Title
Dept/ Agency: Economic & Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Application for Long-Term Tax Exemption
Purpose: Assignment and Assumption of Existing Tax Exemption and Payment of Outstanding Annual Service Charges Due and Owing on property located at 744 Broad Street, Newark, New Jersey 07102
Entity Name: Emerita Urban Renewal, Limited Liability Company
Entity Address: c/o Hilla Capital, Inc., 136 Madison Avenue, 4th Floor, New York, New York 10016
Abatement Period: Original 15 Year exemption granted in 2000 - remaining term of original exemption which expires in 2015
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale ( ) Grant ( ) Sub-recipient ( ) n/a
List of Property:
(Address/Block/Lot/Ward)
736-752 Broad Street, /Block 145/ Lots 1, 7 and 78/ East Ward
Additional Information:
Original tax abatement granted by Resolution 7RBP 050300
Payment of $3,828,884.36 in settlement of outstanding delinquent annual service charges, through December 31, 2012)
body
WHEREAS, on May 3, 2000 the Municipal Council of the City of Newark adopted Resolution 7RBP granting a long term tax exemption to 744 Elroy Urban Renewal Investors, LLC ("744 Elroy") for a fifteen year term for a commercial project pursuant to the provisions of the Long Term Tax Exemption Law (N.J.S.A. 40A:20-1 et. seq.), as amended, on real property commonly known as 744 Broad Street and identified on the City of Newark's tax map as Block 145, Lots 1, 7 and 78 (the "Property") and authorizing the Mayor to execute a financial agreement with 744 Elroy governing the terms and conditions of the long term tax exemption (the "Financial Agreement"); and
WHEREAS, Section 8.1 of the Financial Agreement provides that 744 Elroy may file a written application with the City seeking the City's consent to the sale of the commercial project and the transfer of 744 Elroy's obligations under the Financial Agreement to another entity qualified under the Long Term Tax Exemption Law to operate the project and that, so long as 744 Elroy is not in default on its obligations under the Financial Agreement and the proposed assignee agrees to fully assume the obligations of 744 Elroy under the Financial Agreement on a going forward basis, the City will not unreasonably withhold its consent to such sale and transfer; and
WHEREAS, on July 7, 2011, an Order was entered, in an action entitled Bank of America, N.A. v. 744 Elroy Urban Renewal Investors, LLC et al., Docket No. F-12621-10, Superior Court of New Jersey, Chancery Division, Essex County, appointing Jonathan Schultz of Onyx Equities, L.L.C. as special receiver to manage, secure, market and sell the Property (the "Receiver"); and
WHEREAS, on May 4, 2012, the Receiver filed a written application with the City on behalf of 744 Elroy seeking the City's consent to the sale of the project and the transfer of the Financial Agreement to Emerita Urban Renewal, Limited Liability Company (the "Transfer Application"); and
WHEREAS, the City has reviewed the Transfer Application and has determined that Emerita Urban Renewal, Limited Liability Company ("Emerita Urban Renewal") is an urban renewal entity authorized to operate the project on the Property under the Long Term Tax Exemption Law, that Emerita Urban Renewal, has the experience and financial capacity to operate the project, and that Emerita Urban Renewal, has agreed to fully assume all of the obligations of 744 Elroy under the Financial Agreement; and
WHEREAS, the City wishes to enter into an Assignment and Assumption Agreement with the proposed assignee, Emerita Urban Renewal; and
WHEREAS, in accordance with Ordinance No. 6PSF-a 050411 adopted May 4, 2011 (the redeveloper pay-to-play ordinance), Emerita Urban Renewal has filed with the City a sworn statement that it has not made any contribution in violation of said Ordinance; and
WHEREAS, N.J.S.A. 54:4-99 and N.J.S.A. 54:4-100 pertain to the adjustment of delinquent taxes and interest charges and provides that a municipality may make such abatement, revision, alteration, adjustment and settlement of any past due taxes, assessments, interest, penalties and other municipal charges, both of principal and of any and all interest and penalties thereon; and
