Three of the four landlords at Newark’s Gateway Center have filed an appeal to block a $250 million tax credit package awarded to their tenant, Prudential Financial Inc., which has been exploring a move within the Brick City.
The suit, filed Dec. 23 in state appellate court, argues the state Economic Development Authority on Nov. 9 approved Prudential’s application for Urban Transit Hub tax credits without notifying or consulting the three building owners. In the notice of appeal, attorney Peter J. Wolfson wrote that the EDA “failed to consider the devastating financial impact” of its decision on the landlords.
“If Prudential proceeds as proposed in its Urban Transit Hub tax credit application, it will vacate the Gateway Center buildings to the extreme detriment of the appellants, the city of Newark and potentially beyond,” the appeal reads.
The tax credits, worth up to $250.8 million over 10 years, were awarded to Prudential based on a plan to invest $368.9 million in a new office and renovations. The credits would be received over the course of 10 years, and require the creation of 400 New Jersey jobs, in addition to the real estate development.
EDA spokeswoman Erin Gold said the agency does not comment on pending litigation.
The landlords listed in the appeal — 2 Gateway Partners LLC, TPE Gateway III LLC and Lichter Gateway 4 LLC — lease to Prudential about 922,000 square feet of total space, according to the notice. Prudential’s existing leases run through at least December 2014, and include several five-year renewal options.
The dispute over the tax credit package was first reported in this week’s Grapevine column. It is at least the second legal challenge in less than a year against an Urban Transit Hub award, and follows Hartz Mountain Industries’ suit over an award given to the North American operations of Panasonic Corp. to move from Secaucus to Newark. Hartz eventually withdrew its lawsuit.
The latest appeal argues that Prudential did not satisfy the so-called net benefits test used when determining eligibility for state economic development incentives. The notice also said the EDA’s decision “violates the (landlords’) constitutional rights and treats similarly situated private entities disparately.”
Advance Realty, which owns One Gateway Center, is not listed as an appellant.