City Clerk File No. Ord. 18-149 Agenda No.. Agenda No._ ^ ^- • 3.E 1st Reading 2nd Reading & Final Passage COUNCIL AS A WHOLE offered and moved adoption of the following ordinance: CnY ORDINANCE 18-149 TITLE: AN ORDINANCE RESCINDING ORDINANCE 16-021 AND TERMINATING THE TAX EXEMPTION AND FINANCIAL AGREEMENT WITH NINTH STREET TWO URBAN RENEWAL, LLC THE MUNICIPAL COUNCIL OF THE CITY OF JERSEY CITY DOES ORDAIN: WHEREAS, on or about May 21, 2015, Ninth Street Two Urban Renewal, LLC, ["the Entity"] applied for a long term tax exemption under N.J.S.A. 40A:20-1 et seq., for improvements to be constructed on property located within the Ninth & Brunswick Redevelopment Plan, on the Tax Map known as Block 6902, Lot 29, Qual. C0002 and more commonly known by the street address of 360 Ninth Street, Jersey City ["the Property"]; and WHEREAS, by the adoption of Ordinance 16-021 on September 7, 2016, the City of Jersey City ["the City"] approved a 15 year long term tax exemption with a service charge equal to eleven percent [11%] of Annual Gross Revenue each year, and a term that would expire on or about September of 203 1; and WHEREAS, the Project is a six [6] story mixed-use condominium building with sixty-six [66] residential units, approximately 10,121 square feet ofground-floor retail/commercial space and seventy-seven (77) parking spaces ["the Project"]; and WHEREAS, the Entity and the City entered into a Financial Agreement dated as of September 7, 2016 ["the Financial Agreement"]; and WHEREAS, in addition, pursuant to Section V of the Financial Agreement, the Entity signed a Project Employment and Contracting Agreement ["the PECA ] whereby the Entity agreed to provide Jersey City residents with certain employment and other economic related opportunities as set forth in the PECA; and WHEREAS, the Office of Tax Abatement Compliance issued the Entity a Notice of Default for failure to adhere to the terms and conditions of Section V of the Financial Agreement and for failure to adhere to the terms and conditions of the PECA; and WHEREAS, that Notice was dated October 23, 2018 and is attached hereto as Exhibit "A"; and WHEREAS, the Entity never cured the deficiencies cited in the Notice of Default; and WHEREAS, as a consequence of the Entity's failure cure the deficiencies cited in the Notice of Default, it is in the City's best interest that the Tax Exemption and the Financial Agreement granted to Ninth Street Two Urban Renewal, LLC be terminated and the Property be returned to the conventional tax rolls. Continuation of City Ordinance _^ u -1 ~r~f- _, page, NOW, THEREFORE, BE IT ORDAINED by the Municipal Council of the City of Jersey City that: 1. The Tax Exemption and the Financial Agreement with Ninth Street Two Urban Renewal, LLC is hereby terminated and the Property shall be returned to the conventional tax rolls and assessed as an added/omitted property, subject to the conditions set forth below. 2. Nothing in this ordinance shall prohibit the Entity from applying for a new tax exemption for the Project. 3. The Mayor, Business Administrator and the Corporation Counsel are authorized to execute any agreements or documents appropriate or necessary to effectuate the purposes of the within Ordinance, including but not limited to the issuance of a Memorandum confirming the rescission and termination of the tax exemption and Financial Agreement for the Project to be constructed by Ninth Street Two Urban Renewal, LLC. 4. All Ordinances and parts of Ordinances inconsistent herewith are hereby repealed, including but not limited to Ordinance 16-011. • 5. This Ordinance shall be part of the Jersey City Code as though codified and fully set forth therein. The City Clerk shall have this Ordinance codified and incorporated in the official copies of the Jersey City Code. 6. This Ordinance shall take effect at the time and in the