Tensions flare over Jersey City Pompidou project

A threat by the state last week to pull funding for a prestigious museum project in Jersey City has led to inflamed tensions and back-and-forth here in the Garden State.

NJBIZ caught up with Jersey City Mayor Steve Fulop and New Jersey Economic Development Authority CEO Tim Sullivan Wednesday for an update. Both held their respective grounds regarding the matter.

As previously reported April 26, the NJEDA wrote a letter to Jersey City Redevelopment Agency Executive Director Diana Jeffrey. The correspondence highlights the JCRA’s operating budget shortfall of some $19 million and expresses concern about releasing funding for Centre Pompidou x New Jersey . The project aims to create the Garden State’s own version of the Paris Museum and serve as a catalyst in the city’s Journal Square revitalization.

Even before the letter, the project had become a bit of a political football.Republicans in the Legislature have used it as an example of overspending by Democrats.

The project earmarked nearly $58 million in state funding ($34 million at NJEDA and $24 million at Department of State), including a last-minute $24 million during the last budget cycle, which incited Republicans.

Dear John

“Thank you for sharing the updated operating model outlining the revenue and expense projections on March 28, 2024,” Sullivan wrote last week. “We have taken time to review the plan in depth, and it is evident that strides have been made in identifying funding sources, including substantial state appropriations and potential tax credits under the recently enacted Cultural Arts Incentives Program. However, it is also apparent that the persistent operating gap continues to pose a substantial challenge. Based on the information you provided us, JCRA has identified annual revenue of slightly less than $4 million annually, and recurring expenses of more than $23 million for an annual operation shortfall of approximately $19 million.”

Sullivan wrote that while the state is excited about the "potential transformative impact" for the project in both Jersey City and the state, at large, the annual operating gap remains too significant to release any funding. The letter gave JCRA a month to clean up its books and offer a better path forward.

“As you know, none of the $34 million appropriated to the project via the NJEDA has been released due to the lack of balanced sources and uses and operating plan,” wrote Sullivan. “With federal funding deadlines looming and the state budget process underway, it is clear that we must meaningfully narrow this gap. We kindly request an updated revenue and expense model for the CPxNJ project that rectifies the annual operating deficit. If the JCRA cannot provide an updated model by May 26, 2024, we will have to consider whether it is more prudent for the state to use these funds for other fiscal priorities that the Legislature and governor might identify through the budget and federal fund process.”

'What changed?'

Fulop, a 2025 Democratic gubernatorial candidate, forcefully pushed back on the threat to pull the funding in a series of social media posts. He accused the governor of political payback for his March decision to endorse U.S. Rep. Andy Kim, D-NJ 3rd District, in the Senate Democratic primary over First Lady Tammy Murphy, who exited the race March 24.

Fulop endorsed Kim March 18.

“We heard zero from the state for months other than all is good except for the exact week I said I was endorsing Andy Kim,” said Fulop. “That EXACT week we all of a sudden got multiple letters from Trenton after months of silence. What changed?”

The administration has pushed back on that characterization. Emails obtained and viewed by NJBIZ showed concerns over the project’s economic viability and sustainability going several months back.

Retribution

“As recently as December, we had a really constructive and frank meeting which was positive as well,” Sullivan said in an interview this week with David Cruz on NJ Spotlight news. “Which we were really clear that we couldn’t release the funding we were responsible for until we saw a few things one was a balanced set of sources and uses. Meaning could you find enough money to spend to build the building you want to build? What’s the economic impact? Is it worth whatever that money is? And, also, what are the revenues and expenses to keep this thing going? We made it clear that we couldn’t release that money unless we had a check of the box on all three of those things.”

In that same segment, Fulop insisted to Cruz that the only explanation for the change in tone was political payback.

“The only thing that has changed is my relationship with the front office meaning I’ve been more critical of lines, of Tammy Murphy’s candidacy and the direction of the Murphy administration,” said Fulop. “Their tone changed, as well, regarding this project directly related to my tone changing on their administration.”

'Literally zero to do with any politics'

During a gaggle with reporters following Tuesday’s HAX ribbon cutting in Newark , Gov. Phil Murphy was asked about the situation. He stressed that this has "literally zero to do with any politics."

“First of all, it’s a project we have loved, and I continue to love. It would be a huge badge of honor to have the Centre Pompidou have a North American presence in New Jersey. We’d love that,” Murphy told reporters. “Only in late March, however, did it come to the attention of Tim Sullivan at the EDA and our colleagues that there would be a permanent, ongoing operating deficit, which was news to us.

"And it was largely the revenue line that was meaningfully lower than expectations," Murphy continued. "So, you’ve got about a $19 million annual operating and that’s new news.”

TBD

The governor said that they had earmarked a significant amount of money for the project. He reflected on the administration's excitement about the project’s potential.

“But there’s a point to which our fiscal appetite goes,” said Murphy. “If it were a modest amount of support on an ongoing operating basis, that’s something to be open-minded to.”

The governor has also stressed that funding has not been pulled yet.

“We basically sent a letter to the proper authority in Jersey City to say listen, this ongoing operating deficit is a real problem for us. Can you please come up with a plan that would reduce meaningfully this operating deficit,” said Murphy. He also noted that his administration would be happy to sit and go over this at the same table with them. “So that’s where it stands. And if they can’t, then we’re going to have to look at all options. But, as we sit here now, we still love this project. But we can’t marry ourselves to a $19 million deficit forever and always.”

