By John A. Martins
Reporter staff writer July 20, 2003
The developers slated to rehabilitate the historic Hudson and Manhattan Powerhouse on Washington Boulevard allowed their designation to expire last month, a move some city officials are describing as the product of an impasse with the Port Authority of New York and New Jersey on what to do with a transformer yard located in front of the building.
Conshohocken, Pa.-based Preferred Real Estate Investments Inc. lost its developer's designation on June 30 after it was unable to come to an agreement on hammering out a contract between itself and the two co-owners of the building, Jersey City and the Port Authority.
"Preferred didn't like some of the terms," executive director of Jersey City Redevelopment Authority [JCRA] Suzanne Mack said. "They were very close. They just broke off negotiations."
Preferred Real Estate was initially designated as the developers of the site on March 21, 2002. After applying for an extension on Dec. 19, 2002, they asked for another one on May 27, 2003, for the purpose of completing the contract, Mack said.
"It didn't get finished," Mack said. "The contract was 95 percent complete when it broke down."
Representatives from Preferred Real Estate Investment declined to comment.
The expiration, however, doesn't mean the Powerhouse has lost its chances of being refurbished.
"Preferred is still in the mix of things," former JCRA board chairman E. Junior Maldonado said.
The company has not been de-designated and will have to reapply if it is still interested in the project.
Transformer yard a 'hot potato'
Although representatives from Preferred wouldn't comment on why contractual negotiations dissolved, both Mack and Maldonado said it had to do with who was going to be responsible for moving the transformer yard, which powers the PATH trains running to and from New York every day.
"The Port Authority says it would cost $20 million to move the substation," Mack said. "The developer claims the Port Authority should pick up the cost. But the Port Authority hasn't consented to doing that in any way, shape or form. It's an engineering and systems issue."
Maldonado, however, said that progressing with the site involves more than just coming to a consensus on where to move power lines.
"We don't know if [Preferred] has the tools to make the project go forward," Maldonado said. "It doesn't seem like they've made any in-roads with the Port Authority to get them to the table to sign off on their portion. They haven't even gotten to first base."
Port Authority spokesman Steve Coleman said the Port Authority never formally met with Preferred on the issue of the transformer yard.
"We've never had any formal discussions with Preferred," Coleman said Thursday. "Nor were we ever requested to have one by the city. We're interested in talking to the city on the future of the Powerhouse, and that's where things stand."
Ownership of the building is divided equally between the city and the Port Authority. The building, designed by the architectural firm of Robins & Oakman and constructed in 1908, is literally split down the center by a brick wall, with Jersey City owning one half and the Port Authority owning the other. It was placed on the National Register of Historic Places in December 2001.
Waiting in the wings
Even if Preferred opts to not renew their designation, the city won't be at a loss, Maldonado said.
The Baltimore-based Cordish Company has expressed a bona fide interest in developing the Powerhouse, an interest Maldonado said has been present for two years. Both Maldonado and Mack traveled to Baltimore early this month to meet with Cordish.
"[Cordish Company president David] Cordish was interested in bidding on the project back when we first designated a developer, but he never got a Request for Proposal [RFP]," Maldonado said. "Preferred came to the JCRA through an RFP. And according to Cordish, he never got an RFP."
The Cordish Company has developed mixed-use buildings in Virginia, Florida and Maryland. Its redevelopment of a similar powerhouse in Baltimore is regarded as one of the company's most prominent projects, and it just recently completed a project in South Jersey.
That project, "The Walk of Atlantic City," a partnership with the state and Atlantic City, is a $70 million retail/entertainment district in the heart of Atlantic City situated between the Atlantic City Convention Center and casinos on the boardwalk.
Cordish's past experience with working with state personnel is another factor to consider if, in fact, Cordish proposes to develop the project, Maldonado said.
"Cordish has close ties with the governor's office," Maldonado said. "He's a designated developer with [the Atlantic City project] and he's done a good job. If the governor's office decided to step into [negotiations with the Port Authority] and persuade them to come to a compromise, that would also give him an edge."
"He does have the financial wherewithal to complete the project and a proven track record in [rehabilitating historic] structures," Maldonado added. "[Cordish] has also said he can redevelop the Powerhouse without moving the transformers, which would probably get the Port Authority to work with him."
"Ultimately, if Preferred is not the developer, we have an avenue we can pursue with Mr. Cordish," he added.
Cordish was unavailable for comment on Thursday, but Cordish spokeswoman Allison Parker said the Jersey City Powerhouse project was right up her company's alley.
"The Cordish Company loves abandoned power plants, and we have had wonderful success around the United States converting them to entertainment/mixed-use projects," Parker said in an e-mail. "The Jersey City Powerhouse is a spectacular building in a terrific location. In a word, it would be a no-brainer for us. On the other hand, we only go where we are invited by the public sector."
©The Jersey City Reporter 2003