Asbury Park Attorney Explains iStar Plan at Council Meeting Dec 2, 2009

Reporters' Notebook -
Asbury Park City Council Meeting Dec. 2, 2009
Work Session 6:30 PM
Council members Susan Henderson, John Loffredo, James Bruno, Mayor Johnson attending

City Attorney Fred Raffetto – proposals 12, 14, 16 Avenue A
Conflict of interest charge had been raised, ordinance tabled; Draft RFP prepared by his office and Don Sammet, copy to Monmouth Housing Alliance and to Ms. Horvath. Will be advertised for public, deadline 45 days from now or Jan 15th, for prospective developers to meet with City. Decision to be some time after Jan 15th. Seeking council approval for this time schedule and RFP to authorize go out for RFP on development of these 3 lots.

Also, city adopted ord to convey 16 lots to three developers, affordable hsg alliance, Interfaith Neighbors, etc. Affordable had been known as Monmouth Hsg Alliance, difference in name references to Ord. 2914, as record owner of deed, so need this ord for that.

Events tabled tonight.
Comments from Council –
Loffredo streets look great
Mayor Johnson: Wants to thnk fire and police for volunteer work during T-day events
At Kean College Sat. Blue Bishops will play Highland Pk for Group 1 championship, pls give them send off in morning and victory parade after. Holiday toy gift drive here and tree lighting in Fireman’s Park.

