On New Jersey's 'Gold Coast,' politics and development clash

With cool breezes, a river walkway and unimpeded views of the Manhattan skyline, the nearly 7-mile stretch of New Jersey waterfront between the Lincoln Tunnel and the George Washington Bridge is some of the most sought-after real estate on the East Coast.

As gleaming office towers and luxury high-rises have replaced factories and refineries over the decades, the "Gold Coast" also has been the site of battles between developers, tenants and the small towns sprinkled along the Hudson River that wield control over who builds what, and where.

In the latest, a federal lawsuit alleges one of those towns has colluded with a politically connected local developer to block an outside developer's plans to erect residential buildings on the last large, undeveloped space on the waterfront.

The allegations against the town of Edgewater read like a compendium of clichés about New Jersey politics: small-town government riddled with conflicts of interest; payoffs and political favoritism involving the town and local developer Fred Daibes; and the roughly 19-acre former site of a Hess petroleum storage terminal.

"Corrupt transactions, self-dealing, and conflicts of interest" mark the town's relationship to Daibes, according to the suit filed last month by developer 615 River Road Partners, which bought the property from Hess several years ago for about $26 million.

Nonsense, said an attorney for the town, who called the lawsuit "basically the last ditch effort of a desperate developer." Daibes, who is not a defendant but is mentioned numerous times in the suit, called the allegations "out-and-out lies" and denied a claim in the lawsuit that he is seeking to sabotage the effort because he was outbid for the property.

The combination of proximity to New York and a lack of available space — New Jersey is the most densely populated state — has made real estate development both a highly profitable industry and one ripe for abuse.

That was evident more than a decade ago when future Republican Gov. Chris Christie, then the state's U.S. attorney, mounted a sting using an informant peddling cash bribes for fictitious real estate projects.

More than a dozen public and elected officials, including two mayors and a state Assemblyman, were convicted or pleaded guilty to bribery and extortion.

In the Edgewater case, 615 River Road Partners claims the town has unfairly denied zoning changes it sought. Edgewater has taken preliminary steps toward taking the land by eminent domain for a park and a new public works facility, a recent move that "doesn't pass the straight-face test," according to plaintiffs' lawyer Justin Walder.

Daibes, meanwhile, has "participated in the development of virtually all high-density properties built in Edgewater since 2000" and has routinely been granted the same kind of zoning variances the plaintiffs are seeking, the suit alleges.

The lawsuit seeks damages at least equal to the value of the property once it is developed, which could be $50 million or more.

The suit contends Daibes has gained favor with local officials over the years through undisclosed cash payments, employment at his companies, loans from a bank he controls and below-market rentals at his buildings.

Some of those local officials have direct or indirect ties to him, according to the suit. One of the town's zoning board members was a vice president of a Daibes entity for nearly 20 years, and the town zoning board's attorney's husband, whose mother is a borough council member, does legal work for Daibes.

The suit charges neither the zoning board attorney nor the councilwoman recused herself from actions affecting the Hess property.

That simply isn't so, said borough attorney Robert Mariniello. He denied the conflict-of-interest claims and said Daibes doesn't have the equivalent of a blank check when it comes to his dealings with the town.

"Daibes has gone before the board when necessary, and there have been times when the board has cut down what he wanted to do," Mariniello said.

Daibes said he wasn't in favor of the group's plan for nearly 2,000 residential units because of the effect that would have on the town and on adjacent properties he owns — which the zoning board reduced in size, he added. But he scoffed at the idea he has interceded.

"First of all, I wish I had that kind of power," he said. "Nobody has that kind of power. Second I'm not anti-development, I'm a developer. But I'm for good development."