Lawsuit seeks to force NPS to cancel fort lease

Save Sandy Hook charges terms altered to favor developer


Staff Writer

A grassroots group has taken its fight to preserve Sandy Hook as a natural refuge for all citizens to the federal courts.

In a suit filed last week, Save Sandy Hook (SSH) is seeking to stop the National Park Service (NPS) from leasing historic Fort Hancock buildings to private developer Sandy Hook Partners LLC (SHP).

The suit seeks to force the NPS to cancel the 60-year lease and to block work on the buildings on several counts, including the charge that the NPS is — according to its own appraisal — receiving well under fair market value for the 36 buildings it has committed to lease to the developer. It also charges that the lease could permit up to 70 percent commercial usage of the historic buildings.

The suit, filed in U.S. District Court in Trenton Dec. 1, names the U.S. Department of the Interior; NPS and its Northeast regional director, Marie Rust; Wassel Realty Group Inc. (WRG); and developer Sandy Hook Partners LLC (SHP) as defendants.

Also named as a defendant is the New Jersey Department of Environmental Protection. While the suit does not allege the agency violated any law, it seeks to enjoin DEP Commissioner Bradley Campbell, who is also the State Historic Preservation Officer, from authorizing renovation of the historic structures.

The suit asks the court to: find that the lease violates federal regulations; cancel the lease and order the NPS to rescind the award; enjoin the developer from working on the $75 million project.

Plaintiffs SSH and retired Superior Court Judge James M. Coleman, recording secretary of SSH, demand a jury trial.

SSH attorney Paul Josephson said he would file a motion for a preliminary injunction this week, asking the court to find in favor of the plaintiffs without going through a trial phase.

The fact that under terms of the lease, the NPS would receive rent that is 60 percent below fair market value for the Fort Hancock properties was disclosed in documents obtained by SSH attorneys, who filed a Freedom of Information Act request to get them.

“The appraisal was a critical new document,” explained Josephson of Princeton law firm Hill Wallack. “The fair market value is significant because the historic leasing statute and regulations governing leasing of NPS properties stipulate the agency must get fair market value rents.”

According to Josephson, the NPS’ own 2003 appraisal shows the fair market value for the properties is $2.46 per square foot but the lease agreement calls for SHP to pay only a $1.65 per-square-foot service district fee.

“In sum, the appraisal calls for a fair market annual rent of $744,723 but {developer James}Wassel will pay only $457,898 – barely 60 percent of the NPS’s own fair market value appraisal,” said Josephson.

Josephson said appraisers took into account the developer’s capital expenditure to rehabilitate the properties.

Richard Wells, Sandy Hook Unit superintendent, said Monday he had not seen the complaint and could not comment.

James Wassel, head of SHP, could not be reached for comment.

The suit lays out for the court the history of the Sandy Hook Unit of the Gateway National Recreation Area created in 1972, reminding the court Congressional intent was “to preserve and protect for the use and enjoyment of present and future generations an area possessing outstanding natural and recreational features … “

Despite the fact that NPS management plans in 1979 and 1990 expand the scope of adaptive uses for Fort Hancock, Congress established the national park because it provided an oasis of outdoor recreation for millions living in the greater New York metropolitan region, the suit states, quoting from the Gateway Act:

“For many of these people, Gateway will offer the only real hope that they might ever have to visit a national park.”

In a brief timeline of the NPS procurement and awarding of the lease, the suit says the NPS chose WRG as the favored bidder in March 2000 and SHP was incorporated in October 2001. A Letter of Intent with no lease attached was executed in November 2001. In November 2002, the LOI was extended through November 2003. The NPS released a Finding of No Significant Impact relieving the agency’s obligation to conduct an Environmental Impact Statement in July 2003. In October, the NPS extended the LOI for a second time through June 30, 2004. On July 9, 2004, the NPS executed a lease with SHP authorizing a 60-year lease for 36 buildings for $1.65 per square foot for the first five years of the lease. The developer was given until Dec. 30 to show proof of firm financing commitments.

In eight counts, the suit lays out a case against the NPS that includes charges that the agency altered procurement requirements in favor of SHP and the lease violates the National Environmental Policy Act, the National Historic Preservation Act.

Count I: The lease will result in degradation of Sandy Hook. The development is inconsistent with the creation of Gateway National Recreation Area “for the conservation and management of wildlife and natural resources.” The lease is intended to turn Fort Hancock into “a sophisticated, state-of-the-art research, office and educational and corporate retreat,” it says, quoting the developer’s own proposal. Also, “the lease permits by its terms up to 70 percent commercial usage of the buildings leased and permits the NPS to expand such uses in the future.”

Count II: The lease does not ensure the preservation of the historic properties. SHP’s stated plan is to fully redesign the interiors of the buildings to incorporate modern décor and technology. That aim is inconsistent with requirements that new uses for properties involve only “minimal change to the defining characteristics of the building and its site.

Count III: The lease does not provide for the payment of the fair market value rental of the properties. Federal statutes prohibit leasing of historic properties for less than the fair market value rent. In fact, the $1.65 per square foot stipulated in the lease is not rent, but a common area maintenance charge, “typically paid in addition to rent.”

Count IV: SHP has not shown that it has the financial capacity to execute the proposed agreement. SHP’s proposal did not demonstrate the required “compelling evidence” of ability to obtain financing and document the source and availability of funds. The NPS rejected other proposals because they did not include proof of financial capability. Wassel failed to submit a responsive proposal and should not have been awarded the lease.

Count V: The NPS “continually altered various material terms of the RFP, favoring the developer at the expense of the public interest and other bidders and potential bidders.”

Altering requirements of the RFP gave the developer an unfair advantage over public and nonprofit organizations “that could and would have submitted proposals.”

Count VI: The lease violates the National Environmental Policy Act. The NPS was required to conduct an Environmental Impact Statement unless it found the project would have no significant environmental impact. It did based on 665 new parking spaces required for the project, but the NPS has added 293 more spaces. The addition of almost 50 percent more spaces renders the EA incomplete, inaccurate and invalid. The EA and traffic study don’t take into account increased traffic and environmental impacts generated by more intense commercial use and increased parking needs. The NPS should have conducted a Natural Resource Inventory.

Count VII: The lease violates the National Historic Preservation Act because the NPS entered into the lease agreement before securing a Memorandum of Understanding or Programmatic Agreement with the State Historic Preservation Office and/or the Advisory Council on Historic Preservation to insure appropriate preservation of Fort Hancock properties.

Count VII: The conduct of the NPS was arbitrary and capricious and violates the Administrative Procedures Act. The NPS “repeatedly altered material portions of the RFP without issuing any formal amendments” by giving SHP four years “to provide less comprehensive funding guarantees than were required of all the bidders and prospective bidders at the time proposals were submitted.” The NPS also rejected other proposals based on their failure to provide proof of financing that was waived for SHP and extended the lease term to 60 years. SHP is an unproven venture consisting of a single asset, the lease, “with no funding, experience or track record in development …”

The defendants have 20 days to answer the complaint.