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Jersey City, Kushner trade blame over One Journal Square delay

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Negotiations between Jersey City and Kushner Cos. have come to a screeching halt.
Negotiations between Jersey City and Kushner Cos. have come to a screeching halt.

The fate of the much-touted $821 million One Journal Square project is up in the air as negotiations between Jersey City and Kushner Cos. have come to a screeching halt.

While the Jersey City Redevelopment Authority has accused the developers of making multiple changes to the project and missing key construction and financial deadlines and failing to submit an administrative fee payment, the developers say the city walked away from discussions on the brink of a final agreement.

The project is being developed through a partnership between Kushner Cos. and Ridgefield Park-based real estate investment firm KABR Group.

Jared Kushner, a principal of Kushner Cos. prior to becoming a special adviser to his father-in-law, President Donald Trump, bought the vacant site in 2015 for $27 million, with plans to erect two mixed-use, 66-story towers on two acres in the center of the city’s Journal Square neighborhood. Later that year, the developers and JCRA entered into a Redevelopment Agreement for construction of the project.

But things began to unravel last year. WeWork, a shared-workspace provider initially signed as the flagship tenant, pulled out of the project, reportedly giving up a 50 percent ownership stake and driving $59 million in tax subsidies away from the project. The city later announced it would not support a 30-year tax abatement Kushner had sought for the project.

A letter written in February by Kushner Cos. attorney Eugene Paolino to Jersey City Deputy Mayor and Housing and Economic Development and Commerce Director Marcos Vigil said the developers had “worked furiously and quickly” to obtain necessary government approvals amid multiple amendments to the site plan due to the “massiveness and complexity” of the project.

Paolino followed up in March with a letter asking JCRA corporation counsel to urge his clients to move forward with the project.

But earlier this month, the JCRA informed the developers they were in default of the redevelopment agreement due to their failure to start construction and submit evidence of financial commitments by the required deadlines.

“The city and the Kushner Cos. agree that this is a project that would greatly benefit the area, but unfortunately, the delays and failed payments have led to the default status with the JCRA,” said a spokesperson for Jersey City Mayor Steven Fulop.

A Kushner Cos. spokesperson did not return calls at press time concerning questions about the allegations of missed deadlines and a payment, but in an earlier statement claimed Fulop tried to derail the project for political reasons.

“Mayor Fulop has expressly acknowledged to several people on the phone and in meetings that Kushner Cos. is being unfairly and blatantly discriminated against by Jersey City simply because its former CEO works in the Trump administration,” a Kushner Cos. spokesperson told NJBIZ. “He even referenced another case of discrimination which the city lost in litigation.

“Mayor Fulop also stated that the city would not defend such discriminatory action in a litigation. Despite dealing in good faith and detrimentally relying on Jersey City's representations that our project was on track to have an amended developer's agreement approved, it is crystal clear that Fulop is now playing politics and did an about face when he was up for re-election to get the anti-Trump vote.”

The Jersey City spokesperson denied politics played a role in the dispute.

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Elana Knopp

Elana Knopp

Elana Knopp covers all things real estate for NJBIZ. You can contact her at eknopp@njbiz.com.

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