Unresolved issues derail release of Monarch condos performance bond

The developer's agreement calls for rooftop solar panels,
which have yet to be installed.

Citing several unresolved issues with the Monarch/Senior Center project, City Council members failed to get a consensus to put the Robinson-Briggs administration's proposed release of the developer's performance bond on the agenda for next week's business session.

Though Corporation Counsel Dan Williamson protested that the Planning Division had signed off on the release, Council members Storch, Mapp and Williams spoke to the unresolved matters: a finalized parking agreement (in writing) that will mollify the Seniors; the unfinished 'roof garden' for residents and Seniors; certificates of occupancy; and rooftop solar panels called for in the original developer's agreement.

I have written about the solar panels issue before (see here and here), but will summarize it again.

It is important because a) it is in the Developer's Agreement, b) it is a considerable expense from which the developer would be excused, and c) it would comport well with the UCIA's push for solar energy use throughout the County.

The complete Developer's Agreement is available online (see here).

The pertinent section dealing with the roof-top solar panels is Section 7. (a)(viii), an image of which appears below --

Rooftop solar panels are called for in the developer's agreement.

Corporation Counsel Williamson's protestations to the contrary notwithstanding, no one has yet produced a memorialization in writing of Dornoch being excused from this provision of the developer's agreement. It seems to me a change of such magnitude -- it could be several hundred thousand dollars worth -- would have had to engage the attention and approval of both the Planning Board and the City Council.

It's about time that the Council got to the bottom of the matter, BEFORE releasing the performance bond.

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• Plainfield Today --
• "Senior Center: More on developer's to-do list"
• "Update on Dornoch/Monarch issues"
• Developer's Agreement:  "Monarch Condo documents: Developer's Agreement"

-- Dan Damon [follow]

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Update on Dornoch/Monarch issues

News of the Plainfield Senior Center/Monarch condos developer Glen Fishman's woes in Rahway (see here and here), led me to check up on outstanding issues with the project at 400 East Front Street.

Fishman, who is reckoned to have invested $9 million in buying up numerous downtown Rahway properties, made an unusual appearance at Rahway's redevelopment agency's January 5th meeting.

He took the opportunity to update them on his Rahway projects and the news was mixed (renting his retail spaces) to bad (the Savoy development). One item that caught my eye was his reported statement that 'condos can't be built when they're selling for $150,000 a unit' -- which I was arguing was a more likely market-rate figure for Plainfield's Monarch units nearly two years ago.

This past December, I went over the outstanding issues (see here): a parking plan, the 'roof garden', the Veteran's Center and the rooftop solar panels.

Aerial view, December 2010. Neither solar panels nor rooftop landscaping.

As of today, though the City has halted towing of cars from the covered parking area, a parking plan has not been worked out with the Planning Board.

The 'roof garden' seems to be the subject of a 'bait-and-switch' maneuver by Fishman/Dornoch/P&F Management.

It seems that despite the promotion to the Planning Board and the community, the actual construction of the roof deck will not permit the weight loads needed for the originally proposed landscaping. The resolution has been for Fishman/Dornoch/P&F Management to propose seasonal planters and outdoor furniture, which is to be stored in the Senior Center basement (presuming the Director agrees?). Can you say 'tacky'?

The Veteran's Center would require an agreement to cancel or void a provision of the developer's agreement that provides the space is to remain a sales space for the condos until the units are sold off. Despite the efforts of local real estate powerhouses ERA Reed Realty and Sleepy Hollow Realtors, fewer than one third of the units have been sold and closed and an even smaller percentage is actually occupied (leading one to conclude there are speculators buying units for rental).

Lastly, the rooftop solar panels (see Section 7. (a)(viii)).

From the developer's agreement, the solar panel section.

The Robinson-Briggs administration simply ignores any discussion of this provision in the developer's agreement.

What's with that?

Has Fishman/Dornoch/P&F begged off? If so, to whom? The Planning Board? The Robinson-Briggs administration? To Ms. DeFilippo and the Union County Improvement Authority?

As usual, we are still left with unresolved questions.

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• Rahway Rising --
• "Dornoch 'dead in the water' on The Savoy"
• "Dornoch updates agency on retail properties"
  
• Plainfield Today: "Senior Center: More on developer's to-do list" | All coverage here.
  

-- Dan Damon [follow]

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Senior Center: More on developer's to-do list

Senior Center, showing parking, unfinished roof garden, lack of solar panels on roof.
(Google maps.)

Plainfielders were reminded at the Council's last business meeting of outstanding issues at the Senior Center / Monarch condos at 400 East Front Street.

Speakers were particularly vexed over moves by P&F Management (Dornoch's latest alias) to enforce a parking scheme that would put seniors who drive out in the open lot instead of under the covered area, and the veterans' pleas for access to their promised Veterans Center.

