NORTH ARLINGTON – The borough and the proposed developer of a massive meadowlands project went to court on Monday, March 2 but did not start until March 3, because of the snowstorm.
Judge Jonathan Harris in Bergen County Superior Court heard the trial between the borough and various Cherokee Investment Partner entities – those with the notorious EnCap Company.
At issue was whether the original developer’s agreement between the previous borough administration and EnCap, and its parent company, Cherokee Investment Partners, is valid.
The borough’s position is that the agreement is invalid because EnCap failed to meet specific requirements to demonstrate it could fund the “Arlington Valley” project in the meadowlands on the eastern border of the municipality. The project was to include more than 1,600 housing units and at least 50,000 square feet of commercial space on 115 industrial acres below Schuyler Avenue.
Borough Attorney Anthony D’Elia, who represented the borough, said Encap has never demonstrated that it had the financing to complete the project and wants to tie up vast amounts of property to keep other entities from developing it.
D’Elia said that since the state denied EnCap’s request in November 2006 to give the company $100 million in financing against future tax revenue from the Arlington Valley project, the developer has failed to show it has financing for the project.
“EnCap has put the borough through all manner of turmoil and expense, and still cannot demonstrate it has the funding to undertake this mammoth project. We think this project is dead and the borough should be allowed to move forward with its own redevelopment plans,” D’Elia said.
EnCap’s North Arlington project, Phase II, is part of a massive meadowlands project, which included 785 acres of landfills in Lyndhurst and Rutherford. Phase I would change the area into a golfer's paradise but since EnCap subsidiaries filed for bankruptcy last year, that too is out of the picture.
A bankruptcy judge ruled earlier this month that EnCap has failed to demonstrate the financial ability to complete the project.
D’Elia said EnCap was depending on state funding for its project, but the (Gov.) Corzine administration said the project was too risky to finance with taxpayer money. State financing that was a loan against future revenues from the development was part of the April 2006 agreement between EnCap and the administration of former Mayor Russell Pitman.
After investing $200 million in the project, the state quashed EnCap altogether.
“Once the state refused to back EnCap, the company has struggled, and the borough has been in redevelopment Limbo,” D’Elia said. “Our position is that it is time to allow North Arlington to move on and chart its own redevelopment course.
Current Mayor Peter Massa, along with Steve Tanelli, was both council members in 2006 and had refused to sign the redevelopment agreement with EnCap.
Massa and Tanelli called for reviews of the redeveloper’s agreement, saying that the tax revenue predictions and home sales prognostications in the developer’s agreement were highly suspect and that the agreement could place the borough in long-term financial trouble if projects were unfulfilled.
Because both men testified in the trial, they cannot comment directly on the case, but Mayor Massa maintains that his top concern is for the community, not the developers.
“Steve Tanelli and I have maintained from the outset that the agreement with EnCap needed a more detailed and independent study to determine its true impact on the residents,” Massa said.
Tanelli stated that the final copy of the 280-page developer’s agreement, “was thrown on my desk a day or two before the council was to vote on it. I was not going to vote for such a complicated agreement without knowing what was in the document. I think it would have been irresponsible for me to do that.”
A big part of the EnCap plan is dependent on the borough declaring eminent domain against the private property owners along Porete Avenue, which is an industrial stretch of road off the Belleville Turnpike. Eminent domain is the government’s power to condemn private property.
The reluctance of the borough to condemn the Porete properties has been a major point of contention between the developer and the borough.
According to D’Elia, EnCap was supposed to deposit $20 million in an eminent domain escrow fund to pay for the condemnation and purchase of the Porete Avenue properties but they did not. The developer also reneged on soil samples they were supposed to take to determine the extent of the environmental cleanup necessary along Porete Avenue.
“EnCap did not live up to its agreement and just demanded that the council, start condemning private property,” D’Elia said. “This mayor and council said hold on, let’s look at this agreement closely and let’s see if EnCap is meeting its obligations – which are not the case.”
The borough is being sued by the Cherokee Investment Partners for breaking the agreement signed back in 2006 and during the first day of the trial they told Judge Harris that they wanted to end the partnership with the borough since they are not in accord with their piece of EnCap project, according to reports. They did tell Judge Harris that they wanted the $39 million back that they spent on planning and engineering.
