State of New Jersey vs. Tony Novak, et. al.

Baysave was named as a defendant along with its controller Tony Novak in a lawsuit filed May 4, 2018 by New Jersey Attorney General Gurbir Grewal. The lawsuit focuses on properties acquired for stabilization and sustainable aquaculture redevelopment after Superstorm Sandy under a gift/sale to the state. The State does not allege that Baysave, Novak or our associates did anything wrong, but rather that we are the current titleholders of the distressed properties after the state decided that it did not want the properties. The stabilization, recovery,  transfer, sustainability planning and compliance phases are taking much longer than expected and the issues are proving more complex than anyone had hoped.

The underlying issue is that the entire Money Island Marina campus, and in fact most of the small rural port community of Money Island, was built more than a half century ago without building permits, water well or septic system permits, land surveys, tideland leases, etc.

Before Superstorm Sandy, we agreed with the state on a solution to these issues. We assumed these properties would be acquired by the state like other local working waterfronts and that would transfer these issues to the state to deal with (as happened with other local marinas like neighboring Fortescue). Our verbal and written communications indicated that the state would acquire these properties at our cost and lease them back to local watermen just like Fortescue State Marina. But in the years since Sandy, none of this has actually happened. The state switched from being a cooperative partner with Baysave in our restoration efforts to being an unreasonable adversary. We don’t know why. We suspect the action is not taken in good faith.

The lawsuit comes down to this: the government has declined at least 15 permit applications, license applications or pre-application inquiries since Sandy and is now suing us because those same permits are not issued.  It is, in our opinion, unconscionable for the state to be both the denier of permits based on false assumptions and simultaneously bring charges for failure to have permits that should have been addressed decades ago.

Most significant in this matter is the observation that the NJDEP abandoned its normal problem-solving mechanisms (pre-permit planning meetings, application review and comment and alternate dispute resolution) to opt for decline of applications and direct to lawsuit with no attempt at resolution. One NJDEP program director said that this was the first time in her career that she saw this pattern of action by her department and so she did not know what to advise.

Public officials like State Senator Van Drew wrote letters on our behalf to urge the state to act reasonably to communicate and negotiate a solution. Public support and political endorsements have had minimal impact.

We are asking the State to the legal prosecution of this case to allow time for consideration of the issues in dispute. We are asking the Governor’s office to force the NJDEP to discuss the errand assumptions underlying their complaints and discuss ways to resolve the problems that does not include suing the people trying to recover from Superstorm Sandy.

Here are the legal documents:

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Plansmart NJ stranded asset symposium

These are my unformatted notes from yesterday’s Plansmart NJ symposium on repurposing and revitalizing NJ’s financially stranded real estate assets.

NJ is the most exited state in the U.S.

The state’s population is growing rapidly while the number of owner-occupied housing units is dropping.

Influx from NYC to North Jersey offsets the loss of income and jobs in other areas.

Dramatic change in demographics in NJ communities from 2005 to 2015

There is 40% vacancy rate for commercial properties in Hunterdon County.

Commercial property values plummeted.

Tax base must be revenue driven.

Government must focus on economic redevelopment.

Jobs follow people.

Tourism is our sleeping giant.

Flemington is a model redevelopment community.

There is still a lack of public private partnership.

Tax exemptions under NJSA 40A:20-1 can be valuable.

  • Pilot program increases revenue to municipality.
  • Redevelopment bond

What happens to the prior property tax lien when an asset is repurposed?

What if local government does not respond to request for redevelopment of abandoned asset?

 

Planners need to educate local government on redevelopment issues.

Sometimes revenue potential seems “too good to be true” to government.

 

Perception that developers do not need financial assistance is false.

The world is changing and there is a new set of rules.

We are not saving properties; we are transforming them.

The driving factor for government is revenue, revenue and revenue.

Local zoning laws must change for redevelopment to work.

Laws and zoning are falling further behind new technology and millennials’ expectations.

It takes time for education, buy in and consensus building before change occurs in government.

Some don’t want change. Some don’t recognize that the economy  has fundamentally changed.

Some municipal leaders don’t want new students.

There is still much miscommunication between planners, developers and government.

 

Energy – micro grid implementation feasibility study is included in current state budget.

Do you have a boat, motor or trailer to donate?

dry docked boats at Money Island MarinaBaySave, a 501(c)(3) organization and a New Jersey registered charity is looking for boat, motor and trailer donations for upcoming programs.

Due to the way IRS requires a charity to value a donated boat for tax deduction purposes, BaySave can significantly increase the donation value of a boat because we keep the boat here for internal use rather than sell it like most charities do. Under IRS rules, the donor is not required to reduce the tax deduction to the amount realized in the boat’s sale. The end result is that the tax deduction can often be two or three times larger than the result from other larger charities.

If you have a boat, motor or trailer to donate, please let us know. For a detailed explanation of boat tax deduction rules, call Tony Novak CPA at 856-723-0294.