$25.5 million Zimmer debacle revealed
Lawsuit details how Dawn Zimmer botched sale of Muni Garage
SHG accuses Zimmer administration of fraudulently seeking NJDEP approvals by closing deadline
The 322-page filing outlines the path to disaster for the $25.5 million sale that began to unravel when Dawn Zimmer became Mayor. The suit draws a roadmap that exposes the false statements made by Zimmer, un-elected Councilman Michael Lenz and their “public relations team” in an effort to hide the city’s bungling of the sale and garage relocation. SHG is seeking a jury trial in Hudson County Superior Court, which will likely involve sworn depositions of the Mayor and other key players in this debacle. Here’s an exclusive look at how SHG is making its case.
SHG: Hoboken is in Breach of Contract
SHG’s suit repeatedly refers to the terms of the Purchase and Sale Agreement (PSA) and Re-Developer’s Agreement (RDA) specifically approved by a vote of the City Council, including Dawn Zimmer and Peter Cunningham. The PSA states the city was obligated at its sole cost and expense to investigate and remediate certain environmental conditions on the garage site and obtain specific approvals from the NJ Department of Environmental Protection in order to close on the sale of the property. This included a site-wide No Further Action letter regarding soil contamination and an approved Remedial Action Workplan for groundwater. That may sound a bit complicated, but by all accounts it should have been easily accomplished within the time allowed before the sale deadline. All it would take is a bit of due diligence, which is exactly what Zimmer lacked throughout the process.
Zimmer accused of fraud trying to secure NJDEP letter
SHG charges Zimmer’s team submitted information and reports to NJDEP that mis-characterized the results of their environmental investigations and ignored regulatory requirements – as well as the advice of her own consultants – in an effort to fraudulently obtain approvals by the August 13th Closing Date.
For months, critics of Zimmer’s handling of the Muni Garage fiasco were warning that she was not going to get her DEP letter because she had ignored the problem for too long.
Repeatedly Zimmer, Lenz, Environmental Services Director Jennifer Wenson-Maier and Zimmer’s legal and environmental consultants said the critics were wrong, and all would be well by the closing date. Now, nearly six weeks after the deadline, there’s still no sign of the NJDEP letter Zimmer said would come before the closing. With her credibility in tatters and a default looming, Zimmer and her 5-vote council majority chose to speciously declare SHG in default three days before the city would officially and spectacularly default on its own.
SHG was ready to close the sale August 13th
In spite of Lenz’s repeated public claims that SHG “Never had any intention of closing the sale,” the developer outlines the opposite in the suit against the city.
These unsubstantiated and politically motivated comments by Lenz will likely come back to haunt him once he’s deposed under oath by SHG’s attorneys. SHG notes it was Zimmer who failed to appear at the scheduled time and location of the closing where they were ready, willing and able to conclude the sale. This means they’re prepared to go to court and prove they had access to the $22,950,000 due at the closing to buy the property.
Lenz and Zimmer try to keep SHG’s money, charges of tampering rebuffed, the most likely outcome in court & all the supporting legal documentation available after the jump!
City wants to keep the deposit, SHG says not so fast…
The lawsuit seeks to compel the return of SHG’s deposit of $2.55 million plus accrued interest held in escrow since June 2008 and all fees paid including a City Administrative Fee of $200,000. On top of that $2.75 million, SHG is seeking court costs, attorney’s fees and “other relief this court deems appropriate” following a jury trial. SHG also notes the original closing date for the sale was May 31, 2010 but was extended “upon the city’s insistence” to August 13. While SHG was informed of the change, it was later learned that Zimmer failed to inform the bank that held the note on the property.
Suit annihilates Zimmer claims of SHG tampered DEP approval
The city’s pre-emptive charge SHG was “in breach” of their agreements was based on their claim the developer was improperly involving itself in the environmental investigation discussions. Zimmer and Lenz tried to make a case that this involvement caused the delay of the DEP’s NFA letter. In the suit, SHG outlines how it only involved itself to the point allowed in the contract, and that it was the city that participated in improper ex parte discussions. SHG notes the agreement specifically states the city won’t contact DEP without contacting the developer first, and that Mayor Dawn Zimmer herself tried to twist arms in Trenton to get the letter without informing SHG of her contact, in violation of the contract.
The environmental stuff is pretty heavy, especially in regards to the rules and regs of a cleanup. It’s all in the documents below for those who wish to take a look and see exactly how out-of-line the Zimmer Administration likely was throughout the process.
The bottom line:
SHG is probably getting its money back, and then some
Instead, they accept carefully-crafted press releases from Zimmer’s office as fact, and leave the hard work to others. Zimmer’s pattern over the years is to do anything she can to avoid having to testify in court.
She gave up her city council seat in 2007 rather than see more of her campaign workers deposed about illegal practices. Just this week, Zimmer announced she was attempting to end litigation with Hoboken Unleashed over the city’s improper occupation of 1714 Willow Avenue rather than face being sworn under oath. Though she wants the case dismissed, Mike Stigliano is fighting for the rights of small business owners throughout Hoboken and pressing on with his case.
Hekemian is a much bigger fish than Stigliano with deeper pockets and even more reason to be royally pissed at Zimmer. Judge for yourself by reading the documents and you’ll find their lawsuit is quite thorough. Zimmer and Lenz may yet try to squirm out of it with an offer to give SHG back it’s $2.75 million, but the developer is not likely to let them off so easily. Discovery will be very interesting in this trial. Hoboken411 will continue to lead the way on the never-ending Muni Garage story.
SHG Hoboken Renewal Associates vs. The City of Hoboken
OFFICIAL COMPLAINT AND JURY DEMAND (31 page document clearly outlining the facts of the case)
Supporting Exhibits you may (or may not) want to follow along with in the complaint
- A: Muni Garage Purchase and Sale Agreement (PSA)
- B: Redevelopers Agreement (RDA)
- C: Phase 1 Environmental Site Assessment
D: 2006 Site Investigation/Remedial Investigation Report
- E: SHG email and H2M Initial Report
F: January 20, 2009 SHG email
- G: December 4, 2009 email regarding DEP submission
H: Warning from SHG that city’s DEP submission was deficient
I: June 14, 2010 letter regarding ex parte talks with DEP
J: June 25 demand the city cease talk of breach
K: June 22 letter regarding need for more investigation
- L: July 7 letter noting city’s inaction leading to trouble
M: July 19 letter warning city will be in material breach
N: July 21 letter outlining city’s investigation shortfalls
- O: July 23 letter regarding hydraulic lift investigation
P: August 3 letter regarding DEP conference call
- Q: August 5 email to NJDEP officials
- R: August 5 letter regarding Breach of Contract threats
S: August 10 City Council resolution declaring breach
T: August 12 letter: SHG ready, willing and able to close
U: August 13 declaration of city’s breach of contract
- Original Garage Debacle Archives (comments closed)
- City not out by deadline
- City still on site a week past deadline
- Garage contents litters uptown areas
- Zimmer Bullies Business, eventually moves out of Weehawken
- Raises for city hall friends while cops get laid off
As the world turns… in Hoboken!