Park 15X Allied Junction Parking

Deal Summary
  • Secaucus Brownfields Redevelopment, LLC ("SBR") seeks $48,960,000 in exchange for 50% interest in Phase I of its Allied Junction project, a.k.a. Park 15X as well as First Right of Refusal to meet capital calls for participation in Phase II; and again in Phase III.
  • 10.7% IRR on 10 Year Operating Pro Forma for initial investment in Phase I alone.
  • SBR can also offer alternate scenarios involving half equity/half debt (EIT loan at 2.5% requiring a back-up Letter of Credit).
  • Substantially increased projected returns can be demonstrated for Phases II and III.

Executive Overview
Following is a project summary and basic joint venture ("JV") deal structure outline for the SBR project known as Allied Junction, a.k.a. Park 15X site.

SBR owns two tracts of land located in the municipality of Secaucus, comprising a total of 65+ acres along the New Jersey Turnpike, abutting the Lautenberg Train Station. This is a nationally known and critically important location with regard to NJ/NY commuter activity providing immediate access to all major road & rail links between New York City and northern New Jersey in the heart of the Meadowlands, including certain key riparian rights relative to Phase III and zoned air rights relative to Phase II. Extensive legislative, governmental agency and political support are already well in place for all approvals, compliances, grants, loans and/or other required or desired applications in progress as of this writing.

Phase I of this three phase deal concerns the 31 acre parcel closest to the train station. An acceptable JV partner will be offered the right to participate in all three phases, commencing with an initial cash investment of approximately $49 Million for a 50% equity position.

 

For more information and the
10 year proforma for Phase I, go to 15xparking.com or contact:

Robert A. Kwartler
(201) 417-9812
robert@kwartler.com

 

History
Since the time SBR acquired the property in 1999, the site has been the beneficiary of almost $3.0 Billion worth of substantial infrastructure investments in the surrounding neighborhood. Some of those projects include the construction of interchange 15X off New Jersey Turnpike, the opening of the Lautenberg Rail Station, construction of the $150 Million rail link from the Lautenberg Train Station to the new $1.2 Billion MetLife Stadium (site of the 2014 NFL Super Bowl game), and development of over 1,500 residential units (Secaucus Xchange) less than a 1/4 mile away. Additionally, the $2.0 Billion dollar project currently known as American Dream (formerly known as Xanadu) is also accessible by rail from SBR's site.

Studies and reports concerning two other possible sizable projects at our front door have also hit the local media with relevant reverberations in the NJ/NY metro area. One is the extension of the Number 7 train from New York which will end at SBR's property. The other project is the possible construction of a new rail tunnel from NJ into Manhattan, called Gateway. If these projects materialize, the value of the property will further increase dramatically.

As part of its Phase I redevelopment plans for the property, SBR agreed to properly close the former landfill in accordance with all applicable regulations. In that regard, SBR has spent in excess of $4.5 million in environmental studies, engineering reports and landfill closure preparation work. Furthermore, SBR has improved the land by importing the necessary fill material. The fill importation already in place has an in-kind value of $10 million.

Once the sites are "capped," (also known as landfill closure), SBR plans to develop a large commuter "park & ride" facility for approximately 3,000+ cars, covered by a solar panel canopy creating a "power mini-grid" for the train station. Proposed vehicular access will be constructed as part of the redevelopment as envisioned in figure 1 further below. SBR has received preliminary consent from the applicable governing agencies for complete access. SBR has also designed a pedestrian access walkway from the site directly into the Lautenberg Train Station, completing all commuter aspects while producing solar energy to support it as well.

Following is a summary of the balance of the entitlement process.

I. Zoning
Unique and unlike most property in New Jersey and/or other states, the local planning board does not have jurisdiction over land use matters at this special & critical Transit Oriented Development ("TOD") Meadowlands location. The governing entity with jurisdiction is a quasi-state agency called the New Jersey Meadowlands Commission (NJMC). The NJMC is comprised of an Executive Director and Commissioners. Commissioners are appointed by the Governor. The Chairman is the State Department of Community Affairs Commissioner, Richard Constable. The NJMC employs an extremely well qualified and highly professional staff.

Application to NJMC for its undertaking of a Redevelopment Study concerning our property is already in play. As of right, SBR's property, being a former landfill, qualifies under NJ state law to be considered a Redevelopment Area with no other qualification required for such. NJMC has indicated that it will commence the study once approval is secured from the entities responsible for access and environmental compliance as noted below.

In addition to the above, SBR has secured municipal support for redevelopment of the property as evidenced by a Municipal Resolution of Approval passed by the Mayor and Council in 2013 (copy available). The municipality of Secaucus stands to become a substantial economic beneficiary of the proposed parking end use due in large part to its municipal parking tax which will generate approximately $1.8 Million annually from SBR's property. Once the Redevelopment Study commences, SBR expects the process to take about six (6) months.