Corporation Counsel Dan Williamson said he had written to both P&F Management and the towing firm that this move was unacceptable and that no vehicles were to be towed from the premises.

Williamson noted that P&F Management still needed to work out some final points with the Planning Board over unfinished items from the Developer's Agreement (see here, and note on viewing at end of this post), including a parking plan (see Section 7. (a)(vi)) and the finishing of the 'roof garden' (see Section 7. (a)(v)).

To which I would like to see added the ROOFTOP SOLAR PANELS required by the development agreement (see Section 7. (a)(viii)), which are not present and are never discussed though there has been no modification of the Developer's Agreement as far as I know.

As for the Veterans Center, the Developer's Agreement addresses this issue in two places: Section 7. (a) (iii) says the veterans area shall be used as a sales model until all units are sold (page 4), and Section 8. (b), which provides that upon sale of ALL the condo units, the developer shall convey 'a fee simple interest' in the Veterans Center to the City for $1 (page 8).

The Developer's Agreement quite clearly lays the responsibility on 'the purchaser', i.e. the developer (Dornoch/P&F) to 'design, implement, complete and operate the property in compliance with this agreement'.

So, when will Mr. Fishman face the Planning Board to resolve the outstanding issues?

That is a good question. I hear that he does not return the mayor's calls (tit for tat?). But we also have information from the Rahway Rising blog that he does the same with our sister city. Not only that, he has defaulted on a development project there, which the city has taken back from him.

So, it seems it may be a while before the issues are formally resolved.

Meanwhile, rereading the Developer's Agreement, I noted in Section 8. (a), that there is a deed restriction on the Senior Center providing that the center is for 'purposes and activities undertaken by senior citizens and for no other purpose' (emphasis added -- DD).

Does that mean that the City Council put the City in default of the terms of the Developer's Agreement by holding two of its budget hearings in the Senior Center conference room?

Now, that would be ironic.

NOTE ABOUT VIEWING THE DEVELOPER'S AGREEMENT BELOW:

The upside-down problem comes from the way Staples did the scan.

Here's the fix --

• Click on the document window and make sure it is loaded.
• Right-click on the document and select 'Rotate clockwise'; this will make a quarter-turn of the document. Do it again and the document will be right-side up and easy to read.
• If you're left-handed, you can rotate counterclockwise, as long as you do it twice.
• Note however, that if you revisit the document in the future you will have to rotate it again.

---

Dornoch-UCIA Agreement

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• Plainfield Today --
• 10/27/2010:  "Seniors new bargaining chip in developer dispute?"
•  9/14/2009:  "Monarch Condo documents: Developer's Agreement"
  

-- Dan Damon [follow]

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Seniors new bargaining chip in developer dispute?

Seniors fear being forced to park in open-to-the-elements lot.

Plainfield seniors who use the new Senior Center on East Front Street are not happy to contemplate that they may be used as bargaining chips in a dispute involving the center's developer and the Robinson-Briggs administration.

There are actually two open items: the completion of a parking plan to satisfy a requirement of the Planning Board, and an outstanding bill from the developer -- most recently known as P&F Management -- for $287,000 for 'outfitting' the space occupied by the Senior Center.

Funding the payment of $287,000 has been stalled since last spring, when the Robinson-Briggs administration was asked by the Council to explain in detail the charges and the process by which they were approved. To date, the administration has not complied with the Council's request. (Clarification: The Council has been supplied with answers to their questions, but the Administration has not made any further move to resolve the open item).

In the rush to get the Senior Center built, seniors pummeled both City Council and the Planning Board. At the time, issues about how the parking would be shared among condo owners, senior center staff, seniors and veterans who drive to use the center and visitors were simply skirted, with the Planning Board only requiring that a plan be worked out and presented.

Seniors worry now that they will be forced to park in the open-to-the-elements space at the rear of the property (toward 2nd Street) rather than in the sheltered space under the condos' roof garden/terrace.

With only 19 units said to be sold, seniors say there is no reason at present that they should be forced into the outer lot.

The Robinson-Briggs administration cannot be happy to contemplate possible slip-and-fall suits against the City in the event the seniors are forced into parking in the open lot in inclement weather.

Will this mean the Robinson-Briggs administration will finally complete its explanation to the Council, giving it a stronger hand in negotiating with P&F management?

One can only hope.

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-- Dan Damon [follow]

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Moving day at the Monarch

Bronx firm's truck moving someone into the Monarch.

Sales at the Monarch, Plainfield's attempt to enter the market-rate condo world, have been sluggish but there is progress. Yesterday found this bright blue truck from 'The Padded Wagon', a Bronx moving firm, unloading someone's earthly possessions at 400 East Front Street.

I have recently noticed a few more lights on in the building at night. Hopefully this real estate market will begin to pick up at some point.

A warm welcome to the new Plainfielders!

