5/07/2007

A business-owner speaks out, 5/07

By David Einhorn

My company is in Passaic, NJ which a couple of years ago named my 13-acre property and a couple of surrounding properties as an "area in need of redevelopment." They decided that the best use for my property is no longer commercial and light industrial, but rather should now be redeveloped into a shopping strip along with a big box center for a WalMart or Target.

We have been the owners of the property since 1993. We bought it from the previous landowner, whose family had owned it since the late 1800's. Their use of the complex was for commercial/industrial use as they manufactured insulated cable.

Until today, we still use the facility as a furniture manufacturing and distribution facility, one of the very few still remaining in the United States. We employ dozens of local citizens from town who walk to work everyday and their sole trade and specialty is the woodworking craft. The redevelopment plan that the city is proposing would jeopardize all that for my company as well as the people we employ and those around the country we serve with our products.

If that was the entire story, you may think to yourself "hey - that is not so unique - it happens all the time." But the story gets more complicated.

Usually, on a project of the scope we are talking about here, which involves over 100 acres and $200 million, you would think that the city would put out a Request for Proposals (RFP) to find the best developer to take on something of this magnitude. Instead, we find out one day that there was no RFP or opportunity for anyone to bid on this redevelopment. The mayor and the city has already appointed a redeveloper they think is most capable. Ironically, before the City purchases or awards any type type of contract from products such as cars to toilet paper or services including professional, it has to receive at least a couple of bids on the same thing. Yet this project has gone without public opinion or discussion from local citizens or business owners, and without even asking the land owners affected whether or not they would be willing to take on a project such as this themselves if it was decided that the area indeed had to and should be converted to retail from industrial.

As soon as we became aware of the redevelopment plan, we engaged legal counsel to see what our options are and what we should do. After some due diligence and research conducted by the attorneys and a 3rd party Community Planning and Development Consulting firm, it was recommended that we file a lawsuit opposing the redevelopment plan. The findings were that the report prepared by the planning company for the City of Passaic designating the study area as an area in need of redevelopment "failed to establish a proper basis for such action. It was devoid of the 'substantial evidence' required by statute to substantiate a declarative determination that the area is in need of redevelopment as well as permeated with inaccuracies and internal consistencies - obfuscating the true character of the area."

Shortly after our lawsuit was filed, we received a certified letter from the Department of Inspections and Code Enforcement citing us with a list of violations for the exterior of our property, conditions that have been the same way since before we bought the property. We were taken to court and were told that the violations would be dropped if we withdrew our lawsuit challenging the redevelopment plan, something we reluctantly had to agree to.

About five months ago, the designated developer decided that parts of the 100-acre redevelopment plan, some of which were proposed to be residential, were no longer economically feasible due to changing market conditions. So now the developer requested that he be allowed to only develop approximately 25 acres, all of which would be retail with our property at 13 acres comprising over 50% of the plan. Again without asking any questions or letting other bid on the entire project, the city allowed him to continue, and worked with him to establish an official redevelopers agreement appointing him to this now much-reduced-scale project.

Along the way, the city's redevelopment attorney and executive director were ousted from their positions, according to the Herald News because a "Board member said he worried that the important issues that the previous lawyer fought hard for may be overlooked by the new attorney. He said the commission dumped the previous lawyer because board members were bowing to pressure from the city to accommodate the proposed redeveloper in negotiations."

The agreement is now one signature away from being finalized. Yet there is still much uncertainty as to what will actually happen to our business and that of our neighbors, and how we will be able to emerge from it.

If you think about eminent domain and condemnation, you will discover when used for private development and not for "public uses" such as roads, schools, or hospitals, it is only to take advantage of property owners by forcing them into a corner with no choice or option. You can compare it to a company going out of business and forced to sell off its assets. The assets will go ay a "fire sale" price, much less than could have been obtained were there time with no pressure forcing the sale. Also, if the redeveloper was willing to pay a fair price for the properties, most people would probably agree to sell, as long as they would be able to replace their property with something equivalent forthe same money.

If we are forced to close our business and leave our current location, at the very least why not give us a chance at redeveloping the property ourselves and try to meet the redevelopment plan the City is looking for? We thought about this approach and arranged a meeting with Mayor Samuel Rivera of the City of Passaic along with our attorney and architect. We were ready to offer a shopping center plan we envisioned along with a financing arrangement for the project from a major commercial bank. We were given no more than 5 minutes then asked to leave the mayor's office. He said that the redevelopment plan was already decided on and we were too late. This was several years ago and close to two years before a memorandum of agreement (MOA) was entered into with the current proposed redeveloper. If we are able to do the same plan the city is looking for, would it not be easier for the city to work with us and at least give the property owner the benefit of the redevelopment, considering that we would be losing our business?

Unfortunately, this is what we are working with and with much uncertainty ahead in our near future as to what all this would mean for us, we struggle with how to cope.

We hope that if we make more people aware of the conditions that are taking place and how businesses and communities are being impacted for the mere benefit of those parties involved with the City. It is hard to believe that we live in a free and democratic United States of America. I would strongly urge anyone else faced with similar injustices to speak out, demanding their rights and liberties and make sure it is known what is being done. Only this way can we even hope that government officials will correct these injustices and inequalities.


David Einhorn: david@sharutfurniture.com