(Bloomberg)—A company owned by the family of Jared Kushner, President Donald Trump’s son-in-law, has abandoned plans to buy a sprawling industrial site in New Jersey from Honeywell International Inc., a major federal contractor, and develop it into a residential community.
Kushner Cos. had been the leading bidder for the 95-acre formerly contaminated site known as Bayfront, which is co-owned by Honeywell and Jersey City, city officials said. The company had submitted plans to build as many as 8,100 housing units to be marketed to Orthodox Jewish residents of the Williamsburg section of Brooklyn who are being priced out of that neighborhood.
Last fall, the Kushners bid about $150 million, tens of millions higher than competitors, according to people involved in the negotiations. Honeywell heard from others who would only make an offer once the environmental approvals for the cleaned-up site were final. So the bidding is scheduled to reopen later this year and Kushner Cos. had been expected to continue in the process, the people said.
But on Tuesday, when Bloomberg News asked about Bayfront, company spokesman James Yolles said the Kushners are no longer pursuing the project. He wouldn’t elaborate or explain.
A Kushner official who asked not to be named said the company dropped its plan late last year. However, others in the negotiations say they have been in contact with the Kushners in recent weeks with no indication of a change of heart. Mark Albiez, chief of staff to Jersey City Mayor Steven Fulop, said the administration had not received any notice of the withdrawal of the Kushners’ bid.
The move was welcome news to ethicists. Jared Kushner, who is married to Trump’s daughter, Ivanka, has sweeping power in the White House as a senior adviser. Although he has pledged to recuse himself from potential conflicts and sold many assets, some of those sales have been to trusts controlled by family members. Honeywell has billions in federal contracts, and development of the site probably would involve a range of federal funding requests for infrastructure improvements to roadways and nearby light-rail lines.
“It’s a good sign that they are pulling out,” said Larry Noble, general counsel of the Campaign Legal Center. “Though the question is whether or not it’s just because of the publicity or because they actually see there is a potential conflict of interest in these situations.”
Kushner Cos.’ withdrawal from the Honeywell negotiations comes as the family faces pressure for the entanglements inherent in its business-expansion efforts.
Last weekend, Kushner Cos. executives held meetings in two hotel ballrooms in China, trying to raise money for a separate and troubled Jersey City construction project. Part of the money will come from a controversial program that provides visas to investors. News coverage of that effort spurred criticism of the company. Mayor Fulop linked to a story about the Chinese fundraising when he announced Sunday that the city rejected the family’s application for tens of millions in city tax breaks on the project.
And in March, a Kushner plan to refinance its financially struggling office tower at 666 Fifth Avenue in Manhattan collapsed after news reports revealed the proposal involved billions of dollars from Chinese conglomerate Anbang Insurance Group Co., which has close ties to the ruling party.
In Jersey City, a liberal Democratic stronghold, Kushner Cos.’ close connections to Trump have sparked protests, causing problems for its projects in the community and complications for Fulop.
A Democrat running for reelection this November, he has been criticized for his warm relations with both Jared Kushner and his father, Charles, chairman of the family’s real- estate ventures. As the Kushners were developing Trump Tower in Jersey City in 2014, they hired one of Fulop’s closest political strategists to work as an expediter on the project. Kushner Cos. and its executives also donated to various funds that supported Fulop’s re-election campaign this year and brief run for governor last year.
Bill Matsikoudis, Jersey City’s city attorney and a Democrat running against Fulop this year, said Kushner Cos.’ withdrawal from the Bayfront project is good news for taxpayers.
Selling in Increments
“I’ve always thought it was best for the city to sell it off in increments to multiple developers,” said Matsikoudis, who brought litigation against Honeywell that helped lead to the Bayfront project. “That way, the future of this important area of the city isn’t tied to the fortunes of a single particular developer.”
Albiez, Fulop’s chief of staff, rejected allegations that his administration gave the Kushners favored treatment.
The Kushners’ withdrawal takes them out of the running for a potentially lucrative project. Similar efforts in the New York City area have been goldmines for some developers. In Brooklyn, David Walentas bought up 2 million square feet of dilapidated industrial buildings on the waterfront and minted a billion-dollar fortune by converting them into an upscale neighborhood of cobblestone streets, art galleries and boutiques now known as Dumbo. Stephen Ross, already one of the world’s richest men, created Hudson Yards, a 28-acre project including the site of a former rail yard on Manhattan’s far-West side, abutting the Hudson River.
Jersey City’s plans for the site are grand, and could include housing for as many as 20,000 residents, 1 million square feet of office space and 600,000 square feet of stores. Last year it granted $2 million in tax breaks to Honeywell for the construction of three parks.
The site, which runs along the Hackensack River on the west side of Jersey City, became contaminated in the first half of the 20th century, when Mutual Chemical Company used it to dump what was then known as chrome ore processing residue, a byproduct from making stainless steel, from a nearby plant.
To contact the reporters on this story: David Kocieniewski in New York at [email protected]; Caleb Melby in New York at [email protected] To contact the editors responsible for this story: David Papadopoulos at [email protected] Ethan Bronner, Melinda Grenier
© 2017 Bloomberg L.P