Federal law enforcement officers have subpoenaed documents from the Hudson County Improvement Authority, a county agency that funds projects in various towns, concerning the funding for a section of Hudson River walkway in Hoboken.
Sources said that federal authorities are looking into a $1 million federal grant that was issued to Shipyard Associates in 2000 to help fund the construction of the riverfront walkway along a boundary of their luxury housing development on Hoboken’s northern waterfront.
Federal officials have requested documents from the Hudson County Improvement Authority, headquartered in Jersey City, dating back to 1998.
Some believe this is related to an August FBI raid of the Hoboken-based offices of Applied Housing in Hoboken, the parent company of Shipyard Associates. That raid, in turn, is believed to be connected to a larger federal investigation of prominent figures in Hudson County. In September, it was revealed that then-County Executive Robert Janiszewski’s car had been wired for possibly nine months, and that the FBI had been using him to investigate other county power brokers. Janiszewski resigned in September and has not been seen since. Sources say he is under federal protection as an investigation continues.
The $150 million Shipyard project is a mixed-use retail and residential development on 21 acres of land along the Hudson River in Hoboken, on the site of the former Bethlehem Steel shipyard and machine shop. The property currently houses hundreds of luxury units, along with retail stores, the 14th Street Pier park, and the Hoboken Historical Museum.
Hudson County was initially awarded a $1 million federal grant in June, 1995, in connection with a hotel project in Jersey City. When the project did not move ahead, the federal government agreed to use the money toward a retail economic development project: the Shipyard Project. Half the grant would go towards rehabilitating the 14th Street Pier section of the walkway as a public access park along the waterfront.
The other half would be used to cover costs incurred for retail development, in connection with the public space (like sidewalks) in front of retail establishments.
Federal authorities seem to be concerned over the use of money in conjunction with the luxury development, since it was earmarked in the federal budget for projects benefiting the public use. Defenders of the grant note that it did, in fact, go to public use, because it only funded parts of the project that were accessible to the public. However, all developers along the Hudson River are required, by state law, to contribute a portion of a river walkway when they build there. Some, like Applied, began to look for grants and loans to use to help fund it. The ones that got loans would be able to pay the government back once they were renting or selling the units.
The change in use of the grant would have had to be approved first at the federal level by the Department of Transportation. It would have been passed to the state and to the HCIA, and finally to the board of county freeholders, for approval.
The New Jersey Law Journal cited anonymous sources claiming that information was requested from the North Jersey Transportation Planning Authority, where former Hudson County Executive Robert Janiszewski served as chairman. Other sources say that documents have also been requested from the state and federal departments of Transportation.
The million dollars was approved by the HCIA in 1999, but the money actually came from the federal Intermodal Surface Transportation Efficiency Act, commonly called ISTEA.
"We didn’t originate the money," said John Schinnick, chairman of the HCIA, last week. "We were just a conduit for the grant."
Thomas Calvanico, paid executive director of the HCIA, said the inquiry seemed more focused on obtaining information than suggesting wrongdoing on the part of the HCIA.
"We are certain that we did nothing improper," he said. "The authorities seemed to be gathering information in order to put together the whole picture on the project."
After the HCIA had to approve the change in use, the $1 million grant was approved by the Hudson County Board of Freeholders in early 2000 after months of delay. Some freeholders said they didn’t have enough information when the change had been first proposed in September of 1999. Shinnick said the commissioners talked extensively before sending the matter to the freeholders, and relied strongly on the advice of legal counsel.
Freeholder Chairman Sal Vega said the issue was not so much a concern over proper handling of the grant, but of numerous issues going on simultaneously related to the Shipyard project.
Vega said that the freeholders were also deciding on a loan to the project as well as trying to sort through access agreements that would guarantee that the public would be allowed to use the walkway once constructed.
Along with the million-dollar grant awarded the Shipyard walkway project early in 2000, the Hudson County Freeholders also agreed to give the Shipyard project $6.7 million loan from the federal department of Housing and Urban Development.
The loan was designed to help a portion of the Shipyard project. Shipyard Associates was supposed to use the money to finance the conversion of the Machine Shop and Towers project to residential living, adjoined by 46,000 square feet of retail space. The project became eligible for HUD Community Development Block grants because it would provide employment opportunities for low and moderate-income people and other residents of the county.
"With all these things going on, we just wanted to make sure we had all the facts straight," Vega said.
