OPINION: A grave misinterpretation of redevelopment law

By Joe Krakoviak

I was the sole vote against creating the Essex Green Executive Drive Redevelopment Area at the Jan. 9 Township Council meeting, primarily because I believe it does not even come close to meeting the law’s restrictive standards. The state Legislature limited usage because the law’s authority allowing incentives could be abused. This could hurt taxpayers at the expense of wealthy commercial property owners that don’t need any help, but are happy to accept abatements, avoiding millions of dollars in future property taxes that must be made up by the rest of us.

The Legislature is clear on the law’s purpose: to bring private capital and economic activity to areas that cannot attract either.

The law, 40A:12A-2a, begins: “The Legislature hereby finds, determines and declares: a. There exist, have existed and persist in various communities of this State conditions of deterioration in housing, commercial and industrial installations, public services and facilities and other physical components and supports of community life, and improper, or lack of proper, development which result from forces which are amenable to correction and amelioration by concerted effort of responsible public bodies, and without this public effort are not likely to be corrected or ameliorated by private effort.”

Clarion Partners paid $101,850,000 for Essex Green and an adjacent vacant parcel in March 2016, according to state records. The market price for this property has steadily risen more than $60 million, or nearly 150 percent, since 1999. Executive Drive sold for $15,000,000 last year, down nearly two-thirds since the last sale in 1997. While the market values of these two properties have diverged, they are clearly able to command significant private capital.

The law requires a professional “area in need of redevelopment,” or AINOR, study of the proposal to document that it meets any of several restrictive evidential requirements. This study, by part-time town planner Paul Grygiel, found that the proposed area met two requirements — aside from a third one for an adjacent property qualifying only as needed for the overall redevelopment plan: “(b) The discontinuance of the use of buildings previously used for commercial, manufacturing, or industrial purposes; the abandonment of such buildings; or the same being allowed to fall into so great a state of disrepair as to be untenantable;” and “(d) Areas with building or improvements which, by reason of dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light and sanitary facilities, excessive land coverage, deleterious land use or obsolete layout, or any combination of these or other factors, are detrimental to the safety, health, morals, or welfare of the community.”

Reviewing Essex Green, the study goes on at length about the need for various improvements. It also references a 33-percent vacancy rate that we later learned was a typographical error; the actual rate was 23 percent. The study does not cite any discontinuance of the use, or abandonment, of the buildings. Then it projects limited prospects for new tenants, citing vacancies. “Clearly, these retail units are in need of significant renovation. In their unused state, they are detrimental to the public welfare, especially when considering municipal land use policies which are meant to encourage the updating and upkeep of existing commercial development in the Township.”

Grygiel indicates the need for renovation. But does anyone familiar with the mall think that the current vacancies are “detrimental to the public welfare” when so much economic activity and customer traffic is going on all around? And the study doesn’t even acknowledge that it is the owners that are not following the policies.

But is the property untenantable, as the law requires? Here’s a partial list of national and regional brands that are presently tenants: Panera Bread, AMC, ShopRite, Sears, Petco, Total Wine, Macy’s, Pearle Vision, Xfinity, Gamestop, Coldstone Creamery, SuperCuts, GNC, H&R Block, CitiFinancial and TGI Fridays. Does that sound like anything approaching “untenantable”?

In criterion (d), Grygiel again goes through a laundry list of needed improvements. Then, seemingly ignoring the many existing tenants, Grygiel avers: “Consequently, there is little or no potential to re-tenant the property in its current condition.” His narrative essentially points out the need for investment and improvements to better attract future tenants. But that’s not what the law specifies. It’s present, not future, conditions that must be “detrimental to the safety, health, morals, or welfare of the community.”

Grygiel only addresses detriment one other time: “If the current conditions are allowed to persist, and the Study Area continues to lay fallow and unproductive, it will further deteriorate to the point at which it will have a detrimental impact on the surrounding properties and the public-at-large.” But, again, he’s predicting some point in the future that’s much more likely if the owners don’t invest.

As for Executive Drive, Grygiel cites the same two requirements. Again he enumerates the investment and improvements needed to address the 58-percent vacancy rate and “unfavorable prospects for retenanting,” including “aesthetically dated facades” and “interiors that have not been well-maintained. … Updates to the outdated mechanical, electrical and plumbing systems would take a significant amount of investment to bring them up to modern standards.”

Again, we see the recurring themes of a laundry list of improvement investment to make the properties more attractive as well as ignoring current tenants in favor of predicting future tenancy challenges. Actually, Grygiel mentions that the Department of Homeland Security — government tenants are prized for their ability to pay — has signed a long-term lease. But according to the study, the building owner said the tenant has the option to vacate with only several months’ notice, “creating further uncertainty.”

The properties certainly require investment and improvements. They also appear to have tenancy challenges, although the property owners have refused to provide any information underlying vacancy rates or relating to improvement investments. A news release on the Essex Green sale cited a 4-percent vacancy rate 19 months before the study. I understand a desire to help. But the Council can only act as authorized by law, which I believe is clearly not the case here.

Joe Krakoviak is a member of the West Orange Township Council.

COMMENTS

2 Responses to "OPINION: A grave misinterpretation of redevelopment law"

  1. Jonathan Redwine   February 4, 2018 at 12:11 pm

    Thank you, Joe, for asking hard questions and challenging the status quo.

  2. August Ricciardi   February 7, 2018 at 9:28 pm

    Thank you. We need ratables. Not giveaways!