How iStar and Madison Marquette Take Asbury Park Children’s School Money

Let’s be clear – while Asbury Park school children are losing the most money, children all over the State of New Jersey are being shorted money in favor of the multi-billion-dollar companies that control the redevelopment of Asbury Park’s waterfront.

Let me introduce the companies, who grow more infamous as the community learns more about them.  We learned about them the hard way, through bad experiences, because news media in New Jersey have never done a deep report on who they really are, despite them being here for 24 years.

First we have Asbury Partners,  a front for a billion dollar+ company called iStar (also known as Safehold or Starfield). They are the “Master Developer” with rights to develop the Beachfront and four blocks west for the length of the City, including  3,200 gentrifying condominiums (with price tags reaching $9 million for one unit).

Then there is the sub-developer Madison Marquette (aka Avison Young), who own and are responsible for redeveloping all the beachfront buildings, including the historic and glorious Convention Hall/Paramount Theater and the Casino/Power Plant complex.  They also own the Stone Pony and Wonder Bar.

 While they have assets of $7.5 billion, they are just a realty holding company for an even bigger private equity firm based in Switzerland called Capital Guidance.  They are huge and operate in 8 business sectors in many countries around the world. No one knows how many billions they are worth because they are not listed on any public stock exchange – they are completely private equity. We have no idea whose shoes are under the bed.

They have enough billions to have refurbished Convention Hall and Casino two decades ago.

These companies formed a “joint venture,” so what inures to the benefit of one also benefits the other, and they share obligations.  That makes it easy to refer to them collectively as “the Developers.” 

When one builds 3,200 condominiums, you need new infrastructure like  water, sewage, utilities, roads and more. When the project began the infrastructure costs were estimated at $40 million, but because these companies dragged their heels, estimates are now about $80 million (for reference, this plan was first passed in 1984).

The Developers got the redevelopment rights for cheap, they got the buildings for cheap, they were given the power of eminent domain, lots of tax breaks and other emoluments.

In exchange, the Asbury Park community was to get fully restored historic buildings on the boardwalk.

Because the deal was so front loaded with developer benefits, the contract obligated the Developer to pay for the infrastructure (with one condo unit selling for $9 million, it shouldn’t take long to make back their infrastructure investment).

For proof, below is the exact language from the 2002 Redevelopment contract. Article 7.1 on page 58 states:

The parties agree that Master Developer shall be

responsible for the costs of all reasonable infrastructure

repairs or improvements within the Redevelopment Area, whether

associated with property it develops, sells to, or causes a

Subsequent Developer to develop or rehabilitate.

As usual the Developers didn’t deliver, leading to legal action by the City.  In 2006 they entered a “Dispute Resolution Agreement” wherein it was again agreed the Developers would pay for the infrastructure, with a time schedule.

As usual they didn’t deliver again, leading to more legal action by the City that culminated in an arbitrator’s decision in 2011.  Part of the City’s complaints were that the Developers failed to construct infrastructure.

The arbitrator gave what is often called the laziest decision in the history of law.  Let me paraphrase his 22-page decision:  “I don’t know what to rule.  You guys go work it out and if you can’t, file another arbitration.”  Good grief. If I recall correctly, he charged $1,200.00 per hour for that.

The deal the City and the Developer later worked out was to use the City’s school money to pay for the developer’s infrastructure. I kid you not.  Here is how it works:

The Developers front the money for infrastructure.  The property tax bill everyone pays in Asbury is about 50% school taxes.  But  these new condos are given a PILOT. That 50% no longer goes to the schools; it goes to the Developers to pay them back for the infrastructure.  NOW DIG THIS -THE PAYMENT IS WITH INTEREST!!!  That’s right, Asbury school children are paying the debt owed by a foreign billionaire private equity firm and paying them a profit of interest. And everyone else’s taxes go up.

Are you disgusted yet?  Hang on it gets worse.  This has helped blow a $13 million hole in Asbury’s school budget.  Every year Asbury goes to the State to close all or part of that hole.  When the State makes up the difference, that means every child in the State is kicking in their school lunch money to these billionaire developers.

Senator Vin Gopal has a proposed bill on his desk that would curtail the use of PILOTS in towns that heavily rely on state aid to close their school budgets.  It’s called the PILOT TRANSPARENCY AND EQUITY ACT.  Take 2 minutes out of your day to call the Senator and tell him to present that bill for a vote.  His Senate number is 732-704-3808.

That’s not the end of them taking school money. They want more.  Read on.

Madison Marquette has made clear they won’t save Convention Hall or the Casino unless the government gives them $50 million first (that’s not in their contract). We only know that because Mayor Moor very smartly asked them.

To get that money they have a request pending with the State for $75 million in tax credits under a boondoggle called “The Aspire Act,”  more specifically the CAFÉ section. Here is how it works:

The State will give the tax credits for free.  When Madison Marquette calculates their Corporate Business Tax, they apply the tax credits (so they don’t pay any).  For the tax credits left over, they get to sell them at a 15% discount and turn the tax credits into millions of dollars of cash for themselves.  The buyer then gets to deduct the full tax credit from their Corporate Business Tax, saving themselves 15%.  So you have enormous companies not paying tax.

What’s one of the things the Corporate Business Tax funds?  The schools.  Every time these companies don’t pay the tax – your taxes must make up the difference.

Asbury Park developers keep piling debt on children like they are pack mules. Governor Sherrill needs to deny that Aspire Act and CAFE request.  She can prove her commitment to children’s education.

Here is how Madison Marquette will respond: They will say if we don’t get the tax credits, Convention Hall is done.  It will have to be knocked down.

I envision them saying it another way.  Think of the old movie actor Edward G. Robinson’s voice, cigar in mouth. Madison Marquette will hold a gun to Convention Hall and say, “Hand over the money, see, or the building gets it!”   Yes Convention Hall is a hostage, and they’ll threaten to kill it if they don’t get Governor Sherrill to hand over the ransom money.    Here’s a better option:  Take some of the billions of dollars they have and finish the contract they signed.

This isn’t Madison Marquette’s first request for your tax dollars.  In 2024 they received a $13 million grant that came first from the US Treasury, which then went to the State and ultimately to Madison after being handled by Asbury Park.

The problem?  The money came from President Biden’s Covid Recovery Act.  Under that law, the money was supposed to be used by cities to cover COVID RELATED LOSSES. Under the published rules, it was supposed to cover things like Education and Veterans Housing.  It was not intended to pay the obligations of a billion-dollar foreign private equity firm to cover their obligation that is 2 decades old. You can’t take taxpayer money to pay back a debt to the taxpayer. 

I don’t know why Governor Murphy did that, but I do know the local head of Madison Marquette gave thousands of dollars to both Murphy’s election campaigns. Perfectly legal, but optically awful.

Media needs to do a deep dive into the civil legality of that transaction.  So too does the US Department Treasury.

Madison Marquette and iStar are the worst thing to happen to Asbury Park since the riots in 1970.  At least back then poor families from here could still afford to live here.  Thanks to these guys, not anymore.

The bottom line:  They City is having a meeting at the High School on Wednesday February 18 at 6 pm to discuss the Waterfront.  Go there and let them know you want the kids’ lunch money back.