CNB Archives 2011: The Tale of Holt, the Coast Guard Base, and the City of Gloucester City (2nd Part) -
Editor's Note: The second part of the series analyzes the lease arrangement made between the City and Holt for the former Coast Guard building at King Street and the Delaware River. How did Holt end up on the site that was once called the "Jewel" of the City's future waterfront development? Since 1996 Holt has used the building for their corporate headquarters. The first part of the series was a review of the sometimes rocky relationship between the City of Gloucester City and Holt Logistics. In 1984, Holt borrowed $5.6 million from the Urban Development Action Grant program to be used for the expansion of its terminal. Those two UDAG’s generated a total of $21.8 million for the City to use on various ventures. The first part also looked at how the UDAG funds were spent.
By William E. Cleary Sr. |CNBNEWSnet
GLOUCESTER CITY N.J. -- In 1988 (see video)the Coast Guard moved from their Base in Gloucester City, NJ to a new $20 million the facility in Philadelphia. The Coast Guard had occupied the 10 acres located on the Delaware River at King and Cumberland Street for 90 years. Although City officials hated to see the base closed they were excited to take ownership of the property. After all, with the right developer the ground could be converted into a tourist attraction. City officials began talking about building boat marinas, hotels, restaurants, even a new Gloucester City Municipal Building was suggested for the ground.
The former Coast Guard building which is now headquartered for Holt Logistics Corporation. photo by cnbnewsnet
Once the word got out that the base would be available the NJ State Police announced it was interested in it for a marine police station. Even though Holt said they were not interested in using it for expansion of their marine terminal the rumors persisted.
In the end, the City prevailed. On March 15, 1991, U.S. Senator Frank Lautenberg handed the deed to the property to Mayor Walter Jost. The cost to taxpayers, $1.
Today, some 23 years later, the dreams for the development of the City’s riverfront are still being talked about. Instead, of the City occupying the former Coast Guard building Holt Logistics is leasing the four-story structure for its corporate offices.
So what happened?
In 1996 during Mayor Chuck Billingham’s administration, a deal was struck with Holt on a project labeled Waterfront Restaurant/Retail Office Building. The plan called for the shipping tycoon to build a restaurant, boat marina, retail shops and a food court on the site. The agreement also mentioned a proposed conference/meeting/banquet center. The third level of the building was to be the main office of Holt Oversight & Logistic Services. There was no real time frame given for this project to begin or be completed.
In return, the City would lease the ground along with the building to Holt for an annual rent of $140,000 for 79 years beginning August 1, 1996, and terminating on July 31, 2075. There was a clause that called for the rent to increase annually based on the Consumer Price Index (CPI). The Lessee (Holt) shall make improvements to the premises totaling not less than $5 million during the Lease term it was stated in the agreement. The lease contained 40 sections spread out over 25 pages. Section 39 was devoted to mortgage financing. In order for the ground lease to remain in effect Holt had to secure a minimum amount of $2.5 million in financing within 90 days. Otherwise, the property would revert back to the City.
Six months later, on December 1, 1996, the Parties executed an Assignment whereby Crestmont, a Pennsylvania Limited partnership, owned by Holt, assumed the obligations agreed to by both sides in August.
According to the document at some point, Cresmont borrowed $700,000 from the City for renovations to the old Coast Guard Building.
But in between 1996 and 2001, something happened to cause the City to file a lawsuit against Holt in Camden County Superior Court. Holt filed a counter-suit. The legal matter resulted in a new agreement being negotiated. The original pact signed on August 1, 1996, between the two sides was terminated.
Part of the new contract called for Holt to pay the City $350,000 over a period of 84 months without interest. No doubt to pay off the $700,000 borrowed earlier by Cresmont to make repairs.
From the agreement, “Payments shall be made on the first of the month, commencing on May 1, 2001, or on the first day of the month after Bankruptcy Court approval in the monthly amount of $4,167.”
Cresmont remained the tenant and the Holt entities became the subtenants of Cresmont. The 2001 settlement also called for extending the lease for the Coast Guard building from 79 years to 99 years beginning March 1, 2001, at the annual fixed rent of $152,000. It stipulated without an increase for the length of the contract.
The two parties released each other from the conditions outlined in the August 1996 contract regarding the redevelopment of the Coast Guard property. Also claims that the parties may have against one another that alleged fraud and misrepresentation or default were dropped. The document was signed by Mayor Robert Gorman and Thomas J. Holt Sr. and dated March 16, 2001.
