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Vol. LXII, No. 9
Wednesday, February 27, 2008
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Borough, Developer, Agree to Disagree as Both Parties Look Toward Tulane

Matthew Hersh

Following months of legal maneuvering and off-the-dais back and forth, Borough Hall and its contracted developer heading up the construction of a major piece of in-town real estate are clearing the slate and hoping to iron out any financial differences once a five-story mixed use development project slated for Tulane Street is underway.

Both parties confirmed Monday that a developer’s agreement renegotiation effort between downtown developer Nassau HKT Urban Renewal Associates and Borough Hall would be withdrawn, and that the estimated $14 million project, known as Phase II, would continue as planned, with any foreseen differences potentially resolved by a mediator.

The two parties have been stuck for more than a year on three main points of disagreement. The first involved the NHKT proposal to put up a personal guaranty for Phase II over some Council members’ preference for a cash performance bond, and the second was over who would be responsible for financing upwards of $30,000 in legal bills tied to liens filed by subcontractors working in Phase I (Witherspoon House, the Spring Street Garage, and Hinds Plaza) against the ousted former general contractor, Troast.

But the most contentious issue was over when NHKT was supposed to start paying ground rent on the Tulane Street property. The Borough contended that the developer owed roughly $15,000 per month since April 2006, over $350,000 total. However, the stating date could not be resolved between the two parities, so, after months of closed-door negotiations that sometimes percolated over into a public display on the Council dais, the two parties are agreeing to disagree, and talks of progress are replacing what had been an increasingly sour relationship.

“I see the decision to hold the developer to the original agreement as a very positive one,” said Councilman Roger Martindell, who had played an outspoken role recent months, warning the Borough against “negotiating against itself.

“This gives us what we had been lacking up to now, which is a best alternative to a negotiating agreement  we had been going into negotiations without a drop dead position. This is a drop dead position,” Mr. Martindell said. “At least the Borough has an anchor now.”

NHKT principal Jack Morrison expressed optimism in an interview, saying that the project, once completed, would be in the best interest of the town in the long term. NHKT attorney Gary Green confirmed that the developer has all of its state approvals, including the go-ahead from the state Department of Community Affairs. Municipal building approvals have yet to be obtained, but Mr. Green said in an e-mail message “we hope to have those shortly.”

Mr. Green echoed Borough administrator Robert Bruschi when he said that while there was “hope” that outstanding issues could be resolved, the issues would otherwise be decided by a mediator, arbitrator, or another third party.

Regarding the failed negotiations, Mr. Bruschi said both parties were comfortable moving forward. “We weren’t able to bring anything to closure and we were having trouble getting rid of even smaller items because we were tripping over the ground rent issue.”

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