What Asbury Park Needs to Do With Madison Marquette on the Sunset Avenue Pavilion

While we await the non-binding, advisory opinion of retired NJ Supreme Court Justice Lee A. Solomon on what rights the City has on the Casino, expected soon, let’s look at the Sunset Avenue Pavilion.

This one is much easier.  Unlike the Casino, Asbury’s redevelopment attorney and I agree that the 2010 contract governs Sunset.

The Sunset Avenue Pavilion has its own governing paragraph, §4.06(e). 

It required Madison Marquette to file a “Request for Amendment” of the CAFRA permit to allow work on that building within 60 days of the contract date, by August 1, 2010. CAFRA is part of the State DEP which has authority on construction near the ocean.

The contract then details what happens if CAFRA says “approve” or “denied.”  In either case, it required Madison Marquette to file with the City both a redevelopment plan and a proposed Subsequent Developer Agreement just for Sunset, within 5 years, which would be at the latest February of 2011.

But there is a problem.  This is Madison Marquette, so there is always going to be a problem. 

Madison Marquette never filed the application to amend the CAFRA permit.  I know that because I did an OPRA request to the DEP, and they confirmed one was never filed. 

So what can the City do about it?

Section 8.03 of the contract concerning “remedies” gives the City power to correct this problem.

Under 8.03, the City can send a “Notice of Default and Right to Cure” to Madison Marquette.  That gives them 30 days to act.  In that time they will be required to make that application to CAFRA.  If they don’t, the City has these options:

1.     Terminate the 2010 contract and Madison Marquette’s redeveloper rights as to the Sunset Avenue Pavillion; and/or

2.     Sue for “Specific Performance.”   That means they ask the court to order Madison Marquette to make the CAFRA application, and if they don’t, be held in contempt and fined.

Option 2 is best.  It doesn’t involve the City taking back buildings, or expensive appraisals, etc.

Don’t let anyone snow you about costs to the City, because it won’t cost much in counsel fees.  It can be brought under Rule 4:67-1 “Summary Actions.”  That rule allows it to be heard in one single court appearance: no discovery, no delay. The only issue is whether Madison filed with CAFRA, and CAFRA confirmed they didn’t. 

It costs $300 to file the complaint and Order to Show Cause, and I’ll personally donate that.

The City could have, should have, done this at any time in the last 16 years.  There is no excuse to not do it now. Stop the stall. Start the clock.

Below I am copying the relevant contract provisions so you can compare my conclusions to the source material.

(PS: Don’t let the triCityNews (the Madison Marquette Gazette) make you fret about losing the artwork after they read this and write about it next week - the City can negotiate art back into the new subsequent developer agreement)

Below is the 2010 contract language on the Sunset Pavilion:

§ 4.06(e)

Sunset Pavilion.

(i)  The Parties acknowledge that it does not appear to be economically feasible to renovate theexisting structure on the Sunset Avenue Pavilion Property at this time and that the existing structure creates a visualblight and retards the economic revitalization of the Boardwalk north of the CH/PT Property.  Within two months of theeffective date of this

Agreement, MA Retail shall prepare an application for filing by the City and Asbury Partners to

modify the CAFRA Permit to permit for the demolition of the existing structure and the right to reconstruct a structureutilizing the same footprint and maximum building height that currently exist (the "Request for CAFRA Amendment").

(ii)               Within four (4) months of successfully amending the CAFRA Permit, MA Retail shalldemolish the existing structure and shall program the Sunset Avenue Pavilion Property for recreational purposes in amanner reasonably acceptable to the City. Such demolition and programming shall be completed within six months ofcommencing demolition.

Within five (5) years of the issuance of a demolition permit by the City, MA Retail shall propose plans and request a subsequent development agreement in accordance with Section 4.0l(a)(iii).

(iii)             If the Request for CAFRA Amendment is denied, MA Retail shall, within three months ofsuch denial, apply an Exterior Decorative Scheme to the existing structure. Within five (S) years of the denial of theRequest for CAFRA Amendment, MA Retail shall propose plans and request a subsequent development agreement inaccordance with Section

4.0 I(a)(iii).

(iv)   If MA Retail fails to timely apply the Exterior Retail Scheme or timely file plans andproject security as required by paragraph (ii) or (iii) above, the City shall have the right to purchase the Sunset AvenuePavilion Property for Fair Market Value as of that date. For purposes of this section, "Fair Market Value" shall mean anamount agreed to by the City and MA Retail.  If these parties can not agree on an amount, each party shall, within 90days, obtain an appraisal from a qualified appraiser. Such appraisals shall be exchanged on or before the 90¹¹¹day. If oneparty does not obtain an appraisal, the amount set forth in the other appraisal shall govern.  If each party does obtain andexchange appraisals and the amounts set forth in the respective appraisals do not agree, and the parties can not agree on an amount based on the information contained in the appraisals, then within 30 days of the date on which the initialappraisals were exchanged, the two appraisers shall select a third appraiser, who shall select an amount from the initialappraisals.  Such a decision shall be due within 30 days of

appointment of the third appraiser. If the two appraisers do not agree on a third appraiser, each

appraiser shall designate two other independent qualified appraisers and the third appraiser shall be selected from amongthese designated appraisers by lot.  For purposes of this section, "qualified appraiser" shall mean an appraiser whoholds a "certified general real estate appraiser" classification from the State of New Jersey and holds a designation as an MAI.

Below is the 2010 contract language on the City’s rights if Madison defaults:

§8.03

Remedies of City Upon Event of Default by MA Retail.

(a) Whenever any Event of Default by MA Retail shall have occurred and be

continuing with respect to a particular Retail Project, subject to the notice and cure periods herein

provided and the rights of the Mortgagee set forth in Article 14, the City may terminate this

Subsequent Developer Agreement, rescind any designation of MA Retail, or any successor in

interest that is an Affiliate of MA Retail as a Subsequent Developer and/or take whatever action

at law or in equity (including but not limited to specific performance or injunction) as may

appear necessary or desirable to enforce the performance or observance of any rights, remedies,

obligations, agreements, or covenants of MA Retail under this Subsequent Developer Agreement

for that particular Retail Project.

(b) In addition to, and not in limitation of, the remedies available to the City

as set forth above, the City may seek in a court of competent jurisdiction a temporary injunction

or injunction to prevent: (i) any transfer or assignment of the Retail Properties located within the

applicable Retail Project not permitted pursuant to Article 6; or (ii) any action by MA Retail in

breach of covenants as set forth in Section 3.02(a), (b), (g), (I}, {m). (n). (o), (g) and (r).

( c) In addition to, and not in limitation of, the remedies available to the City

as set forth above, upon the occurrence of an Event of Default and notice to MA Retail of not

less than five (5) Business Days, the City may utilize any monies on deposit within the

Performance Escrow Account funded in accordance with Section 4.13(c} of this Subsequent

Developer Agreement to cure any outstanding Events of Default.