BAYONNE, NJ – The city of Bayonne received a blow to its development efforts when it could not finalize an agreement with the company scheduled to build at the Harbor Station South section of the Peninsula at Bayonne Harbor.

Last fall, the city had announced with great fanfare that Kate Howard Ltd., the development arm of Chinese import/export company Waitex, had been chosen to develop the southwest portion of the Peninsula, adjacent to Route 440. Plans called for a 300-room hotel, an upscale European-type mall with dozens of outlets, and 750 residential units.

But now it is back to the drawing board for the city to attract one or more developers for the 72-acre tract. A source said it was a huge setback for the city and for the administration of Mayor James Davis.

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An anticipated $15 million payment to the city for the first phase of the project will now not be paid to Bayonne and will impact the 2016 municipal budget, the source said and a city official acknowledged.

Other results of the deal’s meltdown include no resolution to two issues that have dogged the city for years.

One is the proposed construction of a $4.5 million pedestrian bridge over Route 440 that Kate Howard was to pay for. Two men died late last year while trying to cross the roadway, and it has been the scene of other serious accidents. Now the city will have to find another way to fund the pedestrian bridge.

Another issue is that the long awaited hotel for the Peninsula has once again been delayed. Royal Caribbean Cruise Line and the city have envisioned a hotel there as a strong economic driver, but since Bayonne received the land in the early 2000s, no administration has been able to deliver one.

City Administrator Joseph DeMarco said the deal fell through because final details could not be ironed out.

“We got very close to the deal and then at the end it did not work. There were some issues and discussions,” he said. “It was purchase prices, the timing of things, obligations, permits and when we would close. It was all those issues.”

A Kate Howard representative could not be reached for comment after multiple attempts.

The City Council will now vote to remove Kate Howard as the authorized developer of the property, according to DeMarco.

Davis released a statement that the city was issuing a new request for proposals for the development of the land.

“The fact that Kate Howard Ltd. and the city could not execute a final deal on the land known as Harbor Station South is disappointing to say the least,” Davis said. “However, setbacks will not deter us from pursuing the sale and development of the property.”

Davis said that section of the Peninsula would remain an important part of his agenda for the economic development and revitalization of the city.  

DeMarco said that there are at least three other companies still interested in developing at Harbor Station South.

And plugging the budget hole of the expected $15 million from Kate Howard? DeMarco said the city was working to replace that money with that from other transactions and revenues.

“We’ve spent the last two or three weeks shoring up those things,” he said. “Hopefully in the next week or two a lot of that will be clarified.”

DeMarco said that all was not lost with the work done with Kate Howard on the Harbor South development.

“It’s a delay, but every minute spent on the project is not wasted,” he said. “A lot of the underlying engineering issues and permit issues were addressed, as well as subdivisions; things that needed to be done anyway.”