When Philadelphia developer Carl Dranoff geared up to exercise his long-held development rights on the Camden waterfront, he says, he was suddenly urged to take on a new partner: South Jersey power broker George Norcross.
Dranoff characterizes Norcross’ intrusion on his Camden plans as a “shakedown” involving Norcross and the former real estate giant Liberty Property Trust.
Dranoff delivered that testimony in a newly public deposition in a legal battle in which the developer and the City of Camden have sued each other over the scuttled $71 million sale of his Victor Lofts apartment building.
His account adds another chapter to the tale of how Norcross and his business partners won control of valuable land and development deals backed by lucrative state tax credits in a city fighting to make a comeback.
The litigation is underway at a time of intense scrutiny of development on the waterfront. The Inquirer has previously reported on an FBI investigation and a New Jersey state grand jury probe of development linked to massive tax breaks. A task force appointed by Gov. Phil Murphy last year found evidence that some companies may have won tax credits improperly.
In his testimony, Dranoff, 72, describes an increasingly hostile series of interactions with Norcross, 64, which he alleges inspired the South Jersey businessman and political powerhouse to later derail the Victor sale in a “vendetta” against him.
During one tense negotiating session on a conference call in 2016, “George literally screamed at me,” Dranoff said in the deposition. “It was a very adversarial situation and we just wanted to get out.”
Among Dranoff’s most startling allegations are his claims that Liberty, which aimed to remake a huge swath of Camden’s waterfront after developing some of Philadelphia’s most notable buildings, teamed with Norcross on a pressure campaign that ended with Dranoff cashing out.
In other filings, a city attorney and an economic development executive acknowledged that Norcross’ brother, lawyer Philip Norcross, had asked Camden officials to proceed slowly on Dranoff’s plans.
Dranoff sat for the deposition in November, fielding questions from the opposing side by William Tambussi, who represents the city. Tambussi has also represented George Norcross — including when Norcross unsuccessfully sued Murphy last year over the governor’s support for the task force investigation.
In response to questions about the testimony, a spokesperson for George Norcross said “numerous things are out of context.” The spokesperson, Dan Fee, did not provide specific examples. He said the negotiations referenced “were by and between Dranoff and Liberty Property Trust.”
Conner Strong & Buckelew, the insurance brokerage that George Norcross leads as executive chairman, “looks forward to continuing to be part of Camden’s nationally heralded renaissance,” Fee said.
Philip Norcross did not respond to a request seeking comment.
In its lawsuit, Camden officials say that Dranoff bilked the city out of millions by abusing a tax break for the Victor redevelopment project.
“For almost two decades, Carl Dranoff failed to revitalize the Camden waterfront as he promised to do, all while pocketing tens of millions of dollars and denying my cash-strapped city money it was owed,” Camden Mayor Frank Moran said in a statement Tuesday. “He is resorting to saying things that simply aren’t true in order to deflect attention from his own failures.”
Before setting his sights on Camden in the early 2000s, Dranoff, who declined comment for this article, had already made a name for himself in Philadelphia with such projects as the Symphony House condo building on Broad Street and the Locust on the Park apartments in the Fitler Square neighborhood.
At the time, the vacant wreck of Camden’s former RCA Victor record factory stood as a monument to the deindustrialization that had left much of the city blighted and forlorn.
He bought the iconic building in a deal that included a 2002 “tax agreement” with Camden officials that limited his payments to the city to $200,000 a year. Other agreements protected the building’s Delaware River views from being blocked by other construction and gave him first dibs on future residential development on the waterfront.
The waterfront remained largely vacant for years. That changed in 2013 with the passage of the Economic Opportunity Act under Gov. Chris Christie. It created a pool of corporate tax credits, fueling demand to build in Camden. Businesses were eventually approved for $1.6 billion worth of incentives.
Among those hoping to cash in on that support was developer Liberty, whose past work had included Comcast Corp.’s headquarters tower and most of the South Philadelphia Navy Yard’s central office park.
The company announced plans for up to 1.7 million square feet of office space amid residences, hotels, and shops on what was then a vacant site across the Delaware River from Center City.
When Dranoff got a call from Liberty asking to collaborate, “I said absolutely, yes,” he testified. “We’re in.”
He asked Liberty to honor his residential development rights, he said, and proceeded to hire an architect and win tax credits for a new apartment complex.
But only when he went to meet with a Liberty Property Trust executive at the time, John Gattuso, did Dranoff find out “that John and his group had formed a partnership with George and his group on the master — on the whole waterfront,” he said. “And they wanted me to become a partner of George’s.”
Dranoff wasn’t pleased.
