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Vol. LXII, No. 25
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Wednesday, June 18, 2008
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Vol. LXII, No. 25
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Wednesday, June 18, 2008
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Members of Borough Council voted 5-1 to approve the set of contract “estoppel” agreements with its developer when they met in public session last week, June 10, despite concerns by one member that the legal documents make no mention of start or finish dates.
The vote gives the go-ahead to Nassau HKT Urban Renewal Associates LLC (NHKT) for the long-stalled Phase II of the downtown redevelopment project that will feature a five-story commercial/residential building (Building C) on the Tulane Street parking lot.
The signed legal documents (three estoppels and one guaranty agreement) will allow the two Princeton businessmen who are NHKT’s principals, John M. Morrison and Barry W. Ridings, to secure a loan from one of three lenders who have expressed interest in the project: Sun National Bank, Provident Bank, and an unspecified third.
According to Borough Attorney Karen Cayci, the signed estoppels prevent one party from later disputing agreed upon facts.
Mr. Morrison, owner of Nassau Street Seafood, Witherspoon Grill, and other local businesses, said it would take 60 days to secure financing for the project, which is estimated to take up to 12 to 18 months to complete.
“I’ve worked on this for three hard years,” he said, adding that during that time, NHKT had incurred considerable costs and had every incentive for moving forward and none for further delays. “We need to get moving.”
Gary Green, a partner with the law firm Archer & Greiner, represented NHKT at the Council meeting. He reported that the lender would provide between $10 and $11 million in financing, with Mr. Morrison and Mr. Ridings contributing a minimum of $4 million in personal equity.
Mr. Morrison and Mr. Ridings will personally guarantee the construction loan.
The Council vote follows some 18 months of ongoing dialog with NHKT as well as numerous private sessions and two public discussions on the subject.
The signed documents include a list of 13 items about which the Borough and the developer “agree to disagree,” including disputes over the start date for ground rent due on Phase I and costs for repairs to the Spring Street parking garage. The 13 items are to be resolved via mediation.
Mr. Green said that such a list of disagreements was not unusual with a development project and assured the Council that the developer was keen to move ahead.
He said that it would take 45 days to establish possession of the lot, install fencing, and relocate overhead PSE&G wires. “Our goal is to move ahead as promptly as possible.”
“There is nothing in these documents indicating when the developer would start or finish,” commented Councilman Roger Martindell, noting that the project was already two or three years behind.
Other members of the Council contended that there was no advantage in delay. Indeed there were many “pressure points” throughout the process to make sure an efficient time schedule would be maintained, according to Borough Administrator Robert W. Bruschi.
Nonetheless, Mr. Martindell pointed out that the list contained some “big ticket” items amounting to well over a million dollars. He suggested doing nothing until some of the 13 issues could be resolved.
He moved to approve only the form of the agreements without an official sign-off until seeing, for example, a detailed commitment letter from a lender before voting to move further forward.
“We have to resolve these 13 issues whether or not we choose another developer,” responded Council member Margaret (Peggy) Karcher. “We are so far down the path with a developer that was carefully chosen [that] we should continue on in good faith.”
But a long-time critic of the private nature of the negotiations between Borough Council and its developer, Mark Alexandridis of Princeton Avenue, had a different perspective. “We haven’t made a lot of progress, it seems to me,” he said after his review of the agreements.
“Poor documentation has really put the taxpayer at risk,” he said in reference to the dense language of the contracts and the inclusion of specific cost estimates in the redevelopment agreement estoppel for work on Phase II that might form the basis of a future disagreement if the actual cost was higher than anticipated.
“The notion of proceeding forward while still in mediation doesn’t seem prudent to me,” he said.
As a result of Mr. Alexandridis’s comments, the estimated figures were removed.
Looking Forward
While the long-delayed Phase II has been much-criticized it has also received praise from representatives of the group Princeton Future and the Borough Merchants of Princeton who have expressed satisfaction with Phase I in spite of continuing water problems in the Spring Street parking garage.
“We managed to get a library done, improve the parking situation, and get a parking garage,” said former Borough Mayor Marvin Reed, who advised Council to move ahead.