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-- Dan Damon [follow]

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Council not happy with Senior Center bait-and-switch

Senior Center, under construction.

Hey, Plainfielders! The next time Jerry Green tells you something 'won't cost the taxpayers a dime', grab your wallet or purse and run, RUN, RUN in the opposite direction as fast as your little feet will take you.

If you don't, you're likely to find yourself subject of a bait-and-switch ploy.

A resolution (R-138-10) quietly slipped into last night's Council agenda provoked questions by the public that led to a Council discussion that ended with the resolution tabled pending answers to a number of questions.

Dr. Harold Yood (known affectionately to all as the blogger 'Olddoc') was the first to speak when the public comments section was opened up, and he zeroed in on the resolution, which was to authorize the mayor to execute an agreement with Dornoch Plainfield, LLC, for the PURCHASE of 400 East Front Street, Unit 101 for use as a Senior Citizen Center and Unit 102 for use as a Veterans Center.

Jim Pivnichny, Republican candidate for mayor last year, seconded Dr. Yood's questions.

Yood, Pivnichny and I all recalled that the Senior Center was supposed to be 'free' (Assemblyman Green's word) -- well, alright, it was to cost $1. That is the same amount for which the property was conveyed by the City to the UCIA and thence to the developer.

Corporation Counsel Dan Williamson agreed, but noted that that was for a 'plain vanilla box' and that the dollar amount involved here -- $257,000 -- was for work done to outfit the space for its actual uses.

This provoked a long discussion between Council members Mapp, McWilliams and Storch and the Administration over the expenditures, how they were decided upon, why they were so high, and whether or not there were other shoes to drop in this matter.

When Councilor McWilliams protested that the matter was being presented 'undiscussed' and that there was no money to pay for this, I thought I heard Mr. Williamson say it could be taken out of the bond ordinance for $4.4M which had been adopted just moments before.

Councilor Mapp stated in no uncertain terms that that was not permissible.

Councilor Storch moved to table the resolution. Having a second, Council President tried to bring the matter to a vote when Councilor Reid objected that he had a question. McWilliams explained that a motion to table is privileged, stops all discussion, and must be voted up or down before the meeting can move forward.

The Council voted 5-1 to table the motion (Reid voted no, Councilor Burney was absent).

I have two really big questions about this whole mess --

First, how could the Administration authorize work to be done to the tune of $257,000 without first coming to the Council for authorization to spend the monies?

Who authorized the work to be done? By whom was the work done? Were the state's public bidding laws violated in having the work done? Why was nothing ever presented to the Council before this? And why wasn't the matter on last week's agenda-setting session?

This reminds me of the extra-legal goings-on under Mayor Robinson-Briggs' first city administrator, who spent over $100,000 without Council approval. He left under a cloud.

Second, I question the reference to a PURCHASE of the Senior Center and Veterans Center units.

In the Developer's Agreement (see link at end of post), Section 9 (b) says that 'upon issuance of a Certificate of Occupancy for the Senior Citizens Center, ANY HOLDER OF A MORTGAGE OR OTHER ENCUMBRANCE OR LIEN UPON THE PROPERTY in accordance with this Agreement shall execute a WRITTEN RELEASE OF THE SENIOR CENTER in recordable form' (page 9, emphasis mine). This would seem to indicate the Senior Center is the City's, period. Alright, maybe we'll have to cough up a dollar.

As for the Veterans Center, the Developer's Agreement addresses this issue in two places: Section 7. (a) (iii) says the veterans area shall be used as a sales model until all units are sold (page 4), and Section 8. (b), which provides that upon sale of ALL the condo units, the developer shall convey 'a fee simple interest' in the Veterans Center to the City for $1 (page 8).

If anything, the Administration has either got it wrong or is being disingenuous.

Since the Developer's Agreement is between the UCIA and the developer, what standing does the City have to modify any of the terms of the Agreement?

The Council is perfectly right to demand answers to the questions that have been raised before they do anything along the lines proposed by the Robinson-Briggs Administration.

NOTE ABOUT VIEWING THE DEVELOPER'S AGREEMENT:

The upside-down issue came from the way Staples did the scan.

Here's the fix --

Click on the document window and make sure it is loaded.

Right-click on the document and select 'Rotate clockwise'; this will make a quarter-turn of the document. Do it again and the document will be right-side up and easy to read.

If you're left-handed, you can rotate counterclockwise, as long as you do it twice.

Note however, that if you revisit the document in the future you will have to rotate it again.

---

• Plainfield Today: "Monarch Condo documents: Developer's Agreement"
  

-- Dan Damon [follow]

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Monarch condos: A reader raises issues

Monarch condo sales -- and sign -- have been whiplashed.

A Plainfield Today story from last week (see here) generated a sidebar discussion on the Monarch condo situation that is worth bringing to the fore.

