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Massa terminates EnCap deal

By Kevin Canessa Jr.

NORTH ARLINGTON — The Borough of North Arlington has terminated its deal with Cherokee Porete (EnCap), Council President Steve Tanelli said last week.

The Borough’s special counsel for redevelopment in the EnCap case, Robert J. McGowan, said that as of 9 a.m. last Wednesday, the Borough has terminated the contract in writing.

McGowan notified borough officials that Cherokee failed to live up to a section of the development agreement signed by the former administration that required the developer to make an irrevocable financial commitment to the Borough.

“As far as the Borough is concerned, as of 9 a.m. today (Wednesday), there is no agreement with Cherokee/EnCap,” McGowan said.

In a letter to the Mayor Peter Massa and the entire Borough Council, McGowan noted:

“As provided in Section 6.01 (b) of that agreement, the Cherokee/EnCap Group, as redeveloper, was to provide “an irrevocable commitment from a Quality Security Provider (as that term is defined within the Agreement) stating that such Qualified Security Provider will provide the Pre-Completion Security (also a defined term) . . . (as) . . . required by the terms of (the) Redevelopment Agreement.”

McGowan says this was to be done by not later than March 31. It wasn’t, he says.

Additionally, other material conditions of the agreement have also not been satisfied, according to McGowan.

“Cherokee/EnCap was to have made interim redeveloper contribution payments to the Borough in the amount of $2 million on Dec. 31, 2006 and an additional payment of $1 million on March 31, 2007. Neither of these payments have been received by the Borough,” McGowan said. “Furthermore, the Borough is aware that the financing proposal for which the redeveloper sought approval from the Local Finance Board of the New Jersey Department of Community Affairs was soundly rejected by letter from the department dated Nov. 22, 2006.”

McGowan said that since the DCA rejected Cherokee’s finance plan: “The Borough has been advised that, despite representation to the contrary, Cherokee/EnCap have withdrawn their application to the state and that no application for financing approval is currently pending.”

“More recently, Gov. (Jon) Corzine expressed his concern as to the proposed financing structure of the project and that, as proposed, the public taxpayers were at risk of being stuck holding the bag and having to pay off Cherokee/EnCap’s debts,” McGowan said.

“As if the questions regarding the financial feasibility of the proposed project did not raise more than enough concerns about the viability and probability of the project being able to proceed, earlier this year it was announced that the New Jersey Inspector General is investigating numerous aspects of the entire Meadowlands/EnCap project. The Borough of North Arlington cannot be held captive to an unrealistic, unattainable and infeasible development concept which is wrought with so many substantive problems.

“Accordingly, North Arlington has decided to take back control of its future and to immediately commence efforts to develop a new economic and development strategy which will best serve the interests and needs of our citizens both now and into the future.”

Massa said he was “extremely gratified” by McGowan’s findings, adding: “The Borough has suffered enough at the hands of EnCap/Cherokee and has sought to remove itself from a bad deal signed by the previous administration that has been a cause of consternation to the community. This is a great day for the people of North Arlington.”

Massa also says that this news should be of concern to some neighboring municipalities.

“EnCap is clearly in no financial position to proceed on this project,” Massa said. “They cannot execute this agreement. I don’t think they ever were in a position to execute this agreement. The sooner EnCap is gone, the better for North Arlington. Rutherford and Lyndhurst should consider the same actions.”

Councilman Albert Granell, who campaigned last year on an anti-EnCap platform, like Massa was elated.

“I’m extremely happy with the work the Massa Administration has done to protect the residents of North Arlington,” Granell said. “The team assigned the EnCap Project under the Massa administration never wavered. The team was focused and on task to make this happen for the residents of North Arlington.  I assure you this same administration knows and understands the tasks at hand. We will be very busy working with the community to create a business plan for that makes sense for North Arlington.”

 

 

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