Freeholder William O’Dea said his concerns at the time were largely focused on making sure that the grant went towards those aspects of the project that were considered public.
"I just wanted to make certain that the county was not putting itself at risk," he said.
Shinnick said that no one on the HCIA questioned the grant because the money was designated for a walkway to which the public had access.
"This was for a public use," he said. "When we reviewed the grant, we asked if the contract was valid, did it meet the terms of the federal grant and did it go towards a public use. That’s the purpose of these grants to benefit the community."
State documents seem to support the idea that developers were looking for ways to support the walkway through grants and loans.
In a Memorandum of Understanding signed between Hudson County and the state Department of Environmental Protection Agency in July 2000 obtained from state records, county and state officials outlined the total scope of the walkway project. They said that only 10 of 18 miles of a walkway from Bayonne had been completed. County officials were very concerned at the time by the inability of private companies to fund their share of the walkway.
"To date, less than 10 miles of the walkway has been constructed and approximately half of the completed walkway has been built by State and local governments," the document reads. "Despite legal obligations, many developers either lack financial resources or the willingness to complete their portions of the walkway."
Fuels speculation
The search has further fueled speculation that the FBI is looking into Applied and its president, Joseph Barry. Barry’s company has been developing subsidized and market-rate housing in Hudson County for 30 years, and Barry is also a big political contributor. He said he had no comment last week and referred the matter to his attorney, Roseland-based Joseph Hayden, of Walder, Hayden and Brogen.
Hayden said the HCIA subpoena asked for the same information that Applied was subpoenaed about in August.
"Joe Barry has done nothing wrong," Hayden said. "We’re comfortable that the FBI will find that out as well."
Sources have said, and it has been reported in several publications, that Barry became a target after he refused to cooperate with federal authorities in conjunction with the Janiszewski probe. The FBI apparently talked to Barry this summer, told him that Janiszewski had been wired, and asked him to become a cooperating witness the way Janiszewski had, but Barry refused. The FBI then ended the county probe because Janiszewski’s part in the investigation was compromised.
Applied didn’t get money
At some point, Applied Companies hired a lobbyist to root through the bureaucratic tangle of Washington D.C. grant applications to find possible ways of helping to fund aspects of the development and its associated walkway, Calvanico said.
The federal government made it clear that the money could not be issued to a private company. There was a way to get around that – having the HCIA handle that portion.
"That’s where the HCIA fit in it," he said. "We could use the grant money as long as the walkway was open to the public. We bid the walkway project. We hired the contractor."
Joe Barry’s company did not handle the money from the grant, said Calvanico. Because of the requirements of the grant, the money could only be issued to a public body such as the HCIA.
All Barry’s firm did was to provide the land upon which the walkway was to be constructed, he said. It did make the development more attractive to buyers, but the walkway is open to the public.
"ISTEA is designed to provide transportation enhancements," Calvanico said. "The walkway fit into that parameter."
The HCIA is an autonomous public agency with broad responsibilities in solid waste management, recycling, recycling education, affordable housing and transportation management in Hudson County. But over the last decade, it has taken on a significant role in helping to finance various public projects throughout the county. In 1999, for instance, the HCIA helped refinance the municipal building in Union City in order to help put capital into that city’s ailing municipal budget. The refinancing wasn’t enough to help Union City out of its budget woes, however, and those woes eventually led to the resignation of then-Mayor Rudy Garcia.
"We helped Weehawken rebuild its library," Shinnick said. "They would not have been able to deal with the expense of that project had we not stepped in."
Despite the HCIA’s limited role in a processing the grant to the Shipyard project, he said the commissioners discussed it in depth.
"In the end, we relied on our attorney," he said. "As far as the legal aspects, that’s why we have an attorney."
Rumors before Thanksgiving suggested that FBI had also raided the offices of the Hudson County Economic Development Corporation seeking additional documents. But Elizabeth Spinelli, the director, said no such raid had taken place.
"We don’t have the kind of authority that would provide those kinds of funds," she said. "We are also closely monitored by HUD. It is simply not something we would be involved in."
Throughout the county, much gossip has centered on the investigation since Janiszewski’s sudden resignation two months ago. Some rumors have proven true, but others have turned out to be spurious. Some sources have said there will be 45 indictments resulting from the federal probe, while others have said that the investigation was shut down prematurely and as a result, there will be none.
Some sources said there would be indictments handed down on this past Election Day, but others countered that those rumors were an attempt to hurt statewide Democratic candidates.