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January 22 Town Council meeting

Prism clears foreclosure while town hires lawyer for contract under investigation, begins $100,000 pool renovation, OKs county to build athletic fields, agrees on $950,000 of H.S. improvements

Prism Capital Partners has negotiated a dismissal of the foreclosure proceeding on its Barton Press property in the downtown redevelopment area, according to the township’s outside attorneys at the January 22, 2013, Town Council meeting.

In other actions last night, the council:

- Approved the hiring of a lawyer to provide legal services and conduct an inquiry related to a town contract that is under state investigation;

- Approved hiring an engineering firm to begin a renovation of the wading area at the Ginny Duenkel pool at an estimated cost of $100,000-$120,000;

- Approved a formal request to Essex County to build grass soccer and baseball fields at Turtle Back Rock in South Mountain Reservation, which is on county property off Walker Road in West Orange, at no cost to the town;

- Approved three shared services agreements governing $950,000 of improvements that the town is funding at the high school athletic complex.

The agenda and related documents are here.

While the township’s redevelopment attorneys said they were unclear about the details of the end of the foreclosure other than that Prism purchased the outstanding mortgage (previously estimated at about $4.5 million), they said the settlement was negotiated in late December and the dismissal stipulation was filed in court on January 8. The lifting of the foreclosure removes another negative issue for Prism, following its repayment of delinquent property taxes and redevelopment escrow account in recent weeks following notice of default letters from the town.

However, the attorneys made clear that Prism is continuing to fail to respond adequately to an October 26, 2012, demand for information related to the company’s financial ability to move forward on the project. Prism was given 10 days to respond. The lawyers said they would continue to press for the information, but it was clear that the administration and council majority were not ready to send another notice of default. (I’m in favor sending the notice of default, since we’ve seen that this produces results from Prism.)

Attorney Glenn Scotland said Prism told him that the company is discussing funding of a construction loan (of approximately $50 million) with four major financial institutions – PNC, M&T, First Niagara and Bank of America. He also said he’s seen signs in the market that banks are looking more favorably on projects such as Prism’s. Scotland said Prism is reconsidering plans to seek federal historic preservation tax credits and debating to reformat to condominiums from rentals. He said he was hopeful that construction on the project could begin by the end of the second quarter.

A council majority approved the hiring of Edwin R. Matthews in connection with the state investigation of the town’s contract with Gold Type Business Machines (GTBM), which provided e-ticketing and camera/video equipment for 10 police cars in 2011. Mr. Matthew’s duties will include conducting an inquiry of the transaction “to determine if there have been any improprieties and, if so, how they can be remedied and avoided in the future.” (I voted against the resolution because the contract will have no limits on costs and no timeline for delivery of the inquiry results.)

In a separate decision, Mr. Matthews and his firm, Bourne, Noll & Kenyon, were approved to assume the town contract to defend against residential property tax appeals (as well as the town’s tax-appeal litigation against Orange over the reservoir near Turtle Back Zoo) for an annual fee of $33,000. (I voted against this.)

A council majority approved funding of a contract for $12,800 to Integrated Aquatics Engineering to design the renovation of the wading area at Ginny Duenkel pool, including bid documents and a “spray pad sprinkler system.” The town did not seek competitive proposals for this work. Clarifying my preview blog, the town’s recreation director said the plans would slightly reduce the pool’s footprint and cost an estimated $100,000-$120,000, including equipment. (I voted against this because of the cost and appropriateness, given our tight finances going into the 2013 budget. Council President Victor Cirilo abstained.)

Council actions included:

- Renewal of a one-year contract with Fairview Insurance Associates for risk-management consulting related to the town’s continuing participation in the Garden State Municipal Joint Insurance Fund (JIF). Fairview’s compensation is 7% of the JIF assessment of $810,000, or $56,700. The town did not seek competitive proposals for this work. (I voted against this because I believe we should try to reduce this commission cost.)

- Approval of shared services agreements with the Board of Education for the town to fund, and schools to construct, resurfacing of the soccer field ($400,000, lighting of Soriano Field ($200,000) and a concession stand ($350,000). (I voted against the resolution because we should not be funding all of these projects with our tight finances.)

- Approval of a net decline of $14,042 in the construction contract for the Mayfair sewer project.

- Approval to pay $4,900 to investigate soil at the high school for the placement of lighting for Soriano Field.

- An executive session (closed to the public) to discuss potential litigation, the state investigation and potential release of a legal memo on redevelopment.

