Developer asks judge to settle Kean-Merck property dispute

UNION COUNTY. NJ — Although Russo Acquisitions tried to come to a meeting of the minds with Kean University over dividing the 50-acre tract owned by Merck on Morris Avenue, it appears all efforts failed and the developer is asking the court to decide who should get the land.

In late April, Richard Berger, the attorney representing developer John Russo, sent a letter to Superior Court Judge Katherine Dupuis informing her that efforts to come to some kind of settlement with Kean involving division of the property failed.
“I regret to advise the court that the efforts to achieve a settlement of the matters in issue in the above referenced litigation have been terminated without success,” the attorney said, requesting the judge resume deliberation and hand down a decision.

Dupuis ordered a 60-day cease fire in March between Russo, president of Russo Acquisitions, the Kean University Board of Trustees and John Kean, all of whom have been mired in a legal battle over who actually has the right to purchase the valuable acreage that fronts Morris Avenue.

The judge ordered all involved to take the 60-day stay to try and come to a “voluntary settlement” involving the Merck property. However, according to Berger, since the two parties failed to come to a meeting of the minds, there was only one thing left to do – head back to court.

While it is unknown what took place during settlement meetings between Russo’s attorney and Kean University’s legal representatives, according to several university administration sources, the reason the settlement talks failed was specifically because Kean President Dawood Farahi “wanted all the property” for Kean University.

Yet another party to the legal wrangling has been the Township of Union. The township was pulled into the matter because they wanted to ensure the property is developed by a tax paying owner, not a state university who is not obligated to pay local municipal taxes.

The township contends they will lose $4.5 million in tax ratables annually if the university gets the land instead of a private developer.

Russo, who had been in negotiations for close to a year with Merck to buy the 50-acre tract for $6.2 million, filed a lawsuit last year after the university claimed a conveyance in a Kean family will from 1925 gave John Kean, a living heir, “the right of first refusal,” or right to purchase the land when it went up for sale.

This threw a wrench in Russo’s plans to develop the land and launched a series of lawsuits that have yet to result in a legal conclusion.

Complicating things even more is the unanswered question of whether John Kean could legally transfer the right of first refusal to someone else, namely the Kean Board of Trustees.

The right of first refusal simply means whoever owns the 50-acre tract of land has to go back to any living Kean heir to see if they want to buy the property back. John Kean sold the property in 1986 to Schering Plough Corporation, and Merck in turn acquired the property when the two companies merged in 2009.

Things became even more legally complicated when Russo questioned the legal merit of the conveyance, drafted in 1925 by Stewart B. Kean and Mary Alice Reynolds.

Russo claimed in court that because the Kean family trust was terminated in 1997, anything contained in the 1925 will was not legally applicable today. The court was hoping Kean and Russo could iron out things on their own during the 60-day stay, but that has apparently failed.

The township has made it clear they will continue to fight to see the property in the right hands.

“The township cannot permit the use of the property to be dictated by Byzantine and antiquated restrictions and the rights of first refusal that run contrary to public policy and applicable law,” according to a legal brief submitted by Union.

Russo intended on developing the 50-acre site into a transit-oriented center complete with 1,000 sale and rental units, 100,000-square-feet of lifestyle retail space and 2,000 parking spaces. The developer also fully intended to work closely with the township boards and governing body to facilitate this large development project.

In fact, in his original lawsuit filed last year, Russo’s attorney brought out that if the acreage landed in the wrong hands, it could spell disaster.

“The plain truth is that in a highly complex translation of this nature there is too much that can be mishandled or handled in a way that would be different and inimical to the way an experienced developer like Russo would proceed and could be conducted in a manner that would impair or injure Russo’s proposed project,” Berger said.

Kean University has not alluded in any way as to what they would build on the 50-acre tract if it is handed over to them, but sources close to the administration reported Farahi wants to build more dorms and state-of-the-art buildings.
Confusing is that Kean has a debt topping $338 million, dropping enrollment, a 19 percent four-year graduation rate and parking on campus that has been in crisis mode for years.

