City of

JERSEY CITY
Law Department
280 Grove Street Fax (201) 547-5230
Jersey City, N.J. 07302 (201) 547-5229

April 6, 201 1

President and Members of the Municipal Council

City Hall-280 Grove Street
Jersey City, NJ 07302

Re: Resolution Approving The Settlement Regarding The Claims Between Roxy
Urban Renewal Company LLC and the City of Jersey City Arising from the
City's Lease at 201 Cornelison Avenue, Jersey City, NJ

Dear Council President and Members:

The purose of this letter is to explain the above resolution. The purose of the
resolution is to resolve all claims between the City of Jersey City (City) and the Roxy Urban
Renewal Company, LLC. (Roxy) arising from the City's lease of and move from, 201 Cornelison
Avenue. The settlement wil require the City to pay Roxy the sum of $333,952 and the paries
The only exception to the release will be claims, if any, that may
to exchange general releases.

arse as the result an ongoing investigation at 201 Cornelison by OSHA.

For decades, the City of Jersey City occupied 201 Cornelison Avenue for the
administrative offices at the Department of Health and Human Services (Deparment), a propert
it owned. After the Jersey City Medical Center vacated the Complex and moved to the new
facility on Grand Street, the City continued to occupy 201 Cornelison Avenue. In 2005, even
after the City conveyed title to the Jersey City Redevelopment Agency and then theJCRA
conveyed to the Roxy, the City never moved. In fact, Roxy allowed the City to remain in
occupancy free of charge.

However, in 2009, Roxy insisted that the City either vacate the propert or pay fair
market rent. As the result, on Januar 1, 2009, the City entered into a five- year triple net lease
agreement with the Roxy. The annual rent is $554,474 or $45,372 per month for the first year
with 3% percent increments each year thereafter, plus the payment of utility costs and a pro-rata
share of taxes. Under the lease, the City had the right to terminate the lease by providing the
landlord with i 2 months written notice.

On December 28, 2010, a substantial water leak occured at the building which caused
severe flooding and damage to the building. On December 29, 2010, the Roxy informed the
City in writing that the "building was not fit for occupancy." On December 29, 2010, the City
invoked its right to termináte the lease effective on December 31, 2011. The City also vacated the
building and relocated the offces to the HUB located at Marin Luther King Drive and 1 Joural
Squae.

Thereafter, the attorney for the Roxy informed the CitY that the City would stil be
required under the lease to pay rent to the Roxy until the termination date of December 31, 2011.
Because repairs to the premises would not be completed until March 31, 2011, the Roxy
demanded nine (9) months of rent or $433,244. The Roxy also claimed that additional damage
was done to the building during the City's move, including theft and vandalism and demanded
compensation for those damages.

As the result of negotiations between the parties, the City offered to pay the Roxy the
sum of $333,952, .immediately terminate the lease and exchange general releases excepting only
claims, if any, that result from the OSHA investigation. The Roxy has agreed to accept the
City's offer.

In my opinion, it is in the best interests ofthe City to settle all claims on the above terms.

Very truly yours,

WILLIA C. MATSIKOUDIS

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CORP. ORATIO.. NCOUNASEL 0 . ..

mlNNE MONAHN .
First Asst. Corporation Counsel

JM/cw/he
cc: Wiliam C. Matsikoudis, Corporation Counsel
John Kelly, Business Administrator
Dominick Pandolfo, Asst. Business Administrator
Robert Byre, City Clerk
Darce Toon, Director, Community Development