Suits target lots sold on the cheap in Newark

Newark Mayor Cory Booker yesterday fired his first legal salvo to reclaim scores of discounted municipal lots that were sold to builders by the previous administration but never developed.

Corporation Counsel Aney Chandy said the lawsuits filed against five builders yesterday -- seeking to regain 19 lots -- represent "the first wave" in Newark's efforts to reclaim and then develop languishing city land.

"This administration will not tolerate people who have abused the process for acquiring city-owned parcels," Booker said. "We are ending policies of the past administration and affirmatively working to regain land from those who did not fulfill their commitment to the city and to our residents."

Chandy said two more lawsuits are imminent, including one against TRI, a company owned by Tamika Riley. Riley was indicted with former Mayor Sharpe James last summer on charges that the two conspired to defraud Newark by selling Riley discounted city land. She, in turn, flipped the properties, reaping profits in excess of $700,000, according to the indictment.

Riley could not be reached for comment.

The lawsuits filed yesterday in Essex County Superior Court result from a survey of city land sales from 2000 through 2003. The city is working out settlements with 31 others developers, Chandy said, and also has begun a survey of city land deals from 2004 through 2006, which could yield more legal action.

Stefan Pryor, the city's director of housing and economic development, said eight of the 31 developers were in the process of developing their land and a handful began soon after receiving notification letters. Another six were nonprofits, which had the will but not the ability to develop, so the city is assisting them in those efforts, he said.

Most of the developers contacted yesterday said they were unaware the lawsuit had been filed, while several said they planned to try to resolve the matter with City Hall.

From the late 1990s until James left office in 2006, his administration sold thousands of city lots at $1 to $4 per square foot to jumpstart a housing boom in all five wards of the city. A Star-Ledger analysis concluded that comparable property was selling for an average of $25 per square foot.

When the real estate market heated up in 2003 and beyond, houses were selling for more than $500,000, earning the developers huge profits, and prompting criticism of the discounted land sales.

When the market cooled, some developers sat on their lots, city officials charge, and engaged in land speculation, which is prohibited in redevelopment contracts. Most contracts call for developers to build within 18 months of purchase.

Booker, who has long criticized the discounted land deals, is expected to unveil a new policy today for the sale of city-owned land, which would eliminate discounted prices unless it benefits the city.

Some of the developers said the lawsuits took them by surprise.

Willie Hall, president of Greater Refuge Redevelopment Corp., said the city informed him of only one of the seven addresses it seeks to reclaim.

"I'm going to sign a contract tomorrow morning (Tuesday) at 10 a.m." to develop that site, he said, referring to property on South 19th Street.

Peter Santos, owner of Artco Contracting & Development, said a reporter's inquiry was the first he had heard about the matter. The city is seeking to reclaim six lots from Artco.

Jack DaSilva, one of the leading developers of city-owned land, said he was not familiar with the lots the city is seeking to reclaim.

"If it's a buildable lot, I'll fight this," said DaSilva, president of Brick City Development Group, which has built 24 multifamily homes on property bought from the city.

Joe Romagnino of Bismark Construction Corp. declined comment. The city is seeking to reclaim one lot from Bismark.

No one could be reached from Clove Development Corp., from which the city seeks to take seven lots.

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source:nj.com