Private Development of Fort Hancock in Gateway National Recreation Area Collapses for Lack of Financing

Plans to restore three-dozen historic buildings at Fort Hancock in Gateway National Recreation Area and run them as for-profit businesses have collapsed due to lack of funding. NPS photo.

In a turn of events that raises questions about the National Park Service's ability to conduct due diligence, the agency has declared null and void a 60-year-lease given to a developer eight years ago for three dozen historic buildings at Fort Hancock in Gateway National Recreation Area. This decision comes in the wake of six extensions given the developer to prove he had the necessary financing in place to handle the project.

The agreement between Gateway NRA officials and Sandy Hook Partners, LLC, and its president, James S. Wassel, has been the bone of contention between the agency and a small non-profit citizen's group that long has questioned the propriety of the deal. Under the lease, Sandy Hook Partners was given permission to rehabilitate 36 buildings at Fort Hancock, a long-standing military outpost (history attached below) that has been decaying on the NRA because the Park Service has lacked the funding to restore and maintain the buildings, and run businesses out of them.

The developer planned to spend $70 million-$90 million on restoring the buildings. Sixteen Officer's Row homes were envisioned as bed-and-breakfast inns. A dorm once used for U.S. troops was proposed to be transformed into classrooms for Rutgers University or perhaps Brookdale Community College. Mess halls, gymnasiums, even the old mule barn and the officer's club also were part of the deal. And the NPS would spend $2.2 million on a new dock so he could ferry conferees over to Fort Hancock from Manhattan.

But most of that collapsed Wednesday when NPS Northeast Regional Director Dennis R. Reidenbach announced that the Park Service had concluded that Sandy Hook Partners lacked the necessary financing to succeed, a point opponents long had questioned.

In accordance with the terms of the lease between the NPS and SHP, SHP submitted information in March and June that outlined its financing commitments for Phase I of the project. The NPS evaluated this information with the assistance of consultants at PriceWaterhouseCoopers, LLP and Capital Hotel Management, LLC.

Based on its review of all information submitted, the NPS has determined that the financing commitments made by SHP are insufficient to meet the purposes and requirements of the lease. Based on this determination, the NPS has notified Sandy Hook Partners President James S. Wassel that the lease is null and void.

Under the terms of the lease, SHP may request arbitration of the NPS determination that its financing commitments are insufficient.

This notice effectively stops any development plans and activities for 33 of the 36 buildings originally designated for rehabilitation. In 2007 the NPS and SHP entered into a separate lease agreement for three Fort Hancock buildings: the Chapel, Post Theater and the Headquarters building. SHP performed rehabilitation work on those three buildings and the lease for those buildings is not affected by the decision with respect to the original lease.

The decision was quickly applauded by U.S. Rep. Frank Pallone Jr., who previously had called for an investigation into the Park Service's actions over the lease.

"The National Park Service's decision today is a major victory for New Jersey and the Sandy Hook Unit of Gateway National Park," Congressman Pallone said in a release. "This is a tremendous opportunity for the state, the federal government, local universities and other public entities to become engaged in the restoration of Fort Hancock. It is important that any redevelopment plan does not include commercialization of our national park."

Earlier this year the New Jersey Democrat called on the Park Service to commit some of its economic stimulus funds to restoring Fort Hancock.

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Comments

I'm not sure how they're supposed to handle this. Commercialization within NPS units is very much a fact, whether it's a park concession operating lodging or more unique cases where private concerns have entered into long term leases. Golden Gate NRA in San Francisco has many buildings in need of repair. Some have been leased out to private parties, such as three of the historic Presidio barracks buildings to the Walt Disney Family Museum. Of course the Presidio has a unique mandate among NPS lands of being economically self sufficient.

The Congressman's use of the term "National Park" seems to be loaded - almost suggesting that we're talking some sort of commercialization of wilderness rather than a decaying building seeking some sort of useful rehabilitation.

Some of Mr. Pallone's supporters who opposed the historic lease, also said they wanted the NPS to focus only on the beaches, and were worried if these National Landmark buildings were fixed up, they would attract too many users.