Living up to its promise to revisit previous agreements made for the sale of land at the former Military Ocean Terminal, the Bayonne Local Redevelopment Authority voted against renewing a conditional agreement with Boraie Development LLC for the construction of a retail/residential complex in the Landing District.
This is the second agreement voided by the BLRA since the beginning of the year, living up to a pledge to seek additional bids for the sale of the land.
Councilmen Anthony Chiappone and Ted Connolly, who became members of the BLRA late in 2007, had vowed to revisit previously made agreements.
Conditional agreements with Boraie and Taylor were signed in November 2006 with the belief that they would sign deals within 90 days. With hopes that final contracts could be negotiated, the BLRA extended the deadlines for these conditional agreements in mid-2007.
Hoping the sale funds would be in place to balance the municipal budget, the city had relied on these contracts as well as one for the Bayonne Bay section with Atlantic Realty. But, the agreements could not be worked out in time, leaving the city short for its 2006-2007 municipal budget. And with the deadline for the extensions expiring, the BLRA has decided to start over and seek new proposals for the properties.
“A conditional agreement means that the BLRA will negotiate exclusively with a developer to see if we could come to an agreement,” said Joseph Nichols, executive director of the BLRA. “The commissioners looked at each case and decided that we had reached a place where the agreements didn’t warrant an extension of time.” In an impassioned plea with the BLRA to continue the agreement, Omar Boraie said his company had invested time and money in the presumption that his company would be allowed to move ahead.
“We could start work this year,” he said, noting that discussions have been ongoing with hotel companies, with a five-star hotel planned for the site.
The conditional agreement will allow Boraie to build approximately 600 units of housing as well as commercial/retail and hotel space. These four blocks comprise approximately seven developable acres.
Connelly said that the economics of the Boraie offer did not work to the benefit of the people of Bayonne.
“It was a conditional agreement which means just that,” he said. “The BLRA is not bound.”
He called the plan well thought out, but not good enough. Boraie offered $21 million over the life of the contract. This would mean $5 million upfront, then four payments as the project moves ahead. Boraie said the project would be built in four phases over an eight- to 10-year period.
Nichols said Boraie also agreed to relocate a sewer line, as well as make a contribution to the construction of a park.
“I have a fiduciary duty to the citizens to get the most consideration in dollars for that property and get the best project and the most rateables in taxes,” Connolly said.
Connolly said the BLRA needed to seek more proposals to see if there are better offers, but encouraged Boraie to submit their project again.
Although Chiappone said he respected Boraie as a development company, he said the city would receive the money over too long a period of time.
The change of membership in the BLRA last year came at a time when conditional agreements made over the last few years began to expire. Last month, the BLRA voted to void its agreement with Taylor Group for the Loft District.
In February, the BLRA voided its agreement with Taylor, despite a new offer to give the city $182 million for the Loft and the Point districts. MOTBY is made up of six development districts. The BLRA recently sold the Maritime District to Ports America, and has an agreement with Fidelco/Roseland Realty for the Harbor Station District. Last month, Trammel Crow received a tax abatement on a portion of Bayonne Bay and is expected to start work shortly. This leaves a portion of Bayonne Bay, the Landing District, the Loft District, and the Point District to be developed.
Believing the Point District is the most valuable district of all; the BLRA rejected that portion of Taylor’s offer, but considered the $32 million offer for the Loft District.
Nichols, however, said that the offer came with strings, which resulted in the BLRA’s rejection.
The Taylor Group offered to put the money into an escrow account, and would use it to build infrastructure around the property, such as roads and sewers. Whatever was left over after this work the city would get. But Nichols said BLRA engineers estimated that the infrastructure improvements will cost about $38 million, leaving the BLRA to pay the remaining $6 million.
“We would be getting nothing for the sale of the property,” he said.
Representatives from the Taylor Group, however, said this was not true. The Taylor Group would do all infrastructure improvements. If the costs exceeded the money in escow, Taylor Group would pay for it. If money was left over, the BLRA would get the remainder.
While the BLRA is obligated to install sewers and roads, Nichols said he believes that the BLRA might get a better offer by going out to bid.