(Bloomberg) -- The epic rivalry between Charles and Murray Kushner, wealthy New Jersey brothers with competing real estate empires, has intermittently flared up into lawsuits, fraud allegations and sordid revenge plots.
Now their competition has become entwined in a policy dispute in Jersey City, where both men are trying to remake the skyline.
Charles Kushner, whose son Jared is a senior adviser and son-in-law to President Donald Trump, this week accused the leaders of the staunchly Democratic city of trying to curry favor with anti-Trump voters by unfairly blocking tax incentives he needs to build two 56-story towers in Journal Square.
Comparing the city’s actions to religious or racial bigotry, Charles Kushner said Jersey City had discriminated against his company, Kushner Cos., by denying it the kind of tax subsidies Jersey City has offered other developers.
Left unsaid -- but widely known in Jersey City real-estate circles -- is that one of the most prominent companies to receive tens of millions of dollars in subsidies from the government is Kushner Real Estate Group, or KRE, which is owned by Charles Kushner’s brother and archrival, Murray.
Neither Kushner Cos. nor KRE responded to questions on the rivalry.
In the early 2000s, when the brothers were still in business together, Murray Kushner began to believe his brother was mismanaging the firm’s funds and sued him. That sparked a legal battle that would eventually send Charles Kushner, at that time a prominent Democratic fundraiser, to prison after it was revealed that he made illegal campaign contributions and he hired a prostitute to entrap his brother-in-law.
KRE was the first major developer to commit to a major project in Jersey City’s blighted Journal Square area, receiving a package in 2013 of more than $40 million in tax breaks and subsidized loans. KRE’s development, called Journal Squared, opened a 54-story high rise last year and broke ground on a second tower that is slated to rise to 72 stories. It has plans for a third building too.
KRE’s project generated such momentum to redevelop the area that by 2015, Charles Kushner’s project, One Journal Square, was on track to receive $10 million in subsidized bonds, another $34 million in tax breaks, plus $59 million from the state of New Jersey. The sites of the two projects are less than a block away.
The rival Kushner real estate companies had long competed for tenants in Jersey City, and, according to two people who spoke with Charles Kushner about the negotiations, he was pleased to receive more public financing than his brother’s project had been allotted.
But that plan began to collapse last year, after the anchor tenant, WeWork Cos., left the project, taking with it $59 million in state subsidies tied to it being a tenant. Kushner Cos. maintains it made the decision not to pursue a partnership with WeWork.
Kushner Cos. also dealt the proposal a self-inflicted wound last spring. Top company officials flew to China to raise money using the controversial EB-5 investment-for-visa program and their pitch featured a photo of Donald Trump, which many viewed as a conflict of interest.
Kushner Cos. said it had been unaware the event promoter made references to Jared Kushner and Trump in the promotional material and said it would no longer seek EB-5 money for the project. (Jared Kushner has sold his interest in the company to family members.)
By the time Kushner Cos. and their partner in the deal, the KABR Group, came back with a revised plan last fall, the political landscape had shifted. Jersey City activists organized protests outside the site and blasted city officials for offering subsides that might enrich the family of the president’s son-in-law.
Mayor Steven Fulop, a Democrat who faced an election challenge last year, eventually dropped his support for the project. Charles Kushner said this week Fulop once acknowledged that the city was discriminating against Kushner Cos., but Fulop’s spokeswoman said she could not confirm that conversation ever took place.
The spokeswoman, Hannah Peterson, said the mayor’s decision was based on the merits of the redesigned project, which has struggled to obtain financing. She didn’t respond to questions on the rivalry between the brothers.
Earlier this month, Fulop said he hopes another developer comes in to replace Kushner Cos. The mayor also tweeted that Charles Kushner, his longtime supporter, was out of line.
"There is a sense of entitlement that the developer has towards a subsidy,” he wrote. “We as a city just don’t see it the same way.”
Others in city government are more sympathetic to Charles Kushner’s complaints.
Michael Yun, a Jersey City councilman who has overseen studies of the city’s subsidies to developers, said, "It’s a good project, and if it weren’t for the Trump connection, I don’t think you’d be seeing people oppose it this way."
Still, he said, it would be inappropriate for Charles Kushner’s company to expect the same level of support that Murray’s got.
"When someone goes to redevelop an area first, they’re taking the most risk and deserve incentives to help make sure it works," Yun said. "But once there’s already an established development there and things are starting to happen, it’s a safer investment. So there’s no reason for such big tax breaks."
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