How Hoboken Lost Its Movie Theater, The City Failed Its Residents And Why Developer Givebacks Are Questionable .
Developers commonly offer a giveback for approval to build a larger building than would otherwise be permitted by the city. However, these often do not work out well, our previous movie theater is just one example.
On July 16th, 2017 an investment firm called “Hoboken Theater LLC” purchased a moderately successful, 8 year old, five theater multiplex. Parking, cash flow issues and a lack of recent blockbusters were a concern for Bow Tie Cinemas, who eagerly accepted the $1,350,000 cash offer. The property was new, modern and in great condition, but as part of the developer giveback it could ONLY be used as a multiplex theater, in perpetuity. In 2017, $1,350,000 represented a discount of about 75% to market price for commercial space in Hoboken. In fact, the offer was less than the assessed value of the property. Considering the space could only ever be a movie theater and the theater had only been minimally profitable, the offer price for the 20,000+ square foot property was fair.
It would turn out to be a brilliant investment for “Hoboken Theater LLC”. “Hoboken Theater LLC” is not, as the name would suggest, a movie theater operating company. It was simply a holding company registered one month before the theater purchase by Jonathan Vogel, listed at 141 Ayers Court, Suite 1A in Teaneck. The company shares an address and suite number with Solomon Builders (https://www.solomonb.com/) and Mr. Vogel is listed, still today, as Solomon Builders founding partner and Managing Partner. Solomon Builders, a real estate development company, lists no experience or interest in the movie theater business on their website. As the purpose of the movie theater purchase was not actually to operate the movie theater, it is more accurate to refer to the owner of the movie theater as Solomon Builders rather than “Hoboken Theater LLC”, which is how I will identify the firm.
Once purchased, the building continued to operate as a movie theater temporarily, keeping young people employed and maintaining a Hoboken amenity. Costs were cut where they could be, and for a couple years the theater would break even, making a small profit or taking a small loss. However, the movie theater was never the intent of the investment. The strategy was to convince the public and the city that the movie theater was not viable. If the city eliminated the requirement that the site only be used as a movie theater, the property would be much more valuable.
The theater closed for a portion of the pandemic in 2020, reopened, and closed again. Solomon even received pandemic grant money for movie theater! Finally Solomon Builders made an agreement with Hoboken Grace Church, contingent on the Church gaining approval for a broader use. Hoboken Grace Church was a perfect partner for Solomon Builders. The church could more easily lobby the city to allow a broader use than a developer. Also, since the church would not need to pay property taxes to the City Of Hoboken, they could afford to pay a premium to purchase the property.
On September 29th, 2021, Hoboken Grace along with a half dozen local charities and youth organizations lobbied the Hoboken City Council to allow a change of use for the space, broadening the use from “Movie Theater Only”, to “almost anything”. Upon the successful change of use, not needing to pay property taxes on the space, and badly wanting much needed space in Hoboken, Hoboken Grace purchased the property from Solomon Builders for $13,390,661, a profit of over $12,000,000 and a 991% return on investment for a property held just a few years by Solomon.
Last week I attended the All Schools Open House event at Hoboken Grace. While the event was successful, it was depressing to be inside one of the previous screening rooms, knowing that my 4 year old daughter will never have a movie theater in Hoboken. Don’t get me wrong, this was in no way the fault of Hoboken Grace. I’m happy at least Hoboken Grace bought the space and will continue to use it for community driven purposes. At the same time, it’s clear that this transaction was a failure for all Hoboken residents because the investment firm profited $12,000,000 on our backs and out of our pockets. The original “giveback” was a public amenity in exchange for a sacrifice residents made. Now we have both made the sacrifice and lost the public amenity. The city council should never have terminated the giveback and allowed the change of use. While it may not have been a good business for Solomon Builders, as the owner of an entertainment business in Hoboken, I know the movie theater was a viable business given the property value commensurate with the “theater only” use. It is distressing for me to see the city and city council repeatedly getting one-upped by privately held companies as is similarly the case with our Union Dry Dock property and making the wrong decision for the constituents of Hoboken.
The loss of the movie theater was a failure of Team Bhalla and the entire current city council. Your vote on November 7th matters. Vote for true independents on November 7th. I’m running for city council in the sixth ward. I would also like to see Paul Presinzano and Liz Urtecho also be elected because simply: we can and should do better.