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Jersey City and four developers agree city will get added millions from abatement deals
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Jersey City and four developers agree city will get added millions from abatement deals

Friday, June 11, 2010
By MELISSA HAYES
JOURNAL STAFF WRITER

Jersey City has reached an agreement with four waterfront developers that will bring nearly $500,000 more annually in abatement payments.

The city also negotiated a settlement of nearly $1 million in back payments for the two most recent years.

The agreement impacts Plaza X Urban Renewal Associates LLC, Cal Harbor So. Pier Urban Renewal Associates, Cal Harbor V Urban Renewal Associates and Cal Harbor VII Urban Renewal Associates.

The abatements are for the Hyatt Regency, Mack-Cali and Schwab buildings and one of the Harborside buildings in Downtown Jersey City.

Corporation Counsel Bill Matsikoudis said the developers have a rare abatement, which is calculated on the total project cost instead of the gross revenue.

For years the city and developers have debated the total project cost and the city hired Sax, Macy, Fromm and Co. accountants to conduct an audit.

"The principle disparity was focused on two elements of cost, real estate commissions and construction costs," Matsikoudis wrote in a memo to the City Council.

The developers based the total cost on estimates presented during the abatement and argued that real estate commissions should not be included because they were "in house" costs.

Matsikoudis and Brian O'Reilly, the city's outgoing business administrator who is serving in a transitional capacity, worked on the settlement for years and said it would have been hard to prove in court that commissions were part of the project cost.

"This is something I think is very good and not insignificant," Matsikoudis said at Monday's caucus meeting.

The City Council voted 8-0 Wednesday to accept the audit and new abatement costs. Councilman David Donnelly, who is on his honeymoon, was absent.

The agreement calls for the developers to pay a combined $485,000 more annually, an increase of 8.5 percent in the gross annual service charge.

Plaza X will pay $125,000 and the Cal Harbors combined would pay $360,000 more for the remainder of their abatements.

Matsikoudis said the amendment would bring in more than $5 million more over the life of the abatements, three of which expire in 12 years. The Hyatt abatement expires in seven years.

In addition, the developers will pay a combined $970,000 in back payments.

Posted on: 2010/6/11 17:44
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