One commenter's suggestion that new South Avenue development reflected a 'build it please-we-hope and they will come' mindset, it provoked a comment in defense of the Monarch project.

My suggestion that owning rather than renting was a better way to go prompted this long and thoughtful comment (perhaps from a real estate insider) which I am reprinting in full --

Dan, this is a response to your comments on the rental approach: I agree with you that when someone purchases a property he or she is making a direct investment. I would also agree that the direct investment is most likely a superior investment than a person investing indirectly through rental.

You are correct in stating the agreement was for a condo development. I think we need to consider the Monarch’s best use of the property based on the current economic reality.

Due to the size of the property (60+ units) it will be very difficult for the owners of the property to dispose of units as condos even with FHA financing because of FHA’s presale requirements which have been reduced to 51% from about 70%. As such before anyone can take possession of a unit in the property, the property owner must have contracts for 51% of the units. That can be extremely difficult in this market.

I still contend that quality rentals can be good for a community because there is a strong likelihood that the renter in a true market rate rental will ultimately become a property owner in the city eventually. Plainfield’s problems with rental properties are not necessarily due to the properties being rentals, instead the issues with rental properties in Plainfield are due to a failure of this administration and past administration to seriously enforce the code by addressing overcrowding which leads to potentially higher risks of injuries for firemen and of course a higher probability of deaths due to fires plus other increases in crime due to higher incidents of domestic violence , rapes and incest.

A true capitalist will seek the option that leads to the highest profitability at the lowest possible risk.

We need a solution to the Monarch’s issues and the party that is most likely to lose if we do not arrive at one soon is the Plainfield tax payer. The Monarch’s owners have already made a significant profit on this transaction through general contractors’ profitability, lower interest rates for construction financing through HMFA’s insurance, a non-recourse loan and of course a developer fee on each unit in the building that was probably worth about 20K per unit.

Let's take a closer look --

WHAT'S THE STATUS OF SALES?

The Tax Assessor's office tells me there are just THREE sales recorded with the County, hence subject to tax assessment. The highest sales figure is in the upper $240s. Each unit is assessed separately, based on its sales price, size and amenities; the assessment including the unit's share of the condominium's common spaces.

This is not terribly encouraging, considering the units have been offered to the public for over a year now. Whether that is just because of the weak market, because of the location on the fringes of downtown, or because there are many condo options in the same price range in other communities may never be known.

A driveby on Wednesday evening found two cars in the parking lot and lights on in two third-floor units, one facing Bank of America and the other facing the rooftop 'garden'.

Though the units are being marketed by two of Plainfield powerhouse real estate firms (ERA Reed and Sleepy Hollow Realtors), the softness of sales and time-on-market still indicates the units are overpriced for current market conditions.

But does that mean there's trouble afoot?

RENT VS. BUY: WHAT'S AT STAKE?

The reader holds that renting the remaining units is a viable option for several reasons, including difficulties in buyers obtaining loans, and the assertion that 'the renter in a true market rate rental will ultimately become a property owner in the city eventually'.

Buyers getting loan approvals has become a problem throughout the real estate market -- and not just in Plainfield. We are returning to an old-fashioned, reality-based lending market: you must have a real job with a verifiable income, a real down payment, and qualify for the loan on old-fashioned income ratios. Making the adjustment from NINJA (no income, no job or asset verification) loans to this more traditional reality will take time, but we will get there.

I do not know of any studies that show these 'quality' renters will be likely to buy in the community, or that even if they do it will be the unit which they have rented.

In fact, the experience with the Meadowbrook Village condos further down East Front Street argues against it. In that situation, the developer went belly up with only about 25% of the units sold (in the late 1980s). Subsequently, the balance became mostly rentals. The value of the owner-occupied units plunged, only recently returning to near the dollar values of the original sales (but of course those were in 1988 dollars, and these are 2010 dollars -- hardly worth the same).

Besides that, I learned from the Tax Assessor's office that many units in Meadowbrook Village have been bought by NONPROFITS and are used to house various clienteles. You know what that means -- those units have been removed from the tax rolls. Not exactly a prospect one wants to see replicated at the Monarch.

As for the reader's assertion that the problems with Plainfield rentals have to do with failing to address overcrowding (but leading to incest? Really??!!), there is some truth to that -- a topic on which I have harped from time to time.

That being said, however, there is no guarantee that allowing The Monarch to become rentals would not mean its becoming subject to the same overcrowding pressures (which are, after all, just an expression of the drive to maximize profit).

The point of The Monarch's being developed as MARKET-RATE, OWNER-OCCUPIED CONDOS was to prove that Plainfield was capable of standing on its own two feet in the condo market, competing with other communities for these attractive buyers and using this project as a wedge to leverage transit-oriented, mixed-use development that would enliven its downtown scene.

Succumbing to becoming a rental means the failure of that attempt. Another loss for Plainfield.

