Hoboken Hilton Hotel Hits Speedbump, $4M 'Givebacks' Questioned

HOBOKEN, NJ — Plans to bring a 20-story, 350-room Hilton hotel to the Hoboken waterfront hit a big speed bump last week, when a Hudson County judge ruled that more than $4 million in “community givebacks” from the developer are a no-go.

On March 26, Superior Court Judge Anthony D’Elia allowed a lawsuit against the city and KMS Development Partners to proceed. That lawsuit – filed by the owner of properties adjacent to the Hilton Hotel site – cites concerns about the negotiated terms of the project and seeks to have it nixed.

Hoboken city officials and KMS filed a motion to dismiss the lawsuit, which was denied.

In particular, the lawsuit claims that $4.85 million in planned “community givebacks” from KMS to the city – a major part of the negotiation process – “violate clear New Jersey public policy.”

Those benefits include:

• An allocation of $2 million to revitalize the former Hoboken YMCA at 1301 Washington Street that will include a municipal pool, an uptown branch of the Hoboken Public Library, and additional classroom space for the Hoboken Public Schools
• $1.16 million towards "infrastructure upgrades," which includes the area adjacent to the hotel
• $1 million for the Hoboken Public Education Foundation to establish a permanent endowment
• $484,000 to 3 Hoboken Charter Schools, divided among the schools
• $200,000 contribution to Hoboken's Affordable Housing Trust

As part of his decision to allow the lawsuit to continue, D’Elia wrote that the “risk of bad faith, favoritism and the unlimited range of discretion, which would be afforded to municipalities in exacting off-tract contributions from redevelopers, is too great.”

The lawsuit also takes aim at the redevelopment plan which authorizes the hotel. That agreement can be viewed online here.

There is no payment in lieu of taxes (PILOT) or special tax arrangement for the hotel, which is expected to bring in $1.7 million in annual tax revenue, a city spokesperson previously said.

• See related article: Hoboken Council OKs Hilton Hotel Plans; 'Big Win,' Mayor Says

The City Council ultimately voted 8-1 to approve the project in October 2018, with James Doyle providing the dissenting "no" vote. However, a council subcommittee also took issue with "the fact that the use of the [community giveback] funds will not be directed by any elected officials -mayor, school board or City Council - and that offsets to the myriad of near-term financial commitments to be paid by taxpayers were not considered."

• See related article: Plans For Hoboken's Hilton Hotel May See Big Changes

A day after the ruling, Hoboken Mayor Ravi Bhalla – who has been a big supporter of the proposed hotel and the community givebacks – said that the city will “aggressively pursue” the next steps to defend its position on the merits and believes it will ultimately prevail in court.

“The hotel deal furthers the redevelopment of the city, provides the community with unprecedented benefits and continues to be a priority for my administration,” Bhalla charged. “We are confident that the city will ultimately prevail, our city will be revitalized and our community will realize all benefits agreed to in this deal.”

The proposed hotel would be located behind the Frank Sinatra Post Office near Pier A Park. It would have have an onsite restaurant and bar, a rooftop event space with public access, meeting and banquet spaces with waterfront views and a fitness center for hotel guests. Other approved project details include:

• Retail/sidewalk café use on the ground floor
• Constructed to LEED Silver standards
• Public open space in the form of a "pocket park" to be accessed from River Street

According to a previous statement from city officials, the hotel will be "100% constructed and operated with union labor," and Hoboken residents will be prioritized for "170 well-paying hotel jobs." The hotel is expected to generate $5 million for the local economy and preserve the historic Sinatra Post Office.

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