RACER Trust and the Lennar Corp. are two entities that will very likely shape the future of the Ewing’s Parkway Avenue Redevelopment Zone. But who exactly are these two companies?
Lennar, which was revealed as the proposed redeveloper of the former General Motors Site at a meeting of the Ewing Redevelopment Agency on Jan. 15, would be purchasing the property from RACER Trust, the current owner of the property.
Lennar, headquartered in Miami, was founded in 1954, and in 2000, merged with U.S. Homes to become one of the largest residential developers in the country. It is currently the third largest home builder in the U.S., said Robert Calabro, regional director of land for Lennar, at the ETRA meeting.
Lennar has developments in 18 states, including 10 in New Jersey. According to the company website (lennar.com), Central Jersey properties developed by Lennar are Carriage Park in Old Bridge Township, Greenbriar Stonebridge in Monroe Township and Riverwalk in Burlington Township.
While RACER is responsible for environmental cleanup of the tract to industrial standards, Lennar would be responsible for cleaning up contamination to residential standards.
According to Calabro, the company also has an investment company that manages funds for Wall Street investors, has a mortgage and title company, an apartment operations and development division, and a commercial real estate operation and development division.
“There’s a lot of different avenues by which Lennar does business, however, it’s main focus is in home building,” Calabro said. “I wouldn’t be concerned about the ability to execute some of the various portions of this project. Lennar has the wherewithal and understanding to do it all.”
Calabro said the company’s revenues totalled about $6 billion last year, and it has a continuous availability of funds of more than $1 billion.
“I don’t think we’re going to be short of money when the time comes to spend it to create something special here,” Calabro said.
RACER Trust, meanwhile, is not a conventional property owner. It was the entity created as the end result of General Motors’ bankruptcy filing about five years ago, explained Kevin McManimon, the township’s redevelopment counsel, during the ETRA meeting. RACER is tasked with the environmental cleanup and ultimate development of the property.
It all started in 2000, when General Motors Corporation shut down the manufacturing plant that it had operated on the site since 1938 and eventually demolished all of the buildings on the property. The company was in the process of exploring the environmental conditions on the property when it filed for bankruptcy in 2009, according to McManimon.
In that action, McManimon said, GMC conveyed most of the contaminated properties that it owned around the country — including the Ewing site — to a unit called Motors Liquidation Corp., which also wound up filing for bankruptcy a short time after GMC.
In response, the states in which the contaminated properties were located, including New Jersey, all filed legal claims against Motors Liquidation Corp. to pay for the cost of cleaning up the contaminated properties.
Subsequently, when the federal government bailed out the auto industry in 2009, a settlement agreement was reached between GMC, Motors Liquidation, the federal government, and the states. As part of the settlement, the U.S. Treasury agreed that it would partially fund the cost of remediating environmental contamination on those properties.
In 2011, Motors Liquidation Co. transferred title of those properties to a newly created environmental response trust known as RACER Trust, an acronym for Revitalizing Auto Communities Environmental Response.
“Our role is to continue our cleanup, and we have the authority to sell the property,” said Bruce Rasher, redevelopment manager for RACER, during the Jan. 15 meeting. “We have clear title and we will continue to work cooperatively with Ewing Township and with our buyer to effectuate this transaction.”
“We were born with the specific purpose of undertaking safe and protective cleanup and positioning for redevelopment and sale of the properties left behind in the General Motors bankruptcy,” said Rasher. “On the effective date of the trust, we took title to properties at 89 locations in 14 states. There are approximately 300 properties spread out over these locations.”
As part of the settlement agreement RACER was capitalized with sufficient funding for roughly two-thirds of the sites that required remediation, including the Ewing site, with specific dollar amounts, said Rasher. The amount set aside for the GM site, according to RACER’s website at racertrust.org, is $10.5 million. “Those amounts are secure, we have the cash, and it’s dedicated just for the site.”
RACER’s secondary mission is to see the rehabilitation of the properties, said Rasher.
“The government didn’t just want to give the Trust funding for cleanup without also giving it the charge to productively re-use the property.”
According to Rasher, the settlement agreement has criteria that RACER must consider in every sale. They include factors such as whether the buyer’s proposal for the reuse of the property will contribute to the local economy, whether it will generate new tax income, and whether it will generate new jobs.
“Instead of just dumping these properties into the market for any use, RACER carefully vets buyers and proposals,” Rasher said. “In this case, because of the New Jersey statute that allows for the creation of a redevelopment area and actually authorizes the local jurisdiction to select a redeveloper, we necessarily, and very well worked cooperatively with the township.”
