The town of Kearny and a development firm appear to be on the same page now that the town’s governing body has agreed to settle a legal dispute involving the value of a 26-acre property on Bergen Ave.
And the town is getting a big cash windfall in the bargain.
That settlement – approved by the mayor and Town Council at a special meeting Tuesday, July 25 – clears the way for one Hartz tenant to begin operating and for another to take shape.
The agreement puts an end to wrangling between the town and Hartz Mountain Industries over a longstanding master lease dating from 1979 whose terms Kearny had challenged. A court ruling had dismissed all but one of the town’s challenges, leaving open the question of the calculation of the lease amount.
As a consequence of the settlement, the town will issue a permanent certificate of occupancy to the newly-built 61,825-square foot Cummins truck training and repair facility and permits the town Planning Board – tentatively on Sept. 6 – to review a Hartz site plan for a proposed refrigerated warehouse.
And it will provide Kearny with a payment, from Hartz, of $1 million to buy out the lease from the town while retaining its rights as the property’s redeveloper.
The town accepted a recommendation by Michael I. Hanley, a principal of the Hoboken-based NW Financial Group, which provides financial advice to state and local governments, to accept Hartz’s offer.
Additionally, Hartz – which has invested millions of dollars to remediate the property, a former landfill – “shall release the town from all claims relating the physical condition of the [property], including claims under federal and state environmental law.”
The closing on the transaction is scheduled for Sept. 8, by which point Kearny is expected to have delivered to Hartz an “estoppel certificate” – sought by Hartz in support of a Wells Fargo loan for the new project – and an easement.
Another part of the settlement calls for Hartz to pay for appraisals of town-owned property leased to Hartz at 700 Belleville Turnpike – where two warehouses are situated – to be completed by Sept. 15 for a possible sale to Hartz.
Meanwhile, conditional on the Planning Board granting site plan approval of a Hartz application to build a 197,000-square foot, one-story, 58-foot-tall refrigerated warehouse to be run by Preferred Freezer Services, a national firm whose website calls it “one of the largest public refrigerated warehousing companies in the world.”
The company, which originated in Perth Amboy, says it currently operates 37 facilities comprising more than 270 million cubic feet, coast to coast, with more than 1,800 employees. It also has warehouses in China and Vietnam.
Hartz President/COO Gus Milano told The Observer that, assuming favorable action by the Planning Board, site development would begin with 90 days of “subsurface ground improvements,” followed by paving for the foundation in October and a finished product “within a year after that.”
Hartz has “one additional development site” – about 25,000 square feet – on the Bergen Ave. tract, Milano said, but “there are no plans right now” to build there.
As part of the settlement, the mayor and Town Council have agreed to grant Hartz a 20-year PILOT (payment in lieu of taxes) for the Preferred Freezer Services project set at 15% of the gross revenues, “which reflect the provisions with the master lease.”
Those payments have been projected at $600,000 a year. At the end of the 20 years, the property will revert to conventional taxation.
Mayor Alberto Santos and members of the Town Council – except for the absent Susan McCurrie and Albino Cardoso – met in closed session for about a half hour to hear an explanation of the settlement’s details from town attorneys Jim Bruno and Greg Castano Jr.
Returning to open session, Santos said the town contested the original master lease for the Bergen Ave. property on the grounds that, “the terms to the town were not as favorable as they should be, so now we’ve been advocating for the town’s best interest to renegotiate that lease.”
“This settlement,” he added, “now puts that chapter behind us.”
Representing Hartz at the meeting were Phillip R. Patton, executive vice president/general counsel; and James P. Rhatican, attorney and director of land use and development.