According to Councilman Ruben Ramos, the city of Hoboken may be working on a Payment in Lieu of Taxes (PILOT) agreement with Academy Bus in order to expand the city’s Southwest Park. It would be using a portion of the company’s property.
For those of us who are not sure what a PILOT or tax abatement is - it is an agreement between a developer and a municipality allowing the developer to pay a percentage of a development’s revenues. In other words, it is a percentage of the project’s construction costs for a predetermined period of time (rather than paying traditional taxes on the buildings constructed on the site).
Way back in 2017, the City Council authorized the use of eminent domain to acquire Block 10 of Academy Bus’s land, in order to expand the Southwest Park form one acre to two. Mayor Dawn Zimmer was in office at the time. The city said it has attempted good faith negotiations with the company to acquire the property over the past few years.
The current parking lot, which is approximately one acre of land, will provide much needed open space, important quality of life upgrades for the community, and will also include infrastructure to further manage flooding in the neighborhood, according to the city.
Academy Bus proposed building the park extension for free in exchange for additional office space for Academy Bus, a new Middle School, and 439 residential units. That was in 2019. At the time, Mayor Ravi Bhalla called the plan a “nonstarter,” since the approved Southwest Redevelopment Plan calls for only 192 units.
As you may have read in our other blog posts over the summer, Bhalla announced that the city would again consider eminent domain; and in September Hoboken filed an eminent domain action to acquire the additional acre of land just west of the park-bordered by New York Avenue and Harrison Street.
Here’s where things get expensive. The city of Hoboken deposited $5.3 million, its estimated value of the property, with the court. Note that this deposit was made despite Academy Bus’s appraisal, which estimated the property value to be several million dollars higher- at $21.8 million.
The two parties were ordered back to the negotiating table in November 2019, citing issues with the city’s rezoning of the area and the city’s “faulty” appraisal.
New numbers were presented by the city. This time, the city had another outside appraisal of the property done, which now set the estimated value of the property at nearly $8.5 million. Sounds like a pretty big difference to us too.
In their March meeting, the City Council unanimously adopted an ordinance on final reading, that will allow the administration to offer this appraised value to Academy Bus to acquire the land.
Councilman Ruben Ramos said this will be used during negotiations with Academy. He also said that he hopes that Academy and the city will partner to create the park as part of a PILOT agreement.
In the “similar to what happened on Seventh and Jackson” example given at the meeting, the city was able to receive a park and gymnasium from the developers of the 700 Jackson Street Development Project near the Monroe Center as part of a 30-year PILOT agreement between the city and the developers.
Whispers about eminent domain are still being heard. City officials are saying that they are making efforts to avoid further litigation and come to an agreement as to what the actual price of the property should be. The city of Hoboken and Academy have agreed to enter into 90 days of mediation.
“That’s the strategy going forward,” said Ramos. “We should’ve used that strategy over the years, but we are trying correct that now and enter negotiations about how re-purpose property with them as partners”. He said that if it doesn’t work, the city can go back to court but “we want to avoid that happening."