Real estate people have complained for more than three years that the sale of a large portion of the Military Ocean Terminal at Bayonne (MOTBY) to the Port Authority for use as a cargo terminal had the potential to doom Bayonne as the next site of Gold Coast real estate development.
“The best thing the city could do is buy back that land and return to the idea of developing luxury housing,” said Michael Bernescu, office manager for Weichert, Realtors in Bayonne, earlier this year.
While the city did not buy back the property from the Port Authority, it did the next best thing.
In a series of unanimous votes taken at the Aug. 14 meeting, the city council approved the development of a new permanent cruise terminal for Port Liberty located on the former Military Ocean Terminal, abolished the Bayonne Local Redevelopment Authority (BLRA), and came to an agreement settling a decade-long lawsuit with Fidelco Realty that will clear the way for additional residential and other development.
These changes, city officials said, indicate a return to an earlier vision for development on the MOTBY for residential, commercial, and cruise-related services, rather than cargo-related operations after the city sold a large portion of MOTBY to the Port Authority of New York and New Jersey in 2010.
Although the most recent change will not likely bring back what some say were “the over ambitious” plans the city had envisioned for MOTBY a decade ago, the new moves set the stage for a more gradual development in the same vein, with the core piece of the new development geared around the new cruise terminal and cruise-related industries.
“These are very positive steps,” said Assemblyman Jason O’Donnell, noting that this will make development of hotels more likely as developers eye MOTBY as a possible staging area for tourists, attracting other development similar to what was envisioned in the 2004 redevelopment plan for the area.
New cruise port means more city revenue and local jobs
The city council’s approval will provide Royal Caribbean Cruise Lines (RCCL) non-recourse financing to construct a state-of-the-art cruise terminal and parking facility at MOTBY.
“These are not loans that the city will have to pay back and they do not add to the city debt,” said City Business Administrator Steve Gallo. “Royal Caribbean is completely responsible for the repayment.”
Non-recourse financing means that while the city will serve as the conduit for the financing, the city incurs no new debt and is not responsible for repayment which will be made solely by Royal Caribbean. In addition, RCCL will pay Bayonne a $250,000 application fee and $50,000 annually to monitor the financing.
“This important project is a huge benefit for the Bayonne community,” said Mayor Mark Smith. “Our relationship with Royal Caribbean has been an excellent experience. This project will extend their commitment to our community for many decades into the future and will provide their customers with a state-of-the-art, comfortable and modern cruise facility at an easily accessible location.”
The city can expect to benefit from the cruise line’s continued presence in the community as well as the further expansion, which will allow for multiple ships and year-round sailings. The multimillion-dollar investment will create hundreds of building and construction trades jobs as well as hundreds of cruise-related employment opportunities for area residents, Smith said.
Gallo said the new facility will cement Bayonne’s place as the region’s premier cruise port facility, and the financing allows for $70 million in additional revenue. The project will also create hundreds of new construction jobs, a significant number of additional recreation-oriented permanent jobs, and will serve as a catalyst for the development of support services such as hotels, restaurants, shops, and other amenities sought by tourists. The city also will see an increase in parking taxes annually.
In its action to dissolve the BLRA, the city council took responsibility for overseeing future development on the MOTBY as well as in other parts of the city.
Although forced to pass a $75 million bond to absorb the BLRA’s existing debt, the city council members said the city would still save up to $2 million annually with the move.
Former Councilman Jerry Hogan and former mayoral candidate Leonard Kantor both raised questions about the move in the public hearing.
Kantor said that taxpayers cannot afford to bear the burden of the increased debt, a statement Gallo challenged.
“It’s the city’s debt regardless of what agency,” Gallo said. “We are simply doing away with an unnecessary authority.”
Gallo said the BLRA dissolution follows the abolition of other previously independent authorities such as the Bayonne Parking Authority, and the Bayonne Special Improvement District as well as the downsizing of the Bayonne Municipal Utilities Authority.
Gallo said this was part of a plan Mayor Smith proposed when taking office to downsize municipal operations, reducing costs while maintaining vital services. He said the move would help redevelopment by streamlining the communication and approval processes and reducing the time a project goes from proposal to shovel ready.
Hogan said he had voted against establishing the BLRA in the 1990s, and wanted to know why the BLRA was in debt. He noted that millions of dollars had passed through the BLRA in grants and other venues, and wanted to know where it all went, and why the BLRA was so deeply in debt.
Gallo said the funds had gone into developing infrastructure at MOTBY in order to prepare the site for future development.
Fidelco suit settled
The city council settled the last in a series of legal disputes that had crippled redevelopment of the Harbor Station district of the MOTBY for more than a decade.
MOTBY is divided into six development districts. Fidelco proposed a 75-acre site called Harbor Station nearest Route 440 in 2005. Later it was subdivided into Harbor Station North and South.
Fidelco had proposed to build condominiums there. But when the real-estate market crashed in 2008, the project stopped. The company wanted to change its agreement to build rental units instead, but this came into conflict with a previous development that had exclusive rights for rental development. This was an issue some city officials might have resolved, but it became more complicated when the city sold another portion of MOTBY to the Port Authority in 2010. Many apparently assumed the Port Authority intended to develop its portion for container port operations.
Fidelco filed another suit demanding $100 million in damages.
The resulting settlement proposes that a new development entity develop a portion of the land which represents about 30 percent of the original tract with no less than 850 luxury rental apartments and pay the city $20 million for the land. The settlement immediately frees up the remaining 70 percent of the Harbor Station district for marketing and development by the city. The larger Harbor Station South district contains 55 acres and will likely be the subject of a request for proposals later this year.
Some city officials believe that this might be the site for the development of a new hotel. The city had entertained a similar proposal several years ago.
“This would be different from the earlier plan,” one city official said.
Mayor Smith hailed the settlement for freeing up the development logjam that has plagued the peninsula.
“This settlement provides for the timely investment of $120 million in Harbor Station North, creating hundreds of building trades and construction jobs, adding to our tax rolls, and building high-quality rental housing,” Smith said. “More important, the settlement allows for the immediate marketing of the larger Harbor Station South District which can be anything the community wants it to be.”
Smith said a mix of retail, commercial and residential uses in the Harbor Station District would be a welcome addition to the community. Planning and other development reviews will begin shortly.
Harbor Station is located near the 45th Street Light Rail station and Route 440, as well as near the New Jersey Turnpike Extension and several Bayonne shopping malls.
Al Sullivan may be reached at firstname.lastname@example.org.