Jones Lang LaSalle


February 18, 2006
Asbury Park Gives Developer a Deadline for a Project Long Overdue
By RONALD SMOTHERS

ASBURY PARK, N.J., Feb. 15 — The Asbury Park City Council, under pressure to show more progress on redeveloping 56 acres on the blighted oceanfront, has given the master developer one month to negotiate changes in its agreement with the city to speed progress and prove its financial ability to fulfill the plan.

The attempt to push things along comes some four years after the city entered into the agreement with Asbury Partners, the developer.

But it has been a battle of more than 15 years since the town's first ambitious efforts to revive its oceanfront became mired in the bankruptcy of a developer, protracted litigation, corruption investigations and indictments of some appointed and elected town officials.

There has been some progress. Construction is under way on three condominium projects by major developers brought in by Asbury Partners within the redevelopment area, just blocks from the ocean: the whimsical South Beach-style Esperanza, 224 condomium units in 10- and 16-story buildings in the center of the redevelopment area; 146 town houses to the south on the shore of Wesley Lake; and a 156-unit condominium at the northern end of the redevelopment area.

The units, which areslated to sell for $400,000 to $1.1 million, represent 525 of the projected 3,100 residential units for the area.

But the resort town's trademark boardwalk buildings — the Convention Hall, pavilions, and the Casino and Paramount Theater buildings — which were the direct responsibility of Asbury Partners, remain ghostlike and largely vacant structures beside the Atlantic Ocean.

And while Victorian mansions in inland areas have been bought up and given new life, the defining symbol of the city today remains the rusting steel girders of an unfinished high-rise condominium building near the ocean that was abandoned 10 years ago when the first developer went bankrupt.

Since 2001, when Asbury Partners, a Lakewood-based real estate and development company, offered to take the reins of the redevelopment effort, there have been so many delays and other problems that they have spent only $5.5 million of an estimated $60 million in preparation work on the infrastructure of the area, city officials said.

This week, council members voted to give Asbury Partners until March 30 to amend their agreement with the city to create clear timetables for the redevelopment of the boardwalk buildings, produce a concept plan for their marketing, show clearer proof of financial ability, and set sanctions for failure to comply with the timetable.

Both city officials and Asbury Partners say they are making progress in their talks, but both sides have declared a "news blackout" on the negotiations and will not talk about specifics.
Deputy Mayor James Bruno, a member of the five-member City Council, said that the new deadline was established "because we were just sick of looking at those buildings down there," referring to the Beaux Arts Convention Hall and the other structures that the redeveloper bought from the city.

It is unclear how much leverage the city has to force Asbury Partners to speed things along. Further, there is a palpable fear that to push too hard could result in a round of litigation that would dwarf the nearly 10 years of delay and bankruptcy-related lawsuits that befell the city's first redeveloper.

"Maybe we should have demanded more from them earlier, but we are not out for revenge now," said Mr. Bruno, a two-term councilman who was part of a reform slate that welcomed Asbury Partners to town in 2001 when they offered to put up money to clear the properties from bankruptcy proceedings. "We just want them to live up to their part of the agreement."
Some other council members are more skeptical.

"I don't think Asbury Partners shares our vision for the town," said James Keady, a recently elected councilman who is one of two members pressing for the amendments. " And I don't think they have the ability to perform."

It is not just the city or developers who have much at stake in the progress of Asbury Partners. For the last several years, individuals have invested heavily in the hopes of Asbury Park's rebirth and bought up sagging properties in and around the oceanfront redevelopment area at bargain prices in hopes of a future bonanza.

Those investments sparked further hopes that this time, Asbury Park was on its way back to the kind of heyday it enjoyed from the 1920's to the 1940's, when it was a seaside playland for the wealthy and the upwardly mobile.

In the last few years, renovated Victorians arrayed around three small lakes in the city have become visible signs of those hopes. They, in turn, have triggered a bustle of activity in the downtown area six blocks inland, where new restaurants and stores are popping up and a community of gays and lesbians has settled in.

In many ways, though, this has swelled the ranks of critics of Asbury Partners with those impatient with the pace of the city's major development effort.

Critics of Asbury Partners, like Richard DePetro, a developer who is renovating two 30-unit historic buildings in the redevelopment area, have said that the developer is dragging its feet while "land banking" properties until the value increases.

Mr. DePetro said that Asbury Partners tried to force him to pay "extortionate" development and infrastructure fees and made attempts to get title to any ground-floor commercial space that they develop, all in exchange for permission to build and renovate in the area that the company controls.

Last month, Mr. DePetro won a case against the city and Asbury Partners involving one of his projects, and he is pressing ahead on a second one.

"Until Asbury Partners is gone from here, redevelopment is not going to happen," Mr. DePetro said. "It was a mistake to interpose someone like Asbury Partners between the city and developers."

In an interview, Asbury Partners' principals, Glen Fishman and Hugh Lamle, declined to discuss their dealings with subdevelopers like Mr. DePetro. Mr. Lamle, however, suggested that some of the criticism comes from those who sought to pay bargain-basement prices for development on prime real estate.

On the issue of the boardwalk buildings that they are supposed to develop under the plan, the two said they had conducted marketing studies, but they would not disclose the results. They said only that there was "great interest" among developers for the properties.

The builder of the Esperanza complex, Dean Geibel, president of Metro Homes, said he was satisfied that Asbury Partners had dealt fairly with him. He said that development fees and infrastructure fees, which affect the selling price of units, are commonly the subject of negotiations in such deals. He also said that he had agreed to deed over some of the commercial space in his planned buildings to Asbury Partners and that it was justified by the redevelopers' need to "control the type of retail and tone" of the area.

"It is the way for them to make sure that the beachfront area is what they want," he said. "I was actually encouraged by the way in which they dealt with this part."

For small developers like Robert Ranuro, who has rehabilitated some 400 housing units on the fringes of the redevelopment area and a half-dozen downtown stores, too much is being made of the long road to the oceanfront development while too little is being said about things that he and others are doing in other parts of the city.

"Our success is contingent on what Asbury Partners does," he said. "But their success is also contingent on our success. If you are buying on the waterfront, you want to have a good downtown."

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