The Hoboken Yard redevelopment would easily be one of the largest construction projects in New Jersey, spanning nearly 10 blocks. | Facebook State decision on flood wall threatens massive Hoboken development

A massive economic development project that would sit on some of the last untapped real estate in downtown Hoboken appears to be on life support as New Jersey officials consider building a storm-surge wall right in the middle of the 50-acre site.

The Hoboken Yard redevelopment — a proposal that’s been in the works for more than a decade — would easily be one of the largest construction projects in New Jersey, spanning nearly 10 blocks and encompassing 2.3 million square feet of commercial and residential space. The outlines of the endeavor already have the blessing of the city, which declared the area in need of redevelopment and released a plan for the site four years ago.


But all of that, along with $80 million in improvements to nearby NJ Transit facilities, could evaporate when Gov. Phil Murphy’s administration decides where, exactly, to build an 11-foot wall that’s supposed to reduce flooding in the city, much of which sits below sea level. The storm barrier, as well as other components of the federally-funded Rebuild by Design project, need to be completed by the end of 2022 or the state will have to forfeit what remains of the $230 million grant.

State officials, preparing to making a final ruling on the wall, are making clear their main focus is on getting it built soon, as well as avoiding potential problems for NJ Transit, which owns the development site and the rail yard to its south. The decision is in the hands of the Department of Environmental Protection, which is overseeing the post-Superstorm Sandy resiliency work.

“The DEP, the Governor’s Office, New Jersey Transit and Hoboken are focused on ensuring the Rebuild By Design project protects Hoboken from flooding,” Caryn Shinske, a spokeswoman for the department, said in a statement. “We, along with the Governor’s Office, are mindful of potential impacts to New Jersey Transit and understand that the location of a wall located further within Hoboken [rail] Yard would have a greater impact on operations.

“Accordingly, the $230 million budget for the project, as well as the federally required 2022 completion deadline, will be the primary factors in choosing a location for the southern wall while also considering New Jersey Transit’s needs and the Hoboken Redevelopment Plan,” she said.

Those involved in discussions about the wall and development site say the state is leaning toward an option for the wall that would, in a best case scenario, require a dramatic reduction in the size of the real estate project. About a million square feet could be salvaged, along with a rebuilt bus terminal, a re-activated ferry terminal and improvements to the historic train station.

But even that is unlikely to happen if some minor changes aren’t made to the wall’s design, these people said. The changes would place some additional burden on NJ Transit, affecting at least one track in the rail yard.

The designated developer for the project, LCOR, said it was not giving up hope a compromise can be reached.

“Hoboken Yard is a first-of-its-kind, public-private partnership that would create thousands of jobs and significant annual tax revenues for the State and City of Hoboken, while also providing NJ Transit with substantial non-fare box revenue and infrastructure improvements,” Brian Barry, a senior vice president at LCOR, said in a statement. “Through continued collaboration with our public-sector partners and the leadership of the Mayor and Governor, we are confident that the immense economic opportunity here will not be lost.”

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NJ Transit stands to make more than $200 million off the land on which the real estate project would be built if the proposal were to move forward in its full form, according to the developer. But that would require the wall be built in an area that would interfere with the train tracks that run into Hoboken Terminal, adding costs and logistical challenges for a railroad already facing a slew of problems.

One state official, while not dismissing the $200 million figure, said NJ Transit does not expect to make a significant amount of money off the real estate project, regardless of the outcome of the wall’s design, and what it does realize could come far down the road. Add to that the costs and challenges of accommodating a wall design that works for the developer and there’s even less value there for the state, the official said.

Kevin Corbett, the executive director of NJ Transit, said the agency did not make a specific recommendation to DEP about where to put the wall, but told the department and the governor’s office what challenges and costs would be involved in accommodating the various alignments under consideration.

“We are cooperating with DEP, LCOR and Hoboken, and we’ve made it known what the impact of the wall on the various locations in our yard would be — and the costs related to that,” Corbett said in an interview Friday. “We’re awaiting the outcome of their talks on where best to site that wall in a way that can accommodate LCOR, but without adversely impacting our operations.”

The debate about where to place the resiliency wall had nearly come to a conclusion under former Gov. Chris Christie, with his administration selecting an option that would have placed it near the edge of Observer Highway, the road that runs to the north of the development site, essentially killing the project.

But local officials did not give up, with the City Council passing a resolution urging the state to find a better solution, and freshman Mayor Ravi Bhalla writing to the DEP and state Department of Transportation urging the state to find an approach that accommodates “both the mass transit and economic development interests of New Jersey Transit in a manner that does not compromise” the city’s flood protection plan. After that, the state began weighing other options, including the one that would allow for some of the project to be built.

Bhalla, whose city faces flooding issues after every rain storm, said he’s eager to find an approach that works for everyone even as he, too, counts the resiliency project as his top priority. He said he’s convinced NJ Transit, with all the land it owns, is “sitting on a goldmine.” He urged the state to find a way to make the development work.

“I think a decision needs to be made soon. Hoboken’s concern is that we don’t want the funding to be at risk at any time. There are uncertainties out there that concern us,” Bhalla said last week. “That said, our ideal outcome would be a win-win where the project could be completed while still offering the state of New Jersey the economic development opportunity’s full potential that lies in that part of Hoboken.”

The building trades are also pushing the state to preserve the project.

Kate Gibbs, who leads business development for the labor management fund of Operating Engineers Local 825, said the union has been supporting the project for five years and does not want to see it killed.

“We believe that this project has many benefits for the state of New Jersey, the city of Hoboken and for non-fare revenue for New Jersey Transit,” Gibb said. “We hope that DEP and New Jersey Transit and the state will come to a decision that both protects Hoboken — provides storm resiliency for Hoboken and meets the deadline — but also allows for this major economic development engine to move forward.”

Others were far more blunt, saying privately that there were frustrated the state was actually considering an outcome that would kill the entire project.

“The governor, led by bureaucrats at NJ Transit, is pissing away tens of millions of dollars in revenue that could go toward needed infrastructure improvements, the Hudson [River] tunnel and to keep fares down,” one person familiar with the project, speaking on condition of anonymity to not upset the ongoing discussions, said of the decision on the wall. “They’re doing this all to protect a portion of barely-used track. It’s mind-blowing that a lay-up like this for the governor is potentially on the ropes.”