CORRECTION: This story incorrectly reported Council member Charles Covington’s action.
He stated, “I did not abstain from a vote on the resolution. I recused myself from the discussion on the resolution and removed myself from the Council room during that discussion.
“Further I did not vote on the resolution but again recused myself.
No one “from the Herald contacted me after the meeting or at any other time on this matter.”
AVALON – A majority of Avalon Borough Council authorized the hiring of a special counsel Aug. 8 to appeal sanctions by the state Department of Community Affairs (DCA) against Construction Official John Tracy.
The sanctions stem from an ongoing “debacle” between two Avalon modular home developers, two state regulatory agencies, Tracy and 38 homeowners who didn’t receive required state-sanctioned home warranties before being issued certificates of occupancy (CO).
The resolution to hire special counsel Neil Yoskin, of the law firm of Cullen and Dykman LLC, passed with Council President James Deever, Councilwoman Nancy Hudanich and Councilman John McCorristin voting in favor. Councilman Richard Dean was absent, and Council Vice President Charles Covington abstained.
Contacted after the meeting about his vote, Covington said, “I’m going to recuse myself from this discussion (at the scheduled work session). I have some personal relationships with some of the parties involved in this, and I don’t want any implication that there is prejudice or bias by participating in this particular discussion. And I also recuse myself from the resolution at the regular meeting.”
The state is fining Tracy $600 because it claims he issued COs for 12 modular homes when they were not enrolled in a state-approved new home warranty plan. He has also been ordered to retake and “successfully complete” the Construction Official course within one year of the disposition of the matter.
The notice of violation and order to pay the penalty was dated June 11, 2018. He had 15 days to contest the orders.
As of Aug. 3, the state said Tracy was appealing, and the matter was stayed pending a settlement or administrative hearing. Settlement must be accomplished within 30 days of the state’s receipt of his request for a hearing according to the notice.
During the work session prior to the regular meeting where the resolution was passed, Avalon resident Martha Wright, of Seventh Street, referred to the issue as a “debacle,” urging council to pursue mediation instead of hiring special counsel.
“When I hear special counsel, I see dollar signs,” she said, “and as a taxpayer, I’m paying that. The borough lost another case in Superior Court and the Appellate (Court) and then decided not to pursue it. I hate to see money wasted.
“I bet the law firm will charge more than $600,” she added, referring to Tracy’s fine. “I urge you to consider mediation.”
Under the borough’s Indemnification Ordinance, the municipality is required to provide Tracy with legal representation and to pay any sanctions ultimately imposed on him.
Tracy is represented by Andrew McNally, of Hackensack, while Neil Yoskin, of Princeton, is special counsel to the borough.
James Waldron, borough assistant business manager, responded, saying “Two citizens have pursued complaints” against Tracy, and “if they are removed, then we could drop this because we think they (the charges) are unjustified and unwarranted.”
In the appeal, the borough is seeking termination of the sanctions without any penalty, calling both Tracy’s and the DCA’s actions “unfortunate.”
The borough is requesting a meeting with the DCA to resolve the matter without litigation.
“Tracy and his predecessor Salvatore DeSimone accepted what turned out to be incorrect home warranties on modular homes proffered by Artisan Fine Homes, a local builder, between 2009-2012,” Waldron said.
According to Tammori Petty, director of DCA communications, “Both the construction office and the builder were mistaken that the five-year factory warranty from the modular home manufacturer was the proper new home warranty, which is not the case.
“Both the state warranty plans and the state-approved private warranty plans are for 10 years with respect to major structural defects. Thus, if the homes were issued certificates of occupancy without a warranty, the owner would only have the option of resolving any issues directly with the builder rather than having access to the warranty procedures under the state plan or the state-approved private warranty plans.”
“The DCA Bureau of Homeowner Protection, after being informed of the error, directed CO Tracy to sit on the discovery and directed him not to notify affected homeowners who had been given the incorrect home warranty,” Waldron noted. “DCA informed Tracy that each case would, instead, be dealt with on an individual basis upon discovery of the problem by the homeowner.
“Now, several years after the fact, another DCA office, the DCA’s Office of Regulatory Affairs, is taking a contrary position and seeking to sanction him for doing exactly what the DCA directed him to do in the first place,” he said.
“The sanctioning of Tracy under these circumstances and requiring him to retake the Construction Official course is both humiliating to him personally and particularly egregious in that the situation was corrected many years ago with the full knowledge of and acquiescence by DCA and is not a recent or recurring issue,” he added.
“Moreover, the action unfairly and incorrectly suggests the borough has an incompetent construction official in its employ who has been recommended for further training.
“This undermines the integrity of the Construction Office and is damaging to the borough,” he said. “This is especially true where there has not been a single instance where Tracy’s competency in building and construction issues has been questioned or challenged.”
The sanctions were the result of a peer review May 17. Originally, the fine was $100 per home, which was cut in half.
Between Artisan Fine Homes LLC and Avalon Development LLC there were 38 modular homes constructed. As of February 2017, Waldron said there were 18 customers with incorrect warranties on which the sanction was based. Tracy issued 12 of those COs; DeSimone issued six.
Artisan Fine Homes LLC sold 23 homes and all presently have DCA-approved warranties according to Waldron.
Avalon Development Group LLC sold 15. Of those, 11 have DCA-approved warranties and four have only the factory warranty for modular homes. Avalon Development Group’s state license was revoked/suspended Jan. 29 because it did not follow a state directive to obtain proper warranties. Waldron said the borough has not been notified that the builder’s status had changed. Although the company’s website still lists an Avalon office location, the phone number is out of service.
At the council work session, Michael Prinz, of Seventh Street, said he was one of the four homeowners still without a proper warranty. He said he was unaware of the issue until another resident notified him about it. He found it “troubling” that the borough did not notify him.
“Is that the correct course of action?” he asked. “Why didn’t the borough notify us? This is a huge failure of communication. The borough has some responsibility here as well.”
Waldron reiterated that the borough followed the state’s directive not to notify homeowners. “You are the real victim because the builder is out of business now,” he told Prinz.
He offered to meet with Prinz to discuss options.
According to Waldron, the state has told him that none of the homeowners impacted had filed any warranty claims.
To contact Karen Knight, email kknight@cmcherald.com.
