Restoring the Charm
To a 'City of Ruins'

On a sunny June day at the New Jersey shore, Irene Monahan surveys the view from her towel on the beach here. "Absolutely pathetic," she declares.

At the south end of the nearly deserted beach sits the collapsed roof of the Casino, an ornate seaside pavilion that dates from the city's heyday as a fashionable resort in the 1920s and 1930s. To the west, amid vacant lots, sits the hulking steel skeleton of a condominium tower whose construction was halted by a developer's bankruptcy more than a decade ago. This is the city whose decay has been chronicled in song by local hero Bruce Springsteen.

When Ms. Monahan arrived with two friends for a weeklong health retreat, the Mount Ephraim, N.J., resident says they were tempted to head right back home. A few years from now, though, visitors may see a very different vista. After years in which Asbury Park's dreams of reviving its blighted beachfront were locked in legal limbo, a new group of developers has won approvals to move ahead and has invested $40 million. The group has nearly finished a $6 million replacement of much of the city's mile-long wooden boardwalk. This month it sold its first major parcel of land, a few blocks from the beach, to a homebuilding company that plans to break ground for condos and townhouses in August. A second land sale to a different developer may take place as soon as August.

The plan ultimately is to have upscale urban neighborhoods with more than 3,000 units arrayed along 1¼ miles of Atlantic surf. With restaurants and shops in walking distance -- and an existing New Jersey Transit train station that makes Asbury Park accessible to New Yorkers without cars -- the new "Oceanfront Asbury" will be designed to offer "a hip, city lifestyle" by the sea, says Hugh Lamle, president of New York investment-management firm M.D. Sass Investors Services Inc. He is the single biggest backer of the venture.

A classic Howard Johnson's restaurant hunkers near a never-completed tower.

Some Springsteen fans and history buffs worry about what Asbury Park may be losing. They fear Mr. Lamle's team will move the Stone Pony club, where Mr. Springsteen has often played, from its ratty but much-loved quarters near the boardwalk. The developers say they have no current plans to do that, but already they have partly razed the Palace Amusements complex, one of the oldest indoor amusement centers in the U.S. The Palace has been featured in Springsteen publicity photos and songs, including "Tunnel of Love."

On the day that Mr. Lamle exulted at his group's first big land sale, about a dozen people, including some diehard Springsteen fans, kept a vigil outside what was left of the Palace, known in part for the grinning "Tillie" clown faces painted on a faded green concrete-block wall. Members of a volunteer group called Save Tillie couldn't find anyone willing to pay the developers' asking price of $2.5 million to buy the Palace, part of which dates to 1888, and restore it as a family destination. In anticipation of demolition, Save Tillie members and supporters watched as a volunteer removed one of the 16-foot-tall Tillie faces for preservation and eventual inclusion in a new building on the site.

"This is part of the heart and soul of what Asbury Park has been that is being lost," said Bob Crane, a Springsteen fan and co-founder of Save Tillie, as he watched the effort. The next day, Tillie was safely sprung and trucked off to storage.

The casino's ornate carousel pavilion, will be renovated.

A spokeswoman said Mr. Springsteen wasn't available to comment. But he will be in Asbury Park Saturday for a book signing, with profit going to a local merchants group also working to revitalize the city.

Asbury Park has taken a long slide from its glory days. A 1970 race riot produced heavy property damage and led many white residents to flee. In subsequent years, while day-trippers flocked to the city's honky-tonk amusements and clubs, individuals discharged from mental-health institutions moved into some of its aging housing stock.

Hanging over the current redevelopment plan is the bitter memory of a 1980s rebuilding effort that backfired when the developer ran out of cash, starving the city of real-estate tax revenue. "We can't afford another failure here in Asbury Park," says City Council member Kate Mellina, who says revenue is desperately needed to pay for everything from more police to children's recreation programs. If there is another failure, she fears, "nobody is going to touch this place for 30 years."

Still, Ms. Mellina and others are optimistic. One reason is that a few blocks west of the blighted beachfront the city's dilapidated downtown is being revived with new restaurants, shops and living lofts carved out of old commercial spaces. That rebound began before Mr. Lamle's effort, fueled in part by pioneering artists and gay men, but has gained momentum from the beachfront project. With prices of existing homes up sharply during the past few years Ms. Mellina says out-of-towners are asking her if it is too late to buy.

The renovation of much of Asbury Park's fabled boardwalk is nearly complete.

Rowan University professor Charles A. Stansfield Jr., author of a book on New Jersey shore resorts, figures it is "inevitable" that Asbury Park will bounce back and end the incongruity between the city and the prosperous, charming towns to its north and south. With voracious demand for shore getaways within commuting distance of New York City, he notes, "they are not making any more beaches."

For Mr. Lamle, 58 years old, the effort to redevelop Asbury Park's beachfront is one of the biggest, most complex and riskiest investments of his career. He has about $8 million of his own money on the line, with big investments also coming from Martin Sass, chief executive of M.D. Sass, and from the principals of First New Jersey Real Property Management Corp., a Lakewood, N.J., specialist in distressed real estate. Three years into the venture -- and at least three years away from turning any profit -- Mr. Lamle is hoping for big gains commensurate with the risk. At the same time, Mr. Lamle is enthralled with the project's potential impact.

"This is not like 'Buy stock. It goes up. Sell stock. Put money in pocket,' " says the native of New York City's borough of Queens, after giving a tour of the redevelopment zone. By helping to rebuild a city plagued by poverty and budget woes, he says, "You feel like you are really changing people's lives, changing the town."

The Stone Pony has won a place in rock 'n' roll history as a music venue where Bruce Springsteen made his name.

Rebuilding a faded seaside resort seems a far cry from the analytical investing that Mr. Lamle has done for much of his career. Over the years, however, M.D. Sass, which manages about $8 billion for institutions and wealthy individuals, has expanded beyond basic stock-and-bond investing to sniffing out values in more arcane areas such as municipal tax liens, distressed real estate and the securities of troubled companies.

Getting the venture going required nailing down three crucial transactions: contracts to buy the previous developer's redevelopment rights, the defaulted bank loans that had financed his properties and the associated tax liens from the city. The combined price tag was $16.4 million, with no assurance at the time that the investors would be able to obtain all the approvals they would need. (They have since secured the rights to build.) Most traditional developers don't take risks like that, Mr. Lamle says.

"This is going to end up being a great place five years from now," says Save Tillie's Mr. Crane -- even though he fears that people who have flocked to Asbury Park to see landmarks such as the Palace and the Stone Pony "are not going to have much reason to come back."

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