OCTOBER 19, 2023 – By the spring of 2018, Cliff and I were off to the races. Cliff had put me in touch with Charles Sarlo, a highly regarded land use attorney in Bergen County, and Jak Inglese, head of a local architectural firm with an impressive portfolio and excellent reputation. I retained both and set the wheels in motion for the redevelopment of the Rutherford properties.
Readily embraced by Cliff, my strategy was to complete the process that any real estate developer would have to pursue to render the redevelopment project “shovel ready.” Once that status had been achieved, we could market the properties—with a fully approved redevelopment plan. Our sale to a qualified developer-buyer could thus be without the usual buyer-contingency of borough approval. The developer would be free to expand the plan, but approval of such wouldn’t be a condition of the developer’s performance or obligation to close under a purchase agreement with us; a more ambitious plan, if the developer could subsequently gain approval, would simply provide additional value that the buyer could realize from the property.
I knew that no real estate investor of developer would acquire our “pile of bricks” and pay more than a nominal sum without establishing that a threshold of value—and profit—could be wrung from redevelopment. The key driver of value, in turn, was the income that could be generated from the redeveloped property, and the primary determinate of income would be the quality and quantity of the improvements—condos, apartments, small office and retail stores, all of which were the highest and best use of the properties from a market standpoint. Finally, the nature and number of improvements would ultimately be what the borough of Rutherford would approve. Until that approval was in hand, value was speculative, and as long as value was speculative, no potential developer-buyer would pay more than “basement dollars.”
More to the point, no prospective buyer would make an offer at anything approaching the ultimate fair market value of our properties without making the offer contingent on borough approval of a redevelopment plan by which the end-value—and developer’s profit—could be reasonably determined.
Thus, to harvest reasonable value from the properties that we’d inherited, we faced two choices: sell them to a developer-buyer subject to approvals and sit back and wait for that process to unfold—with the loss of control over much it; OR pursue the approval process ourselves, thus retaining control over the professionals we hired and the plan we submitted for approval. I figured that with the legal and architectural team plus Cliff to grease skids and crack the whip, we stood a far better chance of optimizing the family’s return than if we left it to a developer to shepherd a plan past the borough authorities.
Another consideration factored into my thinking: the favorite adage of my boss at the bank where I’d worked for too many years—“Pigs get fat; hogs get slaughtered.” In selling to a developer, we couldn’t be sure we weren’t selling to a “hog,” who would shoot for the moon regarding size of the proposed development, expecting to settle for something less than the moon but still highly lucrative. That strategy could lead to the “hog getting slaughtered,” that is, derailment by interminable delays and extensions devolving to abject failure a year and a day later. I preferred to remain a “pig,” which meant retaining control over what was submitted for borough approval; shooting for the treetops (say, a 45-unit project) as opposed to the moon (a 145-unit project), and elevating the odds of selling to a developer (and closing!) sooner rather than later and at a fair price.
Confident in the team I had at my disposal, I convinced Cliff that retaining control as “pigs” was preferable to selling conditionally to a “hog.” Our sanguinity, however, ignored the wisdom of Scotland’s preeminent bard: “The best laid schemes o’ mice an’ men / Gang aft a-gley.”[1]
For a time, however, we were on a roll. In mid-2018, I flew to New Jersey for a presentation of the preliminary architectural conceptual drawings for a proposed redevelopment of our properties. Cliff and I were graciously received at Jak Inglese’s offices in East Rutherford and promptly spirited into an impressive conference room equipped with a huge screen. Jak then entered, shook hands, and made some introductory comments while his able assistant opened the PowerPoint file.
I was giddy with anticipation. Like a time-lapsed video of a thorn-bound rosebud exploding into a fragrant blossom, my compressed memories unfolded into a grand mental collage . . . images from early childhood visits to Rutherford, numberless stops there during school vacations, my working days under Grandpa’s shadow, the aftermath of the Great Fire, and most starkly, the dark years of UB’s reign of the realm . . . framed by the promise of significant reward. Here now finally we were about to see the shining future; the full circle leading back to my great grandfather’s brilliant success that Grandpa had leveraged into a national enterprise. I was about to witness le grand dénouement of our “inheritance.”
When the colorful future burst forth upon the screen[2], I abandoned all reserve. “I love it!” I said.
Spontaneously, Cliff seconded my motion. “Nice. It’s great!” he said.
We were pigs in heaven . . . for the moment, anyway. There would be ample time to experience the wisdom of the Scottish bard. (Cont.)
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© 2023 by Eric Nilsson
[1] Robert Burns in “To a Mouse.”
