Alex Sanders:

Let's all keep in mind that Prism is following an established protocol, not one that they invented themselves.

With an existing plan and approvals in hand (circa 2007) Prism was poised to build a retail-condo project when the international financial collapse scuttled those plans as major financing evaporated (BofA).

Still looking to move forward, a 2009 proffer that would have made the Township a significant partener in the enterprise (by floating a significant bond issue) died in the talking stage and was never considered by the Council.

Earlier this year, Prism appeared before the Council requesting a conversion from a residential condo portion of the project to residential rentals, given that additional market changes had resulted in rental units being what could now be financed.

That they would need to return to the Planning Board for amended approvals there was an integral part of the go ahead Prism received from the Council and fully understood.

Redevelopment is a not uncomplicated process, made more so by the unprecedented economic conditions in the last decade; still, Prism has stayed the course, having invested tens of millions of dollarsin acquisition, site remediated and preliminary construction...in addition to pay $400,000 in annual property taxes on a parcel that hasn't provided a penny in income to them.

Nobody is waiting in the wings with $250 Million to pick up the ball here.

Let's let the process play out.

I agree that this couldn't have been done in the time between approval and now.

It's good, from the perspective of getting fewer children into the public schools, that we have more studios and one-bedroom apartments. I would like to know how that affects rentals, because that affects the PILOT payments, which affects municipal revenues. West Orange is, practically speaking, in the real-estate business now, so we should be up front about how this plan affects our "business."

Jake Freivald:

As a practical matter, the Township has been "in the real estate business" since determining that establishmen t of a redevelopment zone and the attended tax abatement was the only way the battery factory (and surrounding neighborhood) would see the sizeable investment necessary to rejuvenate it.

You are correct insofar as the change (from condos to rentals) with less bedrooms will make an influx of students to the schools less of a concern, it's never one I ever shared.

Point in fact: West Mill (on Old Short Hills Road) is probably the largest rental unit complex in town (750 units) and less than thirty school aged children reside there.

Alan Sanders:

Prism Partners is essentially the operating-construction entity for an investment consortium comprised of different entitities (banks, insurance companies, private individuals...what have you).

Common sense tells me that financial commitments from those investors have a shelf life ("We'll commit X dollars so long as the prject begins on Y date and we begin seeing a return by Z year.") That's probably somewhat oversimplified but, grounded in reality.

My point is that in a volatile market, things change rapidly and constantly and that is certainly indicative of the last few years.

Please keep in mind that Bank of America was committed to be a major investor in the intial condo project and pulled out with the real estate-home mortgage-economic collapse...and there are few players bigger than BofA.

Prism now has the requisite financial commitments in hand to finance a rental project but, I think its reasonable to assume that all of those commitments will not last forever as those who've bought in would like to see a return on their investment.

As previously discussed, it has taken the Township 50 years to get to this point in the process and I'm pretty much convinced that time is not our friend here.

(To be continued...)

Please keep in mind, too, that the fundamental reasons the property needed to be declaired a redevelpment zone was that it would cost $30 Million more to turn it into anything than it would ever possibly be worth due to site remediation and the historic designation of the building.

Ergo, the first phase will cost +/- $110 Million on build out and wind up assessed for +/- $80 Million.

Without the tax abatement incentives provided by redevelopment, nobody would lay finger on it.

The suggestion that Prism "converted the site into the "biggest eyesore W.O. has ever seen" is far more inflamatory than accurate as the site is surely a work in progress.

What Prism did was to surround the site with mandatory and temporary construction fencing and then immediately began DEP mandated site remediation, requiring the excavation and removed of contimated soil; a process largely completed.

The also designed, had manufactured and puchased all the prefabricated pieces necesary to build the parking garage which, absent the economic collapse, would now be standing in "the hole" on Main Street.

As a practical matter, the only (iterimn) thing that can/should be done is to replace the fabric (always designed to be temporary) on the fence.

My guess is that they're waiting to do that until they have an approved building plan in place, in order that they can include appropriate graphics.