manner provided by the law. JJH 12/11/18 APPROVED AS TO LEGAL FORM APPROVED:, APPROVED: Corporation Counsel Business Administrator Certification Required D Not Required D ORDINANCE FACT SHEET This summary sheet is to be attached to the front of any Ordmance that is submitted for Council consideration. Incomplete or vague fact sheets will be returned with the Ordinance. Full Title of Ordinance AN ORDINANCE RESCINDING ORDINANCE 16-021 AND TERMINATING THE TAX EXEMPTION AND FINANCIAL AGREEMENT WITH NINTH STREET TWO URBAN RENEWAL, LLC Initiator Department/Division Name/Title Office of the Mayor John Minella 201-547-5201 Aide to the Mayor Phone/email jminella@jcnj.org Note: Initiator must be available by phone durmg agenda meeting (Wednesday prior to council meeting @ 4:00 p.m.) Ordinance Purpose This Ordinance terminates the 1 5-year Tax Exemption granted to Ninth Street Two Urban Renewal, LLC I certify that all the facts presented herein are accurate. ~h December 11,2018 Johi/^inella Date Aidf^to the Mayor EXHEBIT A CITY OF JERSEY CITY OFFICE OF TAX ABATEMENT AND COMPLIANCE DEPARTMENT OF ADMINISTRATION STEVEN M,FULOP 13-15 LiNDEN AVENUE EAST JERSEY CITY, NJ 07305 P: 201547-4538 PIERRE E. LEANDRE DWeGTOff t.WVROFJWSEVWv' ^^ ms October 23, 2018 Ninth Street Two Urban Renewal, LLC ATTN: Eyat Sliusier 155 Second Street Jersey City, New Jersey 07302 RE: Violation of Article V Section 5.1 of Financial AKi'eement 360 Ninth Street; Block 6902, Lot 29, C0002 Dear Mr. Shuster; Ninth Street Two Urban Renewal, LLC (hefemafter, "Recipient") and the C'^ of Jersey City entered into a.Fmaiicial Agreement on September 7, 2016. As part oftlie Financial Agreement indicated in Article V Section 5.1, Recipient agreed to eKecute and comply with a Project Einployment & Contracting Agreement (hereinafter referred to as "PECA") which is attached to the executed Financial Agreement as Exhibit 8. As such, please be advised fhat this letter serves as a default notice that the aforementipried project is not in comnUaiice with Its &xecuted PECA, This determination was uiEide based oil the foliowing violation: insiiffJeient mwiber of Jersey C]ty workers on-sife wflh insufficient documentation (i.e. "Good Fwfh Effort") / on September 28, 2018, a Remecliation Meeting was conducted to re-explam the PECA requirement, "Good faith" documentation, and the opportunilies available to remedy this project's deficiency. On October I2i3\ 2018, the Recipient submitted to this Office a collection of statements from subcontractors which attempted to demonstrate "Good faith" efforts in satisfying the Workforce goal. However, after a careful analysis by the Director and myself, it has been determined that the statements and documentation provided are neither plausible nor suflFicient in demonstrafmg "Good faith" efforts. Tlie reasons are as foJIowed: 1) Ryco Construction Management, the Recipient's subcontractor, claims they subcontracted MPL, "a Jersey City company with ail Jersey City labor" through the months of April 2018 to June 2018. However, after a thorough review, there was only 1 Jersey City employee recorded; 2) Cciitriin Electric, the Recipient's electrical subcontractor, claims they posted Craigslist.com "job advertisements for skilled labor professionals for the duration of the 360 Ninth Street Phase 2 Project" and included a photocopy oftlie advertisement along with tliefr statement. However, upon visiting the advertisement online, it was discovered that this advertisement was posted on October 1, 2018, whicli does not constitute "Good faitli" efforts for the period in question; 3) Centrim Electric also provided a collection of applicants' resumes that responded to their advertisement. "Ceiitrhn specifically requested that Jersey City residents apply for positions. Attached are the resumes of workers thst applied... Ceutrim hired the workers that were