Fifty feet beneath the choppy waves of New York Harbor is a layer of contaminated sludge that New Jersey Governor James E. McGreevey once vowed would never be pulled up onto land in New Jersey. But, a year after Mr. McGreevey’s inauguration, scows continue to blast through the harbor floor, sucking the muck into barges and leaving the harbor some five feet deeper-an accommodation for newer ships that need deeper harbors, like those in Halifax, Nova Scotia, or in Baltimore.
It’s a program that the Port Authority accelerated last August, at Mr. McGreevey’s urging. And a real-estate deal in the Meadowlands hinges on just how much of the “dredge spoils” the scows produce, and who will compete to use the treated sludge to cap off toxic sites in New Jersey so that they can be developed into lucrative real estate.
A player in one such deal is Charles Kushner, the embattled Port Authority board member and real-estate magnate who is preparing to become chairman of the agency-the agency that is paying for the dredging in the first place. Mr. Kushner’s spokesman, Howard Rubenstein, has confirmed that the developer is negotiating with EnCap Golf Holdings, a Florida-based company that builds golf courses on capped waste sites, to develop a residential development and golf course in a North Arlington, N.J., meadowland that was previously home to a waste-transfer station.
The Meadowlands deal has New Jersey Republican insiders furious with the McGreevey administration because, they say privately, it appears to benefit Mr. Kushner, increasingly a polarizing figure in Garden State politics and one of Mr. McGreevey’s top fund-raisers. Mr. McGreevey appointed Mr. Kushner to the agency’s board and is supporting his candidacy as chairman.
The State Assembly’s Republican conference leader, Alex DeCroce, is sharpening his knives, trying to find a way to formally ask Mr. Kushner to stand down as a candidate for chairman. Mr. Kushner was expected to take the seat before next April; then a hailstorm of legal proceedings against him came to the attention of Republican lawmakers in New Jersey. But the controversies over a legal battle between Mr. Kushner and his brother became public after the New Jersey Senate’s judiciary committee had approved his nomination to the Port Authority board in early 2002. Now, according to Port Authority rules, it only takes a vote from the rest of the board to make him the chairman.
But New Jersey and Albany political insiders say that Mr. Kushner’s appointment isn’t just raising eyebrows in New Jersey. On this side of the Hudson River, Governor George Pataki’s Republican appointees to the Port Authority board are making unfriendly noises, too, sources say. “There’s an old guard at the Port that maybe doesn’t like the way Kushner does business,” one source said.
A whispering campaign against Mr. Kushner in Albany has put pressure on board members to consider their vote closely, even though tradition has it that New York’s Governor appoints the agency’s executive director and New Jersey’s Governor appoints the chairman, with no meddling in each other’s appointments. But over the Christmas holidays, rumors abounded in New Jersey that the McGreevey administration was close to dropping Mr. Kushner as its choice for chairman-rumors McGreevey officials waved off in interviews with The Observer.
“We still stand by him,” said spokesman Kevin Davitt, repeating his earlier statement that Mr. Kushner’s legal troubles would be handled by the courts in due time.
One thing is for sure: Growing opposition on both sides of the Hudson will test the McGreevey administration’s thus-far-unwavering commitment to Mr. Kushner. “Frankly, we think there may have been some mistakes made-and if they have, they should certainly be questioned,” Mr. DeCroce said. “What we’ve said is that we thought he should stand aside until the ethics part of this whole thing is cleared up.
“We can certainly make some noise,” Mr. DeCroce added.
Political enemies of Messrs. Kushner and McGreevey in New Jersey had been buzzing about the Meadowlands sludge deal for months. Last July, the New Jersey Meadowlands Commission, controlled by Mr. McGreevey, rewrote its deal with EnCap-the company with which Mr. Kushner is negotiating-to reduce the financial commitment the company would have to make to complete the development deal with the commission. While estimates vary on what the original plan would have cost EnCap, two independent accountants cited by The Record of Hackensack pegged it at $121 million over the 99-year lease term it envisioned.
The new deal rewrote an agreement made under former Governor Whitman’s administration that would convert the brownfield into a golf course using dredge material from the New York harbor. Any developer seeking to build on the site, however, would have to find a way to cap the site so that toxins would not continue to leak from it, or contaminate whatever development they might erect on the site, especially housing developments. Meanwhile, over the years, engineers have found ways of treating dredge and making it into soil that can cap toxic sites. The development changed environmental tactics-groups that in the past had been opposed to harbor dredging now accept it grudgingly, as it can be used to convert brownfields like the one in North Arlington into clean sites with productive uses.
