NJ town approves redevelopment plan for 'dilapidated and decrepit' shopping center

RARITAN BOROUGH - The third time was the charm for the Raritan Mall redevelopment plan.

After months of twists, turns and legal action, the Borough Council on Nov. 26 approved a controversial plan outlining the redevelopment of the "dilapidated and decrepit" shopping center at the intersection of Route 206 and Orlando Drive.

The plan, essentially the same as the proposal rejected by the Borough Council already twice this year, was approved in a final vote on Nov. 26 after it was narrowly introduced by a 3-2 vote on Nov. 12.

The proposal calls for a mixed-use development with 276 apartments and 28,000 square feet of commercial space.

The redevelopment plan calls for 42 affordable units. The state Department of Community Affairs recently determined that the borough has a prospective need to provide for 99 more units in the next round of affordable housing. The borough already has an unmet need of nine units.

Of the 276 apartments in the plan, 234 would be market-rate units. The market-rate apartments would be 144 one-bedroom units, 59 one-bedroom and den units, and 31 two-bedroom units. The affordable units would be eight one-bedroom apartments, 25 two-bedroom apartments and nine three-bedroom apartments.

More: Raritan Borough sued for $100M after rejecting redevelopment plan for 'decrepit' mall

The issue of what to do with the nearly vacant mall has become the fiercest controversy in the borough for years. The mall once housed a Stop & Shop supermarket, a drug store and a variety of other businesses, including a bank and Blockbuster.

The shopping center is next to The Lena, an apartment building with 224 units, and the borough has approved more than 70 apartments in a redevelopment of the Granetz building adjacent to the northeastern corner of the shopping center. Construction is also continuing on an apartment building about a half-mile west on Orlando Drive.

Critics have called the apartment building "gargantuan" while others expressed concerns about flooding from the nearby Raritan River and whether the development would strain the borough's emergency services.

Residents also complained that an online business, Easy Deal, had been allowed to operate in the mall for months without receiving a certificate of occupancy.

The new vote is the latest chapter in the tale of Raritan Mall LLC's $96.3 million plan for the transformation of the 12.2-acre tract.

According to a financial report drafted by NW Financial Group, if the project were built and the borough and developer signed a Payment in Lieu of Taxes (PILOT) agreement, the municipality could receive an estimated $36.65 million from the developer through the lifetime of the 30-year agreement.

If the property is not redeveloped, the borough would only realize $6.9 million in property taxes over 30 years, the study found. If the property is redeveloped without a PILOT, the borough would gain $18.3 million.

Raritan Mall LLC purchased the property, which is in a flood hazard area, in October 2020 for $5.6 million from Raritan Center SPE Owner, part of the Fortress Investment Group in Manhattan. Fortress acquired the property when a previous owner, RAIT Financial Trust of Philadelphia, went bankrupt and sold its assets to Fortress.

The shopping center lost its primary tenant in 2016 when Stop & Shop chose not to renew its lease. A redevelopment study says that no new tenant has been found for the space "despite efforts from the municipality to attract a suitable replacement."

Raritan Mall LLC has agreed to pay $350,000 for improvements to Orlando Drive. The developer had also agreed to work with the borough and Somerset County to facilitate the transfer of Orlando Drive to Somerset County.

Raritan Mall LLC has filed a $100 lawsuit against the borough because of the previous rejections of the plan.

The effort to redevelopment the mall, which now has only a few occupied storefronts, gained steam in 2022.

In June 2022, the Borough Council directed the borough's Planning Board to determine if the property could qualify as a redevelopment area. In October 2022, the Planning Board recommended that it be declared a redevelopment area, and the Borough Council declared it a redevelopment area the following month.

The plan for the apartments was completed in April 2023 and two months later, the developer received a permit from the state Department of Environmental Protection.

In February, the Borough Council designated Raritan Mall LLC as the conditional redeveloper. That designation, by a 5-1 vote, included the agreement that 15% of the apartments would be affordable units.

In March, the Borough Council approved the creation of a redevelopment plan which was introduced on first reading on April 2. The plan was then submitted to the Planning Board which found it was not inconsistent with the borough's master plan.

The Borough Council was scheduled to hold a public hearing and final vote on the redevelopment plan on May 7. However, that morning, Councilwoman Joyce Melitsky resigned.

The lawsuit states that due to the resignation, Raritan Mall LLC was notified the vote was postponed and representatives did not have to show up at the meeting.

But, at what the lawsuit said was a "last-minute change of course," Mayor Nicolas Carra decided to move ahead with the vote without any Raritan Mall LLC representatives present. The Borough Council then rejected the Redevelopment Plan, the lawsuits states.

After Raritan Mall LLC objected to the "improper" vote, the redevelopment ordinance was scheduled to be introduced again on June 11, but that vote was postponed because the meeting was not properly noticed under the state's Open Public Meetings Act.

On June 25, the Borough Council voted 3-2 to reintroduce the ordinance.

But on July 26, after an occasionally raucous public hearing, the Council defeated the redevelopment plan by a 6-0 margin.

Raritan Mall LLC is also involved in a lawsuit in federal court against its insurer, United National Insurance Company, over a claim for damages to the property in the Ida flood on Sept. 1, 2021.

In the federal court lawsuit, now entering mediation, Raritan Mall LLC claims that the insurance company has failed to pay the claim which could amount to $1 million.

Email: mdeak@MyCentralJersey.com

This article originally appeared on MyCentralJersey.com: Raritan Mall redevelopment plan finally approved