OCTOBER 23, 2023 – My strategic vision for the Rutherford properties was to achieve a “win-win” result.
On the family side I wanted to “win” substantial realized value for sisters, spouses, nieces, and sons. I’d succeed by getting a reasonable redevelopment project approved, then selling on a non-contingent basis to a developer with the expertise to bring the project into being.
For the borough’s “win,” I aimed to add corresponding value to the local tax base by turning an eyesore and the sub-optimized core of town into a significant community asset. I’d accomplish that by creating a plan encompassing major aesthetic improvement, attractive retail outlets, and quality housing, including mandated affordable housing but also luxury units with a clear view of Gotham—all with a component of historical preservation.
Unlike the typical developer, I wanted to make every stakeholder a “pig in heaven.” Accordingly, I’d told our architect not to go “whole hog,” not to design some obtrusive high-rise with 150 units and five levels of underground parking[1], but to incorporate the architectural bones of the warehouses and include their ancient façades in the project design along Park Avenue. I wanted to propose and promote a project that would be universally embraced by the citizens of the “Borough of Trees”—and thus, by the borough officials whom we’d need to impress and cajole and with whom we’d have to negotiate.
Cliff was wholly on board with this approach but worried that perhaps I was moving too fast.
“Just keep in mind that for a while I really need to hang on to all the space I use to store my costumes, large party props, street-fair rides, and equipment. There’s just nowhere else for me to go. I need to be able to stay put for another year or two before I retire.”
“Not a problem,” I said, “though it’s a bit ironic that after three decades of dealing with Uncle Bruce, you’re now saying, ‘But wait, hold on!’”
“I know, I know,” said Cliff.
“But not to worry, Cliff. Think of our project as a three-ring circus. In a perfect but unrealistic world, the three rings would overlap exactly. In our imperfect and realistic circus, however, we can strive to get the three rings to overlap as much as possible, but there’s a lot we can’t control. Chronologically, anyway, the three rings probably won’t overlap much. We’ll have to complete one before moving on to the next.
“The first circle of our particular circus represents the process for getting all seven properties rezoned in effect by way of council designation as an area in need of redevelopment—that’s a statutory term under New Jersey law.
“To obtain that designation, however, we’ll need to submit for approval an application to the borough zoning and building committee. As part of the application, we’re gonna have to hire a planning consultant to provide evidence that our seven parcels meet the statutory requirements. That will take a few weeks at a minimum. Then we’ll have to get on the committee’s agenda for a public meeting for approval but after arrangements have been made for publication of a 30-day notice of the meeting. Assuming there’s no opposition and the committee approves and there’s no appeal, we’re next gonna need to run the committee decision up the council flag-pole—after another 30-day published notice. Again, assuming no public opposition and that the council approves with no appeal to the court, we’ll have to assemble a detailed development proposal. The key piece to that will be Jak’s architectural drawings, with input from Charles from the legal side—add another month or two.
“The next step will be to run everything up the building committee and council flag poles again—taking into account applicable notice periods. We can expect to meet all sorts of suggestions, added requirements, et cetera, all of which will require Jak to revise plans.
“Once that whole process seems to be working toward a favorable resolution, we can market the property. If we’re lucky, a buyer will surface immediately. But it might take a week, two, or as much as a month . . . or two. In any case, price and terms of a purchase agreement will have to be negotiated. Enter the lawyers. Add more time. Depending on people’s responsiveness, it could take us a couple more weeks to get to a fully signed agreement.
“The buyer—and its lender—will then have to complete what’s called ‘due diligence’; this will include title work, including a survey, an appraisal and financial underwriting of guarantors, if a lender’s involved, and an environmental assessment. If we’re lucky we can skate by with what’s called a Phase I. Most likely, however, given that there was at least one UST on one of the parcels, a Phase II assessment will have to be conducted, whereby soil is tested for hydrocarbons and other hazardous substances. Assuming—fingers crossed—that no soil remediation is required, we’d be looking at a minimum of a couple of months or more past the signing of the purchase agreement before we’d be able to schedule a closing.”
“Okay. I’ll take your word for it. But how long altogether?” Cliff asked.
Over the previous 20 years I’d observed two defining traits of my “accidental partner”: his brain could download and synthesize information as fast as it could be conveyed to him; and he could cut to the chase faster than a foxhound.
“At least a year,” I said, “assuming everything goes swimmingly—which, I can tell you from experience, it never does. There are always hiccups beyond your control or anticipation.”
“I just need to get myself to retirement,” said Cliff, “and another year would be good—more would be better.”
“More is highly probable.”
The future would render Cliff’s concern wildly ironic . . . and my boring explanation of the timeline wildly optimistic.
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© 2023 by Eric Nilsson
[1] This gets back to the “shoot the moon” strategy pursued by many developers. When the “moonshot” itself gets shot down by municipal officials, the developer then negotiates a cutback but still in “hog” territory. The risk of such a strategy is that the initial plan generates such public blowback, the developer becomes persona non gratis and faces a much more difficult time getting any plan approved. Stay tuned for tomorrow’s post about a highly relevant case in point.
