City sold property for $1. Now it wants to rent it back for $27M.

Posted Feb 13, 2019

Less than two years after Newark sold a piece of property for $1 to its parking authority, city officials are pushing a deal to lease it back.

The total cost for the city: More than $27 million over 30 years.

The Newark Parking Authority plans to develop the land on 43-67 Green Street into a five-story parking deck with administrative offices and retail space. The city would then rent storage space for its municipal court, relocate its finance department there and get 258 parking spots for use during business hours.

But the proposal is befuddling some members of the city council, who say Newark should have kept the prime real estate and developed it on its own. The lot, currently providing parking for city employees, is steps from City Hall and the Prudential Center

“This was land that we transferred to the parking authority for a dollar and now we are paying the parking authority at $27-a-square-foot a year to rent the building that we could have constructed ourselves and maybe rented space to them,” At-Large Councilman Carlos Gonzalez said at a recent council meeting. “I don’t know why we’re doing it.”

Lawrence Crump, general counsel for the parking authority, did not respond to multiple emails and messages from NJ Advance Media. But, during a council meeting he said the deal offered Newark new offices without the obligation of repaying bonds they would have needed to take to build the structure.

“What this does is allow the city to have the space without the burden of paying back that money,” he said. The lease payments are less than what the city would pay to finance the project, Crump said.

The planned five-story parking deck with 515 spaces will also satisfy the city’s long-standing obligation with the New Jersey Devils. Under a 2013 revenue-sharing arrangement between Newark and the Devils for the Prudential Center, the city agreed to build a parking deck on Green Street. The city offloaded that requirement to the parking authority when it sold the land in 2017, officials said.

Additional plans for the property include ground floor retail space, a cafe with outdoor seating and offices that will house the Newark Parking Authority.

The city would lease 26,000 square feet of space for $27 a square foot with a 5 percent increase every three years. City employees will be allowed to use 258 parking spaces, 50 of those without time restrictions.

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“The finance department is in a space that is not conducive for its purposes," Business Administrator Eric Pennington said, adding that the city would likely sell the finance department building on 828 Broad Street. “The court is dilapidated, it needs more storage space and office capacity to do its job."

With the Prudential Center steps away, the Green Street parking deck is expected to generate significant revenue from patrons attending events and games. The city, however, will have no option to buy the property at the end of the 30-year agreement, according to the lease.

The property is assessed at more than 10 million, according to state property records.

East Ward Councilman Augusto Amador said with the city as a 30-year tenant, the parking authority is guaranteed a steady stream of money as it pays back its bonds. The authority employs 56 workers and oversees parking meters and enforcement, with an annual $5 million budget.

“This is the best example of socialism at work. It’s a redistribution of wealth from the city to the parking authority,” Amador said at a recent council meeting. “Something doesn’t jive here."

The council will vote on the lease during a meeting on Feb. 20.

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