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Cervase v. Kawaida Towers Inc.

Decided: July 10, 1973.

JOHN CERVASE AND ANTHONY IMPERIALE, PLAINTIFFS,
v.
KAWAIDA TOWERS, INC., A NEW JERSEY CORPORATION, LAWRENCE F. KRAMER, COMMISSIONER -- NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS AND CHAIRMAN NEW JERSEY HOUSING FINANCE AGENCY, AND THE CITY OF NEWARK, A MUNICIPAL CORPORATION, DEFENDANTS, AND B.J. BUILDERS OF NEW JERSEY, INC., INTERVENOR



Kimmelman, J.s.c.

Kimmelman

[124 NJSuper Page 551] Plaintiffs, residents and taxpayers of the north ward of the City of Newark, bring this action in lieu of prerogative writs to declare illegal and permanently enjoin the further construction of a 16-story medium to low income housing project now in the process of construction at 129-141 Lincoln Avenue, in their ward. The project, known as Kawaida Towers, is sponsored by a limited dividend nonprofit housing corporation, Kawaida Towers, Inc., incorporated pursuant to N.J.S.A. 55:16-1 et seq. Its total cost is financed by a 100% mortgage ($6,424,000) granted by the New Jersey Housing Finance Agency (HFA) under the authority of N.J.S.A. 55:14J-1 et seq. Kawaida

Towers, Inc. was formed under the aegis of Temple of Kawaida, a black, African-oriented religious organization whose spiritual leader is LeRoi Jones, otherwise known as Imamu Baraka.

The residents of the predominantly white north ward generally became aware of the project, and in particular of its black sponsorship, following ground-breaking ceremonies held in August, 1972. By mid-November construction had progressed to the stage where the footings and foundations had been substantially completed. At about that time neighborhood discontent arose and local residents began to demonstrate at the site. Plaintiffs thereupon instituted this litigation. The court temporarily enjoined construction for one week, primarily to afford an opportunity for the heated emotions to cool in order that an examination of the legal issues raised could be undertaken in a less excitable atmosphere. Thereafter, peaceful picketing was allowed at the site (see N.J. Const. (1947), Art. I, par. 18) under carefully prescribed conditions designed to allow workmen and equipment to gain access to the job. Nevertheless, further construction has been completely frustrated by reason of the inability of the general contractor to muster sufficient building and construction tradesmen willing to cross the picket lines for any meaningful work effort to be carried on.

In order to understand the legal challenges to Kawaida Towers, it is necessary to set forth the essential factual matters which occurred prior to the ground-breaking ceremonies.

1. On July 27, 1971 Mayor Gibson addressed a letter to the Newark City Council forwarding an application which had been filed on behalf of Kawaida Towers, Inc. for tax abatement status for a housing project to be constructed at 129-141 Lincoln Avenue in the city. He expressed his finding that the proposed project met a pressing need for housing and conferred his approval for the granting of a tax abatement.

2. On August 4, 1971 Rocco Rossi, the secretary of the Newark Board of Adjustment, addressed an official communication

to one of the attorneys representing the project, indicating that the preliminary plan for the proposed 210-family apartment house had been approved.

3. On September 15, 1971 the municipal council of the city, on motion of north ward councilman Frank Megaro, unanimously adopted resolution 7RC which approved the application of the promoters of Kawaida Towers, Inc. for construction of a project at 129-141 Lincoln Avenue, and pursuant to authorization contained in the Limited Dividend Non-Profit Housing Corporation Act, N.J.S.A. 55:16-1 et seq. , granted a 50-year exemption from taxation. The pertinent text of the resolution follows:

WHEREAS, pursuant to R.S. 55:16-1 et seq., the promoters of Kawaida Towers, Inc., represent that Kawaida Towers, Inc., will be incorporated and duly qualified under the State statute, and will be approved by the Department of Community Affairs of the State of New Jersey; and

WHEREAS, the promoters of Kawaida Towers, Inc., have submitted to the Mayor an application for approval of a plan for the construction of a project located at 129-141 Lincoln Avenue in the City of Newark, and more particularly described in the application which accompanies, and by reference, is made a part of this resolution; and

WHEREAS, the Mayor has submitted such application to the Municipal Council with his approval thereof, a copy of which approval is annexed hereto and made a part hereof; and

WHEREAS, the Municipal Council has determined that said project meets an existing need, as is more particularly provided for in R.S. 15:16-14 [55:16-14] of said Act, and has further determined that the project will be an improvement made for the purposes of clearance, replanning, development or redevelopment of a blighted area within the City, as is provided in R.S. 15:16-18 [55:16-18] of said Act;

NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY:

1. That the application of the promoters of Kawaida Towers, Inc., on behalf of Kawaida Towers, Inc., for the construction of the project herein described, be and is hereby approved in accordance with the recommendations of the Mayor, subject to the proper incorporation of Kawaida Towers, Inc., according to the provisions of the State statute and subject to approval of the Department of Community Affairs of the State of New Jersey.

2. That exemption from taxation is subject to the approval of said plan and project by the Department of Community Affairs of the State of New Jersey.

3. Said exemption shall take effect for a period of 50 years in compliance with and subject to the provisions and conditions of R.S. 55:16-1 et seq.

4. On November 1, 1971 the consulting report of an expert in the moderate-income housing field was submitted by the project's sponsors to the HFA highlighting the features of the project and its feasibility.

5. On January 7, 1972 John C. Chieppa, project manager for the HFA, filed his investigative report with that agency, which again outlined the features of the project, the characteristics of the neighborhood and its feasibility for HFA financing.

6. On January 24, 1972 the Department of Community Affairs of the State of New Jersey, acting pursuant to the Revolving Housing Development Loan and Demonstration Grant Fund, N.J.S.A. 52:27D-59 et seq. , authorized a non-interest bearing cash advance not to exceed $92,078 to Kawaida Towers, Inc., to help defray certain preliminary land, legal, architectural and other developmental costs of the project.

7. On May 25, 1972 the Attorney General's office approved the form of the certificate of incorporation for Kawaida Towers, Inc. as a limited-dividend, nonprofit housing corporation, and on May 26, 1972 the Public Housing and Development Authority in the Department of Community Affairs approved the filing of the certificate pursuant to N.J.S.A. 55:16-7. Up to that time Kawaida Towers, Inc. had been a simple Title 15 nonprofit corporation formed solely for the purpose of having a corporate name to facilitate the developmental stage of the proposed project.

8. Thereafter, the project was finally approved by the HFA for mortgage financing, and on July 20, 1972 a closing was held. Title to the site was taken by Kawaida Towers, Inc., and it in turn executed in favor of the HFA a permanent

mortgage, a mortgage loan agreement and a mortgage and regulatory agreement, all to secure a mortgage note of $6,424,900 and to provide for construction advances and for the regulation of the ownership and operation of the project upon completion. The mortgage closing statement shows disbursements of $580,820.73 as follows:

1. Land: Abraham I. Mayer, et ux

($209,000, less seed

Money deposit of $20,000)

Balance of purchase price $189,000.00

Extras per agreement 16,000.00

Interest per agreement 8,733.22

Taxes per agreement

(1972 1st half) 1,777.28

Total $215,510.50

2. Architect: Bottelli, Ohland & Martins

(Total: $140,182, less

seed money of $18,527,

and 80% of that equals): 85,821.00

3. Soil Investigation: ($1200 included in

$16,000 extra acquisition cost)

4. Land Surveys: Borrie, ...


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