Issue #15 

Spring 2007

The Basin Bulletin

Newsletter for Stakeholders of the Raritan River Basin

Prepared on behalf of the Raritan Basin Watershed Alliance

Edison Fails in Bid to Condemn Land

Sale of 27 Acres to Builder Approved

(Copyright: Star-Ledger April 10, 2007)

Edison failed to win a federal judge's permission yesterday to go forward with plans to condemn a prized 27-acre tract where bankrupt Kara Homes once proposed building 19 luxury homes. Instead, U.S. Bankruptcy Court Judge Michael Kaplan approved the sale of the property to Fenix Investment & Development Inc. The Morristown-based developer was the successful bidder with an offer of $10.5 million last month when the land was auctioned.

Patrick O'Neill, the president of Fenix, attended yesterday's hearing in Trenton and was relieved by the judge's decision. He said he hopes to finalize the sale within 45 days. As part of the sale, Fenix agreed to honor the contracts Kara signed with five homebuyers, who gave the bankrupt developer deposits of $250,000 last year. Several of the homebuyers have been speaking up at Edison Township Council meetings, pleading with officials to abandon their plans to condemn the property. Edison officials have contended the tract off Woodland Avenue is one of the last open spaces in the densely developed township. Mar tin Allen, the township attorney, described the land yesterday as a "pristine parcel" that is home to deer and fox. He also stressed it is environmentally sensitive since it is close to well heads and a branch of the Rahway River that feeds into the Arthur Kill.

The judge was not swayed by the argument, however. While Kaplan said the township's preservation goals were laudable, he said he could not condone condemnation. He said a condemnation would be costly and result in more delays.

"It could only hurt (Kara) and the contract purchasers," the judge said.

Mayor Jun Choi declined to comment on the judge's ruling last night. He said he was advised by Allen not to discuss the case.

Kaplan left open the possibility that Edison could revive its condemnation plans after all the bankruptcy proceedings are completed. But O'Neill said if there is a hint that Edison still wants to seize the land he would not close on the property.

"If we think we're going to be set up and ambushed we won't go forward with the sale," O'Neill said.

Fenix was also the successful bidder on a second Kara parcel in Monroe. Four other properties were auctioned by the court last month. Kaplan approved all six sales, despite objections from some creditors that the bids did not cover Kara's debts.

Some of the creditors, including buyers whose homes were partially completed and contractors who filed liens, urged Kaplan to let the banks foreclose on the properties. But the judge rejected their arguments.

He said at least the five homebuyers in Edison "will see their homes long before any foreclosure will be complete and their nightmare will come to an end."

Twenty-five bids were received at the auction, according to testimony given during yesterday's hearing. Kaplan said a public auction is a reliable method to determine the value of the land. The judge said, "prices paid were a fair value" and purchasers acted in "good faith."

Diane C. Walsh may be reached at dwalsh@starledger.com or at (732) 404-8087.