The township has tried for many years to work with the university so they were up to date on what construction projects Kean is undertaking, but their attempts have not fared well. Not helping the strained relationship was that Kean University, who uses the township fire and police, promised to pay for a new township fire truck but after making a few payments, left the town holding a balance of $200,000, which they had to dip into surplus to pay off.

State universities and colleges do not have to go through the normal channels in order to undertake construction projects. They are exempt from the process of going before the zoning and planning boards, which ensures the project complies with local and state guidelines.

While this exemption applies to all universities, many work hand-in-hand with the communities they are in to foster relationships that help local businesses grow. This has not been the case between Kean University and the township in recent years, although university staff has tried to paint a different picture.

Most recently the township and Kean University were at odds over permit holders not finding parking in the Green Lane N.J. Transit lot because students were parking there during peak hours. Kean Executive Vice President of Operation Philip Connelly penned a letter to N.J.Transit, though, that painted a much different picture of the situation.

In his missive to N.J.Transit, Connelly said the university had taken steps to “not only to be a good neighbor” but ensure they were a leading contributor to the economic development of the township and surrounding region.

As examples, Connelly pointed out that Kean University purchases over $9 million in goods and services from merchants annually; said over 100 university employees earning $6 million live in Union; 530 students hail from the township; 2,100 Kean alumni live in Union and the university provides a host of services to residents, including free concerts, theater performances and special events.

The township, though, presented an entirely different picture of their relationship with the university at a 2013 hearing in Trenton before a State House Commission.

The township and Kean University were there because the state department of treasury, on behalf of the Property Management and Construction Division, was requesting approval to convey 10.5 acres of vacant land and improvements to Kean University for $1.

While the move was not unusual since the state had made similar conveyances to Montclair State University and the College of New Jersey for the nominal figure of $1, the township was not happy about it.

Township Administrator Ron Manzella was present at that hearing on June 27, 2013, and testified that Kean University was not a good neighbor at all.

He explained that while the township is doing well financially, the police and fire departments are strained because of the many emergency calls from Kean for service.

Manzella said that since the Seton Hall fire and tragedy, the township has taken the approach that anytime a signal 11, or emergency, is called in by Kean University “we go in full force.”

“That’s all three fire stations responding with full manpower,” he explained, noting that Union is a lead in the joint effort between mutual aid in Union County.

Manzella also noted that two multiple story buildings had recently been erected by the university on Morris Avenue, which is a state highway and another was in the process of being built on the corner of North and Morris avenues. His concern was that these buildings would further stress the township’s fire and police departments.

“We don’t have a problem with education. We have problems with what is trying to be built without input from our community,” Manzella told the state commission, adding that even the sewers are taking on too much with all the building at Kean.

“We all know that education is important. We are all products of a good education, and our institutions are good, but they need to understand they’re a resident of our community. We do all of these services and we get nothing in return – not $1 in taxes,” the township administrator said.

Manzella told the commission when he was county administrator in Essex County, he went to various town councils to explain what the county was planning on doing.

The commission asked Manzella directly about the lack of communication with Kean University and if they tried to change that relationship, but Manzella said despite their efforts, there continued to be a lack of communication. Although the commission ended up approving the conveyance of the 10 acres to Kean University, Sen. Bob Smith, a member of the commission, spoke candidly about the relationship between Kean and the township.

“The one fatal flaw in all of this is the way in which the town has been treated. I mean they’ve been treated with utter disrespect. There has been no communication, no chance to have any input, no chance to really discuss their issues,” said Smith in the transcript of the hearing.

In the end, the senator admitted he had no legal say over the way Kean University treated the township, but he did not hold back his feelings about the situation.

“The university created the situation by not doing communication 101 with the town in which they are located,” he said, suggesting the township and Kean sit down in a room and actually try to work out their issues, adding “because once we let this go it’s carte blanche.”

Manzella said that meeting never took place and since then the township and university have become even more estranged, with little or no communication going on between the two.