NOPE Chairman's Open Letter Response to APP Editorial

NOPE Supporters:

This Asbury Park Press editorial encouraging the Department of Navy to pursue an expedient buyout of the Laurelwood housing mess at NWS Earle is mostly on target. However, as NOPE Chairman, there are a few arguments worth making, namely that both the Navy AND Teri Fischer's Laurelwood Homes, LLC are guilty of victimizing U.S. taxpayers and endangering our local communities and Earle's mission and service members.

There is no debating the APP's perspective of the Navy's mule-headedness in dealing with this privatized housing debacle, or that the Navy kept its cards close to the vest, largely to compromise Ms. Fischer's bargaining position. But let's not have a pity party for a private housing contractor who has reaped at least $70-$75 million of U.S. taxpayer dollars for housing built in the 1980s...presumably at a cost far below that value...and that has largely been vacant for the past decade (i.e. requiring not as much attention or maintenance as a fully occupied community). To be sure, the $22 million mortgage figure put forth by Ms. Fischer's attorney appears to be the 30-year mortgage amount circa 2002, and likely does not take into account any payments put forth or, conversely, equity (i.e. profit) cashed out during the refinancing.

Hypothetically, let's say the Navy's buyout bid was $20 million, or the value NOPE put forth in our business case on the Laurelwood homes, after backing out the cost to build the unimpeded access road, insurance, daily operational costs (maintenance and repairs, provision of utilities, trash removal, etc.) and teardown costs; remember, by contract, the homes must be town down by 2040 and the land restored to its "original state" (the land was a wetland, believe it or not), which depletes the value of the homes and minimizes the useful life to 30 years.

Clearly, Laurelwood's attorney is going to do his job and ask for much more, and say that the Navy's offer is insulting (or "a song," as the APP editors put it). To be sure, Congressman Smith, as a longtime observer of this case and the champion of NOPE's cause, is charging the Navy with acting in "bad faith."

We cannot discount, however, the Navy having been either a halfway decent business partner and/or extremely sympathetic to Laurelwood's 2002 plea to refinance the mortgage on the homes at a much more favorable interest rate (but, based on a document we've seen, more likely hoodwinked by bankers and Laurelwood's attorney into signing away its right to right to revoke the lease in the event of a national emergency), is well within its right to be a shrewd bargainer. Indeed, based on NOPE's reading of the contract and other documents obtained thru the Freedom of Information Act, the Navy had to know that Laurelwood needed upfront funds to build the new unimpeded access road, starting May 1, and would have almost no shot at procuring insurance on 300 rental townhomes (to civilians) inside a weapons facility and on federally owned land...in the wake of 9-11.

No matter how one slices it, both the Navy and Laurelwood are to blame for this charade. Yes, the Navy should have bought out the contract back in 2002 when approached by Laurelwood, both parties knowing full well that the civilian-rental phase (from 2010-2040) of the 52-year contract would amount to a major logistical and financial headache to the developer, Ms. Fischer, as well as the Navy. Indeed, our review of lease documents shows the Navy has made rent payments to Laurelwood (for one occupied unit) of roughly $30 million since 2002 for unused Laurelwood military housing.

Laurelwood's attorney, and for that matter all proponents of a buyout (NOPE among them, though for long we argued that the Navy should revoke the deal...until learning that the Navy foolishly signed away that right - something it kept out of the Laurelwood EIS and failed to mention during our face-to-face meetings), need to ease the rhetoric and propose a solution to end this mess rather than pointing fingers.

After 2+ years of involvement in this matter, my biggest concern - and I firmly believe this is shared by my fellow NOPE leaders - is the selfish intent of the Navy (get out of a bad housing deal and rent obligation) AND Laurelwood Homes LLC (get the most money out of the deal).

With Congressmen Smith, Holt and Pallone as intermediaries (remember, NWS Earle spans three U.S. legislative districts), arrangements should be made publicly to refrain from drawn-out litigation and/or mudslinging and to have a handful of impartial appraisers come in and assess the fair value of a buyout, rather than the Navy low-balling Laurelwood and Laurelwood falsely assuming that it is sitting on a king's ransom.

Set the buyout at the median or average of the independent appraisals, then immediately level the homes to avoid potential shenanigans and put this Laurelwood housing mess to bed once and for all.

Bill Holobowski
NOPE Chairman