WEST ORANGE, NJ — The township of West Orange issued yet another default letter to Edison Village redeveloper Prism Capital Partners on Nov. 11, after the real estate operator failed to pay fourth-quarter taxes on its redevelopment properties before both the Nov. 1 due date and Nov. 10 extended deadline.
Township redevelopment counsel Jennifer Credidio’s default letter, which is the third in two tax periods and the fourth in the overall history of the project, warned Prism principal partner Eugene Diaz that if the redeveloper does not pay what it owes within 30 days the town will “exercise the rights and remedies available to it” under the 2006 redevelopment agreement, including termination of the contract. At the time the letter was sent, Prism owed more than $245,000 for five properties.
Prism did not respond to request for comment before press time Nov. 17. But at the Oct. 27 Township Council meeting, Diaz defended his company’s repeated tax delinquency by stressing that Prism remains committed to Edison Village despite being impacted by the 2008 financial crisis and being currently $20 million in the hole on the project. Additionally, Prism attorney Matthew Karrenberg reminded the council that the redeveloper had paid everything it owed for the third quarter and that it had never gone beyond a calendar year without paying.
Township Business Administrator Jack Sayers said he believes the latest default letter will induce Prism to pay, pointing out that the redeveloper paid what it owed after the township issued the notices of default and continuing default for the third quarter. Though the town wishes that Prism would pay on time, Sayers added that the redeveloper’s delinquency is really not a cause for concern because West Orange always gets its money eventually, plus a significant amount in interest. In fact, he estimated that the real estate operator has paid the township between $175,000 and $200,000 in interest alone due to tardiness.
As for the possibility of Prism not paying its taxes going into 2016, Sayers said he just does not believe it is going to happen.
“If they don’t pay their taxes, then we have to foreclose on the properties and sell the properties at a tax sale,” Sayers told the West Orange Chronicle in a Nov. 12 phone interview. “They have $42 million invested in this project — they’re not going to let that happen. It’s illogical to think that they’re going to let us take their properties because of a tax sale.”
Council President Jerry Guarino said he is also “optimistic” that Prism will pay its property taxes. While he emphasized that he does not condone or appreciate the redeveloper’s continued lateness, Guarino reiterated that Prism has always paid in the past and surely will pay this time. Regardless, he said the township has not put any money into the project yet, so Prism’s delinquency is not costing West Orange anything.
What will not help, Guarino said, is terminating Prism’s contract while the company still owns the properties, as Councilman Joe Krakoviak and residents opposed to the project have demanded.
“I’m not defending Prism,” Guarino told the Chronicle in a Nov. 12 phone interview. “They should pay their taxes, but that doesn’t change the fact that this project will get built. But if you default them and you take them out as redeveloper, then what are we going to do? Wait another five, six years for somebody to buy the property from them and do the redevelopment? Then we’re back to where we were, starting all over again.”
But opponents of the project see this delinquency as a continuing bad sign.
“Prism continues to disappoint me and many other West Orange residents with its failure to comply with a key provision of the redevelopment-governing documents to pay its property taxes on time — for the 18th quarter in a row,” Krakoviak told the Chronicle in a Nov. 16 email. “The company’s cavalier attitude toward events of default is particularly disturbing to the extent it may reflect its lack of respect for the many other redevelopment obligations it has.”
Meanwhile, the early stages of construction on Edison Village appear to be progressing as Diaz promised. Sayers said the last time he went by the property on Nov. 10 he saw workers laying something down, while Guarino said he knows of surveyors recently visiting the site.
Though the Aug. 11 redevelopment agreement remains unexecuted, Diaz said during the Oct. 27 council meeting that Prism plans to stick to the Sept. 30, 2017, construction deadline that document specifies, with major construction beginning in the spring. Guarino said he asked for a construction schedule at the October meeting, but told the Chronicle he has yet to receive one, saying he wants to follow up in the next few days.
Still, Guarino said he continues to remain positive about the future of Edison Village, and urges everyone else to do the same. Though he said he is frustrated that the project is taking a lot longer than he would have liked, the council president also believes things will turn around once Dune Real Estate Partners officially gets involved. In the meantime, he said the township will continue to stay on top of Prism to ensure the redevelopment progresses.
“I believe the administration is doing what they need to do,” Guarino said. “The default letters are going out like everybody’s requested. This will push them to pay their taxes. But I don’t believe it’s going to change anything with the project. I still believe that this project will be moving forward very shortly. I’m hopeful you’ll see more activity.”