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Date: October 25, 1999

Section: Interview

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Title: Irving Cohen talks about the road leading up to the opening of the Jersey Garden Mall Author:

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Last Thursday, the 163-store Jersey Gardens Mall opened on 100 acres of land in Elizabeth that at one time was piled high with old tires and infested with rats. The much-anticipated redevelopment project, which includes an additional 66 acres, has been in the works for several years. Irving Cohen is president of OENJ Cherokee, the Bayonne-based brownfields developer that is the successor to the firm that purchased the property seven years ago and directed its redevelopment.

BUSINESS NEWS: What is OENJ Cherokee”s background? Cohen: In 1992, when what was then OENJ purchased the 166 acres, the company was run by two Danes, Peter Aagaard and Peter Pfeiffer. They got involved with the property when the owner of the furniture company, IKEA, which is headquartered in Copenhagen, mentioned there was this wonderful property close to the busiest IKEA in the U.S. The owner happened to know that OENJ was involved in distressed real estate. OENJ went on to purchase this real estate, which was a municipal landfill for Elizabeth.

BUSINESS NEWS: Aren”t landfills very difficult to build on? Cohen: Yes. OENJ needed to come up with a creative way to build up the landfill site to handle structures. Back then, the real estate market was depressed. The cost to fill up a site like that would have been extremely high. Instead, they developed a way to beneficially reuse recyclable materials, such as contaminated soil, coal ash and construction and demolition debris, as part of the capping of the site. These materials covered the landfill to the point where buildings could be constructed. Working very closely with the Department of Environmental Protection, OENJ was able to get permits to put these materials on the site as part of the remediation and redevelopment. There was no New Jersey legislation in place that would have allowed for a remediation of this type.

BUSINESS NEWS: Legislation to remediate brownfields has since been passed in the state. Cohen: It”s a lot easier and less expensive to get a deal like this done in New Jersey today than before OENJ started. To a great extent, many of the new laws are as a result of the efforts of OENJ. The OENJ project ended up proceeding through a very heavily negotiated consent decree with the DEP. Out of that consent decree came today”s roadmap for developers. A lot of sites in New Jersey are now being redeveloped through the capping process, which contains the contaminants on the site. The only way many sites can be economically redeveloped is if you”re allowed to leave some of the contaminants on-site. Developer Gene Heller was able a few years ago to cap a site in Jersey City that had chromium on it. It would have cost him $2 million an acre or $20 million if he had to remove the chromium. Now it”s a Home Depot. If OENJ hadn”t paved the way on the Elizabeth site, that Home Depot wouldn”t be there today.

BUSINESS NEWS: How long did the OENJ remediation project take? Cohen: It started in 1992, and got a boost in 1995 when the Environmental Protection Agency ended ocean dumping of contaminated dredge spoils. This site then immediately became a repository for dredged material from the harbor maintenance program. In 1996, 130 of the 166 acres were sold to the Glimcher Organization, a real estate investment trust, for the ultimate development of the Jersey Gardens Mall.

BUSINESS NEWS: When did you arrive on the scene? Cohen: I was with a company by the name of Cherokee Investment Partners, which has a $250 million fund dedicated to acquiring, remediating and redeveloping environmentally impacted properties. At the end of last year, we learned OENJ was looking for a partner with additional capital resources to be able to expand the operation. This April, OENJ Cherokee became the successor to OENJ, and our fund made its first investment in OENJ.

BUSINESS NEWS: How much did your fund invest in OENJ? Cohen: Tens of millions of dollars.

BUSINESS NEWS: Are you working on other projects? Cohen: The two Peters are still partners in the company. We own 20 acres on the waterfront east of the mall, and we”re in the process of planning a 650,000-square-foot Class A office project that will be marketed to the maritime and transportation industries. We own another 400 acres in Bayonne, 250 of which are in shallow water and 150 upland. We are very close to announcing a joint venture with a major regional golf course developer. We will fill this property with recyclable material, including dredged material, grade it and contour it so it conforms to the design of the new golf course. This will be the first golf course in Hudson County.

BUSINESS NEWS: Are people concerned about possible health threats at the mall site? Cohen: One of our biggest challenges is to show the public that this redevelopment project is an appropriate way to deal with the real estate. We need to demonstrate that capping poses no threat to health and safety. We mix the dredged material, for instance, with cement to contain any of the contaminants that exist. Our other challenge is convincing people of the structural integrity of the cap. With the Jersey Gardens project, we learned that we needed to take one and two-ton pieces of metal and bang them on the ground to force the compaction of the site. That prevents the ground from giving way when you put a building on it.

BUSINESS NEWS: So shoppers are going to want to come to this mall? Cohen: Yes, it”s pretty exciting. The beauty of it is that you”ve got an area that”s surrounded by the port, Newark Airport and the New Jersey Turnpike. We”re seeking permits for a ferry from Manhattan. The port is working on a light rail system that can bring people from the airport to the office site. The amenity of having that shopping center there is wonderful for the office building we plan to build. It”s very difficult to build an office without amenities. These things feed upon each other and work together. A lot of real estate developers need a clean piece of ground where they can build a building, market it and get tenants. It”s cut-and-dry. Whereas the interplay with our kind of deal is very involved. You have to have a lot of patience with brownfields transactions.