Compost Plant Developer Files $10.5 Million Lawsuit Against Gloucester City Residents for Breach of Contract
Wednesday, November 10, 2021
In September 2020 former Mayor Daniel Spencer was asked by CNBNews for an update on the Southport compost facility. "It is still a go. It is a slow and lethargic process!"
CNBNews photo
GLOUCESTER CITY NJ(CNBNEWS.NET)—(The date, October 27, 2014)Construction crews have started to clear the site for the Organic Diversion’s food waste to energy facility that will be built on 9.5 acres in Gloucester City’s Southport. Bulldozers, which could be seen on the other side of the cyclone fence on Saturday, have cleared off much of the ground where the $30 million, 110,000 square foot facility will be located. The vacant property, (known to Old Timers as “The Desert”) was once home to New Jersey Zinc which was owned by Gulf and Western. (CNBNews article)
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William E. Cleary Sr. | CNBNews
GLOUCESTER CITY, NJ (November 9, 2021)(CNBNews)--The City of Gloucester City is being sued for $10.5 million by Rocco D'Antonio, head of Gloucester City Organic Recyling LLC, (GCOR) who had an agreement with the City to build a compost plant named Organic Diversions in the Southport industrial area near the end of Water Street. D'Antonio said the lawsuit was filed in March because city officials didn't live up to their part of the contract. That venture was first announced in 2010 by Mayor William James (deceased); followed by a letter of intent.
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D'Antonio is represented by BARON & BRENNAN, P.A. of Voorhees. The City has hired ARCHER & GREINER, of Haddonfield to represent the taxpayers.
In an interview with CNBNews D'Antonio said "The agreement called for the city to prepare the nine-plus acre property for the construction of the plant. Specifically, Section 5B of the agreement states the Lessor (the City) shall deliver the Premises to the Lessee with the following: all water, sewer, and utility hookups and infrastructure necessary for the Lessee to operate its facility. The City was also responsible for the complete environmental remediation of the Premises to the NJDEP satisfaction and the federal government's satisfaction. The City agreed to provide GCOR with the proof thereof that the environmental remediation to the Premises has been completed. The City was to pay the cost for all requirements associated with the Remedial Action Work Plan or another environmental plan for the Premises, according to the 2016 agreement.
(below dated 3/2/2021)
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The city failed to prepare the site to the specification of the agreement, according to D'Antonio. It was also responsible for the remediation of nearby wetlands. Allegedly the city had received a permit to proceed with the remediation but let the permit expire.
When asked how he arrived at the total figure of $10.5 million he said that number included such items as the loss of a $2 million state grant because of the city not fulfilling its part of the contract, the loss of tax credits, engineering fees, permit fees, and every payment he made to vendors and a number of other items.
The court documents revealed that the City was talking with other developers who had expressed an interest in the 145 acres of Southport. One of those businesses was BYKA Sustainability Group, Inc. with whom the City authorized the execution of a letter of intent.
BYKA has proposed the development of a waste processing facility in the Southport area, including on the Gloucester Titanium property, also known as NJ Zinc. There proposed facility would utilize a Plasma Enhanced Classification System to process the organic fractions of a wide variety of materials including *HAZARDOUS WASTE. (*emphasis reporter) to produce Syngas which would then be converted to end products including electricity and liquid fuel.
Syngas contains carbon monoxide, which is a chemical asphyxiant. The toxic action of carbon monoxide is caused by combining with the hemoglobin in the blood to form the relatively stable carboxyhemoglobin. The stability of the carboxyhemoglobin prevents oxygen from being taken into the body and consequently, the body is deprived of needed oxygen.
● Syngas is not classified as a poison at the normal levels of carbon monoxide present, but it can be fatal after just a few minutes of exposure. At lower concentrations, it can cause workers to have headaches and dizziness.
Environment:
● Syngas is a pollutant when released because it contains carbon monoxide. (source: Air Liquide)
The proposed GCOR facility would also process organic materials into electricity and liquid fuel.
