MIFFED MENNA: I GOT MINE, TOO

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Unelected Red Bankers aren’t the only ones reeling over the reassessment letters that landed in their mailboxes in recent days.

Mayor Pasquale Menna said he’s peeved that the letters went out without his approval, and were written, he said, in such a way that might mislead recipients into thinking that their property taxes are about to soar because the market values of their homes have risen so sharply.

“A lot of people at Borough Hall just don’t get it yet,” Menna told redbankgreen when we ran into him downtown this afternoon. “I only found out that the letter had gone out when I got one in the mail.”

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ENERGY SHOCKER COMING VIA JCP&L

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The meter is still spinning out of control on winter heating bills, and now comes news from the state Board of Public Utilities that electricity users will get slammed with a 14.2-percent price increase in June, the Asbury Park Press is reporting.

From the Press:

Beginning June 1, the typical Jersey Central Power & Light customer, who uses 650 kilowatts of electricity a month, will see bills rise to $106.72, up $13.30 or 14.2 percent. The typical bill is now $93.42.

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REAPPRAISALS: ARE YOU SITTING DOWN?

Red Bank property owners: it’s reassessment time. So prepare to find in your mail an innocuous looking white envelope from a company called Realty Appraisal Co.

And brace yourselves.

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We here at redbankgreen got ours just minutes ago, showing a current market value on our house and yard of $409,300 — more than double the present assessment of $200,300.

Not that you should panic, of course. As the letter says:

This value will be used for assessment purposes beginning in the year 2007. Since new appraisals have been made to reflect current market values, the TAX RATE required to raise the necessary revenue to support this year’s county, school and municipal budgets will be SUBSTANTIALLY REDUCED. Therefore, an increase in your assessment DOES NOT necessarily mean and increase in your tax bill.

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HOV’S STORM-RELATED SHRINKAGE

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Having “hit kind of a wall” in 2006, Red Bank-based Hovnanian Enterprises is being cautious about 2007, a company executive says in an interview in today’s Star-Ledger.

J. Larry Sorsby, HOV’s chief financial officer, tells the Ledger’s Judy DeHaven that the company is “not trying to grow through a downturn.

“We’re making the right steps to shrink in a downturn, in terms of our balance sheet, making sure we have the right capital structure in place and the balance sheet to weather the storm.”

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…THE BEAST

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VINCENT J. FAIELLA
RED BANK SURPLUS
16 WALLACE STREET

I’ve been here four months. We were in Brooklyn for 79 years — Reliable Naval Tailoring Co. I’m third-generation.

I’ve been living in Little Silver for 15 years. I was born and raised in the city and wanted to get out of there, found a house in Little Silver and was commuting for 15 years. The opportunity came about that I could rent a nice little store in Red Bank, and I jumped on it.

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HOVNANIAN SLASHES SPACE BUDGET

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Hovnanian Enterprises, the publicly-traded homebuilder that last year moved its corporate headquarters to the heart of Red Bank from Middletown, is scaling back its ambitions in the borough, according to a published report.

GlobeSt.com, a real estate industry publication, says Hovnanian is now planning on subleasing 66,000 square-feet of the 88,000 SF it had committed to use for itself in the PRC Corporate Plaza. That building, shown above, is under construction on West Front Street, just across the street for Hovnanian’s new 65,000 SF HQ.

Instead of taking all four floors for itself, the company will be using just one floor, according to GlobeSt.

What is Hov saying about this self-haircut? From the report:

“We are very excited with the expansion of our presence in Red Bank,” says president/CEO Ara Hovnanian in a prepared statement. A spokesman declined further comment on the reduced occupancy.

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‘Y’ BUILDING ON WEST SIDE SOLD

A gateway property on Red Bank’s West Side, the administration headquarters of the Community YMCA on Drs. James Parker Boulevard, has been sold, redbankgreen has learned.

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The buyer, PS5 LLC, paid $1.3 million for the longtime public school building, according to Y CEO Gary Laermer.

The transaction involves a prominent structure in a section of Red Bank that is heavily trafficked and in need of some TLC.

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LOOSE ENDS 3: FLIP OR FLOP?

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Remember that attempt to flip a house on Madison Avenue we told you about in June?

Well, the house remains unsold 18 months after an investor bought it, at the top of the market, for $475,000 $450,000. Sara Swanson, the New York woman who oversaw its renovation—and lived amid the disarray of construction—is moving on. And the investor who bankrolled the project has decided to keep the house for himself, we’re told.