Clearly, the current deteriorating fabric has been up for far longer than it was ever intended.

@ Tom G. & Alan Sanders:

First, Prism's representation that providing a jitney service would be predicated on demand is realistic as nobody can predict precisely who the residents of the bulding will be at this point in time, can they?

A jitney presumes a signifcant number of people will desire a link to public transportaion (for an NYC commute, no doubt) and time will tell if it's necessary.

Keep in mind, as well, that every expesne absorbed by Prism (necessary or superfluous) in the operating phase will detract from the net PILOT paid the Township; their caution is mutually beneficial here as an unecessary jitney, which migh cost upwards of $50K per year, would mean that much less in the PILOT.

Alan, as discussed in our sidebar communications, yes, the Township has been seeking a viable alternative use for the battery factory since Edison shut it down, circa 1962.

It has never been fully occupied since and it had a lower assessment, less property taxes during this period, than it has since Prism acquired it in the redevelopment process.

There has been no loss of tax revenue; there has been an incease, with Prism paying +/- $400,000 annually since they bought it.

As to a "better idea," please keep in mind that each of the three proposals recieved (early in the redevelopment process) were variations on the same theme: a mixed use, residential-retail ddevelopment; the existing roadways/infrastructure will simply not support any other use.

Alan Sanders:

As to putting anyone "through a meat grinder," I'm a firm believer in civil discourse and treat those who reciprocate in kind with dignity and respect...as I have you.

I will point out nonsense when I see it and respond to personal attacks as necessary, as is anyone's right to do.

Alan, I like that you remember that Prism converted the site into the "biggest eyesore W.O. has ever seen". It was never pretty, but I can't help but feel they wanted the townspeople to think "we have to do something" to help them negotiate.

And remember that we have, unfortunately, given up a lot of leverage on this project already, so we're not in a great position to negotiate with Prism. Also, unless I'm mistaken, a new investor would need to take on additional commitments that Prism doesn't currently have: I believe affordable housing requirements were waived until phase two, for example.

Also, Tom is exactly right. If they're serious about these being used for commuters, they need the shuttle up front as a selling point. If they don't have the shuttle, they're not serious about that aspect of the plan. And although Gary's probably right about the cost of the shuttle taking away from our PILOT, we've known that there are considerable financial risks to this project already (despite people saying that the project is "definitely" revenue-positive to the town); would we as a town be better off with a shuttle service that brings in more commuters and presumably higher prices? I think the likely answer is "yes". If Prism says "no," then I'd really like to see Mr. Diaz's rationale on that: All along he has been talking about commuters, students, and empty-nesters being among the primary target market for this development.

Jake Freivald:

This is worth repeating:

I do not claim to be a real estate professional or developer, let alone someone with specific industry expertise in how to market a specific property to a targeted demographic.

You are entitled to your personal opinion but, lacking any evidence of your specific expertise in this type of marketing, it is just that: a personal opinion.

Prism isn't in this to fail and, if they conclude providing jitney service is a significant hook, I'm sure it will wind up in their sales brochures.

As always, Gary, you're conflating what could be good for Prism with what could be good for West Orange. Our goals are aligned somewhat, but not completely.

Let's say you're right, and it costs $50,000 to run the jitney for a year. $50,000 / 333 units = $150 / unit / year, or about $12.50 per month. If the increase in demand is enough to support that much of a price increase on the rentals, then it's probably worth it to West Orange to have that commuter demographic and higher housing demand in place. It may not be seen as worth it by Prism. I'd like some transparency on that issue before they just take away something that they promised to us.

By the way, the "opinion" thing cuts both ways: If you can claim "common sense tells me" every time you don't have any facts, you should accept the fact that your opinion is just your personal opinion and doesn't count more than anyone else's. The fact that you expound your personal opinion more than anyone else doesn't change that.

3... 2... 1...

Jake Freivald:

Let's stop with the "3, 2,1.." nonsense as, if we're going to have a dialogue here, my response is clearly necessary.

I don't believe I'm "conflating" a thing here but, have indeed long since concluded that redevelopment of the battery factory and the surrounding areas WOULD be in West Orange's best interest.