WHEREAS, there are outstanding annual service charge payments, including accrued interest and penalties, due on the Property; and
WHEREAS, the Tax Collector is the State Statutory Officer mandated with the fiduciary responsibility to expeditiously make the required adjustments and corrections to the books and records of the Revenue Collection Divisions within the Department of Finance pursuant to the rules of audit; and
WHEREAS, the Director of Finance concurs with the Tax Collector to expeditiously make the required corrections to the books and records for the Division of Revenue Collections pursuant to N.J.S.A.54:5-99 and N.J.S.A. 54:5-100; and
WHEREAS, the City through its Tax Collector, the Bank of America, N.A. solely in its capacity as agent for a consortium of lenders and as mortgagee of the Property, Jonathan Schultz solely in his capacity as Receiver, 744 Elroy and Emerita Urban Renewal have agreed to settle the issue of all outstanding annual service charge payments due wherein the Tax Collector agrees to make all necessary adjustments of the delinquent annual service charge payments and interest charges and penalties and accept $3,828,884.36 in full and complete satisfaction of the annual service charge payments due on the Property through December 31, 2012; and the Bank of America, N.A. solely in its capacity as agent for a consortium of lenders and as mortgagee of the Property, Jonathan Schultz solely in his capacity as Receiver, 744 Elroy and Emerita Urban Renewal agree to pay on the earlier of: (i) the date of the closing of the sale of the Property to Emerita Urban Renewal, (the "Closing"), or (ii) October 31, 2012, in full and complete satisfaction of the annual service charge payments due on the Property through December 31, 2012 to the City, in one lump sum payment of $3,828,884.36, via certified check, which shall be paid out of either the Closing proceeds from the sale, or alternatively, by the Receiver, in his sole discretion, from other funds available to him.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Municipal Council of the City of Newark hereby consents to (a) the sale of the Property from the Receiver to Emerita Urban Renewal, and to (b) the transfer of the obligations of 744 Elroy as set forth within the Financial Agreement between the City and 744 Elroy governing the long term tax exemption on the Property to Emerita Urban Renewal.
2. The Tax Collector and the Director of Finance are hereby authorized to settle the outstanding annual service charges, interest and penalties due through December 31, 2012 for a total lump sum payment of $3,828,884.36, via certified check, which shall be paid out of either the Closing proceeds from the sale, or, alternatively, directly by the Receiver, in his sole discretion, from other funds available to him, so long as the lump sum payment in the amount of $3,28,884.36 to the City is made on the earlier of (i) the date of the Closing, or (ii) October 31, 2012, and to execute and insure that the necessary adjustments and corrections are made to the books and records of the Revenue Collection Division within the Department of Finance pursuant to N.J.S.A. 54:4-99 and all other applicable laws and regulations, provided that settlement of the outstanding annual service charge payment due through December 31, 2012 as provided hereinafter shall be effective whether or not the sale of the property is consummated so long as payment in the amount of $3,828,884.36 is made via certified check, delivered in hand to the Corporation Counsel of the City of Newark, on the earlier of the date of a closing of the sale of the Property or October 31, 2012. Otherwise the Law Department is hereby authorized to take any and all action deemed necessary to terminate the Financial Agreement for the Property and the City, through its Tax Collector's Office will include this Property in its annual Tax Certificate Sale and seek the full uncompromised amount then due and owing.
3. The Tax Collector and the Director of Finance are hereby authorized to do all things necessary to accomplish these accounting tasks in a timely manner pursuant to the rules of audit and accounting within the Department of Finance.