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RETAIL TEMPERATURE: JUST WARM ENOUGH

With a couple of critical days left in the holiday shopping season, it would appear that the consensus among downtown merchants is that this year’s cash-register Holidaysales1activity, while not booming, is at acceptable levels.

redbankgreen hit the pavement late Wednesday afternoon for a completely unscientific sampling of viewpoints from behind the sales counters.

Here’s what folks were saying.

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HOVNANIAN CAUGHT OFF GUARD

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Red Bank-based Hovnanian Enterprises was blindsided by the swift drop in values on its inventoried land, the company acknowledged yesterday in reporting a $115 million fourth-quarter loss.

“We did not anticipate the suddenness or magnitude of the fall in pricing that occurred this year in many of our communities,” the company said in a statement on Monday. “Our profitability, and the pace of new home sales, in our markets continues to be adversely impacted by high contract cancellation rates, increases in the number of resale listings, and increases in the number of new homes available for sale.”

The downturn occurred just as the company began moving into its gleaming new digs overlooking the Navesink River.

Yet the homebuilding giant forecast a profitable 2007. Chief Executive Ara Hovnanian said he’s “started to see a glimmer of hopeful indicators that the markets may be stabilizing,” according to MarketWatch.

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IT HELPS IF THE LANDLORD’S AN ‘UNCLE’

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Ten questions for John and Rachel Decker, owners of Graman’s Vacuum & Appliance Parts Co. on Monmouth Street, at the corner of West Street. They live in Tinton Falls.

How long have you owned this business, and who had it before you?
John: We’ve been here for four years. I bought it from Gene Graman—“Uncle Gene,” though he’s no blood relation whatsoever. When I was growing up in River Plaza, Gene was the older guy in the neighborhood who never got married and had all the toys and all the fun: boats, motorcycles, Jet skis, snowmobiles, wave runners. My parents knew him before I was even born.

His shop was in Red Bank for 47 years, and in this location since 1964. He was previously closer to Broad on Monmouth Street. And surprisingly, there was a parking problem then, too.

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HAS THE BUBBLE STOPPED COLLAPSING?

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Signals are apparently turning mixed in the real estate market, which is probably good news for sellers who’ve heard nothing but doom and gloom in recent months.

A new report from the good folks at the Otteau Valuation Group in East Brunswick finds that Monmouth County home-sales contract volume in October was down just six percent from year-ago levels.

If that doesn’t sound all that positive, consider that the same measure was down 19 percent through the first nine months of the year.

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GO WEST, YOUNG MENNA!

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Two weeks after his election, and six weeks before he’s to be sworn in, Mayor-elect Pat Menna moved to put his stamp on Red Bank Monday night, introducing a plan to expand the special-assessment business district known as RiverCenter to the West Side.

Casting the move in terms of rising competition with nearby towns for shopping and entertainment dollars, Menna and RiverCenter executives said the plan, if approved by the Borough Council, would push the western edge of the Special Improvement District west along Monmouth to Bridge Avenue.

On Bridge, the district would reach south to Chestnut Street and north to the Navesink River. Also included would be the Oyster Point and Molly Pitcher hotels, and the new Hovnanian headquarters.

Excluded entirely is Shrewsbury Avenue.

Given what he termed the “positive” reception to the idea, Menna says he hopes to have an ordinance introduced, passed an enacted before he takes office on Jan. 1.

“The only time to move is the present,” he told redbankgreen this morning.

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GOING NOWHERE, AND SLOWLY

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More dark news for people trying to sell homes, and for all those businesses dependent on home-sales activity: the number of houses on the market continued to climb locally in the July-through-September period.

According to a report issued yesterday by the Otteau Appraisal Group, an East Brunswick-based firm that closely tracks residential market data, Monmouth County had 6,919 homes on the market at the end of the third quarter. That’s a whopping 51 percent increase from the end of the third quarter of 2005, a point at which the real estate market was already well into its present stall-out.

The latest figures translate into an oversupply that could take 11 months to work down, if the market were even conducive to sales, Otteau reports. A year ago, the market had a five-month supply.

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RIVERCENTER HONORS MCKENNA

At the annual meeting of RiverCenter on Monday night, Ingeborg Perndorfer of The Language School passed around photos of downtown planters spilling over with colorful flowers. Architect Stephen Raciti emceed a series of awards for downtown building improvements.

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And departing Mayor Ed McKenna, beginning a farewell tour after 16 years in the job, collected a plaque that named him this year’s ‘Red Bank Ambassador’ for his role in the creation of the downtown Special Improvement District in 1989 and of RiverCenter, which manages the district, two years later.

