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K. Hovnanian At 77 Hudson Street Urban Renewal Company, LLC v. the City of Jersey City

July 21, 2011

K. HOVNANIAN AT 77 HUDSON STREET URBAN RENEWAL COMPANY, LLC, PLAINTIFF-APPELLANT,
v.
THE CITY OF JERSEY CITY, THE MUNICIPAL COUNCIL OF JERSEY CITY, AND JEREMIAH HEALY, MAYOR OF JERSEY CITY, PERSONALLY AND IN HIS CAPACITY AS MAYOR, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-006119-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted May 23, 2011

Before Judges Grall and LeWinn.

K. Hovnanian at 77 Hudson Street Urban Renewal Company (Hovnanian) appeals from the July 30, 2010 order granting defendants' motion to dismiss its complaint for failure to state a cause of action pursuant to Rule 4:6-2(e). We reverse.

In March 2006, defendants approved a financial agreement granting Hovnanian, an urban renewal entity, a tax abatement pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 to -20 (LTTEL), to "revitalize a portion of the Jersey City downtown area by constructing a 420 condominium unit development"; the project is known as "77 Hudson." Hovnanian agreed to pay Jersey City "in lieu of property taxes, an annual service charge . . . amounting to [sixteen percent] of the annual gross revenue . . . for a [twenty-]year period," pursuant to N.J.S.A. 40A:20-14.

At about the same time, defendants approved another financial agreement with Second Street Waterfront Urban Renewal, LLC (Second Street), for the construction of a "luxury condominium development" on the shore of the Hudson River under the same financial terms as Hovnanian's; this project is known as "Crystal Point." Construction on both projects began soon thereafter, and each was "nearly complete[]" in 2008.

The decline in the real estate market that year caused "devastating setbacks" to the Jersey City housing market.

Second Street applied for and received an amendment to its financial agreement on June 16, 2009; the amendment provided that instead of paying sixteen percent of gross revenues for twenty years, Second Street would pay eleven percent for the first five years, thirteen percent for the next five years, and sixteen percent for the next twenty years, thereby extending Second Street's original agreement by ten years.

Shortly thereafter, Hovnanian made "an identical application" to modify its financial agreement. On September 21, 2009, the mayor sent a letter to the municipal council recommending that Hovnanian's application be denied, stating the following reasons:

a. The decision to approve a tax abatement, including an amendment, is within the sound discretion of the governing body.

b. For projects that have already received a tax abatement and are under construction, or completed, the bar for approval of an amendment is particularly high. That is because the justification for the tax abatement (i.e., without the tax abatement any project or project of this caliber may not be constructed) is absent. d. . . . [T]here are similarities between the Crystal Point and 77 Hudson projects. Both residential condominium projects are located along the Hudson River corridor. Construction has been complete at 77 Hudson and is substantially complete at Crystal Point. However, after a careful review, . . . I cannot support the 77 Hudson . . . amendment. 77 Hudson is in the heart of Exchange [P]lace, an area with an active street life with access to various urban amenities. It is directly on the light rail. It is nearly across the street from the PATH and within easy walking distance of ferry and bus service. The area has a waterfront park and is nearly fully developed.

e. . . . Crystal Point is in an area that is clearly more remote than 77 Hudson.

Crystal Point is not as close to public transportation and is in an area that is not as ...


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