Hoboken, developer get June court date in garage site battle

May 01, 2008 Jersey Journal

A court date has been set for the lawsuit over the sale of the municipal garage site to a developer who plans to put up residential housing.

In January, MDK Development LLC filed a lawsuit against the city and developer S.Hekemian Group, which won the right to buy the property, charging that the city's bidding process was "arbitrary, capricious, unreasonable," and violates the Local Redevelopment and Housing Law.

The parties will go before state Superior Court Judge Edward T. O'Connor on June 26. O'Connor said he expects to decide the case that day.

MDK is joined in the suit by Maurice DeGennaro, a vocal critic of the bidding process, who said the unusual way the city collected bids shortchanged the taxpayers.

"They set a ceiling on a price, it's ridiculous," he said.

The City Council chose S.Hekemian's bid for the garage on Dec. 13. The developer's plan calls for a 12-story, 240-unit condominium on Observer Highway, dropping down to eight stories for the portion along Willow Avenue.

It was the third time the council called for bids at the site. The council gave developers the opportunity to bid in two different ways, one of which capped the amount that could be offered at $25.5 million. The other option allowed bidders to offer as much as they wanted, but capped the height of the building at nine stories, stepping down to seven stories.

The goal was to have developers compete on how small they could build the structure.

That round of bidding yielded three offers, but only S.Hekemian met all of the city's requirements.

MDK made an unofficial offer of $30.1 million but refused to put in an official bid before the deadline, citing legal concerns with the way the bidding process was conducted. Developer Trammell Crow offered $26 million for a two-tiered building of seven and nine stories but did not include the required $2.6 million bond.

City Corporation Counsel Steve Kleinman said he's confident the judge will find the city's process fair.

S.Hekemian's attorney, Doug Cohen, agreed, calling the case "without merit."