February 26, 2003

By Jason Fink

The Jersey City Council is set to approve a 30-year tax abatement for what many say will be the first major construction project in Journal Square in 20 years.

The 12-story apartment building, which will rise on the site of the former State Theater on Kennedy Boulevard, was initially greeted with skepticism by some council members for what they said was a stingy proposal for annual payments to the city by the developers.

But after two weeks of negotiations and hearings before the city tax abatement committee, the $31 million project, which developers hope to break ground on by this summer, appears to be on track.

"This is the first step in developing the rest of Journal Square," said Councilman Junior Maldonado.

In addition to the 130-unit apartment building, the project includes over 14,000 square feet of retail space and a 396-car garage.

City officials have been pushing for years for new investment in the Square -- once among the city's most vibrant shopping and cultural districts, but now dominated by fast food chains and 99-cent stores.

Councilman Steve Lipski, who represents the area, has been lobbying his colleagues to approve the State Theater project, arguing that financial incentives offered by the city are essential to spurring the kind of development that will breathe new life into the area.

There were attempts to entice Hudson County Community College to expand its current Journal Square campus by knocking down the dilapidated Hotel-on-the-Square building that faces the pedestrian plaza off Kennedy Boulevard, but that plan -- first floated during the Schundler administration and later supported by Mayor Glenn D. Cunningham -- appears to have fallen flat.

The disagreements over the original version of the State Theater plan centered on the direct payments that the developer -- a consortium of some of Hudson County's biggest names in real estate -- would make to the city in lieu of real estate taxes.

Under the formula first proposed to the council earlier this month, the city would have received 6.28 percent of the total revenue generated by the project, well below the customary 15 percent usually charged.

But an alternative, which the council expressed support for during its caucus Monday night, would up the percentage paid from the retail space and the garage.

If the ordinance granting the abatement is adopted at tonight's meeting, the developer will still pay 6.28 percent on everything for the first 10 years of the abatement, then over the next 20 years, payments on the retail and garage revenues would increase.

In years 11 through 20, the developer would pay 10 percent of the revenue on the retail -- which might include a billboard and garage, and during the final 10 years the city would receive 15 percent on both.

The total estimated payments to the city over 30 years would be about $6.6 million.

City Council members said they were willing to provide the incentives because of the potential benefits to the area and because the developer -- whose principals include Joseph Panepinto, Scott Harwood, former Congressman Frank Guarini, the Applied Companies of Hoboken and the Alpert Group of Fort Lee -- will reserve 30 of the 130 rental apartments for low- to moderate-income tenants. The rest would be market rate.

Representatives of the developer said it will likely take about 18 months to construct the building.