BY VINCENT TODARO
Staff Writer
EAST BRUNSWICK – If Toll Brothers defaults on its agreement to purchase the Golden Triangle redevelopment area, a bank would have to take over as owner of the Route 18 property.
In August 2006, Mayor William Nary signed a subordination agreement allowing National City Bank to be the primary party entitled to the land, should Toll Brothers default. The agreement means the township could find itself trying to get any outstanding monies from the bank, rather than from Toll Brothers, which bought the land from the township in 2005 and agreed to pay for it in installments.
Councilman David Stahl expressed dismay with the way certain issues regarding the Toll Brothers deal are playing out, and said he went to the municipal clerk’s office to research the matter. He was upset to find the subordination agreement.
He made the issue public during Monday night’s Township Council meeting, saying he could not believe the governing body was not made aware prior to Neary’s signing. In fact, apparently no one knew about the agreement until Stahl found it.
Neary was not in attendance Monday night. As Stahl peppered Business Administrator James White with questions, Township Attorney Michael Baker was outside the council chambers, leaving his associate, Anthony Iacocca, to deal with the matter.
On Tuesday, Neary said he did nothing improper, but referred the Sentinel to Baker or redevelopment attorney Frank Regan for questions on the matter.
Neary said that Stahl was being “disingenuous” and “devious,” and that the councilman was not acting in the public good.
Baker said later that Toll Brothers has made all its payments on time, and he has no doubt that the developer will make this year’s payment on schedule. As far as the township’s options in the event the deal falls through, he said it would depend on factors such as the reasons for the default.
During Monday’s meeting, Iacocca said the subordination agreement was a condition of the redevelopment deal with Toll Brothers.
Stahl emphasized that he still feels that the overall redevelopment deal with Toll Brothers is a good thing for the township, and he believes it will come to fruition.
Toll Brothers, which purchased the property from the township for about $35 million, is expected to build a transit village on the site, which is currently home to Sam’s Club and other businesses. The redevelopment is to include residences, offices and retail uses.
Stahl said he was disappointed with the mayor’s signing of the subordination agreement, and questioned whether Neary had the authority to sign it without council approval. He said he now wonders what other things have been done without the council’s knowledge.
“We talk about open government yet we’re not kept informed,” he said.
Stahl said he never would have supported the agreement, in part because it expanded Toll Brothers’ authority but gave the township nothing.
“If you are going to restrict your rights, you should get something back,” he told the Sentinel.
The township would otherwise have had the first opportunity to place a lien against the property should Toll Brothers not pay the full amount owed. According to Stahl, National City Bank has agreed to mortgage up to $20 million of the deal.
“The subordination agreement says our rights are junior or inferior to the mortgage documents of the bank,” Stahl said. “So, say Toll Brothers defaults on the bank loan, we can’t do anything, because the bank has first rights.”
Toll Brothers has thus far paid the township about $13.5 million of the purchase price. When Neary signed the agreement, the developer had paid $9 million.
If Toll Brothers defaults, the township “couldn’t sell the property until the bank gets its money back,” Stahl said. He stressed, however, that despite the latest issue, he does not feel Toll Brothers is going to default.
Toll Brothers has not been willing to comment on the redevelopment plans. The Pennsylvania-based developer has yet to file a formal building application to be reviewed by the Planning Board.
During Monday’s public portion, former Republican candidate Robert Tagliente took the opportunity to note that Stahl had strongly supported the redevelopment project when it was arranged and approved.
“A number of us told you how bad the Golden Triangle deal was,” Tagliente said, adding that he asked for a study regarding how much of a market there would be for the housing being proposed by Toll Brothers.
Tagliente said Democrats on the governing body used the sale to fill a $4 million gap in the municipal budget during an election year.
“You pooh-poohed and belittled speakers like myself,” Tagliente said.