The seemingly never-ending saga of One Journal Square added yet another layer of drama yesterday, as several subsidiaries behind the project filed suit against Jersey City, Mayor Steve Fulop, and the Jersey City Redevelopment Agency.
The history of the development is starting to resemble a novel at this point, but the short version is that KABR Group and Kushner Companies purchased the property in 2015. An earlier version of the project was taller and had signed co-working giant WeWork to operate over 100,000-square feet of office space in the building, but that company pulled out of the deal and took $59 million in tax breaks with them.
A scaled-back version of the development featuring twin 66-story towers was approved last September. But in April this year, the Jersey City Redevelopment Agency sent Kushner and KABR a Letter of Default saying they violated a redevelopment agreement the parties entered into following the project’s initial approval in 2015.
The letter stated that Kushner Companies and KABR Group failed to start construction by January 1 of this year, have failed to submit firm financing commitments to the JCRA, have failed to obtain or waive redeveloper contingencies before they expired, and have failed to submit an annual administrative fee that was due in April of 2017.
Lawyers for KABR and Kushner officially fired back yesterday with a lawsuit in Federal Court, slapping the city with breach of contract, civil rights, and due process violations. The companies claim that shortly after 2017’s swearing-in of President Donald Trump and the naming of former Kushner Companies CEO Jared Kushner as a senior advisor, Jersey City’s Deputy Mayor Marcos Vigil advised them that, for political reasons, they “should submit [their] application for tax abatements by April or May, or should wait until after elections for Mayor and City Council were held in November.”
Later last year on May 7, not long after controversies surrounding Kushner’s solicitation of Chinese investment under the EB-5 visa program for the project became public, the lawsuit says that Mayor Steve Fulop posted on Facebook that his administration made clear to the companies that “the city is not supportive” of their tax abatement request for One Journal Square. The case claims that Fulop’s statement “was a repudiation of the contractual promises in the Redevelopment Agreement obligating the City and the JCRA to cooperate with [Kushner and KABR] in obtaining abatements” and was made “to curry favor with the overwhelmingly anti-Trump constituents of Jersey City.”
The lawsuit says that the companies attempted to meet with Jersey City officials in September 2017 to discuss extending certain deadlines in the redevelopment agreement, but the JCRA canceled the meeting and then “unilaterally cut off communications” with them. Following Fulop’s re-election, Kushner’s lawyers claim a meeting was held with the mayor on January 10 this year about why the project wasn’t moving forward.
During that meeting, the lawsuit says Fulop told representatives of Kushner that “it would be blatant discrimination” to refuse to provide tax abatements for the One Journal Square project, but later confirmed that “the true motive in the denial of the tax abatements was the involvement of the Kushner family, stating that it was ‘really tough’ to move forward with the deal, and that the problem would go away if the Kushners left the deal and a new partner was brought in.”
In one of the lawsuit’s more colorful passages, the companies claim that after Bloomberg published a piece about a possible January groundbreaking at One Journal Square, “Fulop called a member of KABR Group…stating angrily ‘what the f*ck is going on with this article?’” The lawsuit then cites several tweets from the mayor lamenting a “sense of entitlement that the developer has towards a subsidy” for the project.
The filing claims the mayor himself “orchestrated the Notice of Default, conspiring with the city entities he controlled, in an attempt to push the Kushner family out of the project.” They also argue that Fulop has failed to properly submit their tax abatement request to the City Council within the legally required 60 days despite them sending it to his office on April 6.
Fulop fired back over the lawsuit last night on Twitter, stating that the case is “nonsense” and that “the same way they illegally try to use the presidency to make money when it suits them is the same way here where they try to use the presidency to be pretend victims when that suits them.” He also told the Jersey Journal in an email that “it’s not like the Kushners have a great deal of credibility in anything they say.”
You can read the full filing here.