Toward that end, Prism's and the community's interest are aligned.

My position here is also an acknowledgement that Prism isn't a bunch of robber barons who came riding into town to rape, pillage and profit: the Township invited and encouraged this entity to come here and make a significant investment in our community, following a long and detailed public process.

That this property would require an investment of $30 Million beyond its possible worth on build out (due to historical designations and necessary site remediation) is a given and the reason it was declared a redevelopment zone, with the attendant PILOT program.

Getting all the pieces to fit and finding someone willing to make the requisite investment took 40 years.

I'm disinclined to micro-manage the inclusion of amenities and marketing of the project by people who are far more expert in the field that you or I.

To that extent "our personal opinions" (not being experts in the field) are meaningless...and while that itself may be a personal opinion, it's not without merit.

By the way:

By the way, a jitney costing $50K a year (given equipment cost, amortization, operating costs and driver salaries) is a pretty reasonable guesstimate...and one I have some standing to make.

Having spent 30 years as a senior executive in the car rental business, operating such vehicles at the all the NYC airports, I can tell you the number is pretty close to today's reality.

Gary, I accepted your estimate. The costs work out to $12.50 per month per apartment (if we only do the number of apartments in phase 1) -- less if we do more apartments. That is not the issue.

The issue is that West Orange and Prism are only *partly* aligned. They want to get money from an investment, and we want to get a better downtown. That does not mean that we are *wholly* aligned, and anyone who has ever seen someone get snookered in a business deal knows that due diligence, caution, and a rational self-interest are necessary -- and the current situation shows precisely why that's true.

Hearing you give personal opinions about how Prism must be just fine, and saying "there's nothing to see here, move along," does little to raise my confidence.

Jake Freivald:

Let's cut to the chase here: what are your precise concerns with this project and what solutions do you propose to address them?

Tom G.: I do not claim to be a real estate professional or developer, let alone someone with specific industry expertise in how to market a specific property to a targeted demographic.

You are entitled to your personal opinion but, lacking any evidence of your specific expertise in this type of marketing, it is just that: a personal opinion.

Prism isn't in this to fail and, if they conclude providing jitney service is a significant hook, I'm sure it will wind up in their sales brochures.

Kelly Wenzel:

This is worth repeating from above:

You are correct insofar as the change (from condos to rentals) with less bedrooms will make an influx of students to the schools less of a concern, it's never one I ever shared.

Point in fact: West Mill (on Old Short Hills Road) is probably the largest rental unit complex in town (750 units) and less than thirty school aged children reside there.

Barry, it takes a big man to admit something like that. This comment shows that you're big in more ways than one.

To highlight your key point: The problem isn't that they went back to the planning board with changes, as per protocol; it's that they must have known about the changes before the Council vote, but didn't even talk to the Council about what those changes might look like. They sold the Council one thing while they knew they were doing another. Barry won't say it, but I will: That's a bait-and-switch.

Barry Gelzeiler:

We're simply going to have to agree to disagree on this one and, particulary on the notion that Prism's new vision was "pre-planned" as prudence dictates not investing more money in architectural drawings and plans without the requisite approvals first.

For what it's worth and having overseen significant construction projects in my career, the cost of architectural plans and project oversight can typically equal 6 to 10% of a projects entire cost.

I certainly would incurr a signifcant additional expense without knowing the new concept would be approved, would you?

Gary Englert: I do not claim to be a real estate professional or developer, let alone someone with specific industry expertise in how to market a specific property to a targeted demographic.

You are entitled to your personal opinion but, lacking any evidence of your specific knowledge of what Prism knew and when, it is just that: a personal opinion.

So, "having overseen significant construction projects in [your] career", do you believe it's plausible that Mr. Diaz didn't talk about proposed changes because he had *no idea* what sorts of changes they'd be making? And if you think he probably had no idea of what sorts of changes they'd be making, does that speak well of his planning abilities?

