Council Votes Against Selling Garage to Developer

The City Council voted 5-3 to terminate the $25.5 million contract to sell the municipal garage property to the S. Hekemian Group during an  "emergency meeting" on Tuesday evening. 

Although the city maintained up to a few days ago it still had every intention to close the deal with the developer, on Monday afternoon Mayor Dawn Zimmer announced the emergency meeting to discuss "anticipated litigation" with Hekemian. The council was briefed during a three-hour closed session on Tuesday, after which they voted to terminate the contract.

"That means that there's no closing on Friday," said Zimmer, who attended the meeting. Zimmer said the city intends to buy back the current garage, with help from a $16 million bond that was approved by city council earlier this year. 

According to the resolution, "the closing has been put in jeopardy by SHG (Hekemian)." In April, the developer asked the council for amendments on the contract, because the property—which the developer had agreed to buy for $25.5 million—was only worth $14 million, according to Doug Cohen, Hekemian's corporation counsel. 

After city council refused to approve the amendments, according to the resolution, "SHG has engaged in a series of actions, calculated to sabotage the closing of title." When asked, Zimmer did not give any specifics of the "different kind of behavior," since the amendments were voted down. 

Before the closing, the city was required to vacate the current garage on Observer Highway and obtain a letter from the Department of Environmental Protection stating that there are no environmental problems at the site. The city did not receive the letter yet. 

Although Zimmer said that the city will still move in a timely fashion to get the letter, it would probably not arrive until Friday. "It's going to be more complicated than that," said Zimmer. 

Zimmer did not give many more details, because of litigation with Hekemian, in which the city as well as the firm will fight for a $2.55 million deposit. Currently the money—deposited to the city by Hekemian—sits in an escrow account. 

This issue, once again, had the council divided. Council members Michael Russo, Beth Mason and Nino Giacchi voted against the resolution. Russo spoke up against supporting the termination and Mason maintained she did not approve of having the emergency meeting in the first place. 

Councilwoman Theresa Castellano was absent. 

"What we're doing here," said Giacchi, "is (saying) we don't want $25.5 million. End of story." Councilman-at-Large Ravinder Bhalla publicly disagreed with the Sixth Ward councilman and called his statements "astounding." The two did not shake hands at the end of the meeting. 

Before the emergency meeting, it was widely believed by city officials and council members that Hekemian would not be able to close the deal, and thus would default on the $25.5 million sale. But, said council meeting frequenter Lane Bajardi during the public portion, "we'll never know now."

The city is proceeding with the move out of the garage on Observer Highway, and moving its vehicles to 1714 Willow Ave. Zimmer said she is still moving forward with a deal to share the cost of that facility with Weehawken, although it is still unclear when Weehawken will move in.

As part as the city's lay-off plan, a dozen garage workers were laid off.