“We didn’t really see the point of that,” he testified. “I felt like we were being — kind of a shakedown, that we were in a situation where we were being asked to participate in a partnership that we really didn’t want to participate in.”
The two sides couldn’t make it work. Dranoff said he didn’t want to hold up the master plan, and asked to be bought out of his rights, including the easement that limited the height of buildings in front of the Victor Lofts
“The value of the view easements and development rights, we felt, was much higher than what George and his group were willing to pay,” Dranoff said. “And that led to a lot of negotiations. And ultimately, I think name-calling and some pretty aggressive and obnoxious behavior against us.”
Finally, Dranoff said, “we agreed to sell our development rights for what we considered to be a very low number, and that was the end of it.” He sold the rights for about $1.5 million.
Under questioning from Tambussi during the deposition, Dranoff conceded that he made a “business decision” to sell the rights, but he disagreed when Tambussi asked, “That was your choice, right?”
“Well, no, not really,” Dranoff replied, adding: “I don’t think that should have been requested of us. There was no obligation for us to take on a partner.”
Gattuso declined to comment on Dranoff’s version of events. “Carl is one of the finest people I’ve ever worked with, and he’s a real good guy,” Gattuso said.
William Hankowsky, who was Liberty’s chief executive at the time, did not respond to an email.
Between 2016 and 2018, Norcross and his business partners amassed five properties, totaling about 10 acres, along the Delaware River. Projects that Norcross invested in benefited from nearly $290 million in tax credits and other state incentives, The Inquirer found last year.
One of those projects started out as the apartment complex that Dranoff proposed. State records show that Dranoff’s firm and two others were approved for an incentive award in June 2016 and that Dranoff’s firm was replaced on the award in 2017. The resulting building, 11 Cooper, is owned by a partnership among the Michaels Organization, the logistics firm NFI, and Conner Strong & Buckelew, Norcross’ company.
Liberty didn’t fare well in Camden, either. Norcross and Liberty clashed over the costs to develop a new office tower, he told state lawmakers last year, and another builder completed the project. The partners on the tower, including Norcross’ insurance brokerage, won a $245 million tax incentive from the state, to be paid out over 10 years.
Ultimately, Liberty developed just one building — for American Water Works — from its original master plan. The developer wrote off $26 million on the Camden venture in 2018. Earlier this year, Prologis, a California real estate trust, completed its acquisition of Liberty.
By the spring of 2018, Dranoff had struck a deal with Apartment Investment & Management Co. (Aimco) to sell the Denver-based investment trust his entire portfolio of Philadelphia-area rental buildings, including the Victor, for $445 million.
For the Victor to change hands, however, Dranoff needed Camden’s permission to transfer the 2002 tax break to Aimco.
The city had been legally obligated to grant that permission, but never did, he argued in his lawsuit.
Dranoff said in his deposition that he was met with “radio silence” from the city and “complete stonewalling of our application.” By late August 2018, he said, Aimco’s offer for the Victor had expired and “it was too late to save our deal.”
City attorney Michelle Banks-Spearman, in another deposition, filed this month, described regular meetings that Philip Norcross attended with Mayor Moran and other city officials in 2018. She said the meetings were called by the mayor “with regard to the Economic Opportunity Act,” the tax-break measure, and that Philip Norcross and another lawyer with his firm came because they represented developers.
Philip Norcross’ law firm, Parker McCay, represented his brother’s insurance firm and other companies in tax-break applications. The governor’s task force found that Parker McCay wrote portions of the tax-credit law behind the scenes.
A Dranoff lawyer asked Banks-Spearman whether, during those meetings, Philip Norcross expressed “that he wanted Camden to slow down its review” of the transfer process for the Victor.
“Yes,” she replied. As to the reason, she said: “He told us he had concerns about the condition of the property. And he wanted to make sure that the conditions were addressed prior to the city agreeing to the transfer.”
Banks-Spearman later testified that she was not aware of any action taken to assess the building’s condition.
She also said she could not recall whether anyone objected to Philip Norcross’ request to slow the transfer process. There are no minutes from those meetings, she said.
The city did not respond directly to questions about the meetings.
Anthony Perno, who led the Cooper’s Ferry Partnership waterfront development nonprofit, also testified that Philip Norcross “instructed Camden not to meet with Dranoff” about another property known as the Radio Lofts building, according to other filings this month, although his full testimony is not included.
William Spearman, a New Jersey state assemblyman whose district includes Camden, testified that he was aware of Philip Norcross’ near-weekly meetings with Camden officials (including his wife, Banks-Spearman), but did not know about any requests that the lawyer may have made to delay the transfer.
“There’s some things you just don’t want to know about,” Spearman said when asked about Philip Norcross’ alleged request. “That’s one of them.”