Jake Freivald:

My recollection of Mr. Diaz's presentation was that the revised project would include +/- 300 rental units of to be determined mix.

I don't think that suggests his "planning abilites" are found wanting at all, given the calculations were a function of available square footage and pending detail designs being drawn.

What the plan now calls for is 302 such units (up from 276 condos); the most notable changes being a decrease of twelve 3 bedroom units and increase in studios (9 to 33) both of which should further alleviate concerns about the project adversely affecting school populations.

I could not agree with you more Barry...

Barry Geltzeiler:

Not for nothing, I sat through the meetings last February and it was pretty clear to me there would be changes in the plans and layout of the building...and that returning to the Planning Board was a given.

For instance, the high-end, three bedroom condos would have sold for in excess of $1 Million and necessitated a monthly rental in the $7-8,000 range.

There was no doubt in my mind that that they wouldn't be a part of the revised plan.

Baryy Geltzeiler:

I don't know the fact "they would move from high end luxury to just an apartment complex" has been admitted in evidence.

There are changes, yes but, is the fit, finish and amenties of the rest of the building the same?

So far as I know, yes.

They are simply offering less of the highest occupancy apartments...and 600+ parking spaces for 302 apartments (33 of which wil be studios and 181 of which will be one bedroom) seems fairly generous to me.

As said before, it is run by Mr. Diaz. How could you turn around and change the project in such short time. Lies, lies, lies. Mr. Diaz knows that if he get his way no one in West Orange can stop him from remaking this town. He will reshape this town like Little Havanna, the slum city of Miami. Where did he get his money anyway? Just thinking, it may have come through the tunnels of Arizona and Texas, I know that Mike will block me for this, but you think it, I sayit. Please stop blood money from building in our town. Let Mr. Diaz take his money to Irvington where he belongs. Taxpayer should not subsidize his project. Again, where did he get his money? Perhaps, Mr. Diaz could answer this question.

Again... you summed it up perfectly. This is just another apartment building plain and simple. When the economy turns around my guess is they will attempt a condo conversion. In the end developers only care about their balance sheet; once the development is completed they walk away smiling to the bank. They will hire a management company and be done with us. Anything at this point is better than a pit on Main St but let's not sugar coat this too much. It is what it is...

Steve Serebrenk:

Not to be unkind here but, you need to get a grip on the reality of the situation; a park was never possible.

The battery factory (good or bad) owns a designation as a historic landmark.

It was built so sturdily that demolition cost would have been astronomical, it can't be levelled even if the Township wanted to and could afford to...and it can't.

Whatever one's personal opinions might be, a mixed use development (residential retail) is what every professional in the field willing to invest was willing to build...and Prism became the developer of choice following long public process and hearings on the entire matter.

Alan Sanders:

Neither Prism nor our Township fathers are responsible for the global economic conditions that stalled this project and if the proposal was "problematic" to begin with, I fail to see where.

When the redevelopment initiative begam in earnest (circa 2002) nobody had a crystal ball and all proceeded in good faith.

Again, I don't feel anyone has been lied to, I don't think there has been any bait and switch and I don't think there have been any deceptive business practics.

Prism has made some necessary adjustments based on circumstances beyond any of our control and proceding as proscribed by law and existing protocols.

"Relatively speaking conceptual design is minimal?"

I, for one, would dispute that an would suggest that final design and construction drawings for a $110 Million project could run well into seven figures.

Traditionally speaking, unlesss the project is huge, construction oversight and sign-off on interim bills doesn't even require a full-time, on-site architect (for the duration) but, periodic site visits and requisite office support.

Alan Sanders:

Above should read:

"I, for one, would dispute any suggestion that final design and construction drawings, for a $110 Million project, would not run well into seven figures."

Alan Saunders:

Having been through the process a number of times, the standard protocol for construction projects is to have weekly, by-weekly or monthly (depending upon the size of the enterprise) "project meetings" between the architect, contractor and owner.

At these meetings, the project schedule is reviewed and updated (as necessary), any design/constuction issues addressed, change orders issued and interim bills for payment (owner to contractor) submitted for approval, these to be signed off on by the architect of record managin the project.

