Title
Dept/ Agency: Economic & Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Leasing City-owned property
Purpose: Renovation of the Frank R. Lautenberg Courthouse & Post Office
Entity Name: KMS Development Partners, LP
Entity Address: 1600 Arch Street, Suite 203, Philadelphia, Pennsylvania 19103
Lease Amount: $
Lease Period: 99 Year Lease
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale ( ) Grant ( ) Sub-recipient ( x ) n/a
Location of Property: Frank R. Lautenberg Courthouse and Post Office)
(Address/Block/Lot/Ward)
2 Federal Square, (AKA 13-57 Walnut Street), Newark, New Jersey 07102 /Block 875 Lot 54/ East Ward
Additional Information:
Resolution authorizes entry of a Collaboration Agreement which contemplates the Redevelopment of the Frank R. Lautenberg Courthouse and Post Office through a subsequent sale-lease back agreement
body
WHEREAS, the United States Postal Service (the "USPS") owns and controls the Frank R. Lautenberg Post Office and Courthouse located at 2 Federal Square, (AKA 13-57 Walnut Street),Newark, New Jersey, Block 875 Lot 54, East Ward, (the "Building") and the parcel of land upon which it is located (the "Land" and together with the Building, the "Property"), and desires to (a) make available a portion of the Building to the United States General Services Administration (the "GSA") for use and occupancy by the United States federal court system and other federal agencies and (b) continue to utilize a portion of the Building for USPS purposes; and
WHEREAS, the Property is located in a designated "urban enterprise zone" within the City, which pursuant to N.J.S.A. 40A:12A-5(g) constitutes an "area in need of redevelopment" for the purpose of granting tax exemptions pursuant to N.J.S.A. 40A:20-1 et seq. (the "LTTE Law"); and
WHEREAS, the Property is also located in the City's East Ward, the entirety of which has been designated by the City as an "area in need of rehabilitation", and in respect of which a redevelopment plan (the "Redevelopment Plan") has been adopted by the City; and
WHEREAS, the Building is partially unoccupied and is in need of repair and rehabilitation to meet the requirements of the federal courts; and
WHEREAS, the City has an interest in the successful continued use of the Building; and
WHEREAS, neither the USPS, the GSA nor the City have available the capital funds necessary to repair and rehabilitate the Building; and
WHEREAS, KMS Development Partners, LP, a company organized and existing under the laws of the Commonwealth of Pennsylvania ("KMS"), with an address of 1600 Arch Street, Suite 203, Philadelphia, Pennsylvania 19103, has proposed a plan which would provide for the rehabilitation of the Building and the long-term leasing thereof to the USPS and the GSA, thereby facilitating the continued employment of federal workers in the City; and
WHEREAS, such plan contemplates generally (i) the acquisition of title to the Property by the City or its designated redevelopment entity, subject to prior long-term leases for the benefit of USPS and GSA, (ii) the conveyance by the City to KMS of a license to construct the renovations, as well as 99-year ground lease interest in the Property (with reversion to the City at the end of such term), and (iii) the construction of the renovations by KMS, as redeveloper of the Property; and
WHEREAS, such plan also contemplates the granting by the City of a 30-year tax exemption under the LTTE Law, and payment to the City of both (i) annual service charges under a financial agreement effecting such tax exemption and (ii) ground rent payments under the ground lease, consisting of both prepaid ground rent payable on the effective date and additional ground rent payable simultaneously with the annual service charge; and
WHEREAS, the purchase price payable for the acquisition of the Property is intended to be satisfied, in whole or in part, from the prepaid ground rent, and it is currently estimated that the sum of the additional ground rent plus the annual service charge will be not less than the ad valorem taxes on the Property it been subject to full property taxation; and
WHEREAS, implementation of such plan will require the negotiation of various documents and the approval of various actions by the City including, inter alia, an amendment to the Redevelopment Plan, approval of the proposed long-term tax exemption and approval of a purchase and sale agreement, a ground lease with KMS and a long-term lease with the USPS; and
WHEREAS, the City and KMS now desire to enter into a Collaboration Agreement outlining the parties' mutual understanding of the proposed transactions and obligating the City to use commercially reasonable efforts to negotiate and obtain such necessary third party approvals in respect thereof.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
- The Collaboration Agreement Regarding the Renovation of the Frank R. Lautenberg Post Office and Courthouse, located at 2 Federal Square (AKA 13-57 Walnut Street), Newark New, Jersey, Block 875 Lot 54, East Ward (the "Collaboration Agreement"), in substantially the form presented to this meeting, is hereby approved. The Mayor of the City of Newark and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development, are hereby authorized to enter into and execute the Collaboration Agreement with KMS in substantially the form attached hereto, with such changes as may be approved by the officer executing same, with the advice of Corporation Counsel, and approval of the Municipal Council.
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- The rehabilitation of the Frank R. Lautenberg Post Office and Courthouse which will include generally (i) the acquisition of title by the City or its designated redevelopment entity, subject to prior long-term leases for the benefit of the United States Postal Service and the United States General Services Administration, (ii) the conveyance by the City to KMS of a license to construct the renovations, as well as 99-year ground lease interest in the property (with reversion to the City at the end of such term), (iii) the construction of the renovations by KMS, as redeveloper of the property and (iv) the consideration of the granting by the City of a 30-year tax exemption under the Long-Term Tax Exemption Law.
- The City shall bear no responsibility for any fees and costs related to KMS fees and compensation to KMS and its affiliated companies.
- The executed Collaboration Agreement shall be placed on file in the Office of the City Clerk by the Department of Economic and Housing Development.
STATEMENT
Resolution approving the City's execution of a Collaboration Agreement with KMS Development Partners, LP ("KMS") to develop and implement a redevelopment transaction for the rehabilitation of the Frank R. Lautenberg Post Office and Courthouse which will include generally (i) the acquisition of title by the City or its designated redevelopment entity, subject to prior long-term leases for the benefit of the United States Postal Service and the United States General Services Administration, (ii) the conveyance by the City to KMS of a license to construct the renovations, as well as 99-year ground lease interest in the property (with reversion to the City at the end of such term), (iii) the construction of the renovations by KMS, as redeveloper of the property and (iv) the consideration of the granting by the City of a 30-year tax exemption under the Long-Term Tax Exemption Law. Property located at 2 Federal Square (AKA 13-57 Walnut Street), Newark, New Jersey, Block 875 Lot 54, East Ward.