Title
Dept/ Agency: Economic & Housing Development
Action: ( ) Ratifying (X) Authorizing (X) Amending
Type of Service: Private Sale/Redevelopment
Purpose: Authorize Execution of an Amended and Restated Agreement for the Sale and Redevelopment of Land Between the City of Newark and Virginia Street Fidelco, LLC
Entity Name: Virginia Street Fidelco, LLC
Entity Address: 225 Millburn Avenue, Suite 202, Millburn, New Jersey 07041
Sale Amount: $13,810,000.00, less the Remediation and Demolition Credit [maximum aggregate credit not to exceed $3,810,000.00]
Contract Period:
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
(X) Private Sale ( ) Grant ( ) Sub-recipient ( ) n/a
List of Property:
(Address/Block/Lot/Ward)
41-45 McClellan Street/Block 3773/Lots 15/Additional Lot41/South Ward
47-63 McClellan Street/Block 3773/Lot 43/South Ward
980-990 Frelinghuysen Avenue Rear/Block 3773/Lot 53/South Ward
Additional Information:
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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-b (s) 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, the City and the Redeveloper have engaged in negotiations relative to the Project and the City has determined that in furtherance of its goals and objectives of the Redevelopment Plan, and any amendments thereto, it is in the City’s best interest to enter into an Amended and Restated Agreement for the Sale and Redevelopment of Land with the Redeveloper, in substantially the form attached hereto as Exhibit A, for the purpose of setting forth in detail each Parties’ respective undertakings, rights and obligations in connection with the development and construction of the Project.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Mayor and/or the Deputy Mayor/Director of the Department of Economic and Housing Development of the City, or either of them, are hereby authorized to enter into and execute the Amended and Restated Agreement for the Sale and Redevelopment of Land by and Between the City of Newark and Virginia Street Fidelco, LLC (the “Amended Redevelopment Agreement), in substantially the form 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 Amended Redevelopment Agreement and may enter into any related documents, which may be necessary in order to effectuate the Amended Redevelopment Agreement.
3. The Redeveloper shall be designated as the exclusive redeveloper of the Property and any other prior legislation authorizing or intending to authorize the sale and/or redevelopment of the Property is hereby rescinded.
4. The Redeveloper shall have thirty (30) days from the date this resolution is certified by the Office of the City Clerk to execute the attached Amended Agreement for the Sale and Redevelopment of Land and return same to the Department of Economic and Housing Development. Should the Redeveloper fail to execute and return the attached Amended Agreement within this thirty (30) day time period, the authorization provided by this resolution shall be null and void, unless the Deputy Mayor/Director of the Department of Economic and Housing Development agrees in writing to extend this thirty (30) day time period.
5. The executed Redevelopment Agreement shall be placed on file in the Office of the City Clerk by the Deputy Mayor/Director of Department of Economic and Housing Development.
6. The Deputy Mayor/Director of Department of Economic and Housing Development is authorized to enter into a maximum of two (2) six (6) month extensions of any timeframe set forth in the Amended Agreement, subject to full written disclosure of such extension(s) (in the form of a signed Memorandum to be submitted to the Office of the City Clerk prior to adoption) to the Municipal Council of the City of Newark by the Deputy Mayor/Director of the Department of Economic and Housing Development and the approval of the City of Newark’s Corporation Counsel.
STATEMENT
This Resolution authorizes the Mayor and/or his designee and the Deputy Mayor/Director of the Department of Economic and Housing Development, on behalf of the City of Newark, to enter into and execute an Amended and Restated Agreement for the Sale and Redevelopment of Land with Virgina Street Fidelco, LLC, 225 Millburn Avenue, Suite 202, Millburn, New Jersey 07041, for the redevelopment of the property located at Block 3773 Lots 15, 41, 43, and 53, more commonly known as 41-45 McClellan Street, 47-63 McClellan Street and 980-990 Frelinghuysen Avenue Rear.