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AN ORDINANCE AUTHORIZING THE MAYOR, AND/OR HIS DESIGNEE, THE DEPUTY MAYOR/DIRECTOR OF THE DEPARTMENT OF ECONOMIC AND HOUSING DEVELOPMENT TO AUTHORIZE THE SALE AND TRANSFER OF THE CITY OF NEWARK PROPERTY IDENTIFIED ON THE CITY OF NEWARK TAX MAP AS BLOCK 3773, LOTS 15, 41, 43 and BLOCK 3773, LOT 53 TO VIRGINIA STREET FIDELCO, LLC FOR THE AMOUNT OF $13,810,000.00, LESS THE REMEDIATION AND DEMOLITION CREDIT, PURSUANT TO AN AMENDED AND RESTATED AGREEMENT FOR SALE AND REDEVELOPMENT OF LAND.
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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, in order to stimulate the reinvigoration of the entire City, by Resolution 7Rdo (A.S.) adopted by the Municipal Council on June 15, 2005, the entire City of Newark was designated as an area in need of rehabilitation pursuant to the Act; and
WHEREAS, by Ordinance 6S+FC adopted December 21, 2000, the Municipal Council adopted the “Frelinghuysen/McClellan Redevelopment Plan and the Feasibility of Relocation of City Tax Block 3773, Lots 15, 41, 43 & 53” (the “Redevelopment Plan”);
WHEREAS, on or about July 3, 2008, the City entered into and executed a Redevelopment Agreement with McClellan Street Urban Renewal, LLC, which later assigned its rights in the Redevelopment Agreement to Virginia Street Fidelco, LLC (“Fidelco” or “Redeveloper”) (the “Original Redevelopment Agreement”) providing for the conveyance, remediation and redevelopment of certain City-owned real property known as 41-63 McClellan Street and 980-990 Frelinghuysen Rear (formerly referred to as 55 Virginia Street), Newark, New Jersey, designated as Block 3773, Lots 15, 41, 43 and 53, on the Tax Map of the City of Newark (hereinafter, collectively referred to as the “Property” or the “Site”), as authorized by Resolution 7R3-F adopted by the Municipal Council of the City of Newark (the “Municipal Council”) on July 2, 2008; and
WHEREAS, the Redevelopment Plan was applicable to the development and redevelopment of City-owned properties, including the Property as that term is defined herein; and
WHEREAS, the City is the owner of the Property; and
WHEREAS, the City has determined that the Property is no longer needed for any public use and that the redevelopment of the Property will contribute to the reinvigoration of the City; and
WHEREAS, the Original Redevelopment Agreement required Fidelco to remediate the Property, the contamination of which was caused by the historic industrial manufacturing operations of fragrances and flavor products which occurred on the Site for many years (the “Underlying Contamination”); and
WHEREAS, the companies that conducted manufacturing operations on the Site included Orbis Products Corporation, Norda, Inc., International, Inc., Adron, Inc., Quest International, Inc., Indopco, Inc., and National Starch, with the shareholders of said companies including Louis Amaducci, Robert L. Amaducci, William R. Amaducci, Flaroma, Inc., and Elena Duke Benedict (collectively, the “Defendants”); and
WHEREAS, on or about October 26, 2010, the Municipal Council adopted Resolution 7R7-B9S authorizing the City to enter into an Agreement with Fidelco, wherein the City agreed to join Fidelco as Co-Plaintiff in litigation proceedings (the “Litigation Agreement”) to recover all or part of costs anticipated to be incurred in connection with the remediation of the Underlying Contamination upon the Property (the “Environmental Claims”); and
WHEREAS, on or about April 14, 2011, a lawsuit captioned Virginia Street Fidelco, LLC et al. v. Orbis Products Corporation et al., Docket No. 2:11-cv-02057-KM-JBC was instituted in the United States District Court for the District of New Jersey (the “Litigation”); and
WHEREAS, during the pendency of the Litigation, but unrelated to the issues involved in the Litigation, unknown third parties illegally dumped numerous piles of materials, appearing to be construction and demolition debris, upon the Property (the “Debris”), such that the Debris has essentially covered the surface of the Property, thereby impairing the investigation and remediation of the Underlying Contamination; and
WHEREAS, in an effort to avoid the exorbitant costs of a trial, the outcome of which cannot be guaranteed, including with regard to the collection of any potential judgment in Co-Plaintiffs’ favor, Co-Plaintiffs and Defendants engaged in settlement negotiations; and
WHEREAS, by Resolution 7R6-A(S/AS) dated February 25, 2020, the Municipal Council approved an agreement to settle the Litigation (the “Settlement Agreement”) wherein:
1. Co-Plaintiffs agreed to release the Environmental Claims against the Defendants in exchange for Defendants’ agreement to collectively pay a sum of $450,000.00 (Four Hundred and Fifty Thousand Dollars) (“Settlement Proceeds”) to Co-Plaintiffs for the defrayment of the costs of remediating the Underlying Contamination; and further
2. Co-Plaintiffs agreed to release the Environmental Claims against Defendant Estate of Elena Duke Benedict (the “Estate”) in exchange for the Estate’s consent to Co-Plaintiffs filing a claim in the amount of $15,000.00 against the Estate in the pending Surrogate Court proceeding in Westchester County, New York, any proceeds of which shall also be referred to and included in the term “Settlement Proceeds”; and further
3. Defendants agreed to vacate the Default Judgement entered against Adron, Inc. during the course of the Litigation; and
WHEREAS, also by Resolution 7R6-A(S/AS) dated February 25, 2020, the Municipal Council approved an amendment to the Litigation Agreement between the City and the Redeveloper (“Amendment to the Litigation Agreement”) wherein the Parties agreed that the Settlement Proceeds will be payable to Redeveloper for utilization solely for the following limited purposes:
1. Agreed upon professional fees; or
2. The characterization and disposal of the Debris; or
3. The investigation or remediation of the Underlying Contamination upon written approval by the Director of Economic and Housing Development; and
WHEREAS, the City, as the last signatory to the agreements, executed the Settlement Agreement on or about April 14, 2020, and executed the Amendment to the Litigation Agreement on or about June 26, 2020; and
WHEREAS, settlement of the Litigation not only resolved legal issues of uncertain outcome if adjudicated, but it also advanced the City’s interest in allowing for the remediation and redevelopment of the Property; and
WHEREAS, the Redeveloper has expressed a continued interest in redeveloping the Property for warehousing use or industrial outdoor storage and outdoor trailer and vehicle storage, or for such other purposes as may be consistent with the Redevelopment Plan, and any amendments thereto, formally approved by the Municipal Council, and in compliance with the terms and conditions of an Amended and Restated Agreement for the Sale and Redevelopment of Land (the “Project”); and
WHEREAS, the City has agreed to adopt an amendment to the Redevelopment Plan in order for the Redeveloper to develop the Project; and
WHEREAS, the City has determined that the Redeveloper appears to possess the proper qualifications, financial resources, and capacity to implement and complete the Project, as that term is defined herein, in accordance with the Redevelopment Plan, and any amendments thereto, any Governmental Approvals and all other Applicable Laws, ordinances and regulations; and
WHEREAS, the Redeveloper will implement the development, design, financing and construction of the Project in conformity with the Redevelopment Law; and
WHEREAS, N.J.S.A. 40A:12A-8(e) and (f) of the Redevelopment Law authorizes the City to enter into contracts or agreements for the planning, construction or undertaking of any development project or redevelopment work in an area designated as an area in need of rehabilitation; and
WHEREAS, the Redeveloper has agreed to pay the purchase price of $13,810,000.00 (the “Purchase Price”) for the Property, less the Remediation and Demolition Credit, up to a maximum aggregate credit not to exceed $3,810,000.00; and
WHEREAS, the City shall not net less than $10,000,000.00 from the sale at Closing; and
WHEREAS, pursuant to N.J.S.A. 40A:12A-8(e) and (f) of the Redevelopment Law, the Department of Economic and Housing Development has recommended that the City enter into an Amended and Restated Agreement for the Sale and Redevelopment of Land of the Property with the Redeveloper for the consideration of $13,810,000.00 (the “Purchase Price”) for the Property, less the Remediation and Demolition Credit, up to a maximum aggregate credit not to exceed $3,810,000.00, which price, and under such terms as, the City deems to be reasonable, for the purpose of redeveloping the Property, in accordance with the Act, the Agreement, and the Redevelopment Plan, and any amendments thereto.
NOW, THEREFORE, BE IT ORDAINED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Recitals set forth above are incorporated herein as if set forth at length.
2. The Mayor of the City of Newark, and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development are hereby authorized to effectuate the sale and transfer of the City of Newark Property identified on the City Tax Map as Block 3773, Lots 15, 41, 43 and Block 3773, Lot 53 to Virginia Street Fidelco, LLC pursuant to an Amended and Restated Agreement for the Sale and Redevelopment of Land.
3. The Deputy Mayor/Director of the Department of Economic and Housing Development is hereby authorized to effectuate certain business terms and conditions related the sale and transfer of the property commonly known as 41-63 McClellan Street and 980-990 Frelinghuysen Avenue Rear and identified as Block 3773, Lots 15, 41, 43 and Block 3773, Lot 53 on the tax map of the City of Newark in the County of Essex, State of New Jersey (the “Property”) and may enter into and execute any related documents which may be necessary to effectuate same, including but not limited a Quitclaim Deed with a Right of Reverter clause for the Property.
4. Said Quitclaim Deed conveying title to the Property to the Redeveloper shall be approved as to form and legality by the City’s Corporation Counsel and attested to and acknowledge by the City Clerk.
5. The Mayor of the City of Newark, and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development are hereby authorized to execute a Declaration of Covenants and Restrictions as agreed to by the City and the Redeveloper and approved as to form and legality by the City’s Corporation Counsel and attested to and acknowledged by the City Clerk.
6. The Deputy Mayor/Director of the Department of Economic and Housing Development shall place a copy of the executed Quitclaim Deed, and all such other executed agreements authorized by this Ordinance on file in the Office of the City Clerk.
STATEMENT
This Ordinance authorizes the Mayor of the City of Newark, and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development to effectuate the sale and transfer of the City of Newark property commonly known as 41-63 McClellan Street and 980-990 Frelinghuysen Avenue Rear and identified as Block 3773, Lots 15, 41, 43 and Block 3773, Lot 53 to Virginia Street Fidelco, LLC for the amount of $13,810,000.00, less the Remediation and Demolition Credit, up to a maximum aggregate credit not to exceed $3,810,000.00.