RENT VS. BUY: WHOSE DECISION IS IT?

In some ways, the conversation about whether The Monarch units should be rentals is beside the point, because the ultimate deciders in that regard seem to be the Union County Improvement Authority (UCIA) and the developer (Dornoch/P&F/Fishman).

That is a decision about which we can confidently expect NOT to be consulted.

WILL PLAINFIELD TAXPAYERS LOSE?

Will Plainfield taxpayers lose if the situation is not remedied quickly?

Yes and no, it seems.

The Senior Center appears to be the City's regardless of what happens to the developer. That could be considered a plus.

Will the tax rolls see the full benefit of the condo units coming online? Not for a while, unless a) the market improves, or b) the prices are reduced.

If it were to become a rental property -- that is with the DEVELOPER owning and renting it -- the taxpayers would have the benefit of a substantial ratable coming onstream, but there would be the conterbalancing negative that increasing tax assessments on the condos, presumed usually to increase as they turn over again and again, would be denied in favor of a one-time, lump-sum assessment.

The reader is right, though, that the developer has already made a tidy bundle off the deal -- even if it goes belly up and the lender seizes the asset (it's only recourse under a non-recourse loan).

The one point the reader fails to mention where the developer has benefited is the outright gift of the property by Mayor Robinson-Briggs to the UCIA and thence to the developer for the majestic sum of ... $1.

Maybe the taxpayers have been the losers from the beginning?

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• Plainfield Today: "New South Avenue businesses focus of lively meeting"
  

-- Dan Damon [follow]

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UPDATE: Monarch condos developer defaults on Rahway project

Monarch condos sign regularly blows over in gusty weather.

Coming down Plainfield East Front Street the other evening, I noticed a lone third-floor window lit up in The Monarch condos, the development by Glen Fishman/Dornoch/P&F Management.

With only a single unit sold and closed, the project is languishing despite the best efforts of TWO local real estate powerhouses -- ERA Reed Realty and Sleepy Hollow Realtors -- to get buyers for the project.

Now comes word that the city of Rahway is preparing an ordinance to buy a vacant property that Dornoch defaulted on (see Rahway Rising, here).

How long can P&F sit here in Plainfield with all these unsold units?

How long can the City afford to wait for some ratables or PILOT payments to show up from the project?

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• Rahway Rising: "City moves to buy Beverage Shop building"

-- Dan Damon [follow]

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UPDATE: Senior Center developer and hedge fund investigation

Dornoch Plainfield developer Glen Fishman, who built the new Senior Center and Monarch condos is the subject of a post on Rahway Rising, a blog presenting Rahway development news by fellow blogger Mark Hrywna (see here).

We have kept in touch over the past year or so, each being somewhat puzzled that Fishman's Plainfield project went forward while the Rahway projects have languished.

Mark's post of yesterday updates the Rahway situation and, in a shocker, reveals that Fishman's Hillside phone has been disconnected.

UPDATE, 12:20 PM: Am advised by Rahway Rising that the phone is evidently not disconnected after all, though there are problems with the line.

Does anyone at Plainfield City Hall know what is going on?

Won't be able to get an answer to that question today, I guess.

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• Plainfield Today: "Will Plainfield's Monarch condos be caught up in hedge fund mess?"
• Rahway Rising: "'The Smoldering Hedge Fund' and Rahway"

-- Dan Damon [follow]

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UPDATE: Plainfield Asset Management mess breaks into news big-time

It's a small pleasure for Plainfield Today to get the jump on the big guys sometimes. As in yesterday's post wondering about the relationship between P&F Management (AKA Dornoch Plainfield) and Plainfield Asset Management LLC, the hedge fund coming under criminal scrutiny.

P&F Management, the entity that seems to be in charge at The Monarch condos on East Front Street, has been billed as a joint venture with Plainfield Asset Management LLC, and I am wondering if there will be any spillover from the Manhattan DA's and Connecticut AG's investigations that will ripple into New Jersey's little cesspool.

Besides the condo project in Plainfield (more here), Glen Fishman is, or has been, involved with a development called The Savoy in Rahway (see Rahway Rising blog here), which has yet to get off the ground, a large project called The Vistas at Great Falls in Paterson, also apparently stalled, and the rescue of Kara Homes noted yesterday.

Today, the Plainfield Asset Management investigation has made the news in the Wall Street Journal (see here), Business Week (here), and the New York Times (here).

A Google search for news in the last 24 hours on Plainfield Asset Management returned Plainfield Today in the fourth slot -- behind Business Week and the Wall Street Journal, but ahead of the New York Times.

Beating out the New York Times?

Patting myself on the back?

Me?!!!

Never!!!