Raffetto – 2 items from exec session will be voted on tonight: execute revised agreement with north beach llc/ exec redev agreement bet city and cookman av urban renewal, for Central Business District (CBD) amendment. i.e.: 550 Cookman
Reidy – fireman’s calendar out now, most prof he’s ever seen
Mayor - First up will be discussion of iStar and AP
Asst. City Mgr, James Famularo – request to use city vehicles – see if can use senior bus plus city vehicles to move the team to Fla. City w/ reimburse drivers for gas – it will be under $5,000, with balance having been raised thru efforts of Councilman Bruno. $15,000 for lodging alone, since required for competing teams to stay on Disney grounds. About 6 city employees volunteering as coaches, who will drive – 2 police, 2 fire and Famularo – city’s mechanic recommended they not take city cars due to their mechanical condition.
Instead of public comment tonight we go to presentation by city redev atty Glen Scotland re membership interest in Asbury partners llc sale on Dec. 15th
Scotland –
Foreclosure Proceedings on Asbury Partners’ membership in same.
Article 9 Sec 610 iStar is RE investment co for investing in signif properties/ made loans to APartners, resulting in loan agreement, in excess of $70M, value iStar has put on membership in partners. Evidenced by a note
Secured by following:
mortgage (land)
Assignment of rents
Pledge of membership interests – such as architects, etc.\
Membership interest in the LLC ucc1 statement – gets filed under comm’l code, which deals w/ how u treat, secure and dispose of assets, so article 9 sec 610, says if u hv interest in an intangible asset u w/ insure fairness bet iStar, creditor, and APartners, debtor, that there is fairness. So go to pub sale of the asset giving others opp to bid on prop and estab fair price, i.e. a price discovery process.
Agreements
Unlike share situation, in llc u hv memberhip interests – like a partnership agreement
The agreement was pledged to iStar & Asbury partners, the pledge was for iStar to take over Asbury Partners interests
Most likely iStar’s view is that attendees w/ be lkg for discount, not paying $70M
this represents all APartners own, entitlements agreements w/ the city,
At some pt there w/ be a determination by someone that the value is capped out/ if value is determined to be less than $70m, iStar w/ put in a bid for slightly more than prev hi bid, then iStar w/ buy parcel. Theirs wd be a credit bid, while others wd make a cash bid. It replaces the current members of APartners, tks over rights and obligations.
TReidy: W/ be Q&A –
iStar hs indicated to city and to APPress, that iStar is in this for long haul. Cd accept a discounted bid and get out, but that is not what they have communicated to city or in press release to Nancy Shields, a reporter with the Press. iStar hired roseland advisors as a consultant, reputable, a positive track record, iStar asked them to value this asset, to be sure not being foolish, is it more profitable to hold onto this asset. Roseland said do not sell this at a discount, AP has a future, you’ll get your money out and make a profit. Of course, we agree w/ Roseland, nice to know firm w/ positive reputation in nj feels this way. We’ll know better after the sale is done. We’ll be working with the new Asbury Partners.
Anselm Fusco, of Madison Marquette asked Scotland to say – if iStar controls there won’t be sales of individual properties/ no parceling out, more orderly this way.
WHAT OF THE OTHER INVESTORS – SASS?
QUES-
Q – Pam Lamberton - Do we know who iStar is?
Publicly traded company, can Google them since publicly traded,
Q no familiar faces?
A – very large company
JL: I know what Pam is asking, no, the answer is no.
R Marano – how did APartners get to the pt where it needed to borrow $70M? It sounds like a Carabetta deal.
A – obligations were enormous, acquisition of prop, infrastructure improvements, it’s a lot. Not typical someone wd pay out of equity, typical u wd go out in mktplc and secue lender type financing. Like other RE developer entities throughout country, diff mkt, liquidity, chgs in RE values. It’s clr from press and financial news, not an isolated incident. Encouraged that iStar a major RE entity is interested here.
Q- What about loan on sewer plants
A - Whatever oblig APartners had iStar w/ continue to have
Q- not good reputation
A – we hv full recourse against iStar just as the City wd’ve had against APartners.
Q- they grabbed a lot of land they sh’dn’t hv gotten
A – I take issue with the idea they took more than they should. They hv rights under master plan and redev agreement
Is it nec in this environment? think that’s 1 of ques roseland is asking itself now, we won’t know that until aft sale is complete and we can enter into serious discussions w/ iStar.
Q - Perillo – not sure what you’re saying about liabilities – is iStar assuming all liablialities of Asbury Partners?
A -Rights entitlements and liabilitities – they take all of that.
Q -APartners won’t hv any liabilities?
APartners is a separate legal entity rights and obligations, membership interest w/ change but not the rights and obligations.
Q -Don’t just tk properties but all liabilities
A – Yes.
Q – Horvath – does city have a voice in this at all?
That is offline, perhaps you can hav discussion w/ them on that.
They do hv – iStar – a strategy for mving forward, APPress article on Thanksgiving alluded to the plans ..includes inviting developers, all w/ be done while revisiting diff parts of redev plan, since some parts won’t be feasible in this economy
Q -Nancy Savino – is there a starting bid. Way you explained iStar is simply going to over bid anyone coming in, so why wd anyone else come in?
A – Bidders may believe can get an asset for less than $70m, maybe if can acquire for less can get a windfall,
Q – but your inference is iStar w/ simply overbid
A – IStar not willing to let its interests go, I’m being presumptuous that they intend to be there as the owners of Asbury Partners. I can’t say that is how it will end up, but all indications are that it w/ be the bidder
Q- Rich Karpinski -
We’re stuck in the redev zone – iStar simply lent APartners $70m, why shd redev rights be transferred at this pt?
A – u bought a shre in iStar well now iStar is buying shares in iStar as part of the $70m
Q but not in development business, they screwed up, partners are paying them there shd be zero rights in the transfer
A – to extent those new owners don’t fulfill we’d hv same rights we had under old Asbury partners, don’t hv ability to prevent…when lender is to lend into a project, it wnts the ability to tk over the assets.
Q – what role apartners
A they continue to be master dev for waterfront, only members changed
Q – if they default shdn’t they lose all those rights, eminent domain, etc.
A – apparently reason foreclosure process is ongoing, is because partners in default of its loan to iStar, they are not technically in default to city of AP, that’s a very important point. Outside of the relationship apartners and city have under redev agreement, this is circumstance of default bet partners and their lender.