Turning point

NJBIZ spoke with Fulop Wednesday following the governor's comments. He continued his pushback.

"Let me just tell you this. I can't tell you what his [Murphy's] angle is. What I can tell you is what he said yesterday with regards to information being new is just not true. That's just a false statement," Fulop told NJBIZ. "There's nothing true about what he said yesterdaywith regards to new information on budgets or costs. And there's plenty of emails and documentation with the First Lady and the governor and the EDA on it. And their actions speak to it. Up until the day I was critical of them, they were supportive of the project."

In his view, Fulop stressed March 18 is the clear time frame when things changed. He noted December saw the signing of Cultural Arts Incentives Program legislation and also pointed to something that took place in January.

"On a Friday, when I said something on Twitter critical of his funding of New Jersey Transit and hard to feel good about the way he's handled it on Monday, we get a letter from the EDA, the first critical one," said Fulop. "I mean, it doesn't take a rocket scientist to connect the dots here."

Fulop said he plans to respond to the letter appropriately, address their concerns, and go from there.

On the clock

And about that one-month timeline Jersey City?

"We're on top of our stuff," said Fulop. "The state comptroller, who was involved from the state, has said we are on top of this stuff. We're going to respond within a week."

As for how he expects this will play out?

"The governor holds the cards. But to say that it is new information is just a lie. There's no new information," said Fulop. "He was aware of everything and involved in everything. And his actions prior to me being critical were very supportive. So, to say there's new information that's just not true. But we will respond. And we also recognize that the governor holds the cards in this sort of thing."

"We're hopeful that the governor does the right thing and isn't punitive for reasons unrelated to the project," said Fulop. "If he wants to go in a different direction, he is entitled to go in a different direction. That is legitimate and somebody is entitled to do that. But to say that there's new information or that something he wasn't informed of that is not true," said Fulop. "So, that is on the record there."

The Murphy administration, though, disputes Fulop's assertions. It maintains the threat to pull funding is not politically motivated and instead pertains to the project's fiscal sustainability, which it reiterated it has had concerns about. The administration said those concerns were exacerbated when latest figures arrived in late March.

Insufficient resources

"All I can say is that as I sit here right now, it is pretty clear to me that there are not sufficient resources whether those are capital resources or operating resources to have this project be sustainable," Sullivan told NJBIZ Wednesday. "We remain really, really supportive of the idea of having the Centre Pompidou in Jersey City. And we will continue to work with the mayor and his team on if there's a path to sorting this out.

"Time is not on our side because some of this money has a federal clock attached to it," Sullivan continued. "The Legislature is debating the budget right now. I think this is a topic that they are going to be interested in. When we got the latest version of the numbers for the revenues and expenses, you had a big chunk that said contributing revenues but no source next to them? That's a problem."

Sullivan pointed to the numbers and stressed that the project does not have a sustainable operating plan.

The road ahead

"We will continue to work on it," said Sullivan. "And if the JCRA and the city team and the mayor's team want to meet on this and keep talking about it, I will clear my calendar and we'll work on this as hard as anybody. But it is time to make a decision on whether we have a path that's sustainable going forward."

As for how Sullivan thinks this will play out and if that path exists?

"If there is one, it's not evident to me right now," said Sullivan. "But hope springs eternal. If there's an idea that we haven't thought of yet - count us in as open-minded."

He closed out by, again, noting that the administration does love this project.

"We've been longstanding partners with the mayor and his team on it," said Sullivan. "If there's a way to bring it forward, count us in. But right now - I just don't see it."

Partisan talking points

Meanwhile, Republican lawmakers, who have been long critical of the project and the state subsidies, are weighing in on the situation as well.



“We have an affordability crisis in New Jersey that has been exacerbated by wasteful and unjustified spending. $58 million of taxpayer dollars earmarked for Jersey City’s failed art project is one such example,” Sen. Mike , R-1st District, told NJBIZ in a statement. “$34 million was frozen by the EDA while the remaining $24 million is currently being held by the Department of State those funds should be frozen too. All $58 million should be redirected to either restore Gov. Murphy’s school aid cuts to almost 150 schools or be given back to taxpayers. In the face of greater economic challenges, it’s time we bid adieu to the Pompidou and prioritize lowering costs in the Garden State.”

On Wednesday, Senate Republican Budget members , along with Sens. Declan O’Scanlon, R-13th District, Doug Steinhardt, R-23rd District, and Carmen Amato Jr., R-9th District wrote a letter to Lt. Gov. Tahesha Way, who serves as secretary of state.

The correspondence called for the Department of State to redirect the $24 million in Pompidou-related appropriations "to a more responsible purpose."

“The Department of State executed a grant agreement with the Jersey City Redevelopment Authority shortly after the appropriation [in FY 2022] was enacted which unwisely advanced $6 million of those funds for the project,” the Republican Senators wrote. “The advanced funds, as well as the $18 million balance in Department of state accounts, remains unspent. We believe it would be better used almost anywhere else.”

The Department of State had no comment in response to that letter.

Stay tuned for further coverage from NJBIZ as this hot-button issue plays out here in the great Garden State.

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