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• Business Week: "Plainfield says it's cooperating in Manhattan probe"
• Wall Street Journal: "Manhattan prosecutors probe Plainfield Asset Management"
• New York Times: "As markets rose, Plainfield was left behind"
  

-- Dan Damon [follow]

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Will Plainfield's Monarch condos be caught up in hedge fund mess?

The Monarch is part of a joint venture with Plainfield Asset Management LLC.

Plainfield real estate watchers have wondered for the longest time how it is that Glen Fishman/Dornoch Plainfield/P&F Management's The Monarch condo project can have escaped foreclosure, what with ONLY THRE UNITS UNDER CONTRACT and NO SALES CLOSED (latest info I have been told).

An investigation by New York City's District Attorney, joined in last week by Connecticut Attorney General Richard Blumenthal (see here), into a Greenwich, Conn., based hedge fund, Plainfield Asset Management LLC, may supply an answer to that question.

Will it also involve The Monarch in the mess that Plainfield Asset Management LLC seems to be at the middle of?

Searching the web for Glen Fishman's connections to Plainfield Asset Management LLC turns up several interesting web pages --

• Maplewood Homebuilders; described as a joint venture between Glen Fishman and Plainfield Asset Management LLC, and noting that the joint venture bought up the bankrupt Kara Homes assets in 2007;
  
  
• P&F Management Company, LLC; a one-page public relations piece detailing P&F Management as a joint venture based in Hillside, NJ, and established in 2005 by Fishman and Plainfield Asset Management LLC;
  
  
• Distressed Debt and Turnaround Investment Summit; an event sponsored by NYinc in March 2009, headlining Glen Fishman of P&F Management, yada, yada, yada; and
  
  
• Monarch Living; the website marketing The Monarch, 'luxury' condos in Plainfield, NJ, (among several other communities), a joint venture between Fishman and 'an entity affiliated with Plainfield Asset Management LLC' (P&F Management?).

So what's the deal with Plainfield Asset Management LLC?

FORTUNE magazine assigned its ace investigative reporter, Katie Benner, to the story and a 3-month investigation led to her report, which appeared online this past Friday (see here), which was picked up by the Danbury News-Times (see here) and Teri Buhl, a columnist with Hearst's Connecticut newspapers on her blog (see here).

What's the beef?

Both the NYC District Attorney and the Connecticut AG are looking into Plainfield Asset Management's distressed properties lending practices, which include sky-high interest rates (for commercial loans), forcing borrowers to pledge their personal assets (including homes), and sharp practices (such as one-day-notice audits) used to force borrowers into default. The New York investigation is of a criminal nature, according to Hedge Fund Net (see here).

This is in addition to the angst created among the hedge fund's investors over the 'gating' of their investments in 2008 -- the 'gate' not to be lifted until 2012!

Funds under management have fallen from a high of $5 billion to a current $3.3 billion, of which $2.74 billion is 'gated' and unavailable to its investors. (You may note some discrepancies about the hedge fund's assets among the websites involving Fishman listed above -- evidently no one goes back to correct any changes once info is posted.)

But there is another wrinkle, the 'Plainfield' in 'Plainfield Asset Management'.

When I chanced upon the Fishman connection in November 2008, it caught my eye, but I figured it had to do with Plainfield, Connecticut, since that was the state in which the hedge fund was located. (Besides us and them, there are Plainfields in Indiana, Illinois and Wisconsin that I am aware of.)

Turns out, according to Benner's piece, that Plainfield Asset Management's founder, Max Holmes, grew up in -- are you ready for this? -- Plainfield, New Jersey, the inspiration for the firm's name. His father was a proofreader at the Star-Ledger and his mother a high school German teacher and librarian.

Small world, isn't it?

So does the 'P' in P&F Management stand for 'Plainfield'?

At any rate, I'll be watching this one develop.

At the very least, we may find out why no one seems overly upset at the lingering limbo of condo sales at The Monarch.

Max Holmes, Plainfield native, Fishman partner.

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• FORTUNE: "The smouldering hedge fund"
• Danbury News-Times: "Fortune report sparks Conn. AG's interest in Plainfield"
• Teri Buhl: "Report says NYC DA is investigating Plainfield Asset Management"
• Hedge Fund Net: "Fortune Plainfield exposé unsettling"
• Clusterstock: "After All This Time, $3B Plainfield Continues To Gate Clients"
• PAM: "Plainfield Asset Management LLC"

-- Dan Damon [follow]

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Monarch condos occupied without certification?

Monarch condos.

Is someone living in the Monarch condos above Plainfield's new Senior Center without the building having been certified for occupancy?

Even as late as Veterans Day, when attendees were specifically told to park ELSEWHERE than the new Monarch complex's parking lot, it appeared issues with granting a certificate of occupany on the 62-unit complex were still unresolved.

Yet, driving by one evening last week, I noticed lights on in a unit facing East Front Street.

