A judge ruled that the City of Hoboken can’t give the planned $4.85 million in givebacks pertaining to the Hilton Hotel deal, since it “would create unacceptable possibilities for abuse and fraud and cannot be permitted for reasons of public policy.”
By John Heinis/Hudson County View
“… The Court concludes that Hoboken does not have the statutory authority to condition or require these givebacks under the LRHL and, further, that permitting a municipality to require givebacks … would create unacceptable possibilities for abuse and fraud and cannot be permitted for reasons of public policy,” Hudson County Superior Court Judge Anthony D’Elia ruled yesterday.
“Therefore, the Court need not address the validity of specific payments to the non-profit Education Foundation or the charter school.”
Back in October, after some expected fighting with the majority of the city council, Mayor Ravi Bhalla announced a $4.85 million giveback plan by the Hilton Hotel developer, KMS Development Partners.
However, D’Elia wrote that such “off-tract costs” for developers go beyond the scope of what they should be providing for a construction project.
“The risk of bad faith, favoritism and the unlimited range of discretion, which would be afforded to municipalities in exacting off-tract contributions from redevelopers, is too great,” he concluded.
Despite the recent unfavorable result for the city, Bhalla said in statement that he expects them to prevail when it’s all said and done.
“The hotel deal furthers the redevelopment of the City, provides the community with unprecedented benefits and continues to be a priority for my administration,” the mayor stated.
“We are confident that the City will ultimately prevail, our City will be revitalized and our community will realize all benefits agreed to in this deal.”
The judge’s ruling came in light of the city filing a motion to dismiss the lawsuit filed by Hoboken Land Building, L.P. and Hoboken Holdings, L.P.
The case was filed on November 15th and claims that the givebacks were “a blatant quid pro quo.”
According to an October 16th email chain forwarded to HCV, Joe Maraziti, special counsel who serves as a redevelopment attorney for the city, told officials that the giveback plan may not work out as planned.
” … The legality of the payments to the educational charities is based on the provision that the funds will not be paid to the City, but instead will be paid directly to those charities,” he wrote.
“The same mechanism cannot work for the $2 million payment for several reasons: it is not clear that the feasibility study will result in a positive conclusion and, more importantly, it is my understanding the funds were not identified as HCC money in the same way that the funds for the educational charities are.”
The compromise of how the money would be distributed broke down as follows:
• An allocation of $2 million to revitalize the former Hoboken YMCA at 1301 Washington Street that will include a municipal pool, an uptown branch of the Hoboken Public Library, and additional classroom space for the Hoboken Public Schools.
• $1.165 million towards infrastructure upgrades, which includes the area adjacent to the hotel.
• $1 million to the Hoboken Public Education Foundation to establish a permanent endowment.
• $484,000 to the (3) Hoboken Charter Schools divided among the schools.
• $200,000 into Hoboken’s Affordable Housing Trust