While an administrative and technical responsibility of the architect/firm, it's far from their biggest expense nor the source of their greatest revenues.

Alan Sanders:

Sorry for the typos, etc....doing this by Blackberry.

Lastly, with property acquisition, DEP site remediation, the pre-fabricated parking garage, professional/legal fees and proeprty taxes paid, I believe Prism has already invested something in excess of $60 Million in Edison Village.

Ergo, "bail(ing) is not an option, :-)

Brett Kaiser:

The existing roadways were ALWAYS an impediment to any redevelopment of Main Stree and WHY anyone willing to invest proposed precisely the same kind of mixed use vision that remains on the table.

The only real difference being the method of paying for the financing (renting the units as opposed to selling them).

Does it really matter whether one leases or buys a vehicle outright?

No, it's simply an alternative form of financing.

Prism has just changed the mix of the "BMWs" on their lot...with more 1, 3 and 5 Series than 6 or 7 Series but, they're still going to be pretty nice cars.

Alan Saunders:

Form follows function and final interior design and layout (which requires specific layout of bearing walls, electrical feeds & conduit, water supply piping and sewage design is absolutely required to say, "We will build X number of units of this type and size in this existing footprint," and, no, I don't believe that's either simple or inexpensive.

While the original plans might have been a basis for some of this, I can't say how much and/or whether "tweaking" was all that was necessary.

The visual, exterior "concept" that was presented to the public and with which many are familiar, hasn't changed very much at all; again, elimination of the rooftop penthouses being the biggest...and they would have been hardly noticed by anyone walking or driving down Main Street.

Right. "Final design and construction drawings" are a lot different from what's needed to estimate changes to an ongoing project. I wonder whether they have "final design and construction drawings" even now. What was needed were estimates of what changes were likely to occur, not "final" anything. This conversation is in danger of making it sound like they needed to spend $700,000 to present their changes to the Town Council, which is, to put it politely, unreasonable.

Jake Freivald:

We're splitting hairs here, aren't we?

My distinct recollection was that Mr. Diaz represented (last winter) there would be +/- 300 rental units in the soon to be revised (if approved) plans and that's what they've wound up with in what's now before the Planning Board.

I maintain that the need to provide any more significant design detail concerning the interior of an edifice whose exterior dimensions have long been established, and will remain intact, was superfluous and a wholly unecessary expense at that time...whatever the cost.

My guess, given they're now before the Planning Board, is that the plans presented are ready for construction code review (read 95% complete) as that's pretty much the protocol.

The man's name is Sanders, how many times are you going to disrespect that after he corrected you.

So Gary, are you saying that they're probably 95% done now, and that takes a large amount of time and effort to get there? Because if that's the case, wouldn't they have been partly done before the Council meeting -- at least far enough along to talk about the differences?

I was at the zoning board meeting prior to this one. There are substantial changes. Penthouses are gone, changing the look fairly significantly. The sizes of the apartments are different. The number and mix of units are different. The townhouses are gone. Is everything bad? No. There's more open space (which I am not complaining about). The amenities are supposed to be fairly similar.

But if they're 95% done now, couldn't they have given us an impression of what changes were likely to take place before the Council voted on it? The council gave them everything they wanted -- it's not likely they would have changed their votes just because of the differences. So why sell us one thing and move to another?

Jake Freivald:

Sorry, this was misplaced:

You're asking rhetorical questions that nobody can answer, absent them being part of Prism's architectural/design firm; it's been 6 months since Council gave the go-ahead, ample time to draw new plans.

I've overseen millions of dollars worth of construction projects, approving the invoices for each and every facet of them...including architectural fees.

They aren't cheap and, as a fundamental business decision, I wouldn't advise anyone to engage any more of such services than is absolutely necessary for the specific task at hand.

Whether used or balled up and thrown in the watse basket, the cost of an architectural plan or rendering is pretty much the same...and nobody but nobody does anything for nothing these days.

