Hudson Reporter Archive

Will open a port, not new housing

With the city on the brink of possible economic disaster, members of the Bayonne Local Development Authority voted on July 29 for what they say is the best deal they could get for development property they want to sell.
They agreed to a $235 million contract to sell to the Port Authority approximately 130 acres of land at the former Military Ocean Terminal – essentially giving up on a redevelopment plan that once was expected to bring in billions of dollars.
The original redevelopment plan would have brought 6,700 units of housing to three of the six waterfront development districts. Instead, the PA will probably turn those three districts into ports for containerized shipping.
The city, which is short about $28 million from last year’s 2010 $135 million municipal budget – which ended on June 30 – was granted an extension by the state until July 30 to find revenue to fill that gap. Some of the money from the land deal can go to plug the hole. The vote to approve the Port Authority contract will give the city $40 million almost immediately, and another $100 million will come in over the next two years. The balance will be paid over the next 20 years.

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“I would take this deal, too. But I would know that I have a gun to my head.” – Neil Barton
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While the Port Authority announced the general outline of the deal in June, the BLRA, when voting last week, laid out many of the missing details.
At the meeting, the public was not allowed to ask questions about the contract before the vote was taken.
The Port Authority has tentatively agreed to pay the BLRA over 24 years to obtain title to the Hudson River property, together with permanent easements over the roadways on the MOTBY peninsula for operational and emergency use.
The PA would pay no taxes on the property.

Details of the contract

While last month, the PA had said no decisions had been made for the use of the site, the contract with the BLRA makes it clear that the site is being considered for container port operations, and could become the key component in helping New York port operations deal with the expected larger container ships that will not be able to fit under Bayonne Bridge to access Ports Newark and Elizabeth along Newark Bay.
In purchasing three of the six development districts, the Port Authority will assume responsibility for all improvements, environmental issues, and existing businesses – including the lease of Port Liberty, out of which Royal Caribbean operates a cruise ship operation. Royal Caribbean has 28 years remaining on its lease agreement.
The BLRA will receive about $1.5 million of the current $4.5 million annually in port fees, and PA will receive the rest as well as rents and other fees from the approximately 38 businesses currently operating on the property.

Will have to relocate two monuments

Two monuments within the sale property will have to be relocated: One dedicated to U.S. Marines that shipped out from MOBTY to fight in the Korean Conflict, and the other the 100-foot Tear Drop 9/11 monument.
Some public portions of the MOTBY remain outside the sale property and will be unaffected, such as the current pedestrian walkway along the south side of the peninsula closest to Route 440.

Developers own other three parcels

The agreement also leaves the door open for possible additional land purchases, even though the remaining three districts are either under contract or already sold.
The agreement also gives the PA the right to build a road from the MOTBY to port roads just north of the MOTBY where PA already has port operations ongoing. This will allow truck traffic to enter and exit MOTBY.

Once expected 6,700 units of housing

Paul Werther, legal counsel for the BLRA, said the PA deal was far better than the six other proposals the BLRA received when requesting offers in 2009. He said the original plan to develop 6,700 housing units on MOBTY is an impossible dream in the existing economic climate.
“The situation has changed since 2001 when the redevelopment plan was proposed, and we have to change with it,” he said, noting that Bayonne is extremely fortunate that the land is valuable as a potential port. “If we were to continue to develop the original plan, the city of Bayonne would go bankrupt. That plan is simply not feasible.”
But some are already protesting the chance. An attorney for Bayonne Bay Development, which purchased a portion of one district for housing development; has already put the BLRA on notice that by permitting container port operations, it will breach its development contract with Bayonne Bay.

Residents have unanswered questions

While residents were not allowed to ask questions before the vote, they were allowed to make comments.
John Budnick told the commissioners they had made bad deal, pointing to deals made for other ports such as in Virginia. He also said that the BLRA should have leased the land, not sold it.
While members of the Longshoremen’s Union applauded the sale, other residents said such as Neil Barton said it was a deal done with “a gun to [the city’s] head.”
Barton said the city had received a good price per acre, but that this does not solve the fundamental fiscal problems the city faces, and will buy only a few years until the city faces fiscal ruin again.
“I would take this deal, too,” he said. “But I would know that I have a gun to my head.”
Louis Ripps said there were many unanswered questions in regard to the deal, but overall, the city would be better served with residential development rather than a container port. He said he he’d hate to think this moment marked “the death of Bayonne.”
Since the city will have no oversight over the property once the sale is made, he said the BLRA should put as many restrictions in the contract as possible, such prohibiting waste transfer operations.
Debra Noble, a resident of Avenue E who lives within a quarter mile of MOBTY, said she was most concerned about the lack of local oversight and the fact that the PA could purchase more parcels, allowing 24-hour-a-day operations to take place.
Of the seven member BLRA commissioners, only five actually voted for the contract. James Pelliccio withdrew from the vote and all discussions because he has business interests involving the shipping industry. Ray Grieves, one of two council member representatives, said he was too new to the board to make an informed decision, even though he is in favor of bringing union jobs to Bayonne. Grieves was sworn in as council member on July 1 and appointed to the BLRA at the July 26 council meeting.
The BLRA also voted to take part in the Hudson County Improvement Authority’s pooled Note Financing Program. The program will allow the BLRA to roll over $30 million in debt incurred as a result of a now-defunct deal with a development group called Fidelco for the once-anticipated housing development at the Harbor Station section of the MOTBY.
The debt is due now. Rather than refinance at a rate of more than 6.5 percent, the BLRA can refinance the same debt through the HCIA for 2 percent interest, BLRA Executive Director Chris Patella said.

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