News
Dispute Over Cultural Center Building Goes To Court
By John Burton
RED BANK - Ask borough officials to comment on negotiations between the borough and the Community YMCA over a property formerly owned by the borough that currently houses the Y's Children's Cultural Center, and you're apt to get an oblique response that negotiations are "ongoing" and not much more than that.
But a review of the charges and counterclaims filed in Superior Court by the Y and the borough paints a portrait of two entities very far apart in a tug of war over the building at 51 Monmouth St. In Feb. 2008 the then YMCA president and chief executive officer, Gary I. Laermer, acknowledged the Y's intention to sell the site.
The property was formerly owned by the borough but had been transferred to a previous nonprofit entity with the stipulation that it be designated for nonprofit, educational uses.
At the time the Y announced its intention to sell, borough officials became reticent about discussing the matter, noting that the issue was under attorney advisement.
But legal documents filed by both the YMCA and the borough reveal substantial disagreement between the two parties over whether the has the right to sell the land and property. In a court filing last October, the Y argues that it has the legal right to sell the structure and property, and that the borough actually owes the Y more than a half million dollars for renovations it did to the volunteer firehouse, attached to the main structure. The borough has countered that the Y does not have the right to sell the property, basing their argument on a previous agreement between the cultural center and the borough. The sale would be prohibited by state statute, anyway; as for the renovations to the firehouse, the borough's attorney for this matter charged they were, "unreasonable, out of proportion for the value, and mainly the result of both incompetence and failure to follow good business decisions [the attorney's italics] in the procurement, management, and supervision of the work," on the structure, stated the borough's counterclaim, filed with the state Superior Court on Jan. 7. This has been a lengthy, winding road to the courts for the two entities, one that goes back more than a decade.
The building, which dates back to 1892, had served as the borough hall when the municipality was first incorporated in 1908 and in 1958 was used for police headquarters, until police moved into the municipal complex, 90 Monmouth Street.
In 1999, the building, while listed on the national and state registers of historic sites, was deteriorating and was unused by the borough. Officials at the time struck a deal with a burgeoning not-for-profit organization that at the time became known as the Red Bank KidsBridge Cultural Center. Elected Officials during the previous Edward J. McKenna Jr. Administration agreed to sell the building to the organization for $1, for the organization's programs centering on the performing and visual arts for area youngsters. The provisions of the sale at the time required KidsBridge to do the necessary renovations of the site, spending a minimum of $1 million for the work, and borough could maintain its firehouse, the Relief Fire Company, on the Drummond Place portion of the property, for 99 years, as well as the borough's veterans' memorial on its Monmouth Street front lawn area. In 2000 the borough council approved the sale by ordinance.
Most significantly, the agreement contained the proviso that the site can only be used for not-for-profit educational and recreational uses; if not, or if the restorations were done, the property would revert back to municipal ownership.
KidsBridge eventually morphed into the Children's Cultural Center, but maintaining its original mission, The Center, while regularly conducting fundraisers and winning some grants, ran into increasing financial difficulties, with the building's restorations and programs becoming stalled. In April 2002 it merged with the Community YMCA, 166 Maple Avenue.
The Y took over responsibility for the center's operation and for the site's restoration. Two years ago, the real estate broker seeking to market the site on behalf of the Y said renovations, completed in 2005, cost in excess of $2.7 million. At the time the broker was listing the site for $2,550,000.
The Y's complaint charges the borough with breach of contract, breach of good faith and fair dealing, unjust enrichment, and among other things, violating the state's Open Public Records Act (for not providing its attorney with requested public documents pertaining to the transfer of the building and property to the cultural center and other related papers).
The Y contends in its court filings, that the so-called "reverter clause," where the property would revert back to borough ownership should it not continue to be used for the original purposes, is no longer pertinent.
A subsequent ordinance, 1999-38, amended the original deal, omitting that provision, as KidsBridge, which had sought state and other public financing through grants for the work, was unable to secure it and had to search out financing through other avenues. At the time, officials for the borough and the center argued that that lease provision, as well as limiting it to a not-for-profit, use, impeded the cultural center's ability to secure the financing.
More recently, the Y acknowledged it had a buyer interested in the site. In 2008, the complaint stated, the Monmouth Conservatory of Music, a music school located in the borough (and a not-for-profit), made an offer of $1.8 million for the building and the Y accepted a deposit on it. But, the complaint alleges that the borough's failure to release its claim on the building caused the conservatory to put the kibosh on the deal.
The Community YMCA maintains it spent $646,983 for the firehouse renovations, and because the borough has only paid $145,460, it would still owe the Y $501,523, plus interest. "The YMCA has suffered harm and was damaged as a result of the Borough's action," the complaint charges.
"The Borough's actions have created a cloud on the YMCA's title to the Property," the complaint alleged. "The YMCA has been damaged by the Borough's actions and has been unable to sell or market the Property at its fair market value due to the cloud on its title."
In its counterclaim, the borough denies the Y's assertions and goes on to make some of its own against the Y.
According to John Bonello, the special counsel retained by the borough council for this matter, in his court documents, "Accommodation was made between the parties with the strict understanding that Kids' Bridge use of the property, and its successors, would be limited to nonprofit use as required by law and uses consistent with the proposed uses given by Kids' Bridge at the time of the negotiations, contracts, agreements, and transfer."
The borough council, Bonello argued, did not, in fact, have the authority to revoke that reverter clause as a matter of public policy laid out in state statute.
As for the cost of renovations, Bonello charged the Y's actions on that front, "resulted in a significant waste of funds, delay in the renovations of the project, and, in many respects, was undertaken taken in an incompetent manner all resulting in significant overruns of costs."
The YMCA acquired the cultural center, and, "did not intend on maintaining the original use proposed by Kids' Bridge," but, instead, "intended to dispose of said property to other groups, including for profit entities so that it could maximize its financial gain," the borough contends.
Where this complaint currently stands is unclear, as officials have continued to cite the ongoing negotiations as reason for no public discussion on the matter. This week neither Bonello, representing the borough, nor Andrew Bayer, the Y's lawyer, returned calls to discuss the matter. Bayer deferred any public comment to the YMCA's administration, headquartered in Middletown. On Wednesday Pam Martino, the Y's director of media and communications, offered an e-mail statement on behalf of Y officials, simply saying, "It's an ongoing issue that the Y is hopeful to resolve."
