Trump: See You in Court

While New Jersey officials evaluate Donald Trump’s remediation budget proposal for the failed EnCap project in the Meadowlands, the borough of Rutherford is seeking $1.2 million from EnCap for land taxes and impact fees it claims the development company owes the municipality.

Maraziti, Falcon, & Healey LLP, special counsel for Rutherford, sent last week a letter to Michael Cohen, special counsel to Trump and manager of the remediation project, indicating that EnCap is in default of a 2004 financial agreement between the municipality and the company. Since signing the contract, EnCap’s ownership structure changed and Cherokee Investment Partners II now holds a majority interest in the company, yet the remediation plan is still commonly known as the EnCap project.

Rutherford claims EnCap owes $705,421 in unpaid land taxes and $250,000 in impact fees from 2007 and the first quarter of 2008. In addition, Rutherford is asking for $250,768 in legal and engineering expenses, saying the financial agreement requires EnCap to reimburse the municipality for any professional services costs the borough incurs related to the financial contract, according to the letter.

In January, the Trump Organization, on behalf of Cherokee, took over management of the Meadowlands clean-up, located in northeastern New Jersey, as remediation on the site was not progressing. In return, Cherokee will pay Trump $6 million annually for three years. Many anticipate Trump will eventually buy out Cherokee, yet those discussion are still ongoing, according to Cohen.

Cherokee’s counsel, DeCotiis, FitzPatrick, Cole & Wisler LLP, did not return a phone call or e-mail by press time.

In response to the borough’s claims, Trump sent a letter to Rutherford Mayor John Hipp, pointing out previous land taxes and impact fees that EnCap has paid to the municipality. Trump also claims Rutherford officials have valued the land higher than it’s worth.

“As for your capricious and over-valued tax bill, we will see you in court,” Trump wrote in the letter. “My attorneys will be preparing a point-by-point rebuttal of the nonsensical claims made in the letter received from your counsel, making it further evident just how arbitrary you and your administration have been with respect to these matters of critical public importance.”

Trump’s letter does not specifically deny or accept Rutherford’s claim that EnCap did not pay land taxes and impact fees in 2007 and the beginning of this year. Joseph Maraziti said his firm is waiting to hear more factual detail from Trump.

“It was a disappointing, non-substantive response,” he said. “We were very specific ... in my letter and I was surprised to see an emotional rant instead of a substantive response.”

In 2005, the New Jersey Environmental Infrastructure Trust and the Bergen County Improvement Authority sold $107 million and $102.8 million of bonds, respectively, on behalf of EnCap. In addition, state officials rejected a $450 million bond deal that would have involved local municipalities, including Rutherford, selling the bonds on behalf of Encap with the debt secured by payments in lieu of taxes, or PILOTs.

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