New developer poised to take over Broadway Arts

Realty firm assumes mortgage for properties tied up in foreclosure proceedings

Staff Writer

 Diversified Realty Advisors last week confirmed plans to become the redeveloper of the Broadway Arts Center zone on lower Broadway in Long Branch, where the condition of properties has continued to deteriorate.  KENNY WALTER Diversified Realty Advisors last week confirmed plans to become the redeveloper of the Broadway Arts Center zone on lower Broadway in Long Branch, where the condition of properties has continued to deteriorate. KENNY WALTER With the current owners mired in a three-year foreclosure proceeding, a North Jersey real estate firm is taking aim at the stalled Broadway Arts Center (BAC) redevelopment in Long Branch.

Diversified Realty Advisors’ managing partner Jonathan Stein said the firm has assumed the first mortgage on the BAC, and the ultimate plan is to become the developer of the 9.8-acre redevelopment zone.

“We purchased the notes, so we’re the lender. And we are actively involved in discussions with the borrowers and the city,” Stein said.

“It’s been sitting fallow for a number of years, and we think that with what’s going on with the economy — and certainly the Shore — it certainly presents an interesting opportunity for us.”

 A sign on a lower Broadway building advertises plans for the stalled Broadway Arts Center redevelopment.  KENNY WALTER A sign on a lower Broadway building advertises plans for the stalled Broadway Arts Center redevelopment. KENNY WALTER BAC has been in foreclosure proceedings since early 2010, brought on by TICIC Inc. Formerly the Thrift Institutions Community Investment Corp. of New Jersey, the company held the first mortgage on the BAC.

The principals in Broadway Arts are members of the Katz and Pereira families.

Long Branch Mayor Adam Schneider previously said that once the foreclosure is completed, the city can sign a redevelopment agreement with a new developer.

According to Stein, representatives of the realty firm have met with City Planner Pratap Talwar about preliminary plans for the zone.

The current plan, which dates to 2007, includes 103 properties along lower Broadway to be redeveloped as a mixed-use arts and theater district, with commercial space, residential and live-work units, office space and parking garages.

However, due to changes in the economy, Stein said that if an agreement is reached, the Summit-based firm will revise the plan.

“The plan that was previously adopted was a very significant undertaking from a number of different perspectives, and it was designed in a different economic time with different economic realities,” he said.

In recent years, both Schneider and City Attorney James Aaron said the plan would need to be revisited once a new developer was in place.

Another priority for the realty firm is to identify which buildings in the zone need to demolished and which ones can be salvaged.

“There is no escaping the fact that many of them are in very poor condition, especially since many of them have been emptied for many years and really haven’t been maintained,” Stein said. “We are looking at that issue, and I really don’t have an answer yet.”

While the current owners remain enmeshed in a foreclosure proceeding, the realty firm must reach a developer’s agreement with the City Council, which acts as the redevelopment agency, in order to take over as developer of BAC, which is designated as one of the city’s redevelopment zones.

Schneider said the city and the realty firm are making progress on an agreement that would ultimately allow for the firm to become the developer of the zone.

“They don’t have an agreement with us; there was an agreement with Broadway Arts. That agreement, I think, is defunct at this point,” he said. “I don’t think we ever declared it as default in the hopes that somebody was going to step into their shoes.

“We’re going to have to make a new deal … one way or another, whether it is an amendment to the deal or just a brand new deal.”

The deteriorated condition of lower Broadway is often criticized publicly during council meetings, and the city’s use of eminent domain to acquire buildings in the zone has been controversial. Stein said the underdeveloped Broadway zone has been a negative for the city in recent years.

“The existing owner had been aggressive about vacating many of the existing properties,” he said. “Certainly through the years, they were working on the site and going through the redevelopment plan and taking the properties through condemnation. That whole downtown area was essentially a nonfunctioning district. “It was certainly underutilized from a development perspective and from a municipal perspective.”

However, Stein spoke highly of the surrounding area and identified “great drivers,” including Monmouth Medical Center, Monmouth University and the developments along the oceanfront.

He said the realty firm is in the process of drafting a new plan that will relate the Broadway Arts zone to other sectors of the city, including the Broadway Gateway zone, Pier Village, West End and the planned transit village.

“We are just going through the process now of re-examining and studying what can be redeveloped potentially in this economy and how it could relate to adjoining sites,” he said.

“Just to see how it ties in, because it is a central district within the city of Long Branch. You want to look comprehensively at what the opportunities are.”

Although he said no specifics have been identified, Stein said any development would likely include some form of mixeduse development.

“I would think so if I was looking into my crystal ball, but at this point we are still going through our studies. We are in an early stage in discussions with the city about [what] the opportunities are.”

Stein explained that the timing for redevelopment in the city is favorable.

“There is a lot of activity on the waterfront through Pier Village; there is obviously interest in the Jersey Shore,” he said. “There is a lot of unfortunate destruction due to Sandy, but also there is a lot of initiative to create additional housing and retail opportunities.

“It is an interesting time to be active in the redevelopment opportunities down the shore,” he added. “Certainly Long Branch has its share of opportunities, including the Broadway Arts redevelopment area.”

Stein said he is confident that all the par- ties involved will move quickly to develop the largely vacant BAC zone. “It just spells opportunity at this point, and the mayor and the city and the borrower all seem receptive to starting that dialogue and figuring out what the best thing is going forward,” he said.

“We are very much encouraged that we will be able to work cooperatively with all the parties to make sure that BAC gets going as quickly as it can.”

Redevelopment of the zone has been stalled in recent years due to the foreclosure action and litigation.

Three property owners in the Broadway Arts zone sued the city, and in a 2010 ruling, the Appellate Division of state Superior Court found that the city’s 1996 designation of the zone as “blighted” did not meet the heightened standards for blight set in subsequent court rulings. The council also reclassified the previously 72-acre redevelopment zone in 2012, designating a portion of the Broadway Corridor zone as a rehabilitation zone instead of a redevelopment zone, eliminating the use of eminent domain in the area.

The BAC redevelopment zone currently consists of the area east of Liberty Street to Memorial Avenue and from Union Avenue south to Belmont Avenue, with Broadway running through the zone.

The Broadway Corridor is one of six zones in the city slated for redevelopment. The developers of another zone — the hotel campus redevelopment zone — also had financial problems, and new owners assumed control. The other redevelopment zones are Beachfront North, Beachfront South, Pier Village and Broadway Gateway.