The film studio, touted as one of the largest commercial investments in Bayonne history, may also receive a rare incentive from the city: millions of dollars in government bonds.
The city is considering the issue as part of a negotiated deal with developer Togus Urban Renewal $65 million in bonds to 1888 Studios Project that would bring a film studio to the former Texaco Property near the Bayonne Bridge.
While the city often offers developers incentives in the form of PILOT (payment in lieu of tax) agreements, it has not offered redevelopment area bonds for a commercial project since 2015.
Why is Bayonne planning this this time?
Partly because the project is so unusual for the peninsular city and exciting in the eyes of the administration. The $900 million The project will transform a long-vacant oil refinery to a studio upon completion, up to 3,000 full-time employees will be accommodated.
“This particular commercial project will create several thousand jobs and will be the largest project to date in the City of Bayonne,” said Bayonne Law Director Jay Coffey, explaining the rationale for the merger.
Filmmaking revenue in New Jersey surpassed $500 million for the first time last year. The state recently increased tax credits for digital media projects from $10 million to $30 million.
Bayonne has also carefully weighed the risks and rewards and believes some safeguards for the deal will significantly reduce the risk factor if the project fails, Coffey said.
One of the safeguards is a $65 million letter of credit, a guarantee that if the developer itself fails to make annual bond repayments, a financial institution will do so on its behalf.
The second is a deed in lieu of foreclosure, which would allow the city to take over the property Chevron sold for $33 million in 2020 if defaults occur.
“We’re doubly hedged,” Coffey said.
The justice director said there had been a “tremendous amount” of negotiations surrounding the project, with the bond being one of the negotiating points.
It requires an application to the tax office and the approval of the city council. So far, it has not even been brought before the city council to be handed over to the finance council.
The project will also have a 30-year PILOT agreement, under which Toguz will pay the city $130 million.
Bayonne issued similar bond agreements for the redevelopment area for Prince Royal Corp. development. and the Bayonne Crossing shopping center. The city approved $17.5 million in bonds for the wine wholesaler’s Lefante Way warehouse in 2013, which were issued in 2015, Coffey said.
Bayonne Crossing’s 2009 bond agreement was $23 million.
The 17-building studio will occupy most of the 58-acre property that was previously a Texaco refinery. Construction is scheduled to start early next year.
It’s just one of several projects designed to transform former industrial sites in Bayonne’s Newark Bay Waterfront in commercial and residential centers with a waterfront public walkway.
Renderings of the project show an Old Hollywood-style Art Deco design being built by Turner Construction Company. In March it received the approval of the planning committee.