The trial extended into the end of the week. Harris will make his decision on the case later.
Judge Jonathan Harris in Bergen County Superior Court heard the trial between the borough and various Cherokee Investment Partner entities – those with the notorious EnCap Company.
At issue was whether the original developer’s agreement between the previous borough administration and EnCap, and its parent company, Cherokee Investment Partners, is valid.
The borough’s position is that the agreement is invalid because EnCap failed to meet specific requirements to demonstrate it could fund the “Arlington Valley” project in the meadowlands on the eastern border of the municipality. The project was to include more than 1,600 housing units and at least 50,000 square feet of commercial space on 115 industrial acres below Schuyler Avenue.
Borough Attorney Anthony D’Elia, who represented the borough, said Encap has never demonstrated that it had the financing to complete the project and wants to tie up vast amounts of property to keep other entities from developing it.
D’Elia said that since the state denied EnCap’s request in November 2006 to give the company $100 million in financing against future tax revenue from the Arlington Valley project, the developer has failed to show it has financing for the project.
“EnCap has put the borough through all manner of turmoil and expense, and still cannot demonstrate it has the funding to undertake this mammoth project. We think this project is dead and the borough should be allowed to move forward with its own redevelopment plans,” D’Elia said.
EnCap’s North Arlington project, Phase II, is part of a massive meadowlands project, which included 785 acres of landfills in Lyndhurst and Rutherford. Phase I would change the area into a golfer's paradise but since EnCap subsidiaries filed for bankruptcy last year, that too is out of the picture.
A bankruptcy judge ruled earlier this month that EnCap has failed to demonstrate the financial ability to complete the project.
D’Elia said EnCap was depending on state funding for its project, but the (Gov.) Corzine administration said the project was too risky to finance with taxpayer money. State financing that was a loan against future revenues from the development was part of the April 2006 agreement between EnCap and the administration of former Mayor Russell Pitman.
After investing $200 million in the project, the state quashed EnCap altogether.
“Once the state refused to back EnCap, the company has struggled, and the borough has been in redevelopment Limbo,” D’Elia said. “Our position is that it is time to allow North Arlington to move on and chart its own redevelopment course.
Current Mayor Peter Massa, along with Steve Tanelli, was both council members in 2006 and had refused to sign the redevelopment agreement with EnCap.
Massa and Tanelli called for reviews of the redeveloper’s agreement, saying that the tax revenue predictions and home sales prognostications in the developer’s agreement were highly suspect and that the agreement could place the borough in long-term financial trouble if projects were unfulfilled.
Because both men testified in the trial, they cannot comment directly on the case, but Mayor Massa maintains that his top concern is for the community, not the developers.
“Steve Tanelli and I have maintained from the outset that the agreement with EnCap needed a more detailed and independent study to determine its true impact on the residents,” Massa said.
Tanelli stated that the final copy of the 280-page developer’s agreement, “was thrown on my desk a day or two before the council was to vote on it. I was not going to vote for such a complicated agreement without knowing what was in the document. I think it would have been irresponsible for me to do that.”
A big part of the EnCap plan is dependent on the borough declaring eminent domain against the private property owners along Porete Avenue, which is an industrial stretch of road off the Belleville Turnpike. Eminent domain is the government’s power to condemn private property.
The reluctance of the borough to condemn the Porete properties has been a major point of contention between the developer and the borough.
According to D’Elia, EnCap was supposed to deposit $20 million in an eminent domain escrow fund to pay for the condemnation and purchase of the Porete Avenue properties but they did not. The developer also reneged on soil samples they were supposed to take to determine the extent of the environmental cleanup necessary along Porete Avenue.
“EnCap did not live up to its agreement and just demanded that the council, start condemning private property,” D’Elia said. “This mayor and council said hold on, let’s look at this agreement closely and let’s see if EnCap is meeting its obligations – which are not the case.”
The borough is being sued by the Cherokee Investment Partners for breaking the agreement signed back in 2006 and during the first day of the trial they told Judge Harris that they wanted to end the partnership with the borough since they are not in accord with their piece of EnCap project, according to reports. They did tell Judge Harris that they wanted the $39 million back that they spent on planning and engineering.
The trial extended into the end of the week. Harris will make his decision on the case later.