qualified for the positions." However, upon contacting all of the resumes that Centrim provided, each so- called applicant mformect this Office that tliey were never contacted by Centrhn or the Recipient uor were they provided with any employment opportimities. I do note that all but one of the applicants were able to be readied; 4) Recipient claims they met with Office of Diversity and Inclusion on or about February 28th, 2018 to discuss potential subcontractors that would be available for open work, and that subsequent emails were sent to iwtlier inquire about potential subcontractors. However, it is understood by this Office and the Office of Diversity and Inclusiou that the meeting was at the request of the Office of Diversity and Inclusion, so they may gain a better understanding of what General Contractors look for when hiring subcontractors, and that the subsequent emails were specifically in reference to 323-325 Pine Street, another project for which Shnster is ii General Contractor, and was not for the project in question. This doGumentation, which, still not provided by the Recipient, does not account for 360 Ninth Street's "Good faith" efforts, and sliall not be accepted; 5) Recipient provided "Agendas" documentation which serve as minutes for periodic meetings with subcontractors. Recipient claims that, "PECA compliance was a monthly agenda item that was discussed in tlie weekly meetings with the sub-contractors". Howevor, after review there is nothing to substantiate "Good faith" efforts in reaching out to potential Jersey City workers. The Agenda line item appears to only serve as a reminder to submit monthly Manning and Payroll reports to this Office, and does not indicate a call for "Good faith" action to be uuciertaken by the Recipienfs subcontractors; 6) Counsel for the Recipient claims that it would be "reasonable to expect/hope tliat Jersey City subcontractors would also have Jersey City residents". However, projects cannot make this assumption, as the two requirements, Workforce and Business Contracting, are independent of each other, as was explicitly stated hi the Initial and Preconsfniction Meetings held on January 10th, 2017 and January 31st» 2017, respectively. It was further communicated that it is the direct responsibility oflhe Recipient to abide by the PECA, not the subcontractors, in liiring of Jersey City businesses and residenfs since tlie Recipient is privy to contract with ttie City; and 7) Counsel claims that, with the Workforce deficiency, "there is an inherent problem with the good faith efforts requirement as some of these efforts are within tlie control of third parties, and not the beneficiary of the tax abatement.,, this was/is a consistent problematic issue for the WWW.JERSEYGITYNJ.GOV projects that were formally subject to Project Labor Agreements and the GC and beneficiary of tlie tax abatement would be subject to the actions of the respective union trades, and their compliance or lack thereof with gooci faith efforts." Counsel's argument would be correct iftliis was Project Labor Agreement However, this project is a PECA and thus has no relation to the PLA. The PLA requirements are strictly determined and coutrollecl by the Labor Unions where developers and/or principEils do not have direct influence on the hiring requirements. Conversely with respect to tlie PECA, the Recipient has full control over the hiring requirements and can subsequently instinct their respective contractors to abide by the Workforce and Business Contracting requirements. In summation, due to the fact there were minimal to no Jersey City workers reported on-site with insufficient documentation tojustify a.nd/or support tlie lack of Jersey Ctly workers on-site, this Office finds tlus project in uon"compHauce. This violafton constifntes a clear material breach of Article V Section 5,1 of the