Tremitiedi on Muni Garage Sale
The story that has unfolded about MDK suing the city is ridiculous!
The lawsuit is politically motivated fluff designed to attempt to sabotage the political enemies of those who launched the suit. MDK is embarrassed, and they are even more so because their main rival Bergen County developers got the bid that they lost. MDK and SHG don’t have the best history together, so MDK wants to screw them good. Trivial lawsuits are just the ticket, right?
And why exactly is Mo DeGennaro a “player”? Is it true that he wants to build an 18 story building on the parking lot of Columbian Towers? Is that why he wants to defeat citizen input? What is his motivation exactly?
In actuality, the suit has no merit, and will likely be thrown out. The main reason this is happening is to try and “get headlines.” The MDK’s attorney wouldn’t even return calls to comment to the Hoboken Reporter that wrote the story. What does that tell you?
Here is a response to Tremitiedi’s recent letter from the Observer Highway Redevelopment Advisory Committee.
Citizens Committee Disputes Tremitiedi
The members of the Observer Highway Redevelopment Advisory Committee would like to respond to the comments made here by Richard Tremitiedi about the sale of the Municipal Garage. We are particularly offended by the headline he chose for his letter “Taxpayers lose $4.6 million.” This is completely false, and may leave your readers with the impression that the City Council was faced with a choice between developers offering to build identical buildings, one for $25.5 million and another for $30.1 million. Does it make any sense that the city council would choose the lesser amount for the same building? Of course it doesn’t, but that is what Mr. Tremitiedi and some others would like you to believe.
The OHRA committee has been fighting for years for a fair bidding process open to all interested developers. The idea is the more developers see they have a fair shot at the project, the more who will step up to competitively bid, getting the most money for the smallest building project. This final bidding process took place during a time of hardship for many residential developers (see the latest news on Metro Homes and Tarragon, among others). Even with the credit crunch, several developers expressed interest in the city’s RFP, which was designed to meet the city’s goal of $25.5 million for the property while ensuring the smallest building possible for that price would be built.
The Fair and Open RFP
This round was designed to address the flaws in earlier rounds, and be the last. Bidders were told they could bid a minimum of $25.5 million (and a maximum of infinity, which means there was actually not a cap set on the price) on the 7/9-story redevelopment plan crafted by the OHRA committee with architects and planners. Alternatively, the developers were also given the option to bid a set price of $25.5 million (no more/no less) on any plan that did not conform with the 7/9 plan, but did not exceed an alternative 8/10/12 story building envelope explained in detail in the RFP.
This was designed to ensure developers would not automatically go “to the max” on the building, but instead would compete on the best design, most community amenities, and other qualifications in the RFP. Several developers signed out the RFP documents, but as the industry conditions continued to deteriorate only two offered large bid documents at the deadline. Neither one of the bids came from Hoboken “insiders” or contributors to local political campaigns. Both bidders were seen as highly qualified.
(Read the rest of the OHRA committee response after the jump.)
Bid #1: Trammel Crow Residential
Trammel Crow Residential offered a bid of $26 million for a project designed to conform to the OHRA Committee’s 7/9 redevelopment plan. The OHRA Committee would have wanted nothing more than to see this plan come to fruition, as it would have reached the goals we have been working toward for so long. However, upon further review there were several omissions and conditions offered by TCR that the city’s attorneys characterized as fatal flaws in violation of the strict conditions set forth in the RFP to ensure an even playing field for all bidders, as well as protect the city’s interests.
The largest, and most important was TCR’s omission of the mandatory 10% bid bond. While there was no $2.6 million bid bond attached, there were several conditions attached that TCR wanted to negotiate before any redeveloper agreement was signed. Some of these conditions were in violation of the RFP, according to the city’s special redevelopment counsel. Perhaps the most easily understood among them was the fact that TCR was looking to relocate the affordable housing component of the property at another location, rather than build it on site as the City Council called for. The other issues identified by TCR were already addressed in the RFP, and were not an issue for the winning bidder who complied with the city’s requirements and stipulations.
