Setting the stage for what city officials hope will be the beginning of a revitalization of the Bergen-Lafayette area of the city, a divided City Council voted on Wednesday to approve a lease-purchase agreement with Brandywine Jersey City LLC to build a new City Hall Annex on Martin Luther King Drive.
The council approved the 45,000 square foot building, which will cost taxpayers about $36 million over the 25 year life of the lease. The city would have the option to take possession of the building at the end of the lease.
The annex will be built by Brandywine through a public-private partnership with the city and the Jersey City Redevelopment Agency (JCRA). City officials say during the period of the lease the city’s payments will cost less than renting office space, saving the city and taxpayers money.
Although the State Local Finance Board has given its approval to the plan, Council President Rolando Lavarro admitted the board called the financing “an unusual arrangement.”
“This is a game changer for Bergen-Lafayette and will be the most significant investment in the history of Ward F,” said Mayor Steven Fulop. ”More than 300 city employees will work here, shopping and dining at area establishments, and spur additional economic development, including new housing and jobs.”
The project, according to Fulop, will also save taxpayers money once it is built, because municipal offices will be relocated from the more costly rented spaces they now occupy. Over the life of the building, he said, the project is expected to save taxpayers tens of millions of dollars.
“I have no doubt that the City Hall Annex will be a catalyst along the MLK Drive.” – Council President Rolando Lavarro, Jr.
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“I have no doubt that the City Hall Annex will be a catalyst along the MLK Drive,” said Lavarro. “This is an exciting project that will spur additional economic development, both commercial and residential, and provide jobs and growth for a part of the city that has been neglected far too long.”
The City Hall Annex will house the Department of Housing, Economic Development and Commerce, the Department of Health and Human Services, a Department of Public Safety office, the Resident Response Center and other city staff.
“This is the best thing that could happen to Ward F, as it will bring business traffic and a beautiful development that will brighten up Martin Luther King Drive,” said Ward F Councilwoman Diane Coleman. “This will be a positive first step in the redevelopment of the area.”
Brandywine is already an established developer in The HUB shopping center, and has been in a partnership with the Jersey City Redevelopment Agency since 2006. The ordinance requires Brandywine to provide a shell of a building, but the city would be responsible for internal elements such as walls, doors, electrical, plumbing, and overall maintenance before any city departments can move in.
However, the city has not provided an estimate on how much it will cost the taxpayers to make the building inhabitable, and Brandywine has only provided color renderings of what the building will look like, not a site plan or architectural drawings.
City officials admitted that construction plans have not yet been developed for the project – and Brandywine was expected to develop more specific construction documents once the ordinance got approved.
A less than successful track record
Originally proposed to accommodate the main offices of the Jersey City Police Department, the Annex’s price tag was scaled back prior to the ordinance hearing after city officials began negotiating with the Jersey City Housing Authority to relocate the police from Journal Square area to Marion Gardens.
However, the police department relocation is not finalized. If the deal falls through, the current $10 million cost estimate of the 45,000 square foot estimate Annex could balloon to its earlier original estimate of $14 million for a 60,000 square foot building.
During the ordinance hearing, Mia Scanga, a budget hawk, pointed out the federal government – which oversees the Housing Authority developments – appears to wants more than the city is willing to pay for the space.
“This means the plan could change again,” she said.
Scanga was also concerned about the lack of disclosure by Brandywine under the city’s pay to play laws. Because the project is a joint venture with the JCRA, Brandywine is not bound by rules that require it to disclose campaign contributions, although officials from Brandywine said any of the contractors hired would be.
Councilman Michael Yun, who voted against the ordinance, said that he supported building the Annex, but disagreed with the leasing arrangement. He said the city ought to cut out Brandywine entirely and use a combination of surplus capital and bonding to construct the building instead.
City officials claim the lease agreement would actually cost less than if the city bonded. Yun disputed these numbers and the fact that the city would have to pay for a substantial amount of infrastructure work before city services could move into the building.
City officials have confirmed that previous projects the city has paid to construct such as the new Department of Public Works facility and the West Side police headquarters were plagued with delays and cost over runs. Yet a comparison study provided by the city showed the square foot cost of the Annex would be in line with the costs of the other facilities.
“This is without any change orders or delays,” Scanga said, noting that the city will have to start paying rent on the new annex on Feb. 1, 2017, whether or not the facility is complete.
Lavarro said the project is expected to take 18 months to complete, and that if the city bonded for the work, it would have to start paying from the first day.
“This gives us two years before we have to start paying for the project,” he said.
Councilman Richard Boggiano also voted against the project, saying that the city has invested millions into the HUB area without successfully bringing in the private investment the city hoped its investment would attract.
While residents near the project site overwhelmingly supported the project, as did local contractors, who hoped to get construction jobs as subcontractors on the project, budget hawks questioned some of the details.
Scanga said Brandywine’s record in the area has not been one of success. Brandywine was named redeveloper of the HUB area by the Jersey City Redevelopment Authority in 2006.
The company has successfully completed facilities in the area, including the construction of a shopping district. But the commercial development did not pan out as the city hoped, drawing few private companies. The city eventually rented out some of these facilities for many of the same services proposed to be relocated in the new City Hall Annex.
But the city under the Healy administration became embroiled in a rent dispute and rent went unpaid for a significant amount of time.
City officials admit that the HUB shopping district has been losing money for years, but are confident that by putting a city hall annex there, it will become a catalyst for future development.
“The City Hall Annex will help jumpstart the struggling shopping center and bring new life to the commercial district,” said Fulop. “We are investing public dollars into a community that has been overlooked and left behind. Today, that changes.”
Al Sullivan may be reached at asullivan@hudsonreporter.com.