historic districts, lower rents and easy commute into Manhattan.

Longtime Jersey City Planning Director and resident Bob Cotter has seen the changes firsthand.

“I’ve lived here for 27 years. When we moved in, we couldn’t get a pizza pie delivered,” he said. “It was a rough neighborhood. Now its one of the highest income census tracts in the city.”

Today, nearly 15% of Jersey City’s nearly 250,000 residents, live downtown. In 2009, the average household income had reached $76,000, compared to $57,000 citywide, according to city-data.com.

One, two and three-bedroom condos in the Silverman’s latest Hamilton Square development sell for between $385,000 to $1.35 million, and median sale prices are above $500,000 for many downtown’s neighborhoods.

Still, the gentrification has come slower than other areas, such as neighboring Hoboken, which boasts a wide mix of commercial development and has on average higher rents and property values.

Jersey City’s commercial development, meanwhile, has been marked by failed businesses, massive turnover and vacant storefronts — a vicious cycle that many attribute to inefficient processes at City Hall.

Most complaints are aimed at the city’s Building Department, which was embroiled in a 2009 high-profile FBI sting that left several city officials with corruption charges and further damaged the city’s reputation.

With no clear-cut set of rules and requirements, many businesses owners said that the permitting process is haphazard at best.

“There is no clear-cut laid out take home list of things that you can go and check off. It’s literally like a puzzle with missing pieces that you find down the road,” said Grove Street Bicycles co-owner Mike Wilson, adding that “It has to be corrected. You have to be business friendly.”

For Puzio, the former co-owner of Ox, the requirements given by city officials kept changing.

Halfway through the process, they were told they would need to add a fire sprinkler system, contradicting what they were told at first. Then, they learned they would need a second entry. Later, they were told their pipes were too small.

“Had they told us everything to do at once, we would have done it,” she said. “It was this game of going back and forth. They couldn’t give us straight answers.”

Cotter, the city’s planning director, acknowledged there is room for improvement in carrying out the city’s goals of continued commercial development. In the past year, he said, the city’s Department of Housing, Economic Development & Commerce has charged a city staffer with serving as an ambassador role to help shepherd businesses through the permitting process.

“If we’re trying to make it easier, through zoning, the last thing we want is for some bureaucrat in the building department to block it,” he said.

In the meantime, the state of commercial development remains mixed.

Some downtown blocks boast high-end retailers alongside lively parks and renovated brownstones and luxury buildings.

At the base of the Silverman’s latest Hamilton Square development are 14 small businesses, the majority of which are both new and locally owned.

The development team handpicked the retailers, which range from a wine shop and flower store to a dance studio and pediatrician. They also help them throughout the financing and permitting process since they see the shops as an important part of their development motto — “building neighborhoods.”

“Its difficult for these small retailers to open. Just to open their doors is difficult,” Silverman said. “We help them with permitting and approvals, financing and marketing. And then we really nurture them as they go.”

Mary Suliburk, an area resident and owner of Hamilton Square’s Downtown Coop, says that the Silvermans’ support makes all the difference.

“I think ultimately for small businesses to survive, it takes having either the landlord or the person that provides the loan to ultimately help you get established,” she said. “Without that, I think small businesses struggle because it’s a complicated process. It’s an expensive process.”

In contrast to the Hamilton Park area, main downtown thoroughfares like Jersey and Newark Avenues — where Ox called home — feature a haphazard mix of independent boutiques and cafes sandwiched between pawnshops and dollar stores.

Former Jersey City resident Gynine Montalto was one of those higher-end proprietors in 2008 when she opened up a knitting café and coffee shop called The Stockinette.

While her shop attracted a crowd of regulars, she said there simply wasn’t enough daily foot traffic to sustain her $1,600 a month rent and other expenses. She closed less than three years after her opening.

For Montalto, the biggest problem stems from the lack of higher-end anchor tenants, such as a Trader Joe’s or Urban Outfitters, to attract people from across the Hudson and get residents out of their homes.

“You’re going to stick a dollar store on Newark avenue and call that your anchor? The longer that they continue to anchor Newark with five and dimes, you aren’t going to do well with new business,” she said, adding, “if you don’t have something to get people, all the little guys suffer.”

The suffering has left many former Jersey City business owners frustrated and bitter. Montalto has since moved to Brooklyn. Puzio still works in Jersey City, but says she would never open a business here again.

“I think unless you’re somebody special you’re not going to get very far,” Puzio said. “And that’s sad because this town has a lot of potential.”

For more on downtown development, check out the video below!