With no bid bond and several conditions identified as issues by TCR, there was a determination that the city could not accept the bid, even though on paper it appeared to show our vision for the property for an additional amount of money. After doing our own due diligence on the issues, members of the OHRA committee found it hard to argue with the attorneys, and would not put their own best interests ahead of the interests of the city as a whole by advocating for a bidder who did not put up the required bid bond.
Bid #2: S. Hekemian Group
The S. Hekemian Group followed the instructions and specifications of the RFP, both as it pertains to the city’s legal team and the OHRA Committee. SHG initially tried to craft a “conforming” bid for a 7/9 project, but concluded that it would not be feasible for them considering the parking, COAH, PILOT and minimum purchase price requirements outlined in the RFP. It should be noted that it was the Mayor and Council who set the minimum bid price target, not the OHRA Committee, which has at times been at odds with the Mayor. (411 note: see this article for more.)
As clearly stipulated in the RFP, SHG offered $25.5 million for a project that was larger than the “conforming” bid, but less than the maximum building height and bulk allowed to mitigate the impact on existing 5-story buildings on the block. The bid also included the mandatory 10% bid bond ($2.55 million) to keep the bidder from walking away from its bid.
The True Value: Over $34 million
SHG also agreed to the city’s stipulation that 12% of the units built be set aside for affordable housing. That means 29 units that would have otherwise been sold or rented at market value are being set aside, which is at best a “wash” for the developer. The city conservatively estimates the value of these units to be $290,000 each, for an overall value to the city of an additional $8.4 million. Add that to the public art studio the developer is also offering as a “give back” and the actual value of the bid easily exceeds $34 million.
The plan also includes many design improvements, including a garage hidden by first floor retail and residential units to bring street life back to an Observer Highway corridor dominated by two and three story parking garages, green roofs, and LEED Certification goals.
But what about MDK?
MDK Development refused to participate in the city’s fair and open RFP process. MDK did participate in a bidding process that took place in the fall of 2006. The OHRA Committee advised against and had no part of this process, which involved “solicitation and negotiation” with prospective bidders and the Mayor’s office. At the conclusion of this process MDK offered the highest bid of $30.1 million. However, this was a bid for a building far larger than even the Mayor was looking to build on the site. It also included non-conforming uses in a residential zone. The City Council formally rejected this bid long ago. It is no longer legally valid.
Over the past year MDK has pressed it’s case through local real estate agent Hany Ahmed, as well as councilmen-at-large Peter Cammarano and Ruben Ramos, who have advocated on behalf of the developers’ plans, and recently these efforts have been supported by politically active individuals who reject the idea of community advisory boards participating in development process. At the close of the latest bidding process, MDK sent a letter to the city indicating though they refused to formally bid and submit the mountain of papers and plans necessary to even be considered, their $30.1 million offer was still available.
Tremitiedi’s Faulty Math: Height
Mr. Tremitiedi made the call to “maximize value” on the municipal garage site a rallying cry during his unsuccessful bid for second ward council this spring. He often called on the council to increase the allowable height of the building, despite its proximity to smaller buildings on the same block. In order to evaluate his claims, you need to compare S.Hekemian Group’s successful bid to MDK’s last formal offer a year ago, also known as “The $30.1 million bid”.
What’s the difference? Plenty!
In December of 2006, planners hired by the city to evaluate MDK’s plan determined:
“While the number of stories complies with the (maximum) 8/10/12 limits, the effective heights are equivalent to 10/12/14 stories. The actual heights exceed the 8/10/12 story height limits by 16 to 22 feet.”
Contrast that to S. Hekemian’s bid, which:
- Included a true 12 story component that rises 127 feet
- Eliminated the allowable 10 story component to mitigate impact on existing properties and enhance design, and
- Stepped down to a true 8-story height on most of the L-shaped property, as opposed to MDK’s 103 foot “8 story component” which is closer to 10 stories.
