A new political team that has made reevaluating tax breaks given to real estate projects a priority may have hit a legal snag as officials in Hackensack are being taken to court by the second developer in as many months.
Jersey Digs reported earlier this summer on actions taken by Hackensack’s new city council to rescind three tax incentive agreements, known as PILOTs (payment in-lieu of taxes). The previous deals were greenlit by former Mayor John Labrosse and his council allies, who were defeated at the polls earlier this year.
A subsidiary of Sanzari Enterprises filed suit against Hackensack on September 15 in Bergen County Superior Court over their One Essex development. The project has been in the works since way back in 2016 when the properties were first declared an area in need of redevelopment.
The $107 million development is set to rise seven stories and feature 250 residential units including a 10% affordable housing component. A structured parking garage with 435 spaces would also be featured at the property, which was granted a 30-year PILOT agreement back in June.
The lawsuit from Sanzari says that the financial terms of the PILOT made the project economically viable, “albeit only marginally so, in view of increasing costs.” The filing notes a clause in the financial agreement that states the deal “may not be amended, changed modified, altered, or terminated without the written consent of each party.”
That reality was not heeded, according to the lawsuit. Shortly after current Hackensack Mayor Caseen Gaines won a May election, “the newly elected Mayor and Council publicly indicated that they are seeking to undue the Financial Agreement, as they claim they were unaware of details, basis or need for the City to provide One Essex with tax incentives.”
After an ordinance emerged to repeal the PILOT agreement when Mayor Gaines and his allies on the council were sworn in, the developers of One Essex sent a letter warning that city that the move was unauthorized and illegal. The city moved forward anyway, revoking the project’s PILOT agreement.
The lawsuit claims that the city has engaged in tactics to get a better deal in terms of tax payments and has undermined their obligations to create affordable housing units under a settlement agreement with the Fair Share Housing Center.
Sanzari additionally claims in the filing that while the mayor has publicly claimed that Hackensack has not undone the site plan approval or pulled construction permits, the project is no longer feasible without the tax deal.
“The Mayor’s proclamation that One Essex remains free to proceed with the development of the project without the benefit of the 30-year tax abatement…represents a gross mischaracterization of the situation and a blatant disregard of its binding legal obligations,” the case says.
The lawsuit seeks an order voiding the resolution revoking the tax abatement. Jersey Digs has reached out to Hackensack Mayor Caseen Gaines and will update this article with any response we receive.
The lawsuit is the second to emerge since Hackensack took action to void previously approved tax abatements. Per CoStar, the Enburg Group filed suit last month over another voided PILOT agreement for their 100-unit development that was previously approved for several properties at 132-148 Main Street.
