Court Upholds Most of Marina Bay Towers Ruling

NORTH WILDWOOD – An appeals court has upheld much of a decision that would allow the restructuring of the long-embattled Marina Bay Towers to permit market-rate units in the senior affordable housing building.
City officials are in the midst of a long, intense negotiation with the property owner to find a way to make needed repairs to the building and keep affordable housing for seniors, or, as North Wildwood Mayor Patrick Rosenello put it, to find a way to put Humpty Dumpty back together again.
That could involve adding a floor or two to the building, creating new market-rate waterfront condominiums that would help fund the repairs.
“Right now, everything’s on the table,” Rosenello said. Over the past two years, he said, the city has been in mediation with the building’s owner, Paul Cocoziello.
“The good news is I feel that we’re making progress,” Rosenello said.
Meanwhile, life has not improved for the dwindling number of residents in the towering waterfront building.
“Other than minimal maintenance, there have been no repairs or renovations done,” according to Olga Pomar, an attorney with South Jersey Legal Services representing several tenants at Marina Bay. She said the number of her clients has declined, along with the number of occupied units in the building. Some have moved, some have entered assisted living facilities, and some have died during the long court process.
A recent Appellate Court ruling, decided Oct. 22, upheld most of a lower court decision issued last year (2018), which cleared the way for some portion of the building to be sold as market-rate condominiums, while rejecting a call from some residents that the building be placed in a receivership.
The court agreed with the Superior Court that there would be no income from rents to pay the receiver to operate the building.
Pomar said she is not sure of the next step, or if the New Jersey Department of Community Affairs, also involved in the suit, would be willing to take the matter to the state Supreme Court. In the meantime, she said, the building’s management was supposed to create a plan for the renovation of the building, to be reviewed by a court-appointed “special master.”
“It’s been a year and a half and that hasn’t happened,” she said.
Of 142 units in the sprawling building, she estimates that about 40 are occupied.
“The more people who move out, the less of a community there is in the building and the less safe it feels,” Pomar said.
There are two points everyone seems to agree on: First, that the matter is extraordinarily complicated, with a confluence of state and federal housing regulations meeting the complicated financing that Cocoziello put together to fund the construction, a process that included the Essex County Housing Authority. Second, there has been a great deal of bad luck involved.
The project has had trouble from the start, even before it opened in 2000, or at least that’s when the first of the units received a certificate of occupancy. According to court documents, construction began in late 1998, with significant delays in the process.
“The project has been involved in multiple lawsuits for many years,” Rosenello said. “There is a very complicated legal web that we are trying to unravel.”
The recent 89-page court ruling goes into the tangled history of the project, which it indicates was originally conceived as market-rate apartments. That changed as the economy soured, one of two recessions that added to damage from Hurricane Floyd and more severe flooding from Superstorm Sandy.
“Unfortunately, the impact of two hurricanes, market declines, and other setbacks caused the project to become fiscally distressed, and publicly issued bonds were unpaid,” reads the Appellate Court’s ruling. “Sadly, the building has needed major repairs and is now about two-thirds vacant. No alternative developer has stepped forward to rescue the project. The project has been mired in litigation for many years, in part because transactional documents were not drafted with sufficient clarity. No matter what course of action is pursued, the developer’s company still owns the land on which the project is built.”
Rosenello admits the situation is hard to understand, let alone explain. Adding to the complication is the fact that Cocoziello is involved with more than one entity connected to the building, including the non-profit organization that runs it and the finance company that threatened to foreclose, triggering the move to break an original deed restriction that mandated it could only include affordable housing for seniors.
Pomar has argued that this was only done as a means to break the affordable housing agreement.
“On paper, he is not the official owner, but in reality, his management company has run the building,” she said. “There is no adversity of interest. It really was the same person suing himself.”
In the recent ruling, the court upheld the Superior Court’s reasoning in its May 2018 decision, that while there is a close relationship with several of the involved entities, the state knew this from the start and did not raise it as an issue previously. Besides, the judges decided, it would be a federal decision to conclude there was no real conflict between the owner and the company seeking to foreclose, regardless of what a New Jersey court ruled, and the federal government did not make that ruling.
Argued before Judges Jack Sabatino, Thomas Sumners, and Arnold Natali, the case is not settled. The judges sent several matters back to the lower court, and there remains the possibility of further appeal, in addition to the biggest unresolved matter – what happens next.
In previous interviews, Rosenello expressed frustration with the project, but on Oct. 29, he said the Marina Bay Towers project was originally welcomed. Older residents often end up leaving North Wildwood, he said, so to have an affordable place to live in a beautiful location seemed like an ideal option.
He said the city is willing to work with the owners to make the project work, as long as some level of affordable housing remains. The Appellate Court seemed to make a similar point.
“Although that plan does not assure the level of affordable units originally intended, it has the upside potential to keep the project viable and avoid its closure and the eviction of the remaining tenants. It is our fervent hope that the litigation and controversy will subside and that the plan, or some other variant approved in the Chancery Court, will succeed,” the ruling states.
To contact Bill Barlow, email bbarlow@cmcherald.com.