Before there were flower pots and award-winning facades, the downtown had the appearance of ghost town, with high vacancies rates at street level and nearly 100-percent vacancies in offices on second floors and higher.

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A LITTLE HYPERINFLATION AT TRT?

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Hey, we all make mistakes. We make mistakes as individuals, and sometimes as members of businesses or other organizations that allow our failings to leak out into public view.

Reporters and editors know all too well the sinking feeling that goes with having made a blooper in print. It’s the kind of thing that can undermine a lot of good work very easily. Of course, this is true in many other fields as well.

At the moment, some poor soul at the Two River Times may be feeling the pang of regret somewhat acutely because of erroneous info that made it into print last week.

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FLIP HOUSE UPDATE

Here’s the latest on the Sara Swanson flip story we told you about in June: the Madison Avenue house Swanson’s been rehabbing for over a year is finally on the market.

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The four-bedroom, twoTHREE-bath house is listed at $699,000.

Will the market, which is at its softest point in years, support that price? We’ll see. Robert Crayhon, Swanson’s deep-pocket partner on the project, bought the house at the peak of the market in June 2005 for $450,000. The idea was to spruce it up and sell it for a quick, tidy gain. But Swanson, who’s been overseeing the renovations and living in its midst, ran into nightmarish delays—largely, she says, because of a guy she refers to only as “the bad contractor.”

Now, only finishing touches remain, and Swanson is confident that the fall buying season that starts in a few weeks will be her salvation.

Meanwhile, she’s planning the first of a series of open houses this Sunday from 1 to 4p. Individual appointments at other times may be made by calling 917-853-9449.

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HOVNANIAN HANGOVER

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The stall-out of the real estate market in recent months isn’t only a matter of potential buyers staying out of the market. It’s also a function of contract cancellations, which appear to be a significant factor in the woes of Red Bank-based Hovnanian Enterprises, New Jersey’s largest homebuilding company.

For the second time this year, the company has amended the earnings ‘guidance’ it gives to Wall Street analysts and investors to reflect expectations of sharply lower earnings. Other major homebuilders have suffered similar embarassments.

In an announcement issued Friday, company chief executive Ara K. Hovnanian said results for the rest of the year are expected to be “negatively impacted by a slower sales pace, high cancellation rates on contracts in backlog that were projected to close this year, and more pronounced use of concessions and incentives, particularly on the resale of those homes which have experienced contract cancellations.”

According to Bloomberg.com:

Hovnanian is also likely to incur walk-away fees for renegotiating “a significant number” of land-buying contracts, it said.

As a result, the company reported that it now expects its earnings-per-share will be in the $1.10 to $1.20 range for the quarter that ended July 31, down from a prior forecast of $1.40 to $1.50 per share. For the full fiscal year, the company is now saying it’s earnings will be in the $5.00 to $5.75 range, down from a previous expectation of $7.20 to $7.40 per share.

Hovnanian’s stock price has been cut in half over the past year, to just above $29 at this morning’s opening.

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SOFT MARKET GETS SQUISHY

It’s customarily the biggest month of the year for real estate sales, but this June was one was one to forget, according to the latest edition of The Otteau Report, which analyzes sales trends.

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Contract sales of Monmouth County residential properties in June fell 10 percent from May and 25 percent from year-prior levels, Otteau estimates.

Jeff Otteau, president of the East Brunswick-based Otteau Appraisal Group, publisher of the report, notes in a commentary that June marks the end of the spring selling season…

“and typically sets the high-water mark for home sales in any given year. Thus, the residential market in New Jersey had much at stake, as any hopes for a market comeback would fall heavily on the June sales performance.”

So much for those hopes. Statewide, sales activity was down 9 percent from May and 24 percent from a year earlier.

And the outlook isn’t much better. Most years, summer sales follow a “gentle but steady” downward slope, followed by “more pronounced dips during the fall and winter seasons,” says Otteau. Combined with rising interest rates, he expects this to put added pressure on sellers to cut their asking prices.

Still, the number of new listings is soaring amid a tepid sales environment. Otteau calculates a supply-and-demand ratio, which compares the number of new listings to the number of homes that went into sales contract; a rising ratio indicates a strengthening market, and a falling ratio is the opposite. In Monmouth County, the ratio at the end of the second quarter was at 38 percent, down from 57 percent a year earlier and 60 percent two years ago.

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