Dealing With the Developer

The borough of North Arlington, N.J., is beginning to realize the consequences of making a Faustian deal with a developer.  Tempted by the mere promise of increased tax revenue, the borough agreed to allow North Carolina-based developer Cherokee Investment Partners to expand their massive 785-acre development on a nearby landfill, even though the plan required the condemnation of 16 businesses. Last November, the citizens of North Arlington did what was in their power as citizens of a democracy:  they voted for a mayor and council that supported their position that property should not be taken for private gain. But the borough’s new government is finding out that just how much of its power was ceded to the developer as it finds itself struggling to protect its own citizens.

Five years ago, Cherokee’s Florida subsidiary, EnCap Golf, proposed to expand its Meadowlands project to include the land occupied by businesses along North Arlington’s Porete Avenue because the industrial businesses would purportedly lessen the desirability of the $500,000 condos being built nearby. Bill Gauger, president of Cherokee Northeast, stated quite plainly, “I can’t create a sense of place with the businesses right next door.”[1]

The North Arlington council agreed to the plan that would add 1,625 residential units and 50,000 square feet of retail space and require the loss of some 16 businesses, 500 jobs and $1 million in tax revenue. In return for developing Arlington Valley, Cherokee would get about 50 percent of future property tax revenues, expected to be about $600 million over the next 30 years, and the ability to place a 15 percent surcharge on future taxes thereby adding another $90 million over next few decades.[2] 

Aware of the more than $500 million EnCap was promised by towns in the nearby Meadowlands development, residents of North Arlington were suspicious. 

At the time the deal was approved, Salvatore DiBlasi, owner of Cobra Construction, one of the businesses slated to be condemned, criticized the decision: “It’s a shame the people we elected to protect us, we have to spend our own money to defend ourselves against…we’re going to give them a fight for their money.”[3]

And fight DiBlasi did – running and then getting elected to the Borough Council last November.  As did councilmember Peter Massa, who objected to the plan from the start, and then ran for mayor and won.  Both vowed to defend the rights of their fellow citizens. 

Just in time for Christmas, EnCap sent a letter to the borough council ordering the borough to begin condemning the businesses along Porete Avenue. At the end of December, EnCap filed a lawsuit against North Arlington because the borough did not follow its dictate and, according to the suit, violated the contract approved by the council years before.[4] 

Mayor Massa assumed office in January and immediately announced a financial crisis because the borough had based their budget on revenues from EnCap’s development, having already accepted $2 million from EnCap, and had allowed the borough’s main source of revenue, fees from garbage collecting, to slip away.[5] 

Despite the lawsuit and the distressing financial situation he inherited, Massa will continue to fight for the business-owners of North Arlington, saying in January: “I will not sell out North Arlington for 30 pieces of silver and short-term political gain.”[6] 

Furthering the mayor’s resolve, North Arlington pulled out of its deal with EnCap on April 4, 2007, a year after agreeing on the deal. The city council still wishes to see new developments in North Arlington, but this time they will not let a developer take over the city.

"The days when a developer can come in here and dictate that business should be torn down are over," declared Councilman Steven Tanelli.[7]

But North Arlington may not be free of EnCap yet. Despite the actions of the Borough Council, Encap’s suit against the city remains. 

The residents of North Arlington have used their power as citizens to affect change in their community, and, try as they might, the new Borough Council has found itself beholden to the commands of a developer. The story of North Arlington serves as a warning to all communities that are willing to bargain away the ownership of the town to outside investors: not only are property rights at stake but so are the powers of local governments.

[1] Laura Mansnerus, “Eminent Domain’s Pre-Eminence,” New York Times, May 28, 2006.

[2] Jeff Pillets and John Brennan, “Turf Battle; N. Arlington businesses spearhead fight against EnCap,” The Record, February 16, 2007.

[3] Quoted in “Showdown looms over eminent domain; N. Arlington merchants fighting redevelopment,” The Record, March 19, 2006.

[4] Mitchel Maddux, “State won’t let EnCap bonding go forward; Wants guarantee that towns don’t face risk,” The Record, December 29, 2006.

[5] John A. Gavin, “N. Arlington mayor warns of belt tightening; Focuses on finances, EnCap friction,” The Record, January 4, 2007.

[6] Quoted in ibid.

[7] Quoted in Jeff Pillets, “North Arlington nixes EnCap development deal,” The Herald News, April 5, 2007.