9/07/2004

A Heated Dispute in Newark



Mulberry Street Landowners Fight $550 Million Project

By Marc Ferris


Almost every building along the Mulberry Street corridor near City Hall
here prominently displays signs protesting a proposed redevelopment plan.
Some state, "Let's Build Tomorrow Together" or "Save our Homes." Another
series features a red circle with a slash slicing through the words
"eminent domain abuse."

At issue is a plan by the Newark Redevelopment Corporation, a private
entity, and Hoboken-based builder Metro Homes to condemn 14 acres in the
shadow of City Hall and build an "urban village" of 2,000 condominium units
and retail stores with 180,000 square feet of space.

The development has been the subject of heated hearings before the City
Planning Board that are expected to continue later this month. The board is
authorized under the state Local Redevelopment and Housing Law, enacted in
1992, to recommend whether the area is "in need of redevelopment," the
statutory standard required to embark on proceedings involving eminent
domain, which is usually defined as the right of a government to seize
private property for public use. In this project, however, private property
is to be taken for use by private entities.

The Newark Municipal Council has the final say over the matter and can
modify the developers' proposal.

More than half the 65 property owners in the area have organized the
Mulberry Street Coalition to fight the project, calling it a land grab by
politically connected developers that would destroy a rebounding
neighborhood. Proponents of the $550 million project say, however, that it
will provide a shot in the arm for the decaying city center and populate the
downtown area after dark.

If the condemnation plan proceeds, the law requires the developers offer
just compensation, or fair market value, to the landowners.

"We will offer existing businesses compensation above and beyond what law
requires," said John Inglesino, a lawyer who represents the developers. "We
want them to be part of the project and welcome the opportunity to
incorporate them into our plan as long as it makes sense."

But George Mytrowitz, spokesman for the Mulberry Street Coalition, said
that trust was lacking and that no signed contracts had been offered. He
owns three buildings in the area, including one that houses Market Body
Works, an auto body shop that his great-grandfather opened as a carriage
repair establishment 90 years ago.

"There is a difference between fair market value and open market value
and we get nothing for the taxes we've spent or for future business," he
said.

"The developer makes a lot of promises, but we don't want to leave."

Mr. Mytrowitz said that the project's history included some interesting
turns. In May, 2003, The Municipal Council voted 7 to 0 (with 2 abstentions)
to reject a request for the Planning Board to consider the proposal. But on
Jan. 5, the council voted 5 to 2 (one member abstained, and another was
absent) to reverse the original decision.

Records at the New Jersey Election Law Enforcement Commission show that
after the May 2003 vote, the developers, along with associates and family
members, contributed money to two councilmen, one of whom then changed his vote, and to Mayor Sharpe James, who supports the project.

The Newark Redevelopment Corporation, the records show, donated $750 to
Councilman Hector Corchado on Aug. 3, 2003, and $500 on Oct. 23, 2003. On
Jan. 5, he changed his vote as the council reversed its opposition to the
plan; that day, the records show he received $ 1,000 from Mr. Inglesino, the
developers' lawyer. On Feb. 4, he received an additional $300 from the
corporation, and on Feb. 5 he received $2,200 from Dean Geibel, a principal
of Metro Homes. On May 5 he got $150 more from Mr. Inglesino.

Mr. Corchado did not return phone calls seeking comment.

Augusto Amador, the neighborhood's Municipal Council representative, who
originally voted to reject the development plan but abstained from the vote
in January to re-introduce it, received $1,000 from Newark Redevelopment
Corporation on March 24 and $1,000 from Emilio Farina, a principal of the
corporation and a former aide to Councilwoman Bessie Walker, on April 4.

Mr. Amador, who said in July that he was considering returning the money,
said last week that he had no intention of doing so.

"It doesn't play a role in that decision or any other decision," he said.
"I'm not in favor of the project, but I will make my decision again if the
owners are not properly compensated."

Mr. Mytrowitz said of the donations and the votes: "This is all legal,
but what does it say? Pay-to-play."

Mr. Inglesino said, however, that "there are certainly no quid pro quos
of which I am aware."

Eminent Domain cases have been the subject of scrutiny statewide, in part
because the law gives broad powers to municipalities, said John Buonocore, a
lawyer for the Mulberry Street Coalition.

"The problem for property owners is that the law and the courts attach a
presumption of correctness to any municipality's decision," he said. "What's
going on in Newark is that they're putting the cart before the horse: the
developer saw an opportunity, got the city to go along, and then they're
trying to make this conform to the redevelopment law."

Scott Bullock, a senior lawyer at the Institute for Justice, a
libertarian legal group based in Washington D.C., argues that municipalities
abuse their constitutional powers when they take property from private
owners and give it to a private entity in the name of economic and tax
benefits.

The legal tide may be turning, he said, citing a decision last month by
the Michigan Supreme Court that overturned a case in which the City of
Detroit was allowed to clear the Poletown neighborhood for a General Motors
plant. The court called the use of eminent domain for private purposes "a
radical departure from fundamental constitutional principles." The case,
originally decided in 1981, had been cited by other courts around the
country to justify broad application of eminent domain proceedings.

In Newark, where hearings on the redevelopment proposal began in July,
the Planning Board has heard conflicting opinions from consultants hired by
the developers and by the coalition regarding the neighborhood's condition.

The developers say that the neighborhood is blighted, meeting a criterion
of the law that allows municipalities to condemn property because of a "lack
of proper utilization" of land that is "potentially useful and valuable for
contributing to and serving the public health, safety, and welfare."

Along the Mulberry Street corridor, which consists of nine blocks and 166
properties, 60 percent of the area consists of surface parking lots, vacant
land and storage yards. Mr. Inglesino said the developers' case was
bolstered when the Appellate Division of New Jersey Superior Court ruled in
June that surface parking lots represented evidence of underutilization.

The area is sandwiched between the downtown business district and the
Ironbound neighborhood, which has experienced a renaissance in recent years.

The Mulberry Street area used to look "like a war zone," Councilman
Amador said. Though it is not a garden spot, however - broken glass and
litter cover some sidewalks on the side streets - signs of life abound. New
stucco sheaths several buildings and satellite television dishes perch on
windowsills and rooftops.

Mr. Mytrowitz questions the need to seize any buildings in the area,
arguing that there are plenty of undeveloped parcels on which to build. But
Mr. Inglesino says that the parking lots and other empty spaces are not
contiguous and that any meaningful redevelopment cannot be done in a
hodge-podge basis.

Jose Criado, a member of the coalition who owns the Pick-It Laundromat,
which inside the redevelopment zone said: "If you can condemn this place,
you can condemn all of Newark. Our roots are here, and we stuck it out when
no one else cared about the neighborhood."

In the end, coalition members may be fighting a losing battle, given the
siren call of redevelopment.

"My dilemma right now is that Newark is on the threshold of moving
forward, and a project like this could plant the seeds for change that will
lift the city for the next 30 or 40 years," Councilman Amador said. "But no
one should be treated unkindly by this process. The project is going to be
done, ultimately, but I just hope it will be done in a manner that is fair
to everyone."





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