Keeping an eye on Readington

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Issues to Watch

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In 2014, the Merck property was assessed at $215M and Merck paid $5.88M in property taxes.  
In 2015, the Merck property is assessed at $153M and Merck will pay approximately $4.18M in property taxes, A REDUCTION OF APPROXIMATELY 29%.  See Merck Properties 

This current reality is in stark contrast to what we were told by our previous Mayor in January of 2014, who stated "the township at this point doesn't anticipate a reduction in that value, if it ever happens, for at least four-to-five years."   See 1/4/14 article.

The Merck property is currently zoned for a single use - Research Office, and although our current Mayor has suggested that Readington may consider a zoning change for a prospective buyer, she has stated that "first we're going to wait and see what they ask for."  See 1/8/15 article.  Under the current state of things, we are left hoping that a willing buyer will agree to purchase the property contingent upon re-zoning, and then spend the time and money involved in developing a plan and attempting to secure the necessary variances.  For any developer, the willingness to undertake the upfront investment will be weighed against the likelihood of securing the necessary variances.  Given Readington's history of hostility toward developers, it is unlikely the current "wait and see" approach will provide much comfort to any interested party.    

Going forward residents should keep an eye on whether our municipal officials are willing to alter the current "wait and see" stance in an effort to attract a purchaser for the Merck facilities. Residents should also keep and eye on what our municipal officials are doing to fill the void left by the substantial drop in ratables from Merck in 2015.  

Pursuant to law established by what are commonly known as the "Mount Laurel" decisions by the New Jersey Supreme Court, each township in NJ is required to meet certain affordable housing obligations.  The obligation exists, but what currently is uncertain is the exact number of affordable units that will be required, as the methodology used by the Council on Affordable Housing (COAH), which is the relevant NJ administrative body, to calculate the number is currently being challenged in the court system.  A ruling by the NJ Supreme Court on this matter is expected this year.

In December 30, 2008, Readington submitted an affordable housing plan to meet its future requirements as established at the time by COAH. See Certified Third Round COAH.  Over the objections of at least one party, this plan was certified by COAH, and in 2012 was upheld by the Appellate Division following another third party challenge (see Appellate Decision).  A review of this plan reveals that Readington committed to three "100% Municipally Sponsored" projects to construct housing at a cost of over $12M (See COAH Certification at pages 12-15) . In the certified plan, Readington agreed to bond for any shortfall in the Affordable Housting Trust Fund or other available funding source that could be used to fund the plan.  In a "special meeting" that took place on December 22, 2014, the outgoing Township Committee adopted a resolution that confirms its committment to the 2009 plan and to bond for any such shortfall.  See Dec. 22, 2014 TC Minutes.  

Since the balance in the Township's COAH approved Affordable Housing Trust Fund was approximately $67,000.00 as of the end of 2013 (see 2013 Audit at B-4, "COAH" line item (p.80)), and no other funding soure has been established or obtained to fund this plan, Readington's certified plan will require a debt increase of at least $12M.  Further, any land acquisitions for the purpose of COAH, such as the Township Committee's purchase on November 17, 2014, for which a $408,500.00 bond was required (see "Additional Debt" under the Recent Happenings Tab), simply CANNOT be reimbursed by the depleted Affordable Housing Trust Fund.  

Full taxpayer funding could have been mitigated back in 2008-2009 by requiring future developments to include some of the required affordable housing units.  In 2009, there was at least one third party who was ready, willing and able to do so in a proposed development near Old Route 28, but Readington selected the 100% municipally sponsored route. See Certified Third Round COAH, pages 23-24.

This issue will be important to watch as it is unclear whether, and to what extent, Readington will be bound by its 2009 certified plan following the upcoming court ruling. If Readington has an option to change or amend its plan, it should be looked at carefully for opportunities, including possible developer partnerships, inclusionary housing developments, or other COAH-approved compliance mechanisms that may alleviate the taxpayer burden.  

Solberg Countersuit

The trial court decision has come down against Readington (see Recent Issues) with affirmative findings by the judge that Readington had brought the condemnation action in "bad faith" and that its actions in bringing the suit were a "manifest abuse" of the power of eminent domain.  

The Solberg's counter suit alleging civil rights violations essentially for intentional interference with their property rights is now free to go forward.

What is important to note is that the Solbergs counter suit names not only Readington Township, but also individually names Tom Auriemma, Julia Allen, Gerald Shamey, Beatrice Muir and Frank Gatti, all of whom were township committee members in 2006.  Normally, the township must defend and indemnify township officials for acting within their official capacity, but an exception exists for conduct that constitutes "willful misconduct" or "actual malice."  See Readington Municipal Code, section 36-9.   Insurance defense policies typically have similar exceptions.  If the latter is found, the township (taxpayers) is NOT obligated to pay for liability resulting from their individual bad actions.  

Given the previous Appellate Division ruling that specifically pointed out evidence suggesting "bad faith" and instructed the trial court to examine the issue (see Appellate Decision, p. 52) and now the trial court decision confirming that as fact, and given that these named individuals intentionally refused to comply with state law concerning zoning of the airport during their tenure as municipal officials, it is possible that the conduct of the named officials could be found to rise to the level of willful misconduct or actual malice.  It will be important to watch this matter going forward, particularly in view of the trial court's factual findings, to ensure that the named officials do not hoist their personal liability onto the taxpayers either directly or by means of lumping it into a broader settlement paid for by taxpayers.

New Condemnation Action

Another notable item to watch is whether any attempts are made to file a new, broader condemnation action if the trial court ruling in the present case is adverse to Readington. In November of 2013, the Township Committee adopted an ordinance to do just that (see 11-4-13 and 11-6-13 RTC Meeting Minutes), and attempted to amend its complaint in the current proceeding to take in fee simple the entire airport property, including taking over and having the township run the airport itself.  The court denied Readington's request to amend its complaint and Readington subsequently rescinded the resolution. See 11/13/13 RTC Meeting Minutes.   This does not mean, however, that Readington cannot file a new, broader condemnation action on these same grounds in the future.  Clearly, the latter was not authorized residents and its cost would far exceed the original bonded amount, so taxpayers should keep a close eye on the matter.