During a special City Council meeting Monday night, the council approved a resolution that authorizes the administration to issue Requests for Proposals (RFP) for developers for the site.
The site currently houses the city's municipal garage, located on Willow Avenue and Observer Highway. Due to a previously approved redevelopment plan, which was created by the 15-member Observer Highway Committee and approved by the council in April of 2006, the imminent building cannot exceed 240 units and is limited to a height of seven stories along Willow Avenue and nine stories along Observer Highway.
This is meant to keep any development consistent with the overall character of the surrounding areas. Monday's resolution, however, contains two choices for perspective bidders.
The first option limits the developer to the size specifications mentioned above and requires a bid of $25.5 million or more.
The second option allows the developer the leeway to propose an alternate plan, but the building cannot exceed eight stories on Willow Avenue and 12 stories on Observer Highway, for the fixed price of $25.5 million. Both options are limited to 240 units.
If developers offer the city an acceptable bid for the first option, the council will not consider bids for the second.
In the previous two bid processes, which took place in June and December of 2006, the City Council found the bids to be too low in price or flawed in the way in which they were conducted by the city.
To date the debacle has cost the city approximately $2 million in interest, having to lease the property to use it for the municipal garage, and approximately $13.9 million in loans from having to borrow against the property to plug gaps in the 2005 and 2006 budgets.
Approximately $102,000 is spent by the city every month to continue leasing the space, which according to Hoboken's Business Administrator Richard England, will likely continue for the next two years.
Monday's resolution allots an 18-month period for the developer to close the deal, and an additional six months for the city to make the necessary arrangements to relocate the facility.
New garage in another town
England also confirmed a statement made by 3rd Ward Councilman Michael Russo during the meeting, who said the city was entertaining the idea of pursuing a joint venture with a neighboring municipality to create a shared municipal building in another part of Hudson County. England refused to identify the city, saying only that it was to the north of Hoboken.
In addition to the current debt of approximately $15.9 million, which does not include the additional interest that will be accrued over the new two years, the city's purchase of a next plot could cost between $4 and $7 million according to England, who estimated that if the city were to close on a $25.5 million deal in the coming months, it would break even on the transaction.
Currently the garage is technically owned by the Jersey City-based brokerage firm NW Financial Group, which will receive the $13.9 million the city owes them after the transaction is complete.
One developer's grievance
As a result of the botched bid processes of the past, City Council President Theresa Castellano said the council will now take a more active role in the bidding process.
One of those developers who felt that they have been treated unfairly by the city was MDK Development LLC, which last year placed two bids, the first consisting of $19 million for the construction of a seven to nine-story residential complex, and second of $30 million for a 14-story building with an option to convert it into a hotel. The second bid was not eligible because of the structure's size and its potential use. That use was not authorized by the city's redevelopment plan for that area.
In an attempt to salvage their initial bids, which cost money to prepare, MDK's attorney Khoren Bandazian urged the council on Monday to vote down the resolution and consider the bids that have already been made. In addition, Bandazian raised concerns over the manner in which MDK has allegedly been treated thusfar by the city when compared with other more locally connected companies who are bidding for the same land.
"We are a developer that is not from Hudson County. We are not affiliated or involved with anybody in this city," he said. "This is our first attempt at a project in town, and this is how new developers coming into Hoboken get treated. So I guess unless you're from the inside, we're not able to come in, because that's certainly how it appears to us."
The attorney was joined at the meeting by MDK's owner, Michael Kasparian, who asked how the council planned to ensure that similar flaws would not arise in the upcoming bidding process.
Third Ward Councilman Michael Russo replied with the simple answer that the city could not afford any further slowdowns when it is spending $102,000 per month to keep the garage on the site. Russo added that by the second meeting this October, the council should make its decision on whose bid it will accept.
Michael Mullins can be reached at firstname.lastname@example.org.