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The vacant lot just south of the Journal Square PATH hub is at the center of a lawsuit filed against Jersey City by the former developers of the property.

(Terrence T. McDonald | The Jersey Journal)

JERSEY CITY -- Jersey City is appealing a judge's decision from October that ordered the city to hand over $2.7 million to the former owners of a Journal Square property later purchased by Jared Kushner.

Hudson County Superior Court Judge Mary K. Costello's order stemmed from a lawsuit filed in July 2015 by three LLCs representing Maryland-based pension trust MEPT, the former owners of the lot. MEPT planned to build two towers on the property, a still-vacant lot across the street from the old headquarters of The Jersey Journal, and gave the city $2.7 million in 2009 after receiving two 30-year tax breaks.

The $2.7 million represents a combination of a $710,769 contribution MEPT made to the city's affordable housing trust fund and a $2 million upfront payment from MEPT that the city under then-Mayor Jerramiah Healy said would be credited against service charges collected once the towers opened, according to Costello's decision.

MEPT never moved on the project, and after it sold the lot to Kushner's Kushner Companies and KABR Group in December 2014, it asked Jersey City to return the $2.7 million. The city refused.

Kushner is President Trump's son-in-law and senior adviser. Kushner Companies and KABR Group are planning a different two-tower project for the Journal Square property.

A phone call seeking comment from the attorneys for the MEPT LLCs was not returned. They argued in court that the city acted beyond its authority by requiring the pre-payment in the first place and by keeping it after MEPT aborted its project, Costello's decision says.

The decision also shows the city argued the $2.7 million payment was part of a contract that the LLCs are bound by even if the project never commenced. The city told Costello the money has already been spent.

City spokeswoman Jennifer Morrill told The Jersey Journal the city is appealing because "we believe the judge made an error."

"We are appealing to protect the taxpayer's interests." Morrill said.

The city hired Morristown-based attorneys Pawar, Gilgallon & Rudy to represent the city for the appeal. The City Council is expected to approve a $50,000 contract with the firm tomorrow night.

In August, Jersey City won a victory in a similar case that also has a connection to Kushner. In that case, an LLC owned by Kushner and KABR Group sued the city to retrieve a $2.1 million pre-payment given to the city by the former developers of the lot now home to the new Trump Bay Street tower. Kushner and KABR Group argued that they inherited that $2.1 million credit from the prior owners of the lot, and won a victory in Hudson County Superior Court that was overturned in August by an appellate panel that sided with the city.

Terrence T. McDonald may be reached at tmcdonald@jjournal.com. Follow him on Twitter @terrencemcd. Find The Jersey Journal on Facebook.