PARSIPPANY, NJ—The State of New Jersey has awarded a New York State based company a $34.475-million contract to demolish the former Greystone Park Psychiatric Hospital here.

The contract award by the Treasury Department last week is a blow to a historic preservation group that had tried to preserve the Kirkbride Building. The state also explored some type of redevelopment at the property, but in March decided to move forward with demolition. The original Greystone opened in 1876, closed in 2008 and was replaced by a modern hospital nearby, according to the Star Ledger.

North Star Contracting Group Inc. was the lowest of four bidders for the contract that calls for the removal of the foundation of the 675,000-square-foot building, as well as the removal of underground tunnels that used to transport patients of the facility, according to Joseph Perone, director of communications for the Treasury Department.

The contract also includes environmental remediation of the property that will involve the removal of asbestos, lead paint and other hazardous materials.

The project will take about 18 months to finish. See story in the Star Ledger.

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