Observer Hwy bldg can rise 9 stories, not 12
Council votes against bigger maximum on old garage property 

08/13/2006 Hoboken Reporter
 
 WHAT WILL BE – The City Council voted to keep the current zoning at its municipal garage property.  

The Hoboken City Council voted down an ordinance Wednesday night that would have raised the allowable height for development at the city's municipal garage property on Observer Highway from nine to 12 stories.

But Mayor David Roberts said that raising the maximum would allow the city to sell the land for more money and use that money to buy park space elsewhere.

Roberts and the council need to sell the city-owned 1-acre piece of prime real estate to plug budget gaps from the past two years, as well as to fund the acquisition of park land.

Roberts hopes to make between $25 and $30 million from the sale of the property. The property was sent out to public bid two months ago, but only two developers submitted bids - one for $22 million and the other for $18 million. Those bids were rejected.

The city still wants to sell the garage property, but City Council and the Roberts administration are faced with a difficult question.

Why where were there only two bidders, and why were those bids lower than expected for property located so close to the train station?

Roberts: Not tall enough

Roberts argues that the council should upzone the property, which will make the land more desirable to the development community. That way the city can reap money to buy land for open space.

The five council members who voted against raising the height said that the original bids were so low before because the original bidding process was a rush job. The first time around, the developers only had 17 days to submit a bid.

Also, the developers were forced to bid without knowing the results of the Phase 2 environmental study. The fact that the property was used as a garage for decades could mean that there is significant contamination. Until the environmental study is released there is no way to know for sure.

How this all started

The idea to sell the garage originated out of a need to plug a budget hole. Two budget years ago, the city gained $7.9 million from selling the municipal garage to the Hudson County Improvement Authority, a quasi-governmental agency. The city then leased the garage back from the HCIA for a monthly fee.

When the garage is sold, the city can get the profits less the debt they have already incurred.

Again this past budget year, the city found itself with a gap, so it borrowed another $5 million against the value of the garage.

That means that the city has already borrowed nearly $13 million against the value of the garage, and is now paying the interest of $71,000 per month, according to city Business Administrator Richard England.

The Observer Highway Advisory Committee

The need to get more money into the budget created some urgency to quickly sell the property to a private developer.

In a proactive effort to have the residents and city work together, Roberts formed the Observer Highway Advisory Committee, a group of 16 Hoboken residents and two City Council members, to discuss and come up with recommendations for possible zoning in the area.

The result was a compromise plan that would allow nine- and seven-story buildings and up to 240 units of residential housing on the property.

In May, that plan was unanimously approved by the City Council despite substantial pressure from the development community to build higher.

But was it hurried

In order to avoid additional sizable interest payments, the city attempted to close on the property by June 30, the end of the 2005-2006 fiscal year. With only a month to select a developer and close on the property, the city had to act quickly.

In May, the city released a "Request for Proposals," hoping to attract a buyer for the property. Developers were given 17 business days to submit their bids, which is an unusually short period of time to produce a bid for such a complex project.

The result was that only two developers placed bids, and those bids were less than what Roberts and the City Council had hoped.

Roberts: A taller building means more parks

Roberts said there are good reasons for increasing the property's zoning.

After the city pays off its $13 million debt, Roberts said that the remaining profit will be used to secure between $40 and $50 million in bonds that will go toward the acquisition of open space throughout the city. During his 2005 re-election campaign, Roberts said his administration would add between 17 and 20 acres of open space to the city.

"We need this revenue to put down a down payment on the parks that we are going to buy," Roberts said. "The benefit that we will receive is worth the extra three stories."

Roberts added that he is not giving up in his effort to lobby the City Council to increase the zoning.

"I'm going to roll up my sleeves and do a better job communicating to the City Council and the [members] and the [Observer Highway Advisory] Committee and will come back [before the council] with a plan that will have more support."

Five say, give it another go

Despite Roberts pleas to up-zone the property, council members Richard Del Boccio, Theresa Castellano, Michael Russo, Nino Giacchi and Michael Cricco said that the redevelopment plan is not at fault for the low bids. Wednesday night, they voted to keep the existing nine-story zoning.

Council President Richard Del Boccio, who was a member of the Observer Highway Advisory Committee, said that the committee spent a year and half developing a viable plan. He said that to disregard all of their work would be an insult to the committee and the public process.

"We asked the community to help in the process and we came up with a good plan," DelBoccio said. "This is a plan that we should stick by."

Observer Highway Advisory Committee chairman Lane Bajardi, who lives in the neighborhood, said that the current plan that maximizes the property value without further scarring a neighborhood with more out-of-scale high rise development.

Bajardi said, "Mayor Roberts' proposal was an unnecessary and disrespectful rush back to 'square one,' which would have erased a year and a half of good-faith work."