Town and Kean spar about Merck property

UNION – The ongoing battle between the township and Kean University regarding the Merck property came to a boiling point last week, forcing the mayor to take radical steps to ensure residents are aware of the financial dilemma they are facing.

At issue was a resolution township officials said was on the Kean Board of Trustees June 23 meeting agenda seeking board approval to accept the “right of first refusal” to buy the Merck property. However, the resolution in question, which several Kean University professors said they actually saw on an initial agenda released by the university more than a week ago, came up missing when the meeting took place at 4 p.m.
Things became even more confusing at the meeting when Kean Board of Trustees Executive Director Audrey Kelly told LocalSource: “There never was a resolution on the agenda regarding this issue.”

Township Administrator Ron Manzella disputed this, noting the resolution had specifically to do with the Board of Trustees voting to formally accept the “right of first refusal” from John Kean. This would allow the university to move forward with purchasing the Merck property, which fronts Morris Avenue and is directly across from the Green Lane entrance to the university.

The Board of Trustee vote is a critical move from a legal standpoint, if Kean is to move forward with the purchase of the Merck property because the right of first refusal was assigned to the board, not university President Dawood Farahi.

Farahi publicly has stated that the university had accepted the assignment of the right of first refusal from the Kean family, which since late April became a subject of much contention and legal wrangling.

Based on the potential of this resolution being approved by the Board of Trustees, Mayor Clifton People launched an all-out effort to inform residents what was going on and enlist their help.

He made this clear on Thursday, June 19, in a LocalSource full-page paid advertisement, telling residents the governing body refused to stand by and watch as taxpayers are forced to absorb millions of dollars in property tax increases because the Board of Trustees is afraid to stand up to Farahi.

“As members of the Board of Trustees, you are charged with being responsible stewards of Kean University’s past, present and future,” the mayor wrote in his public missive. He also urged the trustees to use their powers and call for the immediate dismissal of any further legal action in the effort to purchase the nearly 50-acre Merck property.

The mayor also informed taxpayers that any effort on the part of Kean to continue pursuit of the Merck property in the midst of the university’s ongoing financial “chaos,” which included “drastically declining enrollment numbers, plummeting revenues and declining credit ratings” is “simply unfathomable.”

People asked the board to consider several questions, including why it is “fighting to buy land when enrollment is plummeting, revenue is falling and bond rating agencies are recommending careful expense controls.” He also queried whether the board was aware of the impact this purchase could have on Union taxpayers.

“Why are you moving forward, when your actions will crush the surrounding communities with substantially increased property taxes and further taxing of our infrastructure?” People said, questioning how the university could do such a thing, given the state’s financial shortfalls.
“Why would you consider spending even more state taxpayer money on court proceedings?” the mayor asked.

The mayor followed this up with “Robo-calls,” or an automated message, to approximately 20,000 residents on Thursday and Sunday evenings. The pre-recorded message informed residents that the Kean Board of Trustees “will be meeting to vote on whether Kean should move forward in purchasing 50 acres of land that previously housed Merck on Morris Avenue.”

“If the board votes to move forward with this sale, we will bring this matter to court, but a successful verdict in their favor will mean you and I will have to make up the difference in the property taxes lost,” People said, urging residents to make their voices heard by going to the meeting or, if unable, calling or emailing Kelly that they are against this move.

Kelly did acknowledge during the meeting that her office received “many” calls from Union residents regarding this matter and Farahi, during his president’s comments, spoke about the acquisition of the Merck property.

Touting the assignment of the right of first refusal bestowed on the Board of Trustees as “generously provided” by John Kean, the university president explained the school’s position.

“We have a moral and financial obligation to see what is in this for the university,” he said, adding that “no decision has been made” yet.
“There has been a lot of information dispensed by the township and we understand the township is concerned about the loss of $800,000 in taxes,” Farahi added, pointing out that “when and if we have said we are purchasing the property, we will do everything to make them whole.”

“We are in no position to say what judgment will be handed down by the court, but if at that point we decide it is in the best interest of the university to acquire the property, I will come before you again,” the university president told the board and audience.
The day after the meeting, Manzella bristled when he heard what Farahi said at the meeting.

“Neither the university president or anyone at Kean has been in touch with us to deliver that message. In fact, we have had no contact with anyone at Kean regarding the Merck property or anything else,” the township administrator said, adding that he was confused by the fact the resolution was pulled from the agenda.

“I saw it,” he said, adding “They were going to vote on it.”
Manzella also said the township and mayor never would have gone forward with trying to inform residents about the board voting on this issue if it had not been on the agenda.

“Why would he go to that extent?” the township administrator asked.

For months, the township and university have been fighting about the Morris Avenue acreage, directly across from the Green Lane entrance to Kean. At the core of this argument has been the township’s loss of tax revenue from the Merck property, should it fall into the hands of the university, which will not pay a dime in taxes for the 50 acres, instead of a private developer who, after the acreage is developed, could end up paying millions more in taxes.

Manzella mentioned that, while Farahi claimed at the June 23 board meeting the township is concerned about the loss of $800,000 in taxes, that is not accurate at all.

“If that property is developed by a private developer into a retail and business venture, it could generate as much as $4.5 million in tax revenue,” he explained.

The right of first refusal goes back to 1927, when the Kean family held title to the 50-acre parcel of land but opted to sell it to Schering-Plough in 1986. A covenant to this contract ensured that, if the property was ever sold again, the Kean family would have “the right of first refusal” to buy it back.

When Merck decided to put the property up for sale, the Kean family was notified and given the right of first refusal to purchase the acreage. While they were unable to do so, the family “assigned” this right of first refusal to the Kean Board of Trustees and Farahi went ahead and accepted this bequest, without the approval of the board. This set in motion a legal situation that is still making its way through Superior Court.

This happened when private developer John Russo, in negotiations with Schering-Plough for more than a year to purchase the prime property for $6.2 million, questioned the legality of the Kean family assigning the right of first refusal to the Kean Board of Trustees.
As a result, Russo filed a lawsuit in May against Kean and the township, alleging the right of first refusal no longer exists because it “died” when the trust in which it was named was terminated in 1997.