Thinking someone may have forgotten to outen the lights after showing a unit to a prospective buyer, I made a mental note.

Talking with a real estate professional later, I was told that indeed there IS an occupant in one of the units.

I'll be checking in with City Hall about the status later this morning.

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-- Dan Damon [follow]

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Plainfield's Veterans Day Observance: Incontrovertible, inscrutable, inexplicable

Veterans Day annouccement on City's website.
(Click to enlarge.)

Plainfielders who read the city's official (and presumed official) pronouncements on this year's observance of Veterans Day may find them alternatively incontrovertible, inscrutable, and inexplicable, or perhaps all three.

Above is a screen shot of part of the City's official notice posted on the City's official website (view the complete page here, PDF).

Herewith a transcription of the information (presumably officially released, as not even a cub reporter would make a submission such as this) in today's dead-tree version of the Courier News (couldn't find it online, sorry) --

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PLAINFIELD

The city will break in its new veterans' hall with a special Veterans Day ceremony Wednesday.

The hall is located on the ground floor of The Monarch, an unfinished condominium development at 400 E. Front St. An extremely short parade, starting at 10:30 a.m., will include a march from the city's current senior center at 305 E. Front St. to The Monarch, which also is site of the city's new senior center, which has yet to open.

Mayor Sharon Robinson-Briggs and others will speak during the 11 a.m. Veterans Day ceremony. The event will include free refreshments, giveaways and live music, plus performances by the Plainfield High School ROTC and marching band.

Earlier in the morning will be the city's traditional prayer and wreath-laying at the war monument at the corner of East Seventh Street and Watchung Avenue.

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Some may wonder whether some of the information truly needed to be given ('unfinished condominium development', the refreshments are 'free', and the senior center 'which has yet to open'). We must take it on faith that the observance will actually take place in 'the new Veteran's Center', since the developer's agreement explicitly states the veterans' center will be used as the sales center for the condos until all units have been sold.

At the same time, other valuable information is absent (are the veterans organizations playing no role at all? else why are they not mentioned? When exactly 'earlier in the morning' will be the wreath-laying at the war 'monument'?).

Mayor Robinson-Briggs was quoted in Sunday's Courier (see here) as saying,

"We know we have to do a much better job of getting information out to the public," she said, in particular mentioning what she labeled occasional misinformation appearing on some of the city's many popular blogs — which she said could be cleared up by greater transparency. "It's obvious in some cases that they (bloggers) only had a little piece of what the reality of a situation was ... and not enough to tell the real story or the whole story," she said.

So, there you have it.

The mayor, in her own words, says 'a much better job of getting the word out to the public' needs to be done, and that 'it's obvious that [the bloggers] only had a little piece of what the reality of a situation was ... and not enough to tell the real story or the whole story'.

As you can see from this example of a simple, straight-forward public event, Mayor Robinson-Briggs is absolutely right, on both counts.

About a) what must be done by her administration, and b) how what her administration says (or doesn't say) helps or hinders the bloggers.

This is the mountain up which, by her own admission, she must climb in her second term.

Honor Guard at a Veterans Day observance.

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-- Dan Damon [follow]

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Monarch sales trailer site put to better use

Playground equipment being assembled on former sales trailer site.
(Yes, that's my finger in the picture.).

The vacant lot formerly housing the Monarch at Plainfield's sales trailer has a new -- and probably better -- use.

Stopping by the condos Thursday after new attention-getting sales signs spinning in the breeze caught my eye, I noticed a group of people assembling what appeared to be a giant plastic space ship on the former site of the sales trailer, at the corner of East Front Street and Westervelt Avenue.

The new playground equipment is for the little ones at the Neighborhood House East center across the corner. (This is especially nice, if you consider that many of the city's daycare/preschool facilities do not have decent -- or, in some cases, ANY -- outdoor play areas.)

Spinning 'Open House' signs in front of the Monarch condos caught my eye.

What had been thought by some to be a city-owned lot loaned to Dornoch Plainfield for the sales trailer was actually bought at auction by a private party who has made arrangements with Neighborhood House for the lot's use.

Seems likely to me the kids are going to have a happier time there than any of the sales agents for the Monarch condos ever did.

The Monarch sales trailer, which formerly occupied the corner site,
being disassembled this past summer.

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-- Dan Damon

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Monarch Condos: P&F/Dornoch end run around rentals prohibition?

Monarch sales sign was recently blown over by strong winds.

Notwithstanding Plainfield City Council President Burney's recent announcement that the proposed tax abatement for the Monarch condos is off the table, that does not mean the project may not be in desperate straits.

And, as the old saying goes, extremis malis extrema remedia, or 'desperate times call for desperate measures'.

My curiosity was piqued when city administrator Marc Dashield wrote in answer to a query by Councilor Adrian Mapp (see here) that sales of condo units was 'approximately 13-15 units'.

