Jersey City Set to Officially Acquire Powerhouse from Port Authority

Hudson & Manhattan Powerhouse. Photo by Chris Fry/Jersey Digs.

As one new development after another continues to sprout up in Jersey City’s Powerhouse Arts District, the neighborhood’s moniker itself has seen little progress toward revitalization. But the city council is about to take a step forward that would acquire the building, pump some additional money into stabilizing the structure, and pave the way for a redevelopment deal.

Earlier this year, Jersey City and the Port Authority of New York and New Jersey announced they had settled a 2014 legal dispute between the parties over unpaid taxes. The agreement calls for the Port Authority to make certain payments to Jersey City for outstanding Payments in Lieu of Taxes (or PILOTs) going back to the 2014 tax year and also enter into a new PILOT Agreement for properties owned by the Port Authority.

As part of the deal, the Port Authority wants to upgrade an existing substation that’s located just west and directly behind the decommissioned Hudson & Manhattan Powerhouse, a hulking industrial structure that dates back to 1908. Under the settlement agreement, the Port Authority will convey the entire Powerhouse property to the Jersey City Redevelopment Agency (JCRA), who will then maintain and stabilize the property using $1.3 million that the Port Authority previously paid to the city.

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Existing substation. Photo by Chris Fry/Jersey Digs.

In exchange, the Port Authority will pay $17.7 million in three equal installments to the city to purchase a nearby triangular lot at the intersection of Washington and Greene Streets that’s currently vacant. It is here that they will construct a modern substation to replace the one behind the current Powerhouse, which will then be decommissioned and removed from that property.

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Site of proposed new substation. Photo by Chris Fry/Jersey Digs.

To facilitate the transition from the old substation to the new one, the JCRA and Port Authority will enter into a four-year lease agreement where the Powerhouse property will be accessible to the authority’s workers during construction of the new substation. When completed, the Port Authority will contribute $300,000 for costs incurred in connection with removing and decommissioning the old substation.

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Existing substation. Photo by Chris Fry/Jersey Digs.

All of this is being done so that the JCRA can find a redeveloper who’s interested in revitalizing the Powerhouse. Under the settlement agreement, the city and Port Authority would enter into a Future Revenue Agreement that would require a 50/50 split of any revenue generated from any future redevelopment of the Powerhouse.

The JCRA says in the settlement that it expects to enter into an agreement with a third party at some point setting forth the terms and conditions of the redevelopment of the Powerhouse. However, a four-year lease with the Port Authority as part of the new substation construction indicates that any potential deal could be a ways off.

The city council was set to vote on initial approval of the settlement agreement at their November 7 meeting and would need to pass the resolution a second time later this month to make the deal official. If approved, work at the properties could commence sometime next year.


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