Cherokee sued the borough last December for allegedly failing to meet its end of a redeveloper’s agreement, signed by former Mayor Russell Pitman in April 2006. The agreement would allow Cherokee to build 1,625 homes, along with parks and retail space, on Porete Avenue in place of a dozen light industrial businesses.

The borough agreed to take the businesses through eminent domain to make way for the project, but the council voted to table the resolution to condemn the businesses. Cherokee then sued the borough for violating the agreement for not using eminent domain on Porete Avenue and for failing to include the former Bergen County Utilities Authority (BCUA) trash transfer station in the redevelopment area.

In April, the borough fired back, charging Cherokee with failing to pay a $16 million pre-completion security to insure the project’s completion. According to borough redevelopment attorney Robert McGowan, Cherokee needed to at least write a letter asking for an extension on the due date of the payment by March 31.

The borough then sought to have the case dismissed, claiming the contract was invalid since Cherokee failed to make the payment, a "general material condition" of the agreement.

On Oct. 19, the judge denied North Arlington’s motion for "summary judgement," which would have dismissed the suit altogether. Now, North Arlington will go to trial.

"The judge’s ruling is not a setback for the town. It just means that he doesn’t want to dismiss EnCap’s claim without discovery and a trial," said borough spokesman Thom Ammirato.

According to court records, Cherokee argued that it could have paid the $16 million pre-completion security if North Arlington had not previously breached the agreement and showed not interest in meeting the terms.

Cherokee did not factually support this assertion in court, but the developer will need to as the case progresses, said McGowan. The judge decided the "issues and complexities" of the case were too substantial in terms of money and public policy to dismiss the case, he added.

The borough wants Cherokee Porete’s assets frozen in order to prevent them from "dissipating all of their assets and leaving the borough with claims against worthless company ‘shells,’" said McGowan.

The borough believes EnCap owes them because they own the BCUA site and it does not receive the amount of revenue promised from the property. Cherokee purchased the site last year for $22 million and it remains unoccupied.

If development had occurred on the site, the land would be more valuable and the town would receive more tax revenue. Because the development is tied up in litigation, it remains stagnant and is not producing as much tax revenue from the borough as it could if the site were developed. "They’re stopping the town from going forward with any alternatives," said Ammirato.

Ammirato did not specify exactly how much the borough sought in damages. However, he said a judge or jury will decide on an appropriate amount, if any at all.

EnCap manager James Dausch said the developer is confident it will succeed in the trial. "These claims are frivolous and we are actively considering sanctions against the borough’s attorneys," said Dausch.

In 2006, municipal taxes went down in North Arlington, due largely to impact fees from Cherokee. This year, North Arlington will not receive that money and taxes are going up 33 percent. Mayor Peter Massa wrote a letter to residents, explaining how "previous administrations" created current fiscal problems.

"EnCap exploited North Arlington’s fragile finances by enticing the previous administration to take up front payments from the developer," Massa wrote in his letter. "The council and I understand that rejecting this money would mean a tax hike this year. But we also recognized that continuing to take EnCap money would lead us to accept a development project that would destroy our town."

Massa, who beat Pitman in the June 2006 primary on an anti-EnCap, anti-eminent domain platform, explained how taxes would rise dramatically as a result of past mistakes and the borough’s refusal to allow the project to continue. Massa, along with councilman Steve Tanelli, voted against the redeveloper’s agreement. Three out of six sitting council members, James Ferriero, Mark Yampalia and Phil Spanola, voted for the agreement.