DEVELOPER DEMANDS: ‘Givebacks’ Might Be Great For Hoboken, But Are They Legal?

(ABOVE: Photo via @RaviBhalla)

UPDATED: Thursday, March 28 at 2:15 p.m.

Is there really that much of a difference between “givebacks” and “kickbacks”?

It appears a court will decide, as a lawsuit claims the City of Hoboken’s development plans to build the new Hoboken Hilton, “constitute a blatant quid pro quo for the City’s acquiescence to the Redevelopment Agreement.”

In October, the City of Hoboken was pretty proud of the deal it had reached with KMS Development Partners to green-light construction on the Hilton Hotel in the space adjacent to the historic downtown post office. The initial deal was actually modified to include even more “givebacks” to the community, after a rather belligerent back-and-forth between the Administration and the City Council.

Eventually, KMS agreed to fork over $4.85 million in community benefits—$2 million to renovate the Hoboken Community Center, $1 million to improve infrastructure along 1st Street, $165,000 for infrastructure in adjacent neighborhoods, $1 million to the Hoboken Public Education Foundation, $484,000 to the Hoboken Public Charter Schools, and $200,000 for Hoboken’s Affordable Housing Trust.

“My administration also negotiated with the hotel developer to ensure that the hotel’s height will be lower than the original agreement in 2017, and will be built using union labor with a guarantee of living wage jobs allocated for Hoboken residents,” said Mayor Ravi Bhalla.

When asked by hMAG if this project would move forward without the “givebacks”, Mayor Bhalla told us last October, “I would not be amenable. My administration is insisting on these givebacks.”

In November, owners of properties adjacent to the proposed Hilton site announced a lawsuit against the City of Hoboken, Mayor Ravi Bhalla, the Hoboken City Council, and KMS Development Partners in Hudson County Superior Court.

Hoboken Land Building LP and Hoboken Holdings LP claim the giveback scheme, “promotes favoritism, cronyism, lack of accountability, lack of diversity, and is otherwise unlawful.”

The City of Hoboken and KMS Development Partners moved to dismiss the lawsuit, but a judge denied that motion on March 26.

Mayor Bhalla and the Hoboken Public Education Foundation celebrate their “giveback” from KMS Development Partners.

When the deal was initially announced in October, hMAG spoke with a local attorney who was well versed in development transactions, regarding the legality of the givebacks. “This is plain and simple extortion,” he told us.

It seems the plaintiffs in this case agree. With the lawsuit moving forward, a judge will determine if  there’s a legal differentiation between taking money at a podium in front of news cameras and taking it under the table in the back booth at a diner.

“The hotel deal furthers the redevelopment of the City, provides the community with unprecedented benefits and continues to be a priority for my administration,” said Bhalla. “We are confident that the City will ultimately prevail, our City will be revitalized and our community will realize all benefits agreed to in this deal.”

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