The 9-acre site was the former home of Atlantic Richfield and BP Refinery. It is located in the city's Southport industrial area which consists of 145 acres.
The project was first announced in 2010 at a December 22 council meeting, Mayor William James (now deceased) said a letter of intent was signed with D'Antonio to build the food-waste-to-energy facility at a cost of $30 million. The project was expected to generate 450 construction jobs, and 20 permanent jobs which would include laborers, truck drivers, and office staff. All parties involved said that once all permits are obtained construction would take about 9 months.
Fast forward to 2014, caravans of dump trucks loaded with dirt from a nearby construction project began pulling into the Southport area. D'Antonio said those trucks dumped 100,000 tons of fill on the property to level it out. As for the cost of the fill, he said there was a mutual agreement with the building contractor, "We allowed him to dump the fill in return we didn't have to pay for it. "That year we put in ground stabilizing, and utility poles.
Not much construction happened on the site after that date.
Whenever James was asked what is happening with the compost plant, he would say (paraphrase)"Getting all the necessary permits from the DEP and EPA take time." Most recently, in the fall of 2020, Daniel Spencer, who was mayor at the time was asked the same question by CNBNews; his response was, "It is still a go. It is a slow and lethargic process!"
But, CNBNews recently discovered after several interviews with D'Antonio, and from the court documents that wasn't the real truth. Both mayors were aware that the project was falling apart; although they wouldn’t admit it publicly.
The fallout between the two parties started sometime between 2015 and 2020. The developer said he was becoming frustrated with the lack of progress with the remediation work. In 2019 he thought he could regroup some of his losses by getting involved in the building of a medical marijuana establishment at Southport.
"But that didn't pan out".
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"Shortly thereafter I told city officials I can't wait any longer you have to finish this (remediation work). Howard Long (city solicitor) told my lawyer, we are not going to do it, we just don't have the money. He refused to talk to me or answer any of my letters. We sued the city in March 2021, and they countersued us."
The city, according to the ARCHER & GREINER document, blames Southport Renewal (SR), who was hired to represent the City after they split from Develcom Inc., who held the job from 2010 to 2013.
D'Antonio, who was a 25 percent partner in SR, said he helped form the group that ran that business in 2013. Some of the members of SR were also members of the Gloucester County Organic Recycling with whom the City had a redevelopment agreement related to a neighboring property in that area.
From the ARCHER & GREINER documents (dated 5/14/2021)
Southport Redevelopment's (SR) original estimates for all of this environmental work was approximately $1 to 3 million. The city relied on this estimate in undertaking various activities with regard to the overall redevelopment of the area as well as entering contracts and amendments with Plaintiff and SR.
After a number of years and additional investigation and submissions to various government agencies, the new estimated for the cost of dealing with all of the environmental issues including wetlands mitigation was approximately $10 million.
According to the terms of the redevelopment agreement between SRl, the initial funds for payment of the environmental costs on the property, which included the wetlands mitigation were to be provided by various recoveries from the parties due to existing environmental conditions. If those funds were not sufficient, it was the responsibility of SR to provide the funds, which it then could seek to have reimbursed from the City from the income the City generated from sale or lease of properties in the Southport Redevelopment Area.
The City claims that Plaintiff had unauthorized dealings with Southport Renewal and was responsible for Southport stopping work on remedial measures. "Due to the actions and inactions of Plaintiff, the City has been unable to develop the GCRO property, the SR property, or the surrounding area.
D'Antonio claims The City breached the Redevelopment Agreement, as amended, and the Ground Lease Agreement as amended, by, inter alia, (among other things) failing to address, pay for and facilitate the wetlands mitigation measure required by NJDEP in connection with the permits, and approvals issued for the Subject Property.
The City's attorney ARCHER & GREINER is asking for a trial by jury, while Gloucester City Organic Recycling is seeking a trial by the court judge.