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Corruption in Re-Development

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Twist on eminent domain

East Orange is being sued for razing building before owning it

Tuesday, July 26, 2005


Star-Ledger Staff

East Orange has grand plans to redevelop a dangerous block of vacant apartment houses. But according to the owners of one of the properties, the city doesn't want to pay for it.

In a land-use dispute that has been playing out in court for eight months, two Brooklyn developers say the city, which planned to seize their 36-unit apartment building to make way for a park, took the cash-saving shortcut of tearing it down before owning it.

"They just knocked down my building with no notice," Michael Feldman said last week as he stood in the vacant lot. "Is this America?"

City officials dispute Feldman's version of events.

The unusual case is unfolding amid complaints nationwide of municipalities aggressively pushing redevelopment efforts by taking privately owned land. Last month, in a controversial ruling, the U.S. Supreme Court said towns can use their power of eminent domain to seize properties and turn them over to private developers.

In the case of East Orange, the city added insult to injury, Feldman said, by sending him and his partner a bill for $160,000 to cover demolition costs.

Ronald Kleckley, the city's assistant corporation counsel, said East Orange was right to raze the building, which had been damaged by fire, because Feldman and his partner, Jack Perlamuter, purchased it illegally and then failed to make repairs.

"This building was an imminent hazard located in a high-crime area inhabited by prostitutes," said Kleckley. "It was a haven for criminals. That is why we knocked it down. The predicament they face is one they brought upon themselves."

East Orange has declared nine areas "in need of redevelopment," the first step toward using its powers of eminent domain to seize them. One of the area is on North Walnut Street, encompassing four blocks of real estate including Feldman's lot.

In a lawsuit filed in January, Feldman and Perlamuter claim East Orange stopped them in the middle of rehabilitating the building and then tore it down because it was "convenient for ... its redevelopment effort."

"The city's actions have been confiscatory," says the lawsuit filed by James Turteltaub, a Florham Park lawyer, representing the two partners. It argues the city effectively took the property without compensation.

Without rental revenue and carrying a $6,000 monthly mortgage, Feldman had to file for bankruptcy, the lawsuit says. He also stopped paying taxes on the lot.

Kleckley denied the city halted the partners' work on the building and said the case has nothing to do with eminent domain. He alleges the partners are attempting to get an inflated price for a dilapidated building they failed to repair.

For Feldman, who had worked in real estate for 17 years, his troubles began in early 2003, when a friend in the real estate business showed him the brick apartment building. The top floor had been damaged by a fire the previous October. Still, Feldman thought it was a potential gold mine.

Expecting to fill the building with federally subsidized Section 8 tenants, he figured he could clear $15,000 a month in profit.

He and Perlamuter got a report from Formosa Engineering of Metuchen finding that, other than the area of the fire, the building was structurally sound. So they bought the building March 17, 2003, from a contractor, Michael Beil, for $500,000 and then hired Beil to do renovations.

They purchased the building without obtaining a certificate of conformity, which East Orange says is illegal. Nevertheless, the city granted permits to allow repairs.

In an interview, Beil said his construction company repaired the damage by gutting the fourth floor and putting on a new roof. Photographs supplied by Turteltaub show the new construction through a gaping hole caused by city contractors when they began demolishing the building in November 2004.

Kleckley said a city inspection three weeks before the demolition showed nothing had been done. He said he has never seen Turteltaub's pictures.

On Dec. 1, 2003, city officials had issued a report that deemed the area "in need of redevelopment," inviting offers from building firms. The plan clearly stated Feldman's property and others were in line to be acquired by the city.

Beil said his construction partner, Josh Itzkowitz, visited City Hall within days of the issuance of the December report to check on the status of additional permits needed to complete their work. Beil said Lloyd Raheem, a construction official, told Itzkowitz of the redevelopment plan and advised him to "cease work" on the project.

Reached by telephone at his office, Raheem declined to comment. But in legal papers, the city denies Raheem told the contractors to stop working.

East Orange finalized the "in need of redevelopment" designation in February 2004, but no developer has agreed to take the expensive gamble of remaking North Walnut. Thus the city has taken no steps to acquire property -- or compensate landowners whose plans may have been upset by the designation.

After work stopped at the site, Feldman hired Turteltaub's firm, Carlin & Ward, which has handled eminent domain cases for 35 years. Turteltaub spent months discussing the situation with city attorneys.

On Nov. 1, 2004, both sides agree, Kleckley told Turteltaub in a telephone conversation that the city had no immediate plans to take the property and that work could continue.

Three days later, Kleckley left a voice-mail message at Turteltaub's office advising him that the city was tearing down the building.

The city insists notices declaring the building unsafe were posted on the building, but Beil said contractors never saw them.

The city said construction officials had no other way of finding Feldman, even though his attorney had been in discussions with city attorneys.

"It's pretty clear what happened here," said Perlamuter, Feldman's partner. "The town has no money, and it's five to seven years away from completing its redevelopment. So they do this and they don't have to pay me."

Steve Chambers covers land-use issues. He may be reached at schambers@starledger.com or (973) 392-1674.

1/3 of Harrison is in a Re-Development Zone RIGHT NOW!!! Should you worry!!! Are you in This RRe-development Zone???? If what I heard is true about Harrison, I WANT THIS MAYOR TO STEP DOWN WITH THE CHAIRMAN OF THE RE-DEVELOPMENT TOO!!! TERMS SHOULD BE ISSUED FOR THIS BOARD TO PROTECT US from corruption, WHO KNOWS, YOUR HOME CAN BE NEXT!!!!
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Do you think these guys are corrupt?
Well when they talk about corruption in NJ and they say Hudson county is the worst, do you honestly think that excludes HARRISON?

This town is so small and the public know so little it's esier in this town!

Mayor & Higins are guilty!

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Guest limited terms would be good

limited terms would be good, but then Chairman Higgins would have to give up power, redevelopment members powell, Mcdonough, fife (HR-Doran) would have to give up power.

Maybe for the better of Harrison?

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