II. Access / Past, Present & Future / Timeline
SBR's property is located immediately along the New Jersey Turnpike (NJTPK) at interchange 15X, which was built about 10 years ago for the general purpose of accessing this crucial area of the NJ Meadowlands for commercial & residential development. SBR's infrastructure and engineering firm, T&M Associates, has prepared an access plan proposing roadway construction from Seaview Drive Access, flying over the rails of New Jersey Transit Lines, landing on the northern tip of SBR's property (closest to the Lautenberg Train Station).

NJTPK has been very supportive of our past access efforts and has indicated its support in various official letters. NJTPK engineers are currently reviewing the site plan layout. SBR expects to have final resolution from NJTPK shortly, allowing the required license for SBR to cross over the turnpike. Upon SBR's expected receipt of formal approval from NJTPK's chief engineer, SBR will submit its formal application to the NJMC Board of Commissioners, expecting NJMC's approval to be issued by the end of summer 2014.

The NJTPK Authority operates with an executive director, chairman, and commissioners. The chairman is also the Commissioner of the New Jersey Department of Transportation, Jim Simson. Chairman Simson has toured the site and has acknowledged the tremendous potential that it has to help alleviate traffic congestion into Manhattan.

The second component of the access plan involves another state agency, New Jersey Transit (NJT). NJT also operates with an executive director, chairman, and commissioners. Again, the chairman of NJT is also NJTPK Chairman, Jim Simson.

SBR requires approximately one acre of land from NJT to complete the required assemblage. The identified land in question has already been deemed as surplus by NJT and NJT's conveyance to SBR will not negatively impact NJT operations. SBR expects NJT to issue a formal approval by the end of spring 2014.

Lastly, and rather significantly, Speaker of the NJ General Assembly, Honorable Vincent Prieto wrote a letter on March 13, 2014 to NJ Transit Executive Director, Honorable Veronique Hakim urging complete support for SBR's project – specifically, for SBR's proposed access plans.

III. Environmental
SBR has completed all environmental engineering necessary for the state agency, New Jersey Department of Environmental Protection (NJDEP) to issue approval for the closure and post-closure of SBR's property. NJDEP has advised SBR that in order for their approval to be issued, SBR must demonstrate financial assurance. In essence, SBR must show NJDEP that funding is committed in place to undertake the closure of the site.

Figure 1


IV. Deal Outline

Phase I / Commuter Park & Ride:
  • The total development cost to create the commuter park and ride is approximately $63.4 Million (inclusive of hard/soft costs).
  • The required capital to complete Phase I is approximately $48.9 Million.
  • SBR seeks a JV equity partner that will commit approximately $48.9 Million in exchange for 50% equity interest in Phase I plus the continuing right to participate at 50% equity interest in Phases II and III.
  • Any additional development capital required above the initial $48.9 million after closing will be contributed equally 50/50 by the two JV partners.
  • In exchange, SBR will contribute the land free and clear into the deal, as well as 50% interest in all grants, loans and/or other financing programs already applied for and/or in effect at the time of closing.*

*Alternatively:
  • SBR has submitted an application for a federal grant for the infrastructure improvement portion of Phase I. If SBR is successful in securing the grant, the required capital would decrease, which could proportionately reduce the equity requirement for the incoming JV partner, if the JV parties choose this alternative approach to the proposed JV partnership. For example: if, after closing, federal grants arrive providing $20MM then the equity JV structure would remain at 50/50 with each partner being entitled to equal distribution of the value of the grant proceeds.
  • SBR has applied for a loan from the State of New Jersey under the program called New Jersey Environmental Infrastructure Trust Fund ("NJEIT"). The loan proceeds would be used for the environmental landfill closure costs. All indications from the State of New Jersey are that the loan can be approved subject to either a 100% irrevocable letter of credit from an accredited institution guaranteeing the repayment of the loan over time, or the full faith and credit of a public entity. If the equity JV partner wants to lessen its capital contribution, SBR may consider entering into said loan agreement with the State if the JV partner provides a letter of credit. In that case, SBR would specifically negotiate the amount of equity the JV partner would receive. A positive facet of this alternative financing method is that the interest rate is approximately 2.5%, but conversely, it increases the cost of that portion of the project because it triggers prevailing wage.
Phase II / Hotel, Residential & Services Development:
  • TOD related hotel replete with retail services (a complete market study is underway);
  • Potential development of four 30 story towers of residential construction connected directly to the entire TOD;
  • JV partner will have the right to continue as 50% partner with all incumbent ownership benefits and development obligations.
Phase III / Convention Center & Marina:
  • Site is recognized by existing studies as a primary convention center location in North America with riparian rights possibly capable of supporting a world class marina;
  • JV partner will have the right to continue as 50% partner with all incumbent benefits and obligations.
  • Political indications are that the site may be deemed suitable as a casino gaming location to further support the convention center and augment existing hotel patronage at completed Phase II facilities.
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in New Jersey & New York

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