By Lev D. Zilbermints
As was reported in the April 27, 20, April 13 and March 23, 2023 issues of “Local Talk”: the City of Newark, its Municipal Council and certain other parties were sued by the developer, Fairmount Senior Genesis, Housing Urban Renewal Partnership, LLC, Genesis Fairmount Partners, LLC and Genesis Central Ave Partners. The cause of the lawsuit was that the City and its Municipal Council allegedly failed to live up to their side of the agreement and were engaged in unfair play and political shenanigans.
In this, Part 4 of the article, “Local Talk” sheds more light on what happened.
One-sided Allocation of Grant Funding
According to court papers, the City of Newark decided to unilaterally assign Grant Funding. That is, the City would be the only one to decide how the funding would be used. Meanwhile, their partner, the developer, would be left out of the decision-making process.
“The City’s malfeasance and/or misfeasance under the Agreements continued after the rescission of the HOME Agreement funding obligations. On September 22, 2015, Plaintiffs and counsel met with the City to discuss moving forward with the Central and Fairmount Properties project. At that meeting, Deputy Mayor Wilson said he had not considered removing Plaintiffs as redeveloper with respect to the Central Properties site, and represented that the City was not considering that action.
“Plaintiffs at that meeting also requested site access, the issuance of a notice to proceed and an appraisal to move forward with the project plan.
“Plaintiffs did not receive anything from the City, but in reliance on the City’s assurance that it was moving forward did refine a plan over the next couple of months to develop the Central Properties as contemplated by the RDA.”
It sounds like the developer thought that the City’s word was its bond. Because, in legal and business circles, once somebody gave their word on a deal, it has to be kept. This is very similar to the adage, “a man’s word is his bond.” However, politicians go back on their promises any number of times. This is why the developer got itself in this mess. In fairness to the developer, they did not expect such demeanor from the City of Newark.
Court papers show that the developer, aka Plaintiffs, attempted to schedule a meeting with the Deputy Mayor to talk about issues related to the funding. The City allowed the meeting to take place, but still played coy with Grant funding.
According to court papers, “On February 1, 2016, Plaintiffs requested a meeting with Deputy Mayor Wilson for February 5, 2016, to review the plans for the Central Properties. On February 3, 2016, the Deputy Mayor advised that he could not make such a meeting, but that his assistant would arrange a meeting. A meeting to review the Central Properties plan was eventually scheduled for February 8, 2016.”
The meeting brought about a lot of talk, but nothing constructive. Judging by its subsequent actions, the City already had a plan to keep the developer out of the loop while quietly performing politics.
Alleged Corruption & Not Honoring Promises
Court papers convey the shock and disgust the developer felt towards the City. “Despite the scheduling of a meeting to further discuss matters, on or about February 25, 2016, the City notified Plaintiff Fairmount that it was unilaterally assigning Defendant’s NCC’s rights under the Grant Agreement to itself.”
Huh? What is going on here? It appears as if the City is stripping the developer of its rights.
Court papers state, “The City’s unilateral assignment of the Grant Agreement was wrongful, and without legal basis of any kind. The Grant Agreement cannot be assigned without the consent of Plaintiff Fairmount. Such unilateral assignment without consent is in violation of Sections 8.7 and 8.11 (permitted successors) of the Grant Agreement. The unilateral assignment threatens the funding necessary with respect to the contemplated redevelopment of the Fairmount Properties. By unilaterally assigning the Grant Agreement, the City is seeking to avoid payment for environmental remediation of the Fairmount properties – which it previously owned – since the Grant Agreement monies were intended to be used for environmental remediation of the Fairmount Properties. Plaintiffs have pending before the City invoices for costs incurred with respect to the Project, including for environmental remediation of the Fairmount Properties which was owned but remediated by the City. Payment thereof is now in jeopardy in light of the unauthorized assignment of the Grant Agreement to the City.”
It is crystal-clear from the court papers that the developer believes in legal and business codes of conduct. These codes regulate interaction between two or more parties. Thus, the developer is trying to get the City to follow the established, honorable method of doing business via business agreements, legal agreements, and so forth. It seems like the City has its own agenda, one which ignores the standard used by the developer. In other words, both the City and the developer are speaking different languages. As soon as the developer tries to find common ground with the City, the City acts in its own way.
