NEWARK, NJ - City council hesitantly entered into a lease agreement last week with the Newark Parking Authority that will push forward the creation of a massive 515-space parking deck near the Prudential arena.
The city entered into a redevelopment agreement with the parking authority in 2017. The agreement called for the agency to construct a six-story, mixed-use office building with ground floor retail space and a 515-space parking deck at 47-73 Green St. There property is currently used as a surface parking lot for city employees.
City employees during regular Monday-Friday business hours would have access to 258 parking spots in the deck, which is located behind city hall and about a block away from the Prudential Center. The parking garage would then be open to the public for a fee. The parking authority did not respond to a request for comment seeking how much the rates would be for the public, especially during Devils games.
The Newark Parking Authority is a public agency that is separate from the city government and manages parking projects. Under the agreement from two years ago, the city sold the lot to the parking authority for $1.
The deal that was advanced and adopted on first reading last week allows the city to lease space on the Green Street property for $27 per square foot over a 30-year period. That rate will escalate 5 percent every three years as well, according to the agreement.
The city's finance department and the municipal court will use the office space that the parking authority will build. The parking authority will also be utilizing some of the office space on site and there will about 2,200 square feet of first-floor retail space.
The agreement has been about 10-years in the making, said Councilman At-Large Carlos Gonzalez. While Gonzalez was one of five yes votes, he had several reservations about the deal at a Jan. 29 council meeting.
“This was land that we transferred to the parking authority for a dollar,” Gonzalez said before the vote. “Now we are paying the parking authority rent at $27 a square-foot a year to rent the building that we could have constructed ourselves and maybe rent space to them. And we're doing (it) the other way around.”
East Ward Councilman Augusto Amador and North Ward Councilman Anibal Ramos also expressed concerns about the lease agreement. Amador said the deal just didn’t “jive” and was frustrated that the city sold “probably one of the most valuable pieces of land in the City of Newark” for only a dollar.
“I read the terms of this ordinance and the only thought that came to my mind is that this is the best example of socialism at work,” Amador said. “It's a redistribution of the wealth going from the city to the parking authority. I abstained the last time we had to vote for this, and I'll abstain again.”
Ramos also questioned whether the city could have built the parking deck itself. The city business administrator, Eric Pennington, told council members that the city's bonding capacity improved ever since negotiations were entered into. Although Pennington hadn’t made an assessment on the deal, he suspected the city could have built the parking deck itself.
Pennington also explained that the lease rate is comparable to other rates nearby. Other similar properties go for about $30 per square foot, he said.
Cecil Lawrence Crump, general counsel for the Newark Parking Authority, said the city originally didn’t want to burden themselves with the cost of building the garage.
“I believe one of the reasons was the city didn't want to burden themselves with that large amount of money to borrow,” Crump told council members. “What this does is allow the city to have the space without the burden of having to pay back that money.”
Everett Johnson, bond counsel for the Newark Parking Authority, said the agreement ultimately reduces the cost to the city.
“The total cost that you'd be paying for the lease of the facility is less than the actual construction cost that the Newark Parking Authority is paying to construct the site,” Everett said in the city hall chambers last week. “It is not merely because the parking authority is going to be in there as well as a tenant. You guys are actually paying less with us building this site than you would be paying if you were to finance it yourself.”
In 2013, the city and the New Jersey Devils reached an agreement in a years-long legal battle over how revenue would be shared when the team moved to Newark. The Star-Ledger reported at the time that part of the agreement required the city to build a parking deck on Green Street that the Devils could rent, which would generate revenue for the city.
Pennington, the city business administrator, explained that the deal with the parking authority also helps the city comply with the terms of the settlement with the Devils, whose home ice rink is at the Prudential Center.
“Failure to do so could have a negative impact on us,” Pennington said of building the parking deck. But he also touted the benefits of the parking deck for the city.
“We have parking spaces that the city will be able to use. The finance department is now in a space that is not really conducive for its purposes. They're going to be moved into new space that will allow us to free up the space that they have now...The municipal court is dilapidated. It needs to have more storage space and more office capacity to do its job. The citizens deserve that.”
City spokesman Frank Baraff said the city and the parking authority are in the midst of figuring out where municipal employees will park while the deck is being constructed. The parking authority did not respond to a request for comment seeking the completion date of the deck.