Title
Dept/ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Agreement with Government Entity
Purpose: Authorizing Execution of a Settlement Agreement with New Jersey Department of Environmental Protection (“NJDEP”) to Satisfy Liens for Environmental Cleanup Costs Incurred by NJDEP at Former White Chemical Site
Entity Name: New Jersey Department of Environmental Protection
Entity Address: 401 East State Street, Trenton, NJ 08625
Contract Amount: $725,000.00
Funding Source: Portion of Proceeds from Sale of Block 3782, Lot 109 to 3-J’s Development Group. LLC (“Redeveloper”)
Contract Period: N/A
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale ( ) Grant ( ) Sub-recipient ( X ) n/a
List of Property:
(Address/Block/Lot/Ward)
646-696 Frelinghuysen Avenue Rear/Block 3782/Lot 109/South Ward
Additional Information:
This legislation is related to 7R2-c, adopted April 4, 2018, which is the Original Redevelopment Agreement with Redeveloper, Legistar [18-1504], which is the Interim Redevelopment Agreement with Redeveloper, and 7R2-f (s/as), adopted September 25, 2018, which is a Release and Waiver of Lien Agreement between the City and the United States Environmental Protection Agency.
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WHEREAS, the purpose of this resolution is to approve the execution of a Settlement Agreement with the New Jersey Department of Environmental Protection (“NJDEP”) in order to resolve certain NJDEP liens on the City-owned property located on Block 3782, Lot 109, on the Tax Map of the City of Newark, more commonly known as 646- 696 Frelinghuysen Avenue, Rear (the "Property") in order to allow for the sale and redevelopment of the Property; and
WHEREAS, a long history of on-site industrial operations at the Property, including by Union Carbide, Central Laundry, Lancaster Chemical, and White Chemical Corporation (“White Chemical”), has resulted in significant environmental contamination; and
WHEREAS, White Chemical conducted acid chloride and flame-retardant manufacturing at the Property from approximately 1983 until it declared bankruptcy in 1990; and
WHEREAS, on September 25, 1991, the United States Environmental Protection Agency (“USEPA”) placed the Property on the National Priorities List (#NJD980755623), identifying it as the White Chemical Corporation Superfund Site; and
WHEREAS, the USEPA and the NJDEP have each incurred costs in connection with certain environmental remediation activities that each agency has undertaken to respond to the release of contaminants at the Property; and
WHEREAS, as a result of certain tax foreclosure proceedings in or around 1996, the City acquired the Property; and
WHEREAS, the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq., as amended and supplemented (the "Act"), authorizes municipalities to participate in the redevelopment and improvement of areas that are in need of redevelopment or rehabilitation; and
WHEREAS, on July 14, 2004, the Municipal Council of the City of Newark (“Municipal Council”) adopted the Frelinghuysen Avenue Airport Support Zone Redevelopment Plan by Ordinance 6S&Fk; and
WHEREAS, to stimulate the reinvigoration of the City, the Municipal Council adopted Resolution 7Rdo (AS) on June 15, 2005, designating the entire City of Newark as an area in need of rehabilitation pursuant to the Act; and
WHEREAS, pursuant to N.J.S.A. 40A: 12A-8(f), the City is authorized to arrange or contract with redevelopers for the planning, re-planning, construction or undertaking of any redevelopment project; and
WHEREAS, during its efforts to advance the sale and redevelopment of the Property, the City discovered that the NJDEP and the USEPA had each recorded substantial liens against the Property to secure the costs incurred in connection their respective remediation activities at the Property; and
WHEREAS, on April 4, 2018, the Municipal Council adopted Resolution 7R2c, authorizing the City to execute and implement a Redevelopment Agreement (“RDA”) with 3-J's Development Group, LLC ("Redeveloper"), which provided for the sale of the Property to the Redeveloper for $2,900,000.00, which amount is subject to certain credits (the "Purchase Price"), and redevelopment of the Property: initially, as a secure parking facility for commercial vehicles and upon the completion of the USEPA remediation, as an industrial warehouse, or for such other purposes as may be approved by the City and consistent with a Deed Notice that has been recorded upon the Property in connection with the USEPA remediation; and
WHEREAS, satisfactory resolutions of the USEPA and NJDEP liens is an express condition precedent to any obligation under the RDA for the sale and permanent redevelopment of the Property; and