Financial Agreement and Sections Vff) of the executetl PECA. As such, this Office reconmieuds the assessment of Liquidated Damages as set forth in Section XI(B) of their executed PECA. Please note that this Default Notice shall not be withdrawn from this Office. Respectfully Submitted, R .ipertT. Verano, Deputy Assistant Direotor ec: John Minella, Chief of Staff Peter Baker, Esq., Corporation Counsel Nick Strassei\ Esq., First Assistant Corporation Counsel Brian D. Platt, Business Administrator Ernest Boija, Fiscal Officer / Office of the Tax Collector Pierre E. Leandre, Esq,, Director / Office of Tax Abatement & Compliance Kevin A. Kane, Assistant Director / Office of Tax Abatement & Compliance Charles J. HarringtOHi III, Esq., Counsel for Developer 1 "Failure to allow record or work place access or submit any other required reports (all categories): an amount equal to three (3%) percent increase service charge as set forth in tlie Financial Agreement for each quarter or part thereof that the Recipient is non-compHant. WWWJERSEYCtTYNJ.GOV OFFICE OF TAX ABATEMENT AND COMPLIANCE DEPARTMENT OF ADMINISTRATION 13-15 UNDEN AVENUE EAST f JERSEY CITY, NJ 07305 P: 201 547-4538 STEVEN M. FULOP PIERREE.LEANDRE DSRECTOR MAWftOF JERSEY CfTY August 9, 2018 QUARTERLY PROJECT MPORT Type of Project PECA Quarter: April - June 2018 Developer Name (U.R. aud/or LLC): Ninth Street Two TMinu Renewal J.LC Project Site Location: 360 Nintli Street Principals); Adam ICuoll (us to Notice) Attorney (if applicable): Charles JJSarrmgtoHi III, Esq, General Contractor; SliusterManagement, LLC (Adam Knoll <& John Janiec) Project iu Compliance? (Select One) YES / If No, what acttQu(s) was/were taken if any to briug project into couipliauce? If Vcs, plca$c specify thp rensons why the project is in compliance. (1) WORKFORCE REQUIREMENT -1 Month P18) Total Workers Male/Female Minority Workers Jersey City April May June 100 100 123 100/1 100/1 123/1 Workers 72 78 105 5 3 3 Jersey City resident worker representation is non-sufficient; high number of minority workers. Additionally, tills Office has not received "good faith"ieffort documentation this Quarter with respect to this requirement. (2) BUSINESS CONTRACTING REQUIREMENT " The project's estimated cost of construction is roughly $25.7 million. The General Contractor, Sinister Mrtnftseinent, LLC, is a Jersey City business. Only one of the seventeen cQmpames on site this quarter are a JC Company: Four of the fifteen subcontractors on site this quarter are Jersey City Businesses; Clara Coustmcfion. However "good faith" documentation lias been received in the form of explanations as to why bids were awarded, etc. Moving forward however, this information should be confimied by reaching out to the JC companies who have lost bids, WWWJERSEYC1TYNJ.GOV 3) ACTIONS TO BE TAKEN - This Office will provide this project with an "Advisory Notice" and this project will have seven (7) business days fi'om the time of receipt to cure the aforementioned defects. If the defect is not cured and/or addressed within such time frame, a Default Notice will thereafter be issued. WWWJERSEYCtTYNJ.GOV ORDINANCE.NO. Ord. 18-149 TJTLE: 3,1^&ECH9-20T8-4;E An ordinance rescinding Ordinance 1 6-021 and terminating the tax exemption and fmancial agreement with Ninth Street Two Urban Renewal, LLC. COUNCILPERSON RIDLEV PRiNZ-AREY BOGGIANO AYE NAY N.V. ~z_ "7: ~7' LAVARRO, PRES. • ROBINSON ^. e^r RECORD OF COUNCIL VOTE TO CLOSE PUBLIC HEARING .moved, seconded by Councilperson_ Councilperson, COUNCILPERSON R! D LEY RECORD OF COUNCIL VOTE ON INTRODUCTION U£U ! \ 20 io g'^^ N,V. COUNCILPERSON. , AYE NAY AYE •NAY N.V, COUNCILPERSON RIVERA YUN / t/ ~v WATTERMAN / SOLOMON AYE NAY N.V. XUNCILPERSON AYE NAY _ to close P,H. NV, (W SOLOMON ROBINSON PRINZ-AREY BOGGIANO ~^ ;OUNCILPERSON WERA AYE NAY N.V. WATTERMAN .AVARRO, PRES, NV-Not Voting (Abstain)