4. The City's consent to the sale of the Property; the City's consent to the transfer of the Financial Agreement to Emerita Urban Renewal as set forth in paragraph 1 above and the City's agreement to settle the outstanding annual service charge payments due through December 31, 2012 as set forth in paragraphs 2 and 3 above are expressly conditioned upon the following:
(a) the submission by the Receiver to the City Clerk and the City's Deputy Mayor/Director of the Department of Economic and Housing Development the fully executed Assignment and Assumption Agreement between Jonathan Schultz, solely in his capacity as Receiver on behalf of 744 Elroy and Emerita Urban Renewal, in a form acceptable to the Corporation Counsel and Business Administrator, authorizing the sale of the Property and the transfer of the long term tax exemption on the date of the Closing or on or before October 31, 2012 whichever is sooner; and
(b) the submission by Emerita Urban Renewal of the executed Assignment and Assumption Agreement between the City and Emerita Urban Renewal referenced in paragraph 6 below to the City Clerk and the City's Deputy Mayor/Director of the Department of Economic and Housing Development on the date of the Closing or on or before October 31, 2012 whichever is sooner; and
(c) Emerita Urban Renewal, Limited Liability Company shall obtain fee simple ownership to the Property and shall submit a recorded copy of the deed (or, if a recorded copy is not available, proof that the deed has been submitted to the Essex County Clerk for recording) with the City's Tax Assessor's Office and Department of Law by October 31, 2012; and
(d) Bank of America, N.A. solely in its capacity as agent for a consortium of lenders and as mortgagee of the Property; Jonathan Shultz, solely in his capacity as Receiver; 744 Elroy; and/or Emerita Urban Renewal shall pay in one lump sum, via certified check in the amount of $3,828,884.36, payable to the City of Newark, in full satisfaction of the annual service charge payments due on the property through December 31, 2012, on the earlier of the date of the Closing or October 31, 2012, whichever is sooner; and
(e) Bank of America, N.A. solely in its capacity as agent for a consortium of lenders and as mortgagee of the Property, Jonathan Schultz, solely in capacity as Receiver, 744 Elroy and/or Emerita Urban Renewal shall pay in full, via certified check all water and sewer charges due and owing on the Property by the earlier of the date of the Closing or October 31, 2012, whichever is sooner; and
(f) Emerita Urban Renewal agrees that within nine months of the date that it takes title to the Property, it shall permanently convert the burners in the building located on the Property from oil-burning to gas-burning burners so that the building is only consuming gas and shall provide the Deputy Mayor/Director of the Department of Economic and Housing Development (the "Director") with written verification in a form satisfactory to the Director that this conversion has been timely completed.
5. Failure to perform all of the conditions and comply with all of the requirements of paragraph 2 above shall render this resolution, the City's consent to the sale of the Property, the City's consent to the transfer of the Financial Agreement to Emerita Urban Renewal, and the Assignment and Assumption Agreement between the City and Emerita Urban Renewal; and the City's agreement to settle the outstanding annual service charge payments due through December 31, 2012 for a lump sum payment in the amount of $3,828,884.36 as indicated above, are null and void and, in that event, the Law Department is hereby authorized to take any and all action deemed necessary to terminate the Financial Agreement for the Property and the City, through its Tax Collector's Office, will include this Property in its annual Tax Certificate Sale and seek the full uncompromised amount then due and owing.
6. The Municipal Council hereby authorizes the Mayor to execute an Assignment and Assumption Agreement with Emerita Urban Renewal in the form attached hereto as Exhibit "A" and such will be held by the Corporation Counsel of the City and not released, until such time as the conditions set forth in paragraph 4 (a) through and including (e) are satisfied.
7. The Assignment and Assumption Agreement between the City and Emerita Urban Renewal, once fully executed, and released by the Corporation Counsel as set forth in paragraph 6 above, shall be filed by the Deputy Mayor/Director of the Department of Economic and Housing Development with the Office of the City Clerk.
STATEMENT
This resolution consents to the sale of the property commonly known as 744 Broad Street and identified on the City's tax map as Block 145, Lots 1, 7 and 78 (the "Property") to Emerita Urban Renewal, Limited Liability Company, c/o Hilla Capital, Inc., 136 Madison Avenue, 4th Floor, New York, New York 10016, and to the transfer of the obligations of 744 Elroy Urban Renewal Investors, LLC as set forth within the Financial Agreement between the City and 744 Elroy Urban Renewal Investors, LLC governing the long term tax exemption on the Property to Emerita Urban Renewal, Limited Liability Company, authorizes the Mayor to execute an Assignment and Assumption Agreement with Emerita Urban Renewal, Limited Liability Company, and authorizes the City of Newark, through the Tax Collector, to settle the outstanding Annual Service Charge Payments due through December 31, 2012 for $3,828,884.36.