Commenting on questions about the agreement, Leo A. Holt president of Gloucester Marine Terminals said in a written statement, “I recall the circumstances of the US Coast Guard turning over the property to the City well. From the eventual turnover until the present day and across several administrations it was clearer that what the City did not want was a southern migration of industrial activity, instead a general desire by the governing body was and continues to be a successful mixed-use development. In an early iteration, a broad marina centered development called for the demolition of the former Coast Guard building. That development languished for a variety of reasons, mostly surrounding the difficult economics of the project.
“Some years later we discussed the construction of a new office building to accommodate our growth. The Coast Guard Building, which has a long history as you know as an immigration center and later the USCG, was fallow and in disrepair. In a daring agreement with the City, we undertook a complete reconstruction of the building, costing well over $2.5 million dollars. This is already 15 years ago nearly. The initial idea was to also develop the entirety of what is now known as Freedom Pier. The condition of the Pier required a great
deal of work (which the City has now undertaken very ably) but which made the various plans we presented difficult to achieve. In the meantime we expanded and contracted and expanded again, taking a lot of management focus. We negotiated a neighbor agreement with the City which reduced our rights to the building only and not the entire site. The City undertook stewardship for the planning and execution of the balance of the property.
“Together we created the extension of Monmouth Street and have worked cooperatively for achieving the overall success of the site.”
Holt was asked to further explain the 2001 agreement.
Did Cresmont file for bankruptcy?
“If you have the lease, which was later amended, you will see that the tenant is Crescent LP, a company that is not and never has been in bankruptcy. To say that would be inaccurate. Cresmont put over $2 million into the building and paid the rent, that and being a cooperative neighbor being a normal way to stay in a property on any kind of lease.
“As it relates to my father's former companies, he purchased a shipping line in the late nineties, the decline in that market caused a reorganization and eventual liquidation of his interests shortly thereafter. My family purchased the terminal from his former bondholders and always maintained our commitment to the City and you may have seen just finished the UDAG program.
“In the meantime, our long-term commitment to Gloucester City remains unchanged, including the recent event to celebrate the installation of the largest Photovoltaic (solar) array in North America, right here in Gloucester City.
“In the intervening years the concept of Freedom Pier was born and the plan evolved to include housing and mixed use. These were put in the hands of a different developer who has since gone. The collapse of the housing market/bubble is no secret and certainly no bad mark on the folks who thought it would be a solid foundation for part of the City's development, it is an international situation. The current administration stepped into the gap and has completed the Pier work and are doing a good job of bringing the project to fruition. We view the entire development positively and continue to cooperate with the many programs the City is promoting.”
When asked how many local people his companies employs he said, “Our census for 08030 folks averages about 165 and the Gloucester Marine Terminal contributes about $2.2 million annually to the City in terms of property taxes and pilots.”
As for the current status on the development of the old base, the James Administration passed a resolution at the June 6 work session meeting to enter into an agreement with the owners of Ott’s Bar, a Burlington County restauranteur, to discuss lease arrangements for the city-owned Freedom Pier site (King Street and the Delaware River). If our sources are correct the agreement calls for the owners of the new restaurant paying for the construction of the building (estimated at $1.6 million) and the City holding on to the ownership of the pier.
Recently the City has spent close to $400,000 on the Freedom Pier building a riverfront walk connecting the Pier to nearby Proprietors Park. Originally that work was scheduled to be completed by November 2010. We were told last month that the opening of the walkway has been delayed because security cameras need to be installed. The walk, pictured, is still not opened.
Questions for the writer said...
What is the amount of the investment to be made by the city?
Who are the owners of Ott's Bar?
How long will it take for Gloucester City to reach the financial break even point in this venture?
What are the fund sources that will allow Gloucester City to reach a break even point?
Who is brokering this deal for each side?
Reply Saturday, July 16, 2011 at 07:06 AM
- See more at: http://www.gloucestercitynews.net/clearysnotebook/2011/07/the-tale-of-holt-the-coast-guard-base-and-the-city-of-gloucester-city-cnbnewsnet.html#sthash.RAlZ5BAY.dpuf
- FIRST PART: The Tale of Holt, the UDAG, and the City of Gloucester City -cnbnews.net (gloucestercitynews.net)
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- cnbnews.net Video: Holt News Conference Announcing Start on Solar Panel Project at Gloucester Marine Terminal (gloucestercitynews.net)
- JUNE 2011 CHEERS AND JEERS -cnbnews.net (gloucestercitynews.net)
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