As this blog has delved deeper into Mayor Jackson’s business
dealings, there have been some interesting stories that make me wonder about
the Mayor’s leadership and track record, which will be recounted here. Mayor
Jackson has quite a few businesses in Montclair and the surrounding
communities. One business in particular, Lorterdan, is a diversified real
estate development company. Lorterdan Properties has numerous businesses
throughout New Jersey.
In 2002, Lorterdan Properties at Ramapo, LLC purchased close
to 250 acres near the New Jersey/New York border. The property was originally
acquired by CHFM Associates and was sold to Jackson.
The land was a HUGE discount for Jackson. Jackson bought the
land for $2,075,000 in 2002 and later sold the land (keep reading below for the
details) for $11,500,000 in 2009. If the land was adjusted for inflation, the
land should only have been worth $2,474,509.59 in 2009. Instead, Jackson saw a
454% increase. That’s a pretty significant increase. After looking through
records, it appears like Jackson didn’t make any improvements to the land.
So why did Jackson receive such a discount on the land he
purchased in 2002? Well, CHFM Associates is a New Jersey Partnership, founded
by its partners Foun-Chung Fan, Wen-Hong Chen, Maurice Hsu, and Hsiu-Ju Mao.
According to New Jersey’s business entity records, Foun-Chung Fan is also a
principal at Lorterdan Properties at Ramapo, LLC. Probably as a result of this
partnership, Jackson received the property at a heavily discounted rate.
Once Jackson got the property in his hands, he
intended to build four developments, totaling over 1,800 housing units.
Jackson even received zoning
for the property, but something seemingly went amiss and Jackson put the
property up for sale. Some speculate the economic
downturn was a contributing factor for Jackson’s decision to sell the
property.
What follows next is taken from a lawsuit, Lorterdan vs. Watchtower. Documents
from it are linked to at the bottom of this blog for your reading pleasure.
The property was eventually
sold by Jackson to Watchtower Bible and Tract Society of New York (a Jehovah’s Witnesses group) for $11.5
million in 2009. If Watchtower decided to develop the land, they would then pay
an additional $9.5 million in “consulting fees.” A repurchase agreement on the
land was also included in the contract—at any time, Watchtower could back out
of the contract within a two-year period, and Lorterdan was contractually
obligated to repurchase the property for the same price as it was sold for.
Over the course of a year, Watchtower had numerous setbacks
when they tried to get zoning for the property in order to develop it, and were
ultimately unsuccessful. Additionally, they had difficulties earning a
tax-exempt status. When it was clear that Watchtower could not get the property
developed within the agreed upon timeline of two years, they sent a letter to
the mayor dated November 1, 2010 and asked his company to repurchase the land.
Mayor Jackson personally met with Watchtower, acknowledged
his contractual obligation, and promised to begin financing the repurchase of
the property. Mayor Jackson’s company, apparently planning for what to do with
the property after the repurchase, petitioned the Town Board on March 1, 2011. Lorterdan’s original 2005 development plan was zoned for a 55+ Senior
Development, but in 2011, he wanted the age restrictions removed due to the
"proposed target market of those homes" had "drastically
declined, largely because of the current deteriorated national economic
conditions."
Watchtower was more than willing to work with the mayor
(developer) and consented to Lorterdan’s rezoning efforts, providing Lorterdan
with an Owner's Consent Affidavit dated March 14, 2011. The Owner’s Consent
Affidavit stated that the Lorterdan had a contractual right in the property and
there was an obligation to repurchase it from them.
However, during that period of time in March 2011, it seems
Mayor Jackson’s rezoning plans did not pan out. According to the Opinion and Order,
on March 28, 2011, Lorterdan’s attorneys sent Watchtower a notice that it was
rejecting the repurchase agreement, despite Mayor Jackson’s previous statements
and assurances. In addition to backing out of the property repurchase plan,
Lorterdan demanded that Watchtower pay $9.5 million for consulting fees that
would have been owed had Watchtower decided to develop the property (perhaps the
mayor somehow forgot the letter they received from Watchtower several months
earlier?). Mayor Jackson’s company then initiated a very, very messy lawsuit.
Ultimately, the case was settled confidentially.
This begs the question: why did Mayor Jackson agree to
repurchase the property from the Watchtower group, only to reject the
repurchase agreement and file a lawsuit against the religious group? This blog
has a couple of different theories.
1.
It’s quite possible that Lorterdan's rezoning
plan submitted on March 1, 2011 was turned down, or that they weren’t able to
secure financing for the project. But
even in that case, they were still obligated to buy the property back from
Watchtower, and suing instead of doing that raises questions about principles
and ethical business behavior.
2.
Another possibility is that Jackson just didn’t have
the $11.5 million on hand to return to Watchtower and was looking for a way out
of the contract. But in that case, that’s just irresponsible.
The case raises a number of interesting and important
questions that will be explored in future posts. Stay tuned…
For
more information on the case, click here.
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