While the garage has been open and operating since October 2002, the city had not been able to take full control of the building because of pending litigation against the city, the Hoboken Parking Utility, and Robotic Parking Inc. Robotic is the contractor that installed the garage's automated features.
In January of 2001, because of long delays and disputes between the Parking Authority and contractors, the insurance firm Lumberman's Mutual Casualty Company, which holds the performance bond on the garage, entered into a "takeover agreement" in which the insurance company was charged with overseeing the completion of the garage.
While the garage opened, Lumberman's has not been able to turn it over to the city until ongoing litigation was settled regarding an unpaid subcontractor. Now that the city is able to accept the garage, it clears the way for it to enter a long-term management contract or to begin the public bidding process to sell the controversial building.
According to the settlement agreement, in December of 1998 Robotic hired Engineered Software Products, Inc, and Gamsys, LLC to work on the design and installation of the automated parking system. According city officials, the firm was hired without the consent of the Hoboken Parking Authority (the now defunct semi-autonomous agency that approved the construction of the garage).
Both of the subcontractors performed their work for Robotic but were not paid, according to the settlement. The subcontractors then filed a complaint in Superior Court against Robotic, the city, and Lumberman's, the surety.
At the date of the initial litigation, all three of the defendants denied liability. Robotic said the city should pay, while the city said that since it never gave permission to hire the subcontractors, Robotic should pay the bill. The defendants then filed counterclaims against the plaintiffs and cross-claims against each other.
After months of litigation and negotiations, the parties have finally reached a settlement. Lumberman's will pay $377,000 to Engineered Software Products and Gamsys. Lumberman's will also pay the city $42,300 to finish the last remaining construction items, including installing a sound barrier around an auxiliary generator. Additionally, the city will pay $25,000 to the plaintiffs for 160 man hours of work to "close out" some minor programming features.
In return, Engineered Software Products and Gamsys will drop the lawsuit and agree not to sue in the future. They also indemnify the city, surety, and Robotic, and the case is dismissed "with prejudice" without any of the parties involved admitting liability.
Once Lumberman's pays the settlement, the city then agrees to finally accept the garage as finished and operational.
Reasons for the settlement
For Lumberman's, the settlement was necessary because until the litigation was sorted out, the city would not accept the project. Therefore, if the litigation continued indefinitely, the company risked having to pay out the nearly $6.3 million performance to the city. With this settlement, the surety is able wash its hands of the troubled project.
Robotic is a clear winner in the settlement because the company does not have to admit any guilt and does not have to pay any money as part of the settlement. Also, if the garage does go up for sale, Robotic has in the past expressed a desire to buy the building, so the settlement could bring the company one step closer to that goal.
"Finally, the city can accept the garage," said a relieved city attorney Joseph Sherman Monday. "This settlement is a very good thing for the city."
Now it is up to the City Council to decide what to do with the garage. According to Sherman, there are a couple of options. It can keep the garage and continue to manage it. For the past year the city has had a month-to-month contract with Robotic to manage the garage for a little over $30,000 per month.
If it so chooses, the city could enter into a long-term management agreement with Robotic or a firm of its choosing.
According to City Business Administrator Robert Drasheff, even at full capacity, at the current rate, with the current management contract, the building "can barely make a profit." It does, however, provide the service of keeping more cars off the street.
Another option that has been expressed by several members on the City Council would be to sell the building. While it is too early to guess what the sale price might be, Sherman said that it would take approximately $5.2 million to satisfy what is left of the bond. If it were to go to sale, there would be an open and advertised bidding process.
Separate from possible criminal
The litigation that is settled should not be confused with a possible ongoing criminal investigation into the automated garage. In February of 2003, the state's attorney general ordered the city to produce numerous documents related to the garage and its construction. "[The lawsuit that was settled] only brings to close the construction phase," said Sherman. "It is possible that a criminal investigation is still on-going, but the status of that investigation is unknown to me."
In June 2002, Mayor David Roberts, frustrated with the lack of progress at the 324-car garage, announced that he was launching an independent investigation into the garage. That investigation worked its way to the attorney general. At that point, the project was three years behind schedule and millions of dollars over budget.
According to the subpoena, which is signed by Deputy Attorney General Basil Merenda, the city was ordered to present on Tuesday, Feb. 4, 2003 all documents relating to the development, bidding, or award of any contract for the construction for the garage from 1997 to the that date.
Included in the subpoena are all bid packages, specifications, and documents received from vendors, as well as the advertisements for bids and the request for proposals. The city was required to produce to the Grand Jury correspondences, minutes, e-mails, notes, and calendars or date books from all Parking Authority members and employees. Also, the city must hand over the minutes of any Parking Authority meeting at which the contract, or proposed contract, was discussed.
The Attorney General's office does did not comment as to the status of that investigation.