Further, if you were at a Zoning Board meeting, you were likely in the wrong place, as it's my understanding no such appearance is necessary! :-)

Lastly, does it really matter to much of anyone what the interior layout and the design of the apartments are (other than that they're built to code), other than those opting to rent and live there?

This is really of little consequence to me; they represented +/- 300 units and that's what the plan calls for!

If the appearance of the exterior hasn't changed detrimentally(and I doubt it possibly could, given the battery factory is what it is and the parking garage is already built and in storage), what's the real problem here?

Project:

While I don't claim to be an expert in real estate devlopment or its marketing,I am alos not a cowarldy anonymous, Internet nitwit (such as yourself) and civic involvement is a right, responsibility and privilege of citizenship that I choose to exercize.

Jake Freivald:

If I'm wrong about the PILOT being based on gross and not net revenues, my assertions regarding any positive economic impact (for the Township) may well be wrong but, absent any proof to the contrary, your assertion is no better than mine.

Let's find out definitively, shall we?

That said, I still believe its much ado about nothing as this is an amenity Prism may or may not provide for their tenants...and really doesn't change the paradigm for the Township.

Frankly, I'd be disinclined to say a NYC commuter is a "better tenant" than one who is not; so long as they can pay the rent, what does that possibly matter to anyone?

There are scads of middle-upper middle class folks in the area who don't go to NY to make a respectable living.

Will Rod: Actually, the revenue projections are spot on: they projected building 333 units in January and the documents submitted to the Planning Board show 334 units.

Tom G.:

My comment about commuters versus local tenants was in response to this remark by Jake Freivald: "However, it's probably in our best interests to fill those apartments with commuters rather than leaving them open only to people who work in the local area. I'd have to think about that more, but it seems likely."

I simply think where someone works is irrelevant when it comes to filling the building.

I also think it's rather ridiculous for us to be micromanaging the marketing of the project and dictating what amenties Prism needs to provide in order to attract the tenants at the price points and requisite demographic they need.

This is analogous to telling Pal's they've got to put a slice of pickle on the plate or nobody is going to buy a hamburger, when hamburgers are sold the world over without one.

I see Edison Village much like the "anchor store" in a fledgling shopping mall; you start with a Macy's and you expand from there...and that's precise hope for Main Street.

Barry Getlzeiler: Rather than positing that Prism was "being generous," I opined hat the parking being provided now appeared to be generous given the increases in studios and one bedrooms, and the likelihood of only a single driver occupying many of them.

Preferring to deal with fact, for me, the jury is out on just how "sketchy" Prism is being about all of this.

Architectural renderings of the interiors of a sampling of units, and a requisite materials list, would satisfy any concerns I may have about how luxury (or not) the finished product is going to be.

Thanks Mr. Getzeiler.

NOT FULLY UP ON THIS DEVELOPEMENT HOWEVER IT APPEARS YOU GOT IT RIGHT!

Steven Serebrenik:

As with most things, the devil is in the details and, since you're "NOT FULLY UP ON THIS DEVELOPEMENT," how can you opine that anyone has "GOT IT RIGHT?"

@ Steven Serebrenik:

Yes, Edison Village is designed to be the anchor that will rejuvenate the area and, absent any evidence to the contrary, how the complex is fnanced (residents carrying a mortgage or paying rent) really should matter a bit.

Can you tell if the car in your neighbor's driveway is leased, financed or own outright by looking at it?

Why would you even care?

I learned a long time ago never to deal in absolutes when talking about people and not ALL "people who own things take care of them."

My understanding is that Edison Village will be a luxury rental property, albeit without the fit and finish options that would have been available to purchasers of condos.

Gary...You are right..As I said twice I am not Fully up on this issue. I can only observe things thru my experience...

Again, I hope I am wrong.
Thanks

Steven:

My comparison/analogy is really quite simple: renting a residence is nothing more than a alternative form of financing a home.

Renting is attractive for many with very good reasons; the vagaries of the current real estate market being one of them...and the vagaries of the current real estate and mortgage markets is precisely why this has been switched to rentals; fiancing isn't available to build condos.