Opinion ID: 175418
Heading Depth: 4
Heading Rank: 1

Heading: South Ward Redevelopment Plan

Text: In the aftermath of the 1967 Newark riots, many residents abandoned the city, and the market for properties substantially eroded. During this time, home ownership was extremely low and lenders often would not provide financing to acquire property in Newark. In 1998, in order to address these problems, Newark adopted the SWRP, which was designed to sell parcels of distressed, City-owned real property at low prices to preapproved developers, without advertisement and public bidding. 3 In exchange, the purchaser contracted to construct new or renovated housing on those parcels,1 which would then be sold, occupied, and returned to the City’s tax rolls, in order to revitalize the residential real estate market and redevelop Newark. The New Jersey Department of Economic and Housing Development (“DEHD”) managed the SWRP process. Initially, the DEHD conducted a pre-qualification process that screened applicants to ensure they had experience in the construction of residential property and the ability to finance the projects. Once DEHD approved an application, department officials drafted a resolution and the contracts, which were then reviewed by the attorneys in the Newark Corporate Counsel’s Office (“Corporate Counsel”),2 the City Clerks office, and the Municipal Council.3 After the resolutions were approved by the Municipal Council, the DEHD was responsible for enforcing the contractual provisions to renovate the distressed properties. The SWRP proved successful and profitable to participants early on. By 2001-2002, the market for Newark real estate surged and applicants for SWRP property flooded the DEHD with requests. This success prompted the Municipal 1 The contracts specifically forbade “speculation in landholding.” Supplemental Appendix For the United States (“SA”) 611:217; 1456 § 17(a). “Speculation” involved purchasing the real property merely for resale at a higher price, rather than for renovation. 2 Corporate Counsel reviewed the resolutions and contracts for form and legality. 3 The city of Newark elects both a Mayor, who is the chief of the city, and a Municipal Council, which serves as the legislature. The Mayor is empowered, subject to Municipal Council approval, to sell real property owned by the City. The Municipal Council, without conducting its own investigation, reviewed and considered the DEHD resolutions to determine whether it would authorize the contracts. 4 Council to pressure the program to accommodate “local entrepreneurs” and minorities with little or no development experience. Thus, the DEHD abandoned the pre-qualification process and no longer required applicants to have development experience so long as an applicant had “the right team” to fulfill the obligations under the contract.