WEST ORANGE, NJ — The property that Prism Capital Partners had intended to use for much of Edison Village’s retail space will soon be up for sale as its mortgage holder successfully foreclosed on it last year.
According to the Essex County Sheriff’s Department sales listing detail, 217-219 Main St. will be available for purchase Nov. 29, though that date is subject to change. The detail also shows that Prism owed $3,714,438.52 in mortgage payments on the land, which is currently the site of an empty CVS and other closed businesses. The monies collected through the sale will go to lender entity LBUBS 2001-C3 Retail 217 LLC so it can recoup what it is owed.
The NJ Courts Public Access database shows that LBUBS initially filed for foreclosure Nov. 13, 2013. After years of hearings, a foreclosure judgment was rendered on Jan. 8, 2015, the database shows. Additional hearings took place through July 2016, though a representative of the New Jersey Superior Court Clerk’s Office told the West Orange Chronicle that no further legal matters are pending aside from the sale.
Prism Principal Partner Eugene Diaz said he could not answer questions due to his company’s policy of not commenting about litigation. The law firm representing LBUBS did not respond to a request for comment before press time Oct. 18.
This is the second time Prism has lost one of its West Orange properties. The first occurred after Wells Fargo filed a foreclosure action on 55 Lakeside Ave. in December 2011, though Prism would eventually buy the site back at the subsequent auction. At the time though, Prism did not inform the township administration of the situation as it was supposed to do — the redevelopment agreement requires Prism to alert the township about any negative financial actions in which it is involved — so the administration demanded and received financial and legal information from the company after Councilman Joe Krakoviak discovered the foreclosure. This included 2010-2011 financial reports, which is how the township initially learned that Prism’s mortgage for 217-219 Main St. was in default and that the redeveloper had even made attempts to sell the property.
In the case of the 217-219 Main St. foreclosure, Krakoviak said Prism waited until Sept. 21, 2016, to inform the township of the action. As a result, he said West Orange should again demand information from the company — which it has not yet done — to learn whether there is more that Prism has not told the township.
“It is beyond comprehension why the township doesn’t do what it did the last time Prism was in foreclosure,” Krakoviak told the Chronicle in an Oct. 14 phone interview. “If they are in fact intentionally breaking their promise to repay (their mortgage), why should we as a town trust them to do anything else they’re contractually obligated to do? This is all the more reason to get more information and exercise more scrutiny over them, not less.”
Krakoviak also pointed out that the situation is especially concerning considering that this is Prism’s second foreclosure and that it had to give up nearly all of its ownership in Phase 1 of the Edison Village project just to obtain a construction loan. Since Prism remains the designated redeveloper for Phase 2 and Phase 3, the councilman said West Orange should have a better understanding of the company’s finances to judge whether it can handle the rest of the project. Demanding financial reports would provide a clearer picture of this, he said.
The councilman additionally said that now is the time to start following through on other aspects of the redevelopment agreement, particularly the part that allows the township to request written progress reports about Phase 1 construction. Otherwise, he said the township will never know for sure whether Prism is fulfilling its promises.
“This redevelopment agreement and all the associated documents are built on a foundation of trust,” Krakoviak said. “We trust that the other party in any contract is going to perform as it says it does. But in this case, I think we have plenty of information to be skeptical that Prism is doing anything it is supposed to be doing.”
Krakoviak said he raised these points during an executive session of the Oct. 6 Township Council meeting, but is unable to comment on what he was told in response until after the session minutes are released to the public. Township business administrator Jack Sayers said he could not comment due to potential litigation that might arise from the foreclosure.
Council President Victor Cirilo likewise told the Chronicle that he could not comment due to potential litigation. But Cirilo did say that he did not believe the foreclosure will have an adverse financial effect on Phase 1 since 217-219 Main St. was intended to be part of Phase 2. And he said there are currently no firm plans for Phase 2 or Phase 3 — the township and Prism have yet to negotiate what exactly they will entail.
If Prism is able to repurchase 217-219 Main St. after it goes on sale, the property can once again be included in Phase 2. But another developer buying the land would be required to present a project to the township for approval as the site is part of the redevelopment area. Once the project is approved, the buyer would become the new designated redeveloper for the site. Of course, there is always the chance that a speculator will buy the property and sell it sometime in the future.
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