NEWARK, NJ - The most recent agreement between Newark and the Port Authority allows the city to acquire additional property for leasing by the authority for its Port Street Corridor Improvement project, netting the city an additional $155 million over the next 30 years.
In return, the city must assist the authority in obtaining all appropriate licenses and permits for the project. Should the Port Authority seek additional land for the project, the City Council “shall not unreasonably withhold or delay” such requests, according to the agreement.
Engineers and attorneys for both the city and the Port Authority have been negotiating the terms of this lease agreement since 2017. (See the full lease agreement here.)
The most recent agreement between the city and the Port Authority marks the 21st iteration of an ongoing lease negotiation between the two government bodies since 1947 regarding the “improvement, development, operation and maintenance” of Newark’s Marine and Air Terminals. It extends the lease the Port Authority has for its port and airport operations by 10 years to the year 2075.
The agreement, obtained by TAPInto Newark under New Jersey’s Open Public Records Act, was adopted on Oct. 1. That was the same day Mayor Ras Baraka announced the city intended to use the extra Port Authority money as a mechanism to pay the debt service on a $120 million loan from Essex County to expedite timing of the city’s lead line replacement program.
While construction on the lead line replacement program has been underway since March, the Essex County loan allows the city to speed up completion of the project from 10 years to 24 to 30 months.
Baraka’s office had initially billed last month’s agreement with the Port Authority as a way to pay for its lead line replacement program, but changed its tune the next day to say the Port Authority money could be used for any purpose to benefit the city and that paying the debt service was just one option.
Baraka said at the time he had not gotten pushback from the Port Authority to fine tune that message. Newark city officials did not respond to requests for comment on the official agreement or to explain why the official contract has a $5 million discrepancy showing the city netting $160 million instead of $155 million over the three decades.
While Newark officials are allowed to use the additional Port Authority money for any purpose it deems necessary, the intention to use the funds to pay the debt service on the Essex County loan shows guaranteed funds the city could use to do so. That then lowers interest rates on the bond that would save both city and county taxpayers over the years, said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University.
“The City of Newark is now in the position to say, ‘hey we know we owe you the money first and now we're going to dedicate these funds from the Port Authority, who is reliable, to pay the debt,’” Pfeiffer said.
The city’s lead water crisis catapulted Newark in the national spotlight after test results in August showed city-issued water filters were not working, prompting the U.S. Environmental Protection Agency to recommended residents in impacted areas drink only bottled water.
Shortly after, Newark officials were able to secure the $120 million loan from Essex County to speed up the replacement of 18,000 lead service lines citywide. The city has since wound down its bottled water distribution program after further testing showed water filters were effective.
The scope of the Port Street Corridor Improvement project includes replacing the Corbin Street ramp, realigning portions of Inner Port, Port and Outer Port streets, Corbin and Kellogg streets and modifying three intersections.
The improvements impact only internal port roads, and not commuters on the New Jersey Turnpike or other surrounding highways, according to the Port Authority.
Corbin Street and Port Street serve as the main entrances for truck access to Port Newark and the Elizabeth Port Authority Marine Terminal.
Under the agreement, the city acquired properties belonging to the NJ Turnpike Authority and Conrail that will then become public roadways and thus charge the Port Authority rent to use the areas, according to the agreement.
The authority will pay the city $155 million via $5 million payments each year for the next 30 years plus a $5 million upfront payment, the Port Authority said.
The agreement cites a study that revealed “a pressing safety need for roadway improvements due to substandard geometric features on Port, Inner Port and Outer Port Streets and the Corbin Street Ramp.”
From 2005 to 2018, the agreement cites 401 accidents in the Port Street Corridor, including 81 serious injuries and three deaths. In addition to the traffic accidents, the agreement cites “severe signs of deterioration” of the Corbin Street ramp.
“The study identified areas that required roadway realignment and widening, traffic signal integration, and safety improvement,” according to the agreement.
The contract also creates an Office of Airport and Seaport Administration, which will be staffed with an administrator, paid between $75,000 to $175,000 by the Port Authority, to act as a coordinator between the city and the authority during the transportation infrastructure overhaul.