Developers in recent years have come to appreciate dredge spoils because they open up new development opportunities in brownfields-and because dredgers pay a fee to developers to take the dredge off their hands. The prices developers get to take the dredge have gone down in recent years. The Whitman deal, orchestrated by then–Meadowlands chief Alan Steinberg, was based on the developer receiving $63 per cubic yard for using the dredge spoils. Meadowlands officials have pointed out, however, that no deal to take the dredge spoils at that price has been worked out. With more developers competing to take dredge spoils and less of it to go around, the prices that dredgers pay has gone down, they say.
As a result, EnCap has revised its accounts of the costs of developing the Meadowlands site. And the Meadowlands commission has since amended the agreement, significantly reducing the financial burden that EnCap and its partners-including, potentially, Charles Kushner-will pay to develop the site.
But there is no guarantee that the sludge fees EnCap would receive will remain at that low level. Indeed, the price of dredge can vary wildly based on any number of factors.
“We paid $118 [per cubic yard] to take material to Utah; we’ve paid nearly $70 to go out to Pennsylvania, $50 for a number of projects in the region,” said a spokesman for the U.S. Army Corps of Engineers, which is coordinating the dredging for the Port Authority. “Now we’ve got some competition in this market, and a few sites where folks are competing [to take dredge spoils], so it has brought the price down.”
What’s more, the dredgers’ contracts-which are themselves based in part on the costs they incur finding placement for their dredge spoils-are ratified by the Port Authority in its capital plan. That’s one reason the involvement of developers in the Port’s capital plan has been controversial before: If the Meadowlands Commission approves EnCap’s bid to increase the amount of residential units built on brownfields in North Arlington, Mr. Kushner is expected to sign on. Then he’ll be part of a deal that depends for its profitability, in part, on a fee for taking dredge spoils that the Port Authority can determine. What’s more, with competition raging for dredge spoils, there’s no guarantee that any one project will win a contract with a dredger to take spoils-assuming, of course, that the developers are not in a position of influence in the harbor-dredging project.
Mr. Kushner’s expected appointment to chair the agency is particularly important for New York as disputes between Albany appointees on the Lower Manhattan Development Corporation, which controls funding for the redevelopment of the World Trade Center cite, and the Port Authority, which owns the site, continue to set a grumbling tone for the redevelopment of lower Manhattan.
Mr. DeCroce has previously noted Mr. Kushner’s recent admission that he has made political contributions to Democratic causes throughout New York and New Jersey in the names of his employees and officers without informing them beforehand. In addition, The New York Observer and other news organizations disclosed potential conflicts of interest the developer would face as chairman of an agency with its own massive capital program for real-estate development.
The questions surfaced after Mr. Kushner was sued by his brother, Murray Kushner, and his former chief accountant, Robert Yontef. The suits detailed alleged misappropriation of company funds for charities and political causes. Mr. Kushner is a top Democratic donor in New Jersey, as well as in several downstate New York counties, and has been a major contributor to powerful medical and religious institutions throughout the area. Cardinal Theodore McCarrick, formerly the Roman Catholic Archbishop of Newark, calls Mr. Kushner a friend. Other Kushner friends include the Clintons, Rudolph Giuliani and Senator Charles Schumer.
But details of Mr. Kushner’s campaign and business dealings have remained largely unavailable to the press, the Senate Judiciary Committee and the Port Authority. The earlier lawsuit filed by Murray Kushner was sent into binding arbitration by the judge at the agreement of both parties; also at their agreement, all evidence and transcripts relating to the arbitration are sealed. The new lawsuit, filed by former Kushner accountant Mr. Yontef, claims the accountant was fired after he provided much of the evidence used by Murray Kushner in his case against his brother. The whistle-blower case is being closely watched by Kushner rivals for the possibility it will bring out evidence sealed in the earlier lawsuit, which some Democrats suggest privately may have been the motivation for Mr. Yontef’s suit. Indeed, on Dec. 23, Charles Kushner’s attorneys argued before the judge in the Yontef proceedings that the case should also be sealed. The judge rejected the move, but reserved the right to rule on individual pieces of evidence as they come up. That means that much of Kushner v. Kushner is likely to come into the public record as the Yontef case advances.
Meanwhile, critics pound the selection of a real-estate developer with so many economic-development interests in common with the Port Authority. Several weeks ago, Mr. Kushner said he would recuse himself from any voting on the future of a proposed office tower above the Port Authority Bus Terminal on West 42nd Street, in response to questions from The Observer about his involvement with one of the designated developers on the building, Vornado Realty Trust. Mr. Kushner negotiated with Vornado to buy the Monmouth Mall in Monmouth County New Jersey just after his nomination to the board of the Port Authority.
Mr. Kushner said through a spokesman that he would recuse himself from voting on the matter.
Whether as chairman Mr. Kushner can remove his influence from these and other projects that are tied to his personal fortunes remains to be seen.