More Units, Parking in MDK bid
S. Hekemian conforms to the redevelopment plan’s 240 unit maximum, while MDK’s 2006 bid included 333 units and a hotel component. That alone should indicate to you that the MDK building proposal was far bigger than the building designed by SHG, and therefore an “Apples and Oranges” comparison.
While SHG conforms to the plan’s 180 parking space maximum, MDK wanted to build 257 parking spaces in it’s much larger $30.1 million building. This plan also included a rather unlikely plan to excavate two stories down in a high water table area.
When the city noted the height of their non-conforming proposal was a concern, and asked MDK if they would consider reducing the height, the developer responded that there would be no height reduction without a commensurate reduction in the offer price.
The Bottom Line
The OHRA Committee has often been at odds with the Roberts Administration during this process, and wish our calls to expedite this process sooner would have been heeded. However, as a citizen advisory committee with no power we have done all we can to ensure there would be an honest process that would reach the goals of the city while limiting impact on he neighborhood where the Muni Garage is located.
To that end, the advisory committee and Mayor Roberts ended a stalemate by agreeing to this innovative and fair bidding process, which was then initiated by a unanimous vote of the City Council. The open process met it’s goals, and we thank council members Theresa Castellano (1st ward), Beth Mason (2nd ward), Michael Russo (3rd ward), Dawn Zimmer (4th ward), Peter Cunningham (5th ward), and Terry LaBruno (At Large) for their votes to uphold the public process.
Though he did not cast his vote affirmatively this time, the committee also sincerely appreciates the support of 6th ward councilman Nino Giacchi, whose support and vote was key at several other points in this process over the last two and a half years. Though we are disappointed that councilmen-at-large Peter Cammarano and Ruben Ramos chose to advocate for the MDK offer, we hope we can continue to work with them as the OHRA committee moves on to the challenge of building a redevelopment plan consensus on the Neumann Leather site, which is the second part of our charge.
Many thanks for reading our response. – Lane Bajardi, OHRAC Chairman
NOTE: OHRAC was appointed in September of 2005, with 15 members representing five of the city’s six wards. More about this process here.
Here is what former Hoboken Fire Chief Richard Tremitiedi has to say about the recent city council meeting where S. Hekemian received a 6-3 vote approving their bid for the Municipal Garage plot.
Taxpayers lose $4.6 mil on garage sale
After almost three years and often intense meetings which included three confusing bidding process decisions, the Hoboken city council has left $4.6 million on the table at the expense of all residents and taxpayers. They elected to take the lowest amount of money for the largest building.
Some of the recommendations heard at the recent city council committee of the whole budget workshops include increasing the revenue stream, independent operational audits, layoffs, hiring freeze, privatization, retirement incentive program, review of table of organizations , overall reduction in operating expenses and of course salary , wages and health benefits.
In view of the foregoing, it is extremely unusual that six members of the city council appear to have overlooked their due diligence and fiduciary duty by voting not to maximize the benefit to the taxpayer. This is hard to understand when we have a possible three to seven million dollar deficit in this year’s budget. The council could have used their broad powers as the redevelopment agency by discarding all the bids, meeting with the three developers, picking the one with the best deal and naming them as the “designated developer”. This could have been done in a rather short period of time.
According to the December 15th article appearing in the Jersey Journal, some of the speakers at the December 13th council meeting commented that “the council must move forward on the plan or it might lose credibility with developers”. “Credibility and respect are worth a few million bucks,” said Tom Newman, a former councilman and member of the Observer Highway Advisory Committee. I strongly disagree with this opinion since one does not buy respect, one earns it. This hits home when we have to pay the bill.
Regarding respecting the tax payer and residents, I suggest that you retain this letter for reference when making future voting decisions.
Yours in fiscal responsibility,
Richard Tremitiedi, Taxpayer/Resident”