Metro Homes Halts Major Project
Geibel and Company declared “in default”
Pressure is growing on Hoboken developer Metro Homes. When Dean Geibel first told Asbury Park officials he would have to halt construction on the Esperanza high-rise condo tower they expressed sympathy for his plight. Now that they know Geibel is not shutting down any of his other projects, they’ve changed their tune. The Asbury Park Press reports the city notified Metro Homes it is now in default in violation of their legal redevelopment agreement. The APP quoted Mayor Kevin Sanders:
“If the reason for Metro Homes’ decision was the slowdown in the national real estate market, then why are they building in other towns? I know that this administration has kept its commitment to Metro Homes and done everything possible to make this project a success.”
No performance bond
One reason why Geibel is able to stop work so quickly is because he did not have to put up a performance bond to protect the city in the event of his default. Had Asbury Park forced Metro Homes to put up millions to ensure he would follow through on the project some say he may have though twice about halting construction. This is particularly noteworthy considering the decision the Hoboken City Council made last week to accept a bid from S. Hekemian Group to purchase and develop the Municipal Garage.
While Trammel Crow Residential offered slightly more money for a smaller building, it did not put up the required $2.6 million bid bond to protect the interests of city taxpayers. S. Hekemian did post the bid bond in strict accordance with the city’s request for proposals. Now if they walk away from Hoboken, the taxpayers get to keep their $2.55 million dollar deposit.
In light of Geibel’s move, Asbury Park Councilman Ed Johnson said that he is going to insist that performance bonds be posted for future projects that would offset the city’s losses if development falls through.
30-day Deadline to revive project
The APP reported:
According to the letter Geibel received Wednesday, the city said Metro Homes was in default because it stopped work unilaterally and taking that step showed it is unable to finance and construct the Esperanza, where work on the lower three stories was in progress. The builder will now fail to meet deadlines and time frames to complete the building, and was obligated to make its best effort to construct the project, the city said. It also asserted that the redeveloper failed to inform the city of a change in its financial condition or its capacity to construct the project until Dec. 7.
“It is apparent from the timing and the course of these events that (the) redeveloper has, for a period of time, had information regarding its inability to proceed,” the letter said, yet did not share that information with city officials until moments before the stop work order was given.
There is more to the story in this article from the Asbury Park Press.
One of Hoboken’s biggest developers is getting hit by the credit crunch. Dean Geibel’s Metro Homes is shutting down all construction at the 224-unit Esperanza high rise condo tower in Asbury Park. The Asbury Park Press reports Geibel said Metro Homes is halting sales “Until such time market conditions allow us to move forward and successfully complete this important luxury beachfront development.” Geibel told the paper he is “convinced that the national mortgage crisis now impacting real estate markets around the country represents a temporary setback.”
A former bond trader, Geibel started Metro Homes with Paul Fried and made a name for the company building several mid-rise infill projects in Hoboken, including The Oz at Newark and Adams and The Belmont at 711 Clinton. A few years ago Metro started to take on much larger projects, including the controversial Metrostop high rise, as well as Gulls Cove in Jersey City and the Esperanza. The largest of these projects is Trump Plaza in Jersey City. With one tower under construction and rumors it could be years before a planned second tower is built. Trump’s name is on it for marketing purposes, but Metro is the builder of what will be New Jersey’s tallest residential building.
Pictures of the somewhat odd, boat-shaped Esperanza (designed by Hoboken architect Dean Marchetto) are in the windows of many Washington Street real estate offices, so if you or someone you know may be one of about 70 people who signed sales contracts. Geibel told the Asbury Park Press deposits will be held in escrow, though people may start demanding their money back if this project ends up going the way of the failed C-8 condo project that preceded it. Esperanza was to be built on the site of the infamous steel skeleton that haunted Asbury Park for 17 years after the last real estate boom went bust. They say those who ignore history are doomed to repeat it.