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Kushners confront turbulence in New Jersey real estate plans

Jared Kushner, right, was chief executive of Kushner Companies until he joined the White House this year.
Brendan Smialowski | AFP | Getty Images
Jared Kushner, right, was chief executive of Kushner Companies until he joined the White House this year.

The Kushner real estate family, whose scion Jared Kushner is President Trump's son-in-law and close adviser, has run into more turbulence in Jersey City, where it has placed a major bet on development.

The Kushners have six projects under development in Jersey City — with square footage equivalent to two Empire State Buildings — the once blue-collar town that sits a mile across the Hudson River from Manhattan.

Now, after making the highest offer last year for a 95-acre waterfront parcel that would have been their seventh project, the Kushners said they have dropped out of the bidding for the site, where a Honeywell factory once stood.

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Kushner Companies, which is led by Jared's father, Charles Kushner, had bid as much as $125 million for the Honeywell site, which had been contaminated by chromium, with plans to build 3,000 apartments catered to Orthodox Jews who are being priced out of the Williamsburg neighborhood in Brooklyn.

Honeywell suspended the sale last year to obtain environmental approvals from the state and expects to resume negotiations later this year.

"A decision was made late last year not to pursue the project," James Yolles, a spokesman for the Kushners said Wednesday, "because the company was not persuaded by the economics of the deal."

The Kushners' decision to drop out of the bidding was first reported by Bloomberg.

But the mayor of Jersey City, Steven Fulop, also cast a shadow over an existing Kushner project: the $820.8 million, twin-towered complex known as One Journal Square.

A joint venture of Kushner Companies and KABR Group, the complex would entail 1,476 apartments, shops and office space. A third company, WeWork, which builds shared office spaces, recently dropped out of the project. Kushner Companies is negotiating to buy WeWork's stake in the project, according to the group's spokesman, Mr. Yolles.

Mr. Fulop announced Sunday on social media that the city would not support Kushner's recent application for additional subsidies, including tens of millions of dollars in property tax breaks over 30 years and $40 million in city bonds.

The development had already obtained state approval for more than $90 million in tax credits for the 10-story base of the complex and one of the two towers. With the loss of WeWork, that number has been cut to $34 million.

Last week, the city provisionally rejected the developers' request for additional subsidies because the components of the complex have changed over time and the total subsidy package would have exceeded anything the city has given other projects in that neighborhood. The plans, to be built in two phases, now call for more apartments and less office space than originally proposed.

"Our current proposal for One Journal Square would provide 4,000 sorely needed union jobs and $180 million in tax revenue for Jersey City over the next 30 years," Mr. Yolles said. He said that the developers had changed the project to focus more on residential and retail based on the market.

Jared Kushner was chief executive of Kushner Companies until he joined the White House in January. But last weekend, his sister Nicole Meyer alluded to the family's ties to the Trump administration when she pitched the Journal Square project to prospective investors in China.

Kushner and KABR recently eliminated some of the office space, which had garnered the state tax breaks, and expanded the number of apartments. Those changes will have to be approved by the city planning board, according to city officials, although Kushner disputes the necessity of that step.

The Kushners opened Trump Bay Street, a 53-story residential tower, in Jersey City last year. They have two commercial projects in the planning stages and a third residential tower in Journal Square, which would rise 72 stories with 741 units.