Newark - Ledger - City tries to take back lots sold cheaply

Published in the Star-Ledger, Tuesday, July 3, 2007

Newark tries to take back city lots sold on the cheap
Some in bargain-basement deals haven't built homes, lawyers say

BY IAN T. SHEARN
Star-Ledger Staff

Newark Mayor Cory Booker is looking to reclaim acres of city land sold by the previous administration at cut-rate prices to developers who have not built the new homes they promised.

City lawyers have identified more than 250 lots and have sent out letters to 32 builders, informing them that the city will "invoke the full range of remedies," including taking back the land.

"Your purchase of the property was for the purpose of redevelopment and not for speculation in land holding," the May 16 "Notice of Default" letter sent to the property owners said. "The City of Newark has elected to invoke the full range of remedies available to it under the agreement, including but not limited to the reacquisition of title."

Several of the developers enjoyed "cozy relationships" with former Mayor Sharpe James, "and have been sitting on the properties for years," Booker said in an interview.

Most of the redevelopment contracts call for new home construction within 18 months of purchase, according to Stefan Pryor, the city's director of housing and economic development. The city reviewed properties that were sold between 2000 and 2003.

Booker said his administration also is finalizing a public land policy, which will include putting city-owned land up for bid, as opposed to the $4-per-square-foot, below-market price it was selling for. The policy should be complete within a month, the mayor said. If prices are discounted, Booker said, it will be to induce benefits that come back to the city, like building parks and utilizing local labor.

During the past seven years, under the James administration, more than 5,000 city lots were sold at cut-rate prices, in some cases to developers with close ties to the mayor or city hall.

Federal agents are investigating city land sales to developers with ties to the mayor, according to sources close to the investigation, who asked not to be identified because the probe is ongoing.

One property owner who received the May 16 Notice of Default letter is Tamika Riley, a local businesswoman who bought nine parcels from the city during the James administration for a total of $46,000 and resold them -- in some cases just a month later -- for $700,000. The city also tried to sell her three more properties in James' final months as mayor, but a judge halted those plans.

FBI agents subpoenaed city records related to Riley's land deals late last year. The subpoenas, copies of which were reviewed by The Star-Ledger, instructed Newark officials to deliver the documents to the federal grand jury that has been investigating James' travel bills and city land deals during his last years in office. Federal prosecutors last month formally notified James he was the target of the grand jury probe and likely faces indictment.

Agents also have interviewed Riley about trips she made with the former mayor in the past four years, according to two sources familiar with the probe. Investigators are trying to determine her role on the trips and who paid her expenses. The sources declined to characterize the 70-year-old former mayor's relationship with Riley, except to call them "travel companions."

The phone for Riley's business has been disconnected, and she could not be reached for comment.

James did not respond yesterday to requests for comment, but last week he delivered a handwritten letter to the Associated Press, dated June 16, denying any responsibility for the cut-rate city land deals, saying they were the responsibility of the city council.

Messages left for 10 of the property owners went unanswered yesterday, while two who responded said they have developed the properties in question and have informed the city it is in error. Newark attorney Francis Giantomassi, who said he represents three of the property owners who have been sent notices, said he has responded to city lawyers and that his clients will answer the letter.

Eight of the 32 developers did not meet a May 29 deadline to respond to the city's letter, said Booker spokeswoman Desiree Peterkin Bell.

Aney Chandy, the city's corporation counsel, said that if any of the owners has a legitimate reason for not building, or if the city's findings are inaccurate, she would be happy to hear it. But absent a reasonable excuse, she will pursue putting the properties back in the city's hands.

If the city is successful in reclaiming the land, it will not reimburse the owners, Peterkin Bell said.

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