Hot News on the Municipal Garage
Office of the Mayor announces:
STATEMENT FROM MAYOR ZIMMER REGARDING DEVELOPER’S PROPOSAL FOR MUNICIPAL GARAGE
At yesterday’s City Council meeting, SHG Hoboken Urban Renewal Associates LLC (“Hekemian”), the redeveloper for the site of the existing Municipal Garage, asked that the existing contract be restructured for the sole purpose of restoring Hekemian’s profits given the decline in the real estate market. One of the changes proposed was a $1 million reduction in the agreed upon annual PILOT obligation until “market conditions improved.” Under these terms, we would be giving Hekemian a $1 million tax break every year until the market “comes back,” which could be quite some time.
The proposal also included the elimination of the obligation to provide 24 units of affordable housing. Instead of a community benefit worth, by Hekemian’s own calculation, $1.8 million – $4.8 million, Hekemian is proposing a single $1 million payment.
The effect of these changes is to reduce the value of the sale of the property to the City by millions of dollars while officially stating that the sale price is still the agreed upon $25.5 million. In fact, since we don’t know how long the reduced PILOT will last, we don’t even know what the true value of the sale would be.
Last November, I was elected on a platform of achieving balanced development by insisting that developers give our community what it needs, not by asking developers what they want from us. I also made clear that I believed that future tax abatements (PILOTs) should only be provided if the City received clear tangible benefits in exchange such as open space or affordable housing.
As a Member of the City Council, I sponsored a resolution requiring that a financial analysis be conducted for any proposed PILOT agreements identifying, for every year, whether it will result in a benefit or cost to taxpayers compared to regular taxation. In cases where it would cost taxpayers more, the same legislation requires a clear statement on the benefits the City will receive in return from the developer.
The proposed changes might be in the best interest of the developer, but the dramatic price reduction requested is not what’s best for Hoboken and our taxpayers. I strongly urge the Council, as the redevelopment agency for the City, to reject these proposed changes.
My Administration is planning for all contingencies and making the necessary preparations, including vacating the garage premises and completing the environmental mediation, to close the sale of the property in accordance with the original agreement on August 13, 2010. We must, however, recognize that the possibility exists that the transaction will not proceed as planned.
In order to be prepared for this possibility, we need to make the necessary preparations to refinance the existing debt on the garage at the most favorable rate possible. That is why I have asked the City Council to approve a bond ordinance that will enable us to do so if this should become necessary. Timing is tight, and the failure to pass this bond ordinance in a timely manner could cost Hoboken taxpayers as much as $450,000 per year in higher interest payments. A meeting to consider the bond ordinance is scheduled for Sunday, June 13th. Failure to act will leave the City unprepared to reacquire the property should that contingency arise.
Talking Ed Note: Da Horsey just finished another comprehensive interview with Mayor Zimmer, our second this year. The first was in February. There’s some additional important information covered in the Q&A. Stay close.
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