Hoboken Developer Files for Bankruptcy, Seeks to Block Sale of Interests

Dil Hoda, one of two members of Monroe Center II Urban Renewal Co. LLC, announced yesterday that it plans to apply for an order to impose an automatic stay to stop the sale of the company’s membership interests, which is scheduled for Wednesday. A hearing in U.S. Bankruptcy Court for the District of New Jersey is expected Tuesday afternoon.

In the filing, Hoda said the sale would doom the entire Monroe Center project, and requested the court to allow the company more time to obtain a No Further Action Letter relating to environmental contamination on the site, and resolve other issues relating to the project, before such a sale would take place.

Monroe Center, a five-phase project situated on a five-acre site, comprises two existing mill buildings, totaling 190,000 square feet, and land approved for 435 residential units, some 53,000 square feet of retail space, 1,120 parking spaces and a 55,000-square-foot public space. Hoda and his partner, Gerard Saddel, began working on the development almost two decades ago, when the pair purchased the former Levelor blinds factory in December 1990 for $3.43 million.

In recent years, environmental issues have plagued the project, as site investigations revealed significant contamination of volatile organic compounds on the property. Remediation efforts did not reduce the contamination, but in fact worsened the problem, according to Hoda, whose firm has spent about $4 million in cleanup costs for the site.

In bankruptcy papers, Hoda blamed the environmental problems, along with the real estate slowdown and credit crunch, for the company’s inability to raise sufficient funds to pay Strategic Performance Fund-II Inc., a mezzanine investor that’s holding Hoda and Saddel’s personal equity in the project as collateral, and is the entity planning to sell the partners’ interest.

Monroe Center II Urban Renewal Co. submitted a new Remediation Action Work plan to the New Jersey Department of Environmental Protection, which is expected to be approved within the next 30 days, according to Hoda, who said the approval would put the company in a more favorable position to raise funds to make payments to Strategic Performance.

In its bankruptcy petition, filed Friday, the company listed estimated assets between $0 and $50,000, and estimated liabilities between $10,000,001 and $50 million. The 19 creditors holding the largest unsecured claims include Montroy Anderson, a New York-based architecture firm, which is owed $197,305.54, and Sadat Associates, a Trenton-based environmental consulting company, which is owed $172,468.26.

Christine Gravelle, an attorney with Markowitz Gravelle, which is representing Monroe Center II Urban Renewal Co., declined to comment on the filing until after Tuesday’s hearing. The city of Hoboken said it had no comment on the filing or its impact on the Monroe Center project.

Tern Group Development, of which Hoda is a principal shareholder, said the bankruptcy filing had no impact on its $2 billion Tern Landing project on the Elizabeth waterfront. “The two projects are completely separate,” said Michael Turner, a spokesman for Tern Group Development. The Tern Landing project “is moving ahead.”