Harrison’s pitch to reach a tax settlement with the Red Bull ownership on the team’s stadium property has thus far fallen short of its goal.
The Hudson County Improvement Authority (HCIA), which Harrison has asked to partner in the deal, is balking at terms and, as of last week, was not inclined to sign on – at least not without further persuading.
But the New Jersey Supreme Court, which was due to rule April 11 whether the 12.34-acre property occupied by the major league soccer team should be categorized as tax-exempt, as argued by the team owners, is allowing the parties more time to try and resolve the issues.
Upon the recommendation of a mediator assigned to the case, the state’s highest tribunal has agreed to adjourn the matter until April 25 or 26, according to William Netchert, counsel to the HCIA.
Harrison is looking to a compromise agreement, fearing a worst-case scenario that, according to town officials, could compel the town to refund Red Bull more than $15 million in back taxes it collected on the property dating from 2010 to the present, plus 5% interest fees, plus the costs of bonding to pay that back over time.
Under the terms of the proposed settlement which Harrison Mayor James Fife and the Town Council approved March 16, the HCIA – which in 2006 sold $40 million in bonds to facilitate the acquisition, clearing and remediation of the stadium site within the town-designated waterfront redevelopment area – would take over ownership of the land and Arena.
The HCIA would enter into a lease agreement with Red Bull for the use of the property and would use the income from lease fees to pay Harrison an annual PILOT (payment in lieu of taxes), beginning in 2017, of $1.3 million and thereafter “escalated annually” to the yearly CPI (Consumer Price Index).
Then, within six months of the settlement’s approval and real estate closing, the HCIA would issue up to $1 million in bonds, with the proceeds dedicated to certain types of capital improvements to the stadium, as needed, with a Red Bull affiliate to pay the debt service on those bonds.
As provided under this agreement, the Red Bulls would pledge to stay in Harrison at least through 2038, with options to renew that commitment for four 5-year extensions through 2058. (By 2038, Harrison – which is responsible for paying the debt service on the HCIA’s $40 million bond – expects to have satisfied that debt.)
Reached last week, Netchert said the parties involved in the potential settlement last met during the Easter weekend, adding that they “have continued to meet” to try to attain a “fair settlement to sticky problems.”
Noting that the primary disputants are Harrison and the Red Bull ownership, Netchert said, “The HCIA is here to help if we can, at no exposure to the authority.”
Asked if the proposed $1 million bond was one of the “stick” issues, Netchert said the HCIA was “prepared to do that” but cautioned that there were “other things much more detailed” dealing with the proposed lease/lease back arrangement that must still be resolved to the authority’s satisfaction.
Under that proposed arrangement, Netchert said, that, essentially, as owners of the site, “ownership responsibilities are different as those of a lease-hold and that’s not the easiest thing for the authority to take on.”
But, ultimately, “we are here to be accommodators to a solution,” he said.
In a separate conversation, Fife told The Observer that he chooses to remain optimistic about the chances for reaching an agreement and, to that end, he said that Harrison representatives, led by special counsel Stephen Pearlman, were scheduled to meet with Red Bull’s “second in command” Volker Viechtbauer and, most likely, Red Bull attorney Michael Caccavelli of the Monroe Township law firm Zipp & Tannenbaum, on April 14.
Fife said the mediator, a retired Superior Court judge, has encouraged the parties to strive for a settlement.
“He told us, ‘You’ve gone this far – you’re a hair away. It would be a terrible waste if you don’t do it,’’’ Fife said.