City to Developer on Municipal Garage – See ya!
City of Hoboken announces:
CITY COUNCIL TERMINATES AGREEMENT TO SELL GARAGE TO PROTECT FINANCIAL INTERESTS OF HOBOKEN
Last night, the City Council voted 5-3 to terminate an agreement with SHG Hoboken Urban Renewal Associates, LLC, (SHG), an affiliate of the S. Hekemian Group, to sell the municipal garage property after carefully deliberating the issue in closed session for nearly 4 hours. The decision was made necessary by a series of deliberate and threatened actions by Hekemian which began immediately after their demand to significantly reduce the effective purchase price was rejected by the City in June. Their actions clearly demonstrated that the developer had no intention of closing despite their public statements to the contrary.
Referring to the downturn in the real estate market, SHG requested changes to the terms of the agreement in June that would have cost the Hoboken taxpayers $1 million annually, and eliminate the obligation of SHG to construct affordable housing units. After the City Council rejected the proposal, the developer began taking actions, in violation of its agreement with the City, to prevent Hoboken from receiving its environmental approvals.
“Unfortunately SHG’s behavior changed immediately after the City Council and my Administration rejected their unfair proposal that was clearly detrimental to Hoboken taxpayers. The record clearly illustrates that after their proposal was rejected they went from being a partner acting in good faith to behaving in a very different way in violation of their clear contractual obligations,” Mayor Zimmer stated. “We did everything we could to prepare for the closing, including moving the garage and performing additional environmental activities, and we will continue working with the DEP to meet all of their concerns so the property can be sold to a responsible developer as soon as possible,” Zimmer explained.
SHG had the opportunity under the contract to conduct its own environmental sampling and testing for six months ending in August, 2008, but did not do so. Only after having had its proposal to amend the agreement rejected, did it attempt to do its own sampling that was not permitted under the contract.
“I want to thank the DEP for their responsiveness to the City of Hoboken’s application,” Zimmer said. “We will continue to address any issues of concern and work towards obtaining environmental clearance as quickly as possible.”
Notwithstanding the City Council’s termination of the agreement with SHG, the City will still be able to repurchase the garage from NW Financial using the low-interest bond that was previously approved by the City Council. As a result of this repurchase, the City’s costs for the Observer Highway garage will be reduced from approximately $100,000 per month to an estimated $20,000 per month. At tonight’s meeting, the City Council will be asked to approve a shared services agreement with Weehawken and the expenditure of additional funds to complete the environmental approvals with the DEP.
“I want to continue with the plan to ensure that the garage is located away from residential neighborhoods, moving the City toward shared services, and sell the Observer Highway Municipal garage site as quickly as possible to a responsible developer,” Mayor Zimmer explained.