Town picks meadows redeveloper

This story is updated to correct inaccurate information originally listed online — and in the May 18 print edition of The Observer.

The Town of Kearny has “conditionally designated” The Sitex Group LLC as redeveloper of about 50 acres of meadows property, with warehousing deemed the prospective use for the land.

Mayor Alberto Santos and the Town Council took action May 10 after they discussed the issue in public before going into private caucus and then re-convening to vote on the proposal.

Sitex would acquire the former Standard Chlorine site, currently owned by Kearny, and the former Diamond Shamrock property from its owner, Tierra Solutions, if the company can execute a redeveloper agreement with Kearny and a purchase agreement with Tierra Solutions by Nov. 9, unless an extension is granted.

No stranger to Hudson County and the outlying region, members of the Sitex team worked on acquiring and remediating the former PJP dump/Superfund site along Rt. 440 in Jersey City and developing an 878,000 square foot industrial building leased partly to Royal Dutch Ahold for e-Commerce grocery home deliveries and partly to Imperial Bag & Paper as its headquarters and distribution center in 2014.

Last year, Sitex began a $66 million project involving demolition, remediation and site elevation efforts at the former Daffy’s corporate HQ in the North Bergen/Secaucus meadowlands.

In 2012, members of the Sitex team worked on redeveloping the environmentally compromised former Continental Freezer facility in Secaucus into a 369,000 square-foot industrial park containing Bed Bath & Beyond’s NYC store replenishment plus a 101KSF data center space leased by Internap, at a cost of $45 million.

In Kearny, meanwhile, If all goes according to plan, Sitex would pay $12.5 million for both sites, with Kearny and Tierra Solutions each getting an equal share of the proceeds, and would build an “849,000 square-foot single industrial building spanning both properties …”

But there’s a catch that could undermine a portion of the sale price: Sitex also has to acquire a rail line owned by the HCIA that runs through the center of the properties but if the parties cannot agree on a price, then the overall purchase price could be reduced by as much as $6 million – which means Kearny’s share would only be about $3.1 million versus $6.25 million.

Santos said the HCIA purchased the narrow strip of land from the railroad years before the town acquired Standard Chlorine. “If a purchase agreement can’t be reached, the concern is that a large portion of the site would not be buildable, which affects the value of the property,” he said. “Having said that, the town and Sitex believe an agreement can be reached with the HCIA.”

Another “caveat,” Santos noted, is that, since the property is in the Meadowlands district, a portion of the revenues would be factored into the meadows tax-sharing pool.

But the proposed redevelopment agreement also calls for Sitex to pay Kearny an annual PILOT (Payment in Lieu of Taxes) of $2 per square foot or 10% of gross lease rentals, whichever is greater, which, according to Santos, could amount to roughly $1.7 million.

And Sitex would also contribute $1 million for sewer and water lines serving the property, to be paid upon connection of those lines to the new development.

Sitex would be expected to begin construction within 12 months of the title closing or of completion of a sewer line/pump station to service the new development, whichever happens later.

Sitex would apply for site plan approval within 180 days after the expiration of the due diligence period and apply for “all other approvals” within 60 days after filing for site plan approval.

There are also timelines built into the agreement for securing all necessary environmental approvals preceding construction.

After the former N.J. Meadowlands Commission adopted a redevelopment plan for the Koppers Coke Peninsula site – which included the Standard Chlorine and Diamond Shamrock properties – in 2013, Kearny and Tierra Solutions joined with the HCIA, owner of the Koppers site, in an effort to jointly market the entire tract.

But that venture failed and the HCIA ended up signing a redeveloper agreement with the Morris Companies to build a separate warehousing project on about 130 acres of the Koppers site and Kearny and Tierra Solutions proceeded on their own path to find a redeveloper. Kearny has had discussions with several prospective builders before selecting Sitex.

Santos said Sitex has a proven track record in “developing challenging environmental sites.” And, the mayor added, “the EPA (U.S. Environmental Protection Agency) case manager assigned to the Standard Chlorine cleanup says, ‘it can happen – we’ll work with you on it.’ ’’ 

Councilwoman Susan McCurrie concurred, adding that “the focus of both EPA and DEP (state Department of Environmental Protection) today on Superfund sites is on remediation, accompanied by development, so dealing with a Superfund site is no longer viewed as a scary proposition.”

So where does that leave the Koppers Coke site? HCIA Executive Director Norman Guerra told The Observer, “We welcome development of the [Kearny and Tierra Solutions] property. In the past, we attempted to work with the town toward the development of the entire [Peninsula] tract.”

As for the HCIA’s Koppers parcel, Guerra said: “We’re doing our due diligence, as is Morris and so is NJ Transit, which has an interest in using a portion of the site. Our engineers and Morris’s engineers are working cooperatively with NJ Transit to accommodate their desire.”

As part of an “inverse condemnation” settlement between HCIA and NJ Transit which has netted the HCIA $1 million, there is the “potential” for HCIA to sell 20 acres within the Koppers parcel and an additional six acres just outside Koppers to NJ Transit, an HCIA spokesman said. Negotiations on that transaction are ongoing.  


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