The City Council has introduced an ordinance that would authorize a 25-year agreement with a developer who will build a new $14 million City Hall annex on Martin Luther King Drive.
The annex, in the neighborhood popularly known as The Hub, would be leased to the city in a lease-purchase agreement. But Ward D Councilman Michael Yun opposes the deal, saying the city has the money to build the annex without needing to lease.
The ordinance will receive a public hearing on Sept. 10. On Wednesday, its introduction was approved 7-2, opposed by Yun and Councilman Richard Boggiano.
Mayor Steven Fulop presented the proposed agreement to the City Council on Aug. 18. If approved, work could start later this year. An annex has been in the planning stages for years, but the previous administration had proposed a site nearer to the center of the city.
By locating the annex on MLK Drive, city officials hope to boost the local economy as well as provide a greater degree of public safety. Also, city officials say with judicious use of various funds recently acquired and some of this year’s surplus, and a relatively small bond, the taxpayers could save more than $60 million over the life of the lease.
The annex will be built by Brandywine Jersey City LLC through a public-private partnership with the city and the Jersey City Redevelopment Agency (JCRA). City officials say during the period of the lease the city’s payment will cost less than renting office space, saving the city and taxpayers money. The city will own the annex at the completion of the 25-year lease with Brandywine.
A stimulus for The Hub
The new building will be named The Martin Luther King Jr. City Hall Annex, and will house city offices that get frequent visits from the public such as the Department of Housing, Commerce and Economic Development, and the Department of Health and Human Services. There will also be a mayor’s office with staff at the Hub Annex in addition to the main office at City Hall.
“Our administration has made a commitment to invest resources into Ward F and the areas of the city that were previously overlooked,” said Fulop. “We believe the City Hall Annex at The Hub will bring even more potential shoppers and diners to the community. With city offices housed here, there will be more foot traffic spurring an increased demand for more services and retail business which will lead to additional investment and development.”
The Department of Public Safety and the Jersey City Employment and Training Program already plan to move into renovated space on MLK Drive in The Hub later this fall. The public safety director, the police chief, and the fire chief will personally work in the annex.
Unlike some city offices, the annex will be located next to the existing Martin Luther King Drive Light Rail Station and mass transportation, making it easier for residents to access city services. Ample parking will also be available.
The city has been holding meetings with community leaders for feedback on the building and redevelopment of The Hub area, including plans for at least 300 new mixed-income residential homes. The JCRA also wants to bring a bank branch back to The Hub.
Who is Brandywine Jersey City LLC?
Documents that detail the finances, the history of the company, and its principal owners were not supplied before the introduction of the ordinance, despite the fact that Yun and Boggiano have requested this basic information be supplied for projects submitted to the City Council for approval. Officials in the Fulop Administration said this was an oversight in this case and said they would supply the documents.
Brandywine Jersey City LLC was incorporated in April 2014 and it is unclear if the company or any of its principal owners are connected to a firm of a similar name that has done business with the JCRA and on private projects in Jersey City.
Yun said he had received some information from the state of New Jersey with whom the company has to also file basic information, but this did not give him the background to learn the company’s history or qualifications for doing a project of this size. There is a company of a similar name that had some involvement with the recently-completed Jersey City Municipal Complex, and another residential project called Jackson Estates for senior citizens.
Yun said he would press the administration for more information about the company’s background and its ownership before the ordinance comes up for a final vote on Sept. 10.
Yun opposes lease deal
Councilman Yun says he believes the lease-purchase is a bad deal for the city. Lease payments would cost about $45 million over the 25 years, and he says that’s more than the value of the building, which would not be fully operational.
“We would be responsible for everything,” he said. “What we are leasing would be frame, roof, windows, doors, the city would have to put everything else in, plumbing, electrical and set it up for our uses.” He said once the Brandywine building is complete the city will have to have to invest as much as $3 million – possibly more – to fit it for use.
On top of all this, administrators for the city said the project will generate no taxes nor payment in lieu of taxes, despite the fact that the lease payments would be going to a private entity.
Yun said the city could construct the building and save the $45 million lease payments, possibly more, as well as save more by relocating offices currently in rental spaces. He said the city currently pays $2.3 million in rent and another $200,000 for parking fees, all of which would be eliminated by moving to a new annex.
“I agree we should build the annex,” he said. “But we should build it ourselves and not lease it. We have the money.”
In the mayor’s proposal, construction on the 60,000 square foot annex would be about $200 per square foot. While Yun believes this figure to be high, he said the city can still afford the $15 million overall construction cost. This includes $12 million for actual construction and $3 million contingency fee.
The city recently received $3 million from JP Morgan in unexpected revenue, which Yun said could be dedicated to this project. Last year’s budget had a $46 million surplus. Of this, $16 million was used in the 2014 municipal budget leaving $30 million.
Yun suggested spending $5 million on the construction of the annex, which would still leave the city with a hefty $25 million surplus. The city expects to get $2 million in additional revenue from a Park Avenue development. The rest of the construction cost – about $5 million – could be bonded.
The bond would be paid off within the first three years after the city has moved offices into the new annex, Yun said, from the $2.5 million saved in rent and parking fees.
Fulop Administration officials said the project would likely take longer to construct if the city did it, a point Yun conceded. But he said the building would be immediately ready for use.
“The tax payers of this city should oppose the lease deal,” Yun said. “We can afford to build the annex ourselves and that’s what we should do.”
Al Sullivan may be reached at email@example.com.