What's to be 'approximate' about? Either they are sold or they are not, right?

It's not quite that easy.

Actually, there are NO COMPLETED SALES YET, only contracts to buy units.

And, considering that some offers to buy were made as long as SEVEN MONTHS AGO, it is hardly any wonder that some prospective buyers are canceling their contracts so they can get on with their lives.

Faced with potential cancellations, rumors in the real estate community are that those with contracts are being offered 'use and occupancy' (U&O) agreements by P&F/Dornoch in lieu of closed sales. In residential real estate, U&O agreements are sometimes used when a buyer is unable -- but on the verge of being able -- to complete a sales transaction.

Essentially, the buyers are granted 'use and occupancy' of the premises for a stated length of time for a stated amount of money, at the end of which the deal is expected to close.

(The twist here is that it is P&F/Dornoch which is unable to complete the sales transaction -- not enough units are sold, and there is no Certificate of Compliance.)

You can be forgiven for thinking it sounds like RENTING, which is not part of the Developer's Agreement.

Does it happen anyway? Youbetcha. In Rahway, the developer of the Sky View at Carriage Plaza condos simply started renting units in disregard of the development agreement which prohibited same (see here).

But the Monarch situation is complicated not only by the fact that the agreement does not allow rentals, but also that there is NO Certificate of Compliance, which would allow legal occupancy of any units.

Is P&F/Dornoch trying to make an end run around its Developer's Agreement with the UCIA?

Could be.

But in any event, the City is likely to be the last to find out.

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• Plainfield Today: "Monarch condos: More wrinkles than Dorian Gray"
• Mapping It Out: "Answers to tax abatement questions"
• Rahway Rising: "101 units accounted for at Sky View"
  

-- Dan Damon

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Mapp hits a nerve on missing Monarch documents

Some in Plainfield grouse about Councilor Mapp's style.

I think time would be better spent on the substance of the questions he raises, particularly with regard to the Monarch condos.

(I am NOT talking about the exchange between Mapp and Council President Burney on whether or not an Executive Session last week would have been in violation of the Sunshine Law. For that, you can read Burney here and Mapp here.)

No, I'm talking about the SUBSTANTIVE issues Mapp raised, namely that the Mayor appears to have failed to execute the documents necessary for the whole Monarch project to move forward.

Mapp's bill of particulars runs as follows (see original post here) --

1) Resolution 281-06, adopted on June 21, 2006, that required Mayor Robinson-Briggs to execute an agreement with the UCIA; and

2) Resolution 402-06, adopted on August 23, 2006, amending the original resolution and requiring the Mayor to execute another agreement with the UCIA. The following facts are critical to this discussion:

The Inter-local Service Agreement (ILA) between the City and the UCIA, which was part of Resolution 281-06 that was to be executed by the Mayor and attested to by the City Clerk, was never executed.

Resolution 402-06, which made reference to an ILA dated July 05, 2006, in its first paragraph was flawed because no such properly executed ILA exists;

Resolution 402-06 attempted to amend resolution 281-06 to add the Monarch city-owned site to the sites intended to be controlled by the UCIA, but this amendment, which was required to be executed by the Mayor and attested by the City Clerk was never executed.

In summary, none of the agreements between the City and the UCIA in its role as the city's redevelopment agency were ever executed.

If these documents cannot be produced, the whole Monarch development project is in a tremendous pickle, all hinging on whether the city actually conveyed the property on which the condos sit to the UCIA. Flowing from that is the issue of the basis for loans by banks to Dornoch Plainfield.

The Council alone, as the corporate body of the City, can alienate (sell) public property. It can only take action through a written document which it formally, publicly approves (in this case a Resolution).

How does anyone know the decision of the Council has been effected? A copy of the resolution, noting the governing body's adoption and date thereof, must be signed by the Secretary to the Governing Body (in this case, the Municipal Clerk) and the Mayor, the city's elected chief executive.

Councilor Mapp is arguing that THESE DOCUMENTS CANNOT BE FOUND and are PRESUMED NOT TO HAVE BEEN EXECUTED.

Has he hit a nerve?

I think so.

In checking the site traffic statistics for CLIPS (with a link to Councilor Mapp's blog post) on the day of Mapp's Monarch piece, I noticed a spike. Looking closely, it appears that the number of readers of the Mapp post was 320, approximately FIVE TIMES the number Councilors usually get when CLIPS highlights their posts.

Who could be so interested in this item?

Could it be the principals involved: City officials and legal counsel? the UCIA and its legal counsel? developer Glen Fishman/Dornoch Plainfield and legal counsel? lenders to Fishman/Dornoch?

Somehow, I don't think this is the last we will hear of this matter.

It would be well to pay attention to Mapp's substance and not his style.

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• Councilor Adrian Mapp: "The Mayor dropped the ball - Part 2"

-- Dan Damon

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