Plaintiff alleges Wrongful Termination of the RDA as to Central Properties
According to court papers, “While the City’s above actions alone, which threatened supplemental and subsidized funding sources for the affordable housing redevelopment of the Fairmount Properties under the HOME and Grant Agreements, are wrong in their own right, the City also wrongfully terminated, in part, the RDA (Redevelopment Agreement).
By letter dated February 11, 2016, the City advised Plaintiff Central that it was terminating the RDA, but only with respect to the Central Properties.
Attached as Exhibit P is a true copy of the February 11, 2016 correspondence from the City to Plaintiff respecting the RDA as indicated.
As above indicated, the Central Properties are economically attractive and well situated in the Newark downtown core and were paired with the Fairmount Properties for redevelopment purposes to make the redevelopment of both viable.
The City has purported to terminate the RDA with respect to the more economically feasible of the two (2) sites – Central Properties – but not with respect to the Fairmount Properties, with respect to which the City accepted $114,100 from Plaintiffs.”
So the City appears to be playing games. First agreements are made, and then voided. Perhaps the developer, judging by court papers, is not experienced at political play. In legal circles, a man’s word is his bond. In politics, a promise is only good until a way can be found to get around it. This is precisely the situation with Newark and the developer.
What the City Of Newark Did Wrong
According to court papers, the City of Newark did many things wrong. These include terminating, or wrongfully breaching agreements, not serving notice of its actions to the developer, making the Plaintiffs spend money and not reimbursing them, making false promises, and so forth.
“The City has by its actions wrongfully breached, terminated and/or unilaterally assigned the Agreements of the Parties, which damaged Plaintiffs,” state court papers.
“It has also by its actions as above threatened the viable redevelopment of the Fairmount Properties. Plaintiffs were never served with any notice of other indication of default under any of its Agreements with the City as described above. Defendant City was in no position to act to default, terminate and/or unilaterally assign any Agreement as a result. Plaintiffs were at all times in compliance with their contractual obligations and relied upon same to their detriment.
“As a result of the City’s failure to abide its obligations under the various Agreements, and its own Defaults under the RDA (including its Section 3.3.2 obligation to furnish an appraisal and its Section 2.4(b) obligation to furnish the Relocation Notice), Plaintiffs have not been able to proceed with the Project.
“Despite the fact that Plaintiffs have had several meetings with City representatives to discuss either (i) ways the City can fulfill its financial commitments and comply with the terms of the RDA to move the Project forward, or (ii) otherwise terminate the RDA and reimburse Plaintiffs for their damages, including costs associated with their performance and due diligence, the City has nonetheless acted in abrogation of those Agreements.
“On or around February 3, 2016, Plaintiffs’ principal and the City’s Deputy Mayor and Director of Housing and economic Development, had communicated with respect to moving the Project forward, and had scheduled a meeting to further discuss same, as above indicated.”
Simply put, the developer explains in court papers how they believe the City lied, dragged out things, made excuses, and did not reimburse the developer for wasted money, time and effort.
Litigation
After all the excuses, and broken promises, the developer had enough. According to court papers, “on March 11, 2016, Plaintiffs filed a Verified Complaint in the Superior Court of New Jersey, Law Division – Essex Vicinage under Docket Number L-1738-16 against Defendants City of Newark, a municipal corporation of the State of New Jersey, Newark Animal Shelter, Inc., Community Foundation of New Jersey and ABC Corporate Entity 1-10 and John Doe 1-10.
“Upon initiation of the Litigation, settlement negotiations between Plaintiffs and the City commenced. On November 7, 2016, the Litigation was referred to mediation by Order of the Court. On November 14, 2017, following a meeting between the parties, the City “memorialized” an agreement as to the following: (a) the City would withdraw its prior termination of the development agreement and reinstate said agreement and (b) Plaintiffs would dismiss the Litigation without prejudice and release the Fairmount Properties back to the City. …
“On January 5, 2018, Plaintiffs responded to the City’s letter to request reimbursement of $189,190.90 in out-of-pocket costs in exchange for the release of the Fairmount Properties. …
“On January 11, 2018, the parties filed a Stipulation of Dismissal Without Prejudice of the Litigation.”
What all this means, in simple English, is that once the developer filed a lawsuit, the City started maneuvering. According to criminaldefenselawventura.com, dismissal without prejudice means that the party filing the case can bring it up again. The case is not dismissed forever. Charges can be refiled. By comparison, dismissal with prejudice means that the case is dismissed permanently and cannot be brought back.
Next: Kawaida Towers, more legal maneuvering by the City of Newark, response by city council members
