Jersey City sued the Port Authority of New York and New Jersey for $400 million, saying the payments the city receives in lieu of property taxes from the regional transportation infrastructure overseer are grossly inadequate.

The city government had threatened to sue the authority in November. After months of discussions with the authority, the city decided to go ahead with the suit on May 22.

"We are moving forward with the lawsuit to ensure Jersey City receives its fair share in taxes from the Port Authority," Jersey City Mayor Steven Fulop said.

The authority owns 40 properties in the city, which is located across the Hudson River from lower Manhattan. Instead of paying property taxes it makes $2.2 million in payments in lieu of taxes each year. If it were to pay property taxes it would have to pay $18 million annually, the city claimed Thursday.

The suit filed in U.S. District Court in Jersey City also concerns a $118 million authority redevelopment project in Greenville Yards, Jersey City, for a barge-to-rail transfer station for New York City garbage. Jersey City says the transfer station's PILOT taxes are about half of what it would get in property taxes. Further, the authority is refusing to pay a transfer fee to the city, as is usually done with such operations, the city claimed in the suit.

The Port Authority responded: "The vitality of Jersey City has been important to the Port Authority for many years, and that's why we invested more than $1 billion to create a modern, robust PATH system that serves tens of thousands of city residents daily. It's also why we acquired and invested millions in the Global Terminal, giving the city a thriving, job-creating port facility. Jersey City's claims are without merit, and we will vigorously defend ourselves against these allegations."

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