Neighboring businesses file second suit against Hoboken’s Hilton

Developers accuse plaintiffs of 'duplicity'

The recently approved Hilton Hotel which would be constructed on the Hoboken waterfront behind the River Street post office is again under fire after two neighboring businesses filed a lawsuit in Hudson County Court on Aug. 2.

The companies behind the suit, Hoboken Land Buildings LP and Hoboken Holdings LP, claim a $3.2 million escrow account the developers of the hotel would deposit as part of the new redevelopment deal, “amounts to a slush fund for the city.”

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Last year the city council approved a redevelopment deal with KMS Development Partners for the construction, which at the time would have provided the city with nearly $5 million in community givebacks, including $1.165 million for infrastructure upgrades, $1 million to fund the endowment for the Hoboken Public Education Foundation (HPEF) to support the public school system, $485,000 divided evenly among the three charter schools in Hoboken, $200,000 into the Affordable Housing Trust Fund, and $2 million to help revitalize the Hoboken Community Center (the former YMCA building).

This deal was litigated when Hoboken Land Building LP and Hoboken Holdings LP filed their first suit against the city, city council, and the developers of the project, KMS Development Partners.

That suit stemmed from the givebacks the city would have received. The complainants charged that the givebacks were an obvious quid pro quo and promoted favoritism and cronyism. They also said the city is without the legal authority to require a redeveloper to make a payment to the Hoboken Public Education Foundation because it is a nongovernment entity.

Abuse and fraud feared 

A trial court judge in March denied a motion by the city and developer to dismiss the lawsuit, stating that the givebacks “would create unacceptable possibilities for abuse and fraud and cannot be permitted for reasons of public policy.”

In May the council nullified the original redevelopment agreement in order to terminate the litigation.

In June, the council approved a new redevelopment deal with KMS Development Partners that would require the redeveloper to make infrastructure improvements in the area surrounding the rehabilitation area and in the First Ward for $165,000. It would also have to create a dedicated internship program with colleges and universities focusing on hospitality areas, and a “Day on the Job” Hospitality Training Program for high school students.

The hotel will also provide complimentary meeting facilities three times a year, which could include the local State of the City address or a benefit for the local school system. Infrastructure improvements would include improved traffic circulation, streetscaping, new sidewalks, new lighting, landscaping, storm water control, and the creation of a pocket park.

The developer will also have to deposit $3.2 million into an interest-bearing escrow account that will be used for public projects determined by the city near the rehabilitation area.

These projects could include infrastructure improvements, flood control, improving bicycle and pedestrian access and safety, furthering open space initiatives, and parking and traffic improvements.

This latest lawsuit filed against, the city, Mayor Ravi Bhalla, the Hoboken City Council, and KMS Development Partners, claims this escrow account is a “transparent attempt to circumvent the court’s opinion … by creating what amounts to a slush fund for the city to use in the future as it deems fit.”

In the shadows 

It also charges that the city’s decision to allow for more bulk and density then what is permitted in the Post Office Redevelopment Plan in return for these givebacks in the form of an escrow account is a “blatant quid pro quo.” They believe the new hotel will add to traffic congestion, impair viewsheds, reduce light, increase shadows “and otherwise detrimentally affect the properties of plaintiffs and other property owners and the people of Hoboken.”

The suit also states that the resolution authorizing the agreement is “subversive of law, anathematic to public policy … arbitrary, capricious, and unreasonable.”

The suit seeks for the agreement to be declared null and void as well as attorney fees, and “such other relief as may be just and equitable.”

KMS Development Partners spokesperson Tim White said the new filing is “fundamentally flawed and grossly misrepresents the terms of the 2019 Redevelopment Agreement … It is designed to hold us and the city hostage in order for the plaintiffs to push for their own development interests.”

These interests include having their own property upzoned, according to White.

“Hoboken Land LP… have been actively petitioning the city since the filing of the previous lawsuit to have their property, which is listed on the National Registry of Historic Places, included in the Post Office Redevelopment Plan so they could construct up to 20 stories of residential units,” White said. “A large residential project of that size would increase the types of impacts that they claim to be concerned about in the litigation. This duplicity reveals a lot about the plaintiff’s motivation behind these lawsuits.”

For updates on this and other stories keep checking and follow us on Twitter @hudson_reporter. Marilyn Baer can be reached at

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