WHEREAS, while working towards satisfaction of all conditions precedent in the RDA, the parties entered into an Interim Redevelopment Agreement/Lease (“Interim RDA/Lease”) that was approved by the Municipal Council (Legistar [18-1504]); and
WHEREAS, under the terms of the Interim RDA/Lease, the Redeveloper agreed to clean up the debris that has accumulated from illegal dumping on the Property, to fence the Property, and to use the Property on an interim basis for employee and truck parking to support its nearby local business; and
WHEREAS, further under the terms of the Interim RDA/Lease, the Redeveloper agreed to pay the City a $12,000.00 per month lease payment, fifty percent (50%) of which was to be credited toward the Purchase Price under the RDA; and
WHEREAS, on September 25, 2018, the Municipal Council adopted Resolution 7R2-f (s/as) September 25, 2018 authorizing execution of a Release and Waiver of Lien Agreement with the USEPA (“USEPA Settlement Agreement”) which provides, inter alia, for the payment of $1,450,000.00 (plus 50% of any monies received by the City for the Property in excess of $2,900,000.00) to USEPA from the Purchase Price of the Property in exchange for a release and waiver of the USEPA lien; and
WHEREAS, pursuant to the terms of the USEPA Settlement Agreement, the City’s payment of the $1,450,000.00 settlement amount is contingent upon and is payable within thirty (30) days of the sale of the Property to the Redeveloper; and
WHEREAS, the City now wishes to resolve the NJDEP liens pursuant to the terms of a Settlement Agreement (“NJDEP Settlement Agreement”), a copy of which is attached hereto as Exhibit A, which provides, inter alia, for the payment of $725,000.00 to NJDEP from the Purchase Price of the Property in exchange for a release and waiver of the NJDEP liens; and
WHEREAS, pursuant to the terms of the NJDEP Settlement Agreement, the City’s payment of the $725,000.00 settlement amount is contingent upon and would be made payable within thirty (30) days of the sale of the Property to the Redeveloper; and
WHEREAS, the City believes that the redevelopment of the Property is in the vital and best interests of the City and that it will promote the health, safety, morals and welfare of the City's residents and, as such, the City wishes to resolve the outstanding NJDEP liens in accordance with the terms of the NJDEP Settlement Agreement in order to allow for the conveyance and redevelopment of the Property pursuant to the terms of the RDA, the Interim RDA/Lease, and any further amendments to the RDA that the City and Redeveloper may agree upon; and
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development, are hereby authorized to enter into and execute the NJDEP Settlement Agreement in the form substantially as attached hereto as Exhibit A.
2. The Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized to effectuate certain business terms and conditions related to the Property and may enter into any related documents which may be appropriate and necessary in order to effectuate the NJDEP Settlement Agreement, all in forms which shall be subject to the approval of the City of Newark's Corporation Counsel.
3. A Certification of Funds from the Director of Finance is consistent with N.J.A.C. 5:30-5.4 stating that upon the sale of the Property, there will be sufficient and available funds to make the payment in accordance with the terms of the NJDEP Settlement Agreement.
4. The Deputy Mayor/Director of the Department of Economic and Housing Development and the Director of Finance are hereby authorized to direct payment to be made to the NJDEP in accordance with the terms of the NJDEP Settlement Agreement upon and in conjunction with the sale of the Property to the Redeveloper pursuant to the RDA and any related amendments.
5. The Deputy Mayor/Director of the Department of Economic and Housing Development shall place a copy of the executed NJDEP Settlement Agreement, and all such other executed documents and agreements authorized by this resolution on file in the Office of the City Clerk.
6. This resolution shall take effect immediately.
STATEMENT
This Resolution authorizes the Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development, to execute a Settlement Agreement with the New Jersey Department of Environmental Protection in order to resolve certain liens on the City-owned property located upon Block 3782, Lot 109 on the Tax Map of the City of Newark, more commonly known as 646-696 Frelinghuysen Avenue Rear (the "Property"), in order to allow for the sale and redevelopment of the Property, in the form attached hereto as Exhibit A.