I’m a West Orange Township Councilman, since 2010 and can be reached at jkrakoviak@westorange.org. A former financial journalist, in my spare time I’m a business communications consultant.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Joe Krakoviak January 24, 2013 at 06:25 AM
http://bit.ly/WkwT70 - Link to the meeting agenda and related materials. Sorry for not including it in the post.
Tanya January 25, 2013 at 01:27 PM
Thank you for the updates. Poor business practice to not solicit at least one competitive bid for work. Unacceptable for business or personal projects and equally so when town resources are being used.
Ryan January 25, 2013 at 03:02 PM
I agree that it's probably a good idea. Just wanted to point out that "pursuant to the Local Public Contracts Law, N.J.S.A. 40A:11-3(a), a contract not exceeding the sum of $17,500.00 may be awarded without competitive bidding". (That's from the resolution that passed Tuesday night.) This contract was only for $12,800 so it's not required.
Tom January 26, 2013 at 03:11 PM
People are leaving West Orange because they can't afford to pay their taxes. And the town is spending $850,000 on a ball field?! It is a "Slap in the Face"
Bert Peronilla January 26, 2013 at 04:11 PM
What alternative(s) do the township have with regard to the Redevelopment property if PRISM defaults? Is the absence of a viable alternative the primary reason why the majority of the Council and the Administration are reluctant to push PRISM towards default?
Joe Krakoviak January 28, 2013 at 03:59 AM
In general, like most contracts, if one party defaults on its obligations, the other party pursues remedies. In redevelopment, the designated redeveloper has exclusive right to develop the property in an approved plan that reflects the goals and parameters of the redevelopment area. If the redeveloper doesn’t comply with the contract, the municipality can declare default and – if the default isn’t corrected – begin the entire process again to select another redeveloper from among competing proposals. This can take multiple years. The defaulted redeveloper can decide to challenge the decision in court – so nothing much would happen until the issue is settled. This can take multiple years. The administration issued two default notices to Prism, and the company complied to correct the defaults. The administration issued a demand letter in October asking Prism for information; the deadline was 10 days. Prism has still not complied, that I know of. But at the January 22 council meeting, a council majority and the administration were unwilling to issue a notice of default. I don’t see the town possibly “push(ing) PRISM toward default,” as you say. I see us trying to enforce compliance with the contract. It’s Prism that isn’t paying its property taxes or redevelopment escrow account as per the contract. It’s Prism that’s not providing the requested information. It seems to me that if anyone is pushing for default, it’s Prism.
MSS January 29, 2013 at 06:19 PM
The request to Essex County to build grass soccer and baseball fields at Turtle Back Rock in South Mountain Reservation, which is on county property off Walker Road in West Orange, is no cost to the town, but it is a cost to the residents who live behind the park. This park already generates considerable noise and has opened the doors to robbery and car thefts in the neighborhood. I live a considerable distance from the park yet my house vibrates with the music that comes from there from morning until dusk during the warmer months. It makes it impossible to have any summer bbq's on the weekend. Because it is a county park, we have to call the county police to ask them to lower the volume.
Ryan January 29, 2013 at 07:06 PM
I can sympathize with that complaint. I hear the noise on summer weekends, too, and it's ridiculous how loud they allow it to get. But I'd be a little surprised if the county allowed such events to happen on formal sports fields, which would get quickly torn up by the foot traffic. (Not to mention, they'd probably be in use for soccer and baseball games most of the time.)
Bert Peronilla January 30, 2013 at 03:49 PM
Councilman Krakoviak, you state "But at the January 22 council meeting, a council majority and the administration were unwilling to issue a notice of default." Then the question that begs to be asked of the council majority and the administration is "why are they unwilling to issue a notice of default?". Mr. Smith and others are always pointing out the failures of PRISM iin abiding with the deadlines which should result in the issuance of a notice of default, but I never hear them ask the majority of council and the administration why they refuse to do so. I love to hear their answers to that question.
MSS January 30, 2013 at 08:12 PM
Well that is a comforting thought. Hopefully they won't be bringing megaphones and DJ's with them to the weekend games since that is what we currently hear coming from this park.
Gary Englert February 02, 2013 at 04:47 PM
What continues to puzzle me is the constant criticism of Prism Capital Partners LLC for what are essentially minute grievances in the broad schem of things. Prism has made some of t heir property taxes some weeks late. So what? Have they paid the penalties and interest when they were brought current? Yes. Are there curently hundreds of West Orange property owners in arrears with their property taxes? Yes, yes there are. The bottom line here is that neither Prism, nor anyone else, has some bottomless well of cash that they can access and this project (which was anticipated to take 24-30 months for buildout) has produced virtually no revenue (only the CVS lease) for the last six plus years. Still, Prism has stayed the course and made millions of dollars in tax payments and other fees to the Township...and not walked away from the project as have so many other developers across the nation, since 2008. They are relying on income from o ther endeavors to fund our project. As to those other fees I mentioned, they are essentilaly the Township's redevelopment expenses that Prism has paid 100% of since the project's inception. Yes, redevelopment hasn't cost West Orange a penny but, Prism can't pay that bill unless the Township presents it...and the Planning Director's long medical leave resulted in no bill being compiled and sent. Once it was, it was paid and the escrow account fully funded.
Bert Peronilla February 03, 2013 at 09:30 PM
Mr. Englert, minute grievances to some are not minute to those who are not in favor of this redevelopment project to start with. From your comments, it seems PRISM is having a tough time with their cashflow. As long as PRISM continues to be late in paying their taxes and failing to comply with the council's and administration's requests for their financials, these criticisms will continue.
Gary Englert February 04, 2013 at 05:36 AM
Concerned: Again, in the broad scheme of things, just how consequential are the late payment of property taxes by anyone and precisely how does it actually effect any other property owner? The answer is not consequential at all and it doesn't effect them a bit...and that is true whether or not we're talking about properties owned by Prism or any of the hundreds of others that are in arrears at any given time. That you (or anyone else) is personally "not in favor of this redevelopment project" is similarly of little consequence as the requisite decisions have been made by the people vested with the authority to make them (by majority vote), in open public meetings and in accordance with applicable law. It's taken West Orange 50 years to move the ball down field to where it presently rest; if this project isn't your personal cup of tea, would you care to offer some viable alternative and someone willing to pay for it?
Bert Peronilla February 06, 2013 at 09:21 PM
Mr. Englert, I do not know where you got the impression that I am against this redevelopment project. In my previous post, I asked what alternative(s) do the majority of the council and administration have in case PRISM defaults because I suspect (in my humble opinion) that the absence of a viable alternative might be the reason why they are reluctant to issue a notice of default at their last meeting. With regards to looking at the financials of PRISM (audited 2011), I believe that this should have been done as part of the due diligence before the contract was awarded to PRISM.

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