The nonprofit developer of a much anticipated hotel and conference center project in South Paterson filed a lawsuit against St. Joseph’s Regional Medical Center on Thursday seeking $400 million in damages.
Medical Missions for Children filed the lawsuit alleging St. Joseph’s Healthcare System breached the agreement to build a 14-story hotel and conference center on land owned by the hospital.
The lawsuit alleges the hospital broke the 99-year ground lease agreement to allegedly extort more money in lease payments from Medical Missions. The dispute over the lease agreement emerged in the summer when the hospital unilaterally announced it was stepping away from the project citing the lease was never ratified by the hospital’s board of trustees.
The lawsuit seeks the court to uphold the agreement signed by the hospital’s former chief-executive officer Bill McDonald in 2012. The next year, Medical Missions received a $105.5 million tax credit from the New Jersey Economic Development Authority to move ahead with the hotel project.
McDonald’s successor Kevin Slavin, the hospital’s new chief executive, came into office in late 2014 and began to question the validity of the lease agreement, according to the complaint. The hospital’s board of trustees expressed reservations about the hotel project in January of this year.
The developer has secured approvals from the planning board and the city council to move ahead of the project even while controversy raged over the validity of the agreement. The project was scheduled for groundbreaking at the end of July, but that never materialized.
In the meantime, the controversy over the hotel project has damaged relations between the two nonprofit groups that have been working together since 1999. Medical Missions says the hospital has shut down the group’s Giggles Theater Program which puts on shows and amusements for sick children and plans to evict the group from the hospital by the end of this year.
The hospital has described the lawsuit as having no merit. “The facts are clear and there is no basis for a lawsuit.” As the two groups take their dispute to court, the city looks to lose the $105.5 million in Urban Transit Hub Tax Credit Program.