Power play

City gets county to take back grant money from the Loew’s

In what appears to be his latest attempt to get control of the Historic Landmark Loew’s Theater, Mayor Steven Fulop has successfully persuaded the county to redirect $300,000 of an Open Space Trust Fund grant to another city project.
The Hudson County Board of Freeholders voted on Aug. 13 to rescind part of a 2009 grant that was awarded to the Friends of the Loew’s, a volunteer group that currently holds the lease on the property. Some of the grant was to install air-conditioning at the 86-year-old theater, and some of the money was redirected to help the theater meet Jersey City’s current building and health codes.
The freeholders voted to honor Fulop’s request to use the money to help fund the creation of Berry Lane Park in Ward F instead. Seven of the nine freeholders voted to take away the money, with Freeholder Gerald Balmir absent and Freeholder Bill O’Dea abstaining. O’Dea is a board member on the Friends of the Loews.
FOL officials blasted the Fulop administration for the move, saying the grant was being used to make health and safety improvements to the theater. Some observers see this as the latest chapter in the ongoing struggle between the mayor and the Friends of the Loew’s (FOL) over control of the theater.
In 2014, Fulop attempted to wrest control of the theater operations from FOL, intending to award contracts to professional companies to upgrade the theater and set the stage for it to become a Jersey City center for performing arts.
Colin Egan, director of the FOL, said the city has failed to live up to its financial obligation to help the theater meet basic building and health codes.
The city, he said, not only steered county money away from the theater, but failed to start work on the theater that the City Council authorized several years ago.
Ward D Councilman Richard Boggiano, who represents the Journal Square area where the theater is located, also blasted the move to redirect the money.

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“Unfortunately, the current facility managers (FOL) have remained unsupported and unwilling to collaborate in any forward progress.” – Mayor Steven Fulop
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“To get the record straight, the money for the Loew’s was intended to be used for fire safety improvements and health improvements,” Boggiano said. “What was done at the request of the mayor was wrong.”

City says the money would be wasted

Fulop’s previous attempt to take control of the theater, claiming the lease was invalid, was thwarted by a court ruling earlier this year in favor of the FOL. Fulop had hoped to turn over the theater to corporate management, allowing the theater to be renovated and its operations conducted by a professional talent booking company.
Ryan Jacobs, spokesman for the administration, said the city saw no point in investing this grant money into the theater when the city plans to spend millions to upgrade the property in the future.
Jacobs said FOL does not have its fiscal house in order and that the city has multi-million dollar plans to upgrade the whole of the Loew’s.
“Why spent a couple of hundred thousand of fixing the Loew’s now when we have a plan for renovation,” he said. “This is a fiscal responsibility issue.”
“That makes no sense,” Egan responded. “This money was to be used to bring the building into compliance with the city’s codes on a building the city owns. Any other property owner would be in jail if they failed to do it.”
In a June 1 letter to Hudson County Executive Tom DeGise that has been obtained by the Jersey City Reporter, Fulop questioned the two grants that were issued to Loew’s in 2009.
“One of the grants was originally intended to fund the installation of an air-conditioning system,” Fulop wrote. “The grant was repurposed for several smaller projects, as the initial project cost estimates far surpassed the total grant amount.”
Fulop said that after “a careful and detailed analysis of facility needs, it is clear that these smaller projects will have a minimal impact on expanding the facility functionality or improving the overall community benefits without a significant number of additional large scale improvements.”
Fulop said the city has engaged a variety of partners in both the public and private sectors to develop a full restoration and renovation plan for the Loew’s, one that will include these necessary large scale improvements and at the same time not raise taxes.
“Unfortunately, the current facility managers (FOL) have remained unsupported and unwilling to collaborate in any forward progress,” Fulop wrote.

City has only itself to blame, Egan says

Egan sharply disputed this claim, and said the FOL has offered to work with the city and any professional operators.
He said the grant money was being used to deal with code violations, partly because the city itself failed to live up to its financial obligations to fix the property in the first place. These problems, Egan said, go back to 1993 when the city took possession of the building. Fixing them would have cost about $2.4 million.
While the FOL leased the property with the intention of restoring the historic theater for public use, the lease filed in 2004 required that code violations be addressed before any other work.
Egan said the city originally pledged funds to help pay to bring the building up to code, but over time failed to live up to its promise. In 2009, the city and FOL came to agreement that the city would use unexpended funds from its Urban Enterprise Zone (UEZ) fund to meet this obligation.
UEZ money was also supposed to be used to hire a consultant to help with booking performances.
In 2009, FOL got a grant from the county to fix the air conditioning in the theater. But the actual cost was higher than the grant. In a memo of understanding, the city apparently agreed to cover the additional cost using UEZ funds.
FOL also agreed to allow the city to oversee the construction work to bring up the facility to code. This included installing sprinklers, and resolving other fire safety and health-related issues. The city had about five projects planned, including work on the front doors that the City Council voted to authorize.
Everything came to a half when newly-elected Gov. Christopher Christie took the UEZ funds from urban areas to help balance the state budget, including about $11 million from Jersey City.
Egan said in 2010, FOL once more met with the city to deal with the code issues.
“You have to remember, we can’t expand performance operations until we meet city codes,” he said. “The city told us they might be able to find grants to cover some of the costs.”
In 2011, FOL agreed to rededicate the $600,000 Open Space grant from the county to help meet the cost of code violations, Egan said.
“We had spent about $60,000 developing plans for the air-conditioning, which left us about $530, 000,” Egan said.
In 2012, FOL and city officials agreed that the city would do the work, but Egan said this got bogged down in interoffice conflicts within the city itself. FOL had to request extensions on the county grant.
In 2013, Egan said, the city decided not to do the work after all, and even voided the one job the council had authorized.
Egan said the current conflict arose after Fulop was elected in May 2013, and previously open communication between the FOL and various city departments ceased.
In early 2014, the city challenged the lease and awarded contracts to private companies that would take control over operations and restoration out of the hands of FOL. FOL sued, saying that the city had violated its lease.
In June, the court sided with FOL.
Egan said he met with Fulop after this to find common ground and again said the city needed to bring the building up to code.
“Two days ago, I got a call that he wants the county to take the grant,” Egan said. “The city is saying FOL isn’t doing enough. But one reason is code issue. It is a self-fulfilling prophecy.”
Records show that FOL is also operating at a deficit.
“The grant has nothing to do with operating expenses,” Egan said. “But because we do not meet city codes, we are required to have fire marshals on site whenever we have an event. This costs us money each time, and since there are only so many fire marshals, it also limits how many performances we can put on.”
He also said the legal expense to fight the city attempt at a takeover last year also contributed to the lack of profit.

Al Sullivan may be reached at asullivan@hudsonreporter.com.

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