Court Says Jersey City Can Keep Over $700k from Stalled Kushner Development

Kushner Kabr Sue Jersey City One Journal Square 2
One Journal Square rendering by Woods Bagot.

A Journal Square property next to the PATH station hasn’t generated much besides controversy in recent years, but an appeals court gave the city some good news this month that will allow them to keep a developer contribution that’s set aside for affordable housing.

Almost a decade ago, Maryland-based Multi-Employer Property Trust (MEPT) gained approvals to build a project called City Center Towers. Many hoped the development would be a catalyst for Journal Square’s revitalization, as the 1.5-acre property was to be transformed into one 922-unit residential tower of 68 stories, one 693-unit 50-story building, and a final seven-story retail facility and parking component.

In May 2009, MEPT and Jersey City entered into three separate Financial Agreements that granted the project a 30-year tax abatement. As part of the deal, MEPT paid $2 million in taxes under a Prepayment Agreement and made another $710,769 initial contribution to the municipality’s Affordable Housing Trust Fund.

As any passerby in the neighborhood knows, City Center Towers never got built, and MEPT eventually sold the land to KABR and Kushner Companies in 2015. That same year, MEPT sued the city to get their $2.7 million back, and they were initially successful. A trial judge ruled in August 2016 that prepayment agreements were “a run-around that essentially nullifies the requirement of the [Long Term Tax Exemption Law], and…annual service charges shall not be due until substantial completion of the urban renewal project.”

The court declared the prepayment agreements were “void from their inception” and additionally concluded that the Fair Housing Act (FHA) “did not provide the City with the legal authority to condition the grant of tax abatements upon a redeveloper contributing to its [Affordable Housing Trust Fund].”

That last point led the city to file a motion for reconsideration in November 2016, limiting their appeal to the affordable housing contribution. The Fair Share Housing Center participated in the appeal and urged the court to reverse their decision, arguing that the state legislature “decisively distinguished [Long Term Tax Exemption Law] trust fund contributions…from a municipality’s right to impose and collect development fees” under the Fair Housing Act.

On August 9, a three-judge panel agreed with the city, confirming that the Affordable Housing Trust contributions “are expressly authorized by the Legislature under the [Long Term Tax Exemption Law], and are independent from and unrelated to the FHA.” Jersey City will still have to return the $2 million but will get to keep over $700k following the winning appeal.

The ruling doesn’t change anything about the current legal dispute at the still-undeveloped property, in which the city has accused current owners Kushner and KABR of violating a redevelopment agreement and the companies have fired back over alleged anti-Trump bias displayed by officials toward them.


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