iStar when this is over will own 100% of Asbury Partners
Q- w/ all due respect this is what I do for a living, but I want to hear this from his perspective
A – Terry explains again the partnership situation/ all the rights and obl of partnership go with the entity.
A – Scotland compares this to 100% shareholder of IBM, corp rights and respon wd still remain.
Q- you’re absolutely right but if I lend IBM money on a building and they don’t pay me, and they default, I take that bldg back.
Q – Scarano – sheriff’s sale?
A – it’s a default not a sheriff’s sale
Q- timetable always asked never ansered
A – based on prelim discussions we had considerations chgs must be made in plan to accomo date mkt chgs, we’re optimistic can be changes to timeframes and commitment.
We think some real opps to do some very positive things. Not that everyone not wkg hrd to achieve goals, mkt impediments to mving forward as rapidly as may hv wanted but now a new chance.
Q – re. eminent domain
A- Hv been some prelim discussions about what is rely being req’d for development, are prop that hv a cloud over them where the issue needs to be lealt w/ sooner than later, this admin is commited to fix that.
A – eminent domain in AP is not going to go away. Policy directive coming from this group that has to be a bit more selective.
Q – [[Didn't get this question. Corrections, clarifications, as always very welcome.]]
A -That is certainly a prime objective.
Q – Ed Simon - was $70m the loan am’t?
A - Notice indicated it was $70+M – reason we’re hvg this discussion is when notice appeared and story there was lot of discussion about what it meant. Folks here know about joe carabetta and lot of history, this is not what that was, much dif situation in our view a grt potential upside.
Q – so basically this is a PR session
A – yes
Q – so will Asbury Partners keep the same cast of characters in this? And if a consortium buys this can they break up into different projects? If iStar doesn’t buy it?
A – Assets for sale are APartners membership shares. If consortium wanted it they wd assume, new owner but same rights and obligations,
Q could they chg the name?
A – yes, they cd change how they operate as long as consistent w/ the current agreement.
Wd hve to bring more money in and acquire dev partners, we’d hv to discuss with iStar but wd expect that. Don’t see where that wd nec change in agreement.
Q-Marano – still don’t understand why APartners will still be involved
A – the entity that is known as Asbury Partners wd continue, changing the name is not really mat’l to the discussion. We hv this agreement, owners cd chg, but aspects of agreement wd not chg.
Q – in article compared this to car being repossessed. Laughter about Nancy Shield’s source’s comment.
Q – Teretha Jones – you’re in foreclosure, jst like going to McDonald’s and buying a franchise. Let’s move on w/ rest of meeting
.
Public Session –
Q – Marano -Why do we hv to pass a residency ordinance? What was minor change and why hv to do it.
Reidy – existing ord is overly restrictive, prevents AP from getting mst talented people to wk for the city.
Q -RM – do kids get signed permission slips to go to Fla?
A – yes
Q – why do we pay travel and tuition expense when employees take a class? Why not wait until after completed?
A – we don’t – this is for training, not individual development.
Q – Employees are always takg courses and then leaving.
Q- RM – Jimmy – did you get answers you requested re. employees tkg cars home?
A – no not yet.
Q -Frank Stafflex – light out on Bangs Ave bet Dewitt and Bridge/ sign no pkg on bangs on Mondays, can it be suspended on holidays?
Q – Ava Horvath – re. rfp opening for bid on Jan 15th, decision to hold back bid on the 3 properties was based on Ms. Samuels’ conflict of interest. Don’t know why props hv been thrown into a pool for everyone to bid on again. Keeps being emphasized ques regarding my financials
A – Mayor Johnson – time and again I’ve sat here and been asked give us a chance, this is your chance. I don’t want to hear on Jan 15th oh it’s unfair, the conflict if there was one has been cured. You’ve said many times you’ve been working on this for 10 yrs, this is your chance.
Q – Jerry Scarano – ques read in paper, pos lawsuit - worker’s comp case/ w/ city have to pay medical bills
A – first allegation that that happened was something alleged happened 10 yrs ago, so no (there won’t be a disciplinary action).
Formal –
Acceptance of minutes – Johnson abstained on meeting when he was absent/ Sanders is not here again.
Bill Resolutions approved.
2010 bingo license – Harold Daly Post,
Jim Henry – planning board appr’d as Mayor’s appt
Scott Wilson – Loffredo recommended to planning board to fill Alper’s spot
Contract w/ VNACNJ approved.
Metro company for $15k / 5 yr plan/ app’d
Approved discharge of mortgage
Barbara Knight
James Dilione
Crystal Wilks
(missing one)
Jose Montecino Settlement $36, 700.
Professional contract Art Grossman, $19,985. video surveillance installation project mgmt
Resolution – execution of redev agreement between city and urban renewal llc, in cbd area, will entail amendment to CBD. “To bring back the 500 block of Cookman.”
Ordinances to be introduced next meeting
Authorize city of ap provide easement 603-605 madison av
Amend 2913, sept 2 2009, certain properties in Stars area
Ordinance approving exec revised financial agreement bet city and North Beach
Personnel policies ord – heard tonight
In ordinance says police and firemen are exempt? Don’t they have to live in this city?
TR – hv to live here to apply but then they can move. It’s upside down. State law prohibits city from requiring them to remain here. So ordinance does not affect police and fire. All others w/ not be required to live in the city, although applicants from city will be considered first. Want to have the most talented apply.
Ordinance passed

Next ordinance, re. code enforcement fees to rise – no one comments – ordinance passes
Ordinance to amend CBD,
Q – I know this if or Carter Sackman, he does good work, but shouldn’t he be required to pay his taxes before we pass this amendment?
Mr. Sackman is not a scofflaw in this city. I ended up on the tax list because I missed my sewer bill. Will he pay that, yes he will. Collection rate is 99.6% - anyone including Mr. Sackman will hav to pay tax lien if it comes to that plus 18% interest.
Q – Tjones – stipulation in here for residential vs non-residential, residents living above shops, etc.
A – since first day I met w/ this grp it’s been constant topic…hope to iron it out. Zoning was mixed use, preference was very clear for retail on first floor and residential above. As we mv forward how we reach accommodations on this problem.

TR – the mixed use issue, noise, it’s not being addressed in this ordinance tonight. But certainly during informal mtg of PBd, one issue talked about was how buildings can be sound-proofed going forward, Tripp Brooks, on of developers involved is in audience tonight.
Minor changes made to amendments, as per Don Sammet, city dir of planning and redevelopment.