Developer files lawsuit saying Hoboken improperly claimed it breached contract for sale of municipal garage, and that it was ready to pay price agreed upon

September 28, 2010 Jersey Journal

In August, the [Hoboken] City Council voted to kill the sale of the municipal garage on Observer Highway to S. Hekemian Group, stating the developer was in breach of contract for attempting to lower the price.

But now the developer says it was actually prepared to buy the property for the original $25.5 million.

SHG is also accusing the city of having "engaged in a charade," said the developer's attorney Doug Cohen.

"Their allegation that we were in breach was really a pretext to the fact that they were in breach," said Cohen. "They tried to fire the first shot."

SHG filed a 305-page complaint with the Hudson County Superior Court on Aug. 17 explaining what Cohen called a "cover-up" for the city's failure to complete the environmental cleanup required by the closing date on Aug. 13.

The developer is seeking to recover its $2.55 million security deposit with the city, a $200,000 fee that was paid to the city, plus interest and legal fees.

"The mayor and the council should reconsider their refusal to return the deposit and city fee to SHG within the next 30 days to avoid prolonged, costly litigation," said Cohen.

The city has until Oct. 27 to answer, having received an extension while it conducts a search for new corporation counsel.

Mark Tabakin, the city's interim attorney, said yesterday that the city is not able to comment on the specifics of pending litigation, noting: "We believe what we did was right."

As of yesterday, the city resumed use of the public works garage on Observer Highway. In anticipation of the sale to SHG, the city had temporarily moved municipal vehicles to a space on Willow Avenue.