National News

In Jersey City, It’s Kushner vs. Kushner in a Race to Develop

Posted May 21, 2018 9:36 p.m. EDT

JERSEY CITY, N.J. — The decadelong blood feud between the Kushner brothers, Charles and Murray, has already put one brother in jail.

Now, the men, who haven’t spoken in 15 years, are rivals in the development of Journal Square in Jersey City, the site of one failed project after another for the past three decades.

Their ability to get along — or not — could affect this important corner of a rapidly changing city of 264,000 people.

Journal Square is less a neighborhood than a maze of streets occupied by a bus depot and a PATH station, dowdy retail, a community college, low-income housing and a restored landmark theater converted into a Jehovah’s Witnesses Assembly Hall.

The Kushner brothers have both placed bets that they can lure young people fleeing high-priced Manhattan and Brooklyn to the area. They are each building three luxury towers with a total of 3,977 apartments on 388 floors in the six buildings.

Murray Kushner completed his first tower, a 53-story, dark-glass and white-paneled building and he has started work on the second, a 71-story behemoth.

But Charles’ site, arguably the better parcel on the south side of the entrance to the transit center, sits empty and forlorn. Over the last year, he has jettisoned a partner and anchor tenant, feuded with the mayor, and lost a generous helping of state and city tax breaks, as well as a source of financing.

While Murray Kushner may not otherwise care about his brother’s woes, in a twist of fate, the two may very well need each other to succeed.

“You need condos, rentals, restaurants, nice stores and whatnot,” said Arnold Bettinger, a member of the city’s planning board whose family owned Bettinger’s on the Square, a liquor store in Journal Square for 55 years before it closed in 1987. “It’s been empty a long time.”

No matter what they think of one another, said one person who knows both brothers and requested anonymity so as not to be drawn into the feud, “In this case, they’re oddly aligned. They need each other to make their projects work over time.”

Partisan politics also complicates matters.

Charles Kushner is feuding with Mayor Steven Fulop, who once welcomed him and his son Jared to Journal Square and favored tax breaks and subsides for their $900 million project. Last month, Fulop’s administration rejected giving the developer a tax break, notifying Charles Kushner that his project was in default.

“They’re punishing us because Jared works in the Trump administration,” Kushner said in an interview.

Fulop said in a statement that after six years of negotiations and delays, “there was little evidence that the project was moving forward in earnest. Due to these failures to meet certain conditions of the redevelopment agreement, the city had no choice but to file the notice of default.”

Charles Kushner insisted that he is “shovel ready” to break ground in the fall. Despite Fulop’s turnabout, he said his project deserves a tax break to get the complex off the ground, for the good of the city and Journal Square. Kushner said he is unwilling to proceed without a subsidy or incentive from the city.

It remains to be seen whether Fulop will relent, or whether Kushner will sue the city and wait out the mayor as, he said, his land grows more valuable. Kushner’s April application to the city for a 30-year tax break and $8.9 million in city-issued bonds may ultimately make its way to the City Council, where Fulop appears to hold sway.

Charles and Murray Kushner were once close. They raised their families in Livingston, New Jersey, a well-heeled suburb with a large number of Orthodox Jews. Their homes were about as close as the two development sites in Journal Square. Those who know them say there was always a certain amount of rugged competition between the brothers. Each had his own real estate company, but they also invested together.

Charles Kushner, however, was also a powerhouse in the Democratic Party and a major contributor to party causes.

In the early 2000s, the brothers squabbled in court over the amount of money that Charles poured into political campaigns and charities. The U.S. attorney in New Jersey, Chris Christie, took notice, opening an investigation into whether political contributions and other expenses were wrongly listed as business expenses on tax returns.

Charles Kushner assumed his brother and a sister were assisting the investigation. Incensed, he retaliated in a way that made even some of his friends gasp. He ordered the videotaping of his sister’s husband engaging in sex with a prostitute he had hired, then had the video sent to his sister.

Charles Kushner pleaded guilty to witness retaliation, tax evasion and illegal campaign contributions in 2004 and went to prison in Alabama. After he got out in 2006, Charles Kushner sold his house in Livingston, moved to Manhattan and refashioned himself as a New York mogul. Jared became chief executive of Kushner Cos.

Would the brothers ever reconcile? “Perhaps, if Charlie hadn’t gone to prison,” said Alan R. Hammer, who has known Charles Kushner for 35 years. “It’s like a bad television movie.”

Murray and his son Jonathan, who runs KRE Group, or Kushner Real Estate Group, got to Journal Square first.

In 2013, the city granted their complex, called Journal Squared, a 35-year tax break and provided $10 million in bonds for public improvements, while the state granted up to $33 million in tax credits over 10 years. The first tower in the project, with 538 units, opened last year and was fully leased by the end of 2017.

Murray and Jonathan, who declined to comment for this story, broke ground last year on the second tower, although work appears to be moving slowly. “Every building that goes up there will contribute to the success of the Journal Square renaissance,” said Charles Kushner of their projects. Kushner typically does not discuss his brother.

Late in 2014, Charles and Jared, in partnership with the KABR Group, bought the 2-acre site for what is now called 1 Journal Square, two towers sitting above a 10-story base, near the entrance to the PATH station.

They already owned a parcel across the street, where they planned a third tower, that includes the former home of The Jersey Journal.

The competition between projects is fierce in a city where there are 6,000 apartments under construction and 22,000 units in the pipeline.

Jared Kushner brought in a new partner and tenant, WeWork, for the two-towered complex at 1 Journal Square, which was to include co-working space, a business incubator and dormlike living called WeLive.

With the support of Fulop, the Kushners won $34 million in tax breaks from the state in 2015 and an additional $59 million for the innovative WeWork portion of the building. The following year, the city’s planning board approved the master plan for the project.

But by 2017, Jared had left the company for the White House. Charles said he decided to cut his ties to WeWork and build more conventional, market-rate apartments. As a result, the state reduced the total tax credits for the project to $33 million from $93 million.

In May 2017, Jared’s sister Nicole generated a storm of controversy when she sought to raise $150 million for 1 Journal Square from Chinese investors in Beijing and mentioned her brother’s role in the Trump administration.

Fulop, who was running for re-election in heavily Democratic Jersey City, went public immediately with his opposition to hefty tax breaks for 1 Journal Square. The innovative aspects of the project were lost with the departure of WeWork, the city contends. Since then, the Kushners have said that they will no longer use the federal program popular among developers that trades a path to citizenship to foreigners who invest $500,000 in U.S. projects.

Last September, however, the planning board approved Charles Kushner’s revised plan for the project. In April, his company filed a new application for tax breaks and bonds from the city. But Fulop has remained publicly opposed to provided the Kushner project with any tax breaks, contrary to the mayor’s position on other projects, including Murray Kushner’s Journal Squared.

That left Charles Kushner furious. He said that Fulop acknowledged last fall in a telephone conversation that Kushner was being discriminated against for his ties to the White House.

Asked about Kushner’s account of the phone call, the mayor’s office did not specifically address the matter. The mayor did point out that 1 Journal Square failed to start construction Jan. 1, as required by the development agreement, and questioned whether Kushner has the financing to proceed.

“The Kushner project in Journal Square is in default for a number of a project-related issues,” Fulop said in a statement, “not the family’s connection to the White House.”

Charles Kushner acknowledged that Murray’s project, as the first big complex in Journal Square, deserved its generous tax breaks. But that doesn’t mean that he should get nothing, he said.

“We are front and center in Journal Square,” Kushner said. “We are certainly entitled to some sort of tax abatement for enhancing the area.”