The largest hotel project slated for Hudson County’s waterfront is officially dead for now due to a lawsuit challenging included community givebacks, but the developer and officials in Hoboken have agreed to talk about a new deal over the next few months.
There was much fanfare last year when the mayor and city council announced a deal with KMS Development Partners to bring a new 20-story Hilton Hotel to a parking lot behind the Post Office at 1st Street and Sinatra Drive. Details of the 349-room facility itself were impressive, as the building was slated to include meeting space, a ballroom, and a rooftop bar plus event space.
The hotel was granted a 20% bulk height increase from what was allowed under a redevelopment plan and in exchange, KMS agreed to $4.85 million in givebacks. They included $2 million to help establish the Hoboken Community Center inside the former YMCA property at 1301 Washington Street, $1.165 million for infrastructure improvements, a $1 million donation to the Hoboken Public Education Foundation, $484,000 to the Hoboken Public Charter Schools, and another $200,000 for Hoboken’s Affordable Housing Trust.
The final deal, which would also see the renovation of the existing Post Office, passed the city council by an 8-1 vote last October. Just a month later, Jersey Digs broke the news that two nearby landowners filed a lawsuit in Hudson County Civil Court challenging the givebacks, arguing that they constituted “a blatant quo pro quo” that “promotes favoritism, cronyism, lack of accountability, lack of diversity, and is otherwise unlawful.”
The city filed a motion to dismiss the case and got some bad news back in March, as Hudson County View reported that a judge would allow the case to move forward. Superior Court Judge Anthony D’Elia concluded that Hoboken didn’t have the statutory authority to require the givebacks under New Jersey’s Local Redevelopment and Housing Law and ruled that “permitting a municipality to require givebacks…would create unacceptable possibilities for abuse and fraud and cannot be permitted for reasons of public policy.”
The domino effect of that ruling is that Hoboken and KMS will head back to the drawing board, as the city council unanimously voted Wednesday night to completely void the redevelopment deal. The resolution states the canceling of the contract was by “mutual agreement” and the move reinstates KMS as the Conditional Redeveloper of the Hoboken Post Office Rehabilitation Area.
However, both sides are not giving up on the project. The resolution says that the city and KMS will work to negotiate a new hotel deal within a 120-day period that commences on the date of adoption, giving them four months to hammer out an agreement. If at any time, following an additional 120 days, Hoboken determines that a new deal cannot be successfully negotiated, the city may terminate the conditional designation.
It’s unclear what changes could be made to the hotel itself or the givebacks under a new redevelopment agreement, but the project now goes back into a council subcommittee. Despite the setback, Hoboken Mayor Ravi Bhalla is optimistic about a new deal being struck.
“While the administration strongly disagrees with the lower court judge’s ruling, the City is moving forward with an amended plan agreed to by the redeveloper that includes $3.75 million in community givebacks,” Bhalla’s office said in a statement.