Battle over New Jersey terminal intensifies
A battle over one of the last major tracts of waterfront property in New York-New Jersey harbor is escalating.
Monday night, the Bayonne Local Redevelopment Authority (BLRA), voted to sell a portion of the former Military Ocean Terminal in Bayonne, N.J. to the giant stevedoring company Ports America for $90 million, said Joseph E. Ryan, the City of Bayonne's public information director.
A consortium of World Wide Group and the Shaw Group also offered $105 million for the property, Ryan said, but the authority had questions about financial backing for the higher offer and decided to vote unanimously in favor of the Ports America offer. Ports American plans to develop the property into a roll-on/roll-off terminal.
“We’re very pleased,” said Stephen Edwards, president and chief executive officer of Ports America, noting the 153-acre tract has access to a deepwater federal channel and was one of the last undeveloped pieces of property in the New York-New Jersey.
Meanwhile, earlier in the day, the Port Authority of New York and New Jersey filed a lawsuit against the BLRA, saying it was breaching its “signed, approved and recorded contract” for the same tract.
The port authority has also named in the complaint Ports America, World Wide, Shaw and a fourth developer, Fortis Property, which had also bid for the property.
Those firms, “knew there was a valid contract between the port authority and the BLRA, induced the BLRA to breach the contract by offering more money for the property than the port authority had contracted to pay,” the agency said in its complaint filed in Superior Court of New Jersey in Hudson County.
It claimed the competing bidders had “intentionally, maliciously, and without justification interfered with the contract between the BLRA and the port authority and induced the BLRA to void the contract with the port authority.” Without their “interference, the BLRA would have honored the contract” with the port authority, the agency claimed.
Edwards said Ports America was “confident of our legal position.”
The port authority noted that in buying the Military Ocean Terminal, it had agreed to accept a covenant to only use the terminal as a ro/ro terminal. But it said the Bayonne tract is key to a plan to build a new container terminal on the other side of the Port Jersey Channel for large containerships.
Those big ships cannot reach the port authority’s main container terminals in Port Newark or Port Elizabeth because of a lack of clearance beneath the Bayonne Bridge, which crosses the Kill Van Kull, the waterway that leads to Newark and Elizabeth.
In contrast, ships calling terminals along the Port Jersey Channel do not have to pass beneath the Bayonne Bridge.
The port authority said it expects big ships “to begin arriving in New York by 2014 when the Panama Canal will have been enlarged to accommodate them.”
The port authority’s said that in addition to spending $50.5 million to purchase the terminal, it had committed $86 million towards the full redevelopment of the Bayonne property it had leased and intends to make critical off-site road and rail improvements that will improve traffic conditions around the terminal.
It also said it agreed to make payments in lieu of taxes totaling $36 million — $1.8 million per year over 20 years — as well as an escalating annual payment for easements, which it noted when combined exceeded any tax revenue the city could recoup from the property.
Before it made its deal with Bayonne, the port authority said competing bidders had only offered $25 million for the tract. The port authority said that after it executed the $50.5 million contract of purchase and sale, other companies stepped forward with offers of $75 million for the land, which Ports America then raised to $90 million.
On Nov. 1, “the BLRA held a meeting and instead of ratifying the contract as it was obligated to, and without any legal basis it voted to void the contract.”
In its lawsuit, the port authority asks the court to nullify the decision of the BLRA to void its contract of purchase and sale. It asks the court to order the BLRA to honor and live up to its obligations under the contract. It also asks for punitive damages.
