Bloomberg News

Jersey Shore Amusements Race Time to Rebuild for Summer

December 20, 2012

In Seaside Heights, at the heart of the New Jersey shore, the log flume at Casino Pier hangs at the edge of broken boards. The Wild Mouse ride is being dismantled. The Jet Star roller coaster, ripped from its base when Hurricane Sandy struck, still sits in the ocean.

While many people count the shopping days until Christmas, on the battered Jersey Shore it’s the days until beach season that really matter. Seven weeks after Sandy struck and less than six months before Memorial Day, boardwalk operators, merchants and mayors are seeking answers to even the most basic questions: What was broken, what will it cost to fix and, perhaps most importantly, how much can be done before beachgoers return?

“Everybody’s going to be pushing because everybody’s under the same gun,” said William Akers, mayor of Seaside Heights, where Casino Pier remains without electricity. “We all have that same deadline. Our tourist season is short to begin with, and we need to be open.”

Shore tourism is the backbone of New Jersey’s $38 billion leisure and hospitality industry, the third-biggest source of private-sector jobs in the Garden State and an essential part of its soul. The shore’s economy is a complex system of rides, boardwalks, beaches, arcades, bars, restaurants and lodgings. Take one piece away and every other piece is diminished.

FunTown Pier

Seaside Heights and neighboring Seaside Park, on a barrier island that draws more than a million visitors each year, suffered some of the most visible damage to their summer attractions. For Governor Chris Christie, the towns’ boardwalks were “the Jersey Shore of my youth,” where he now brings his own children, he told CNN’s Piers Morgan the day after the Oct. 29 superstorm.

About half of Casino Pier, home to the Jet Star roller coaster, needs to be replaced. Half a mile to the south, most of FunTown Pier in Seaside Park was destroyed. While its Ferris wheel remains standing, the base is warped and tilted. Last week, torn planks from the boardwalk sat in a pile on the sand, like an unlit bonfire.

The cost to restore Casino Pier will be in the “tens of millions” of dollars, said Ken Taylor, chief financial officer of Jenkinson’s South Inc., which manages the pier’s finances. The Jet Star was its biggest money-maker, he said.

“If you ordered a roller coaster like that now, it would take two years to build,” Taylor said.

Blackout, Curfew

It will be almost another month before the Storino family, which owns Casino Pier, completes a study of how best to rebuild and gets a sense of the cost, Taylor said. For now, the focus is on clearing damaged rides and securing the portion of the pier that’s salvageable.

The New York-based engineering firm Mueser Rutledge is conducting the study, which involves using sonar and scuba divers to examine the pier’s pilings and the stranded coaster. Work has proceeded slowly because of the blackout and a curfew that limited access to the barrier island after 3 p.m. The curfew was moved to 4 p.m. on Dec. 6, according to the mayor.

While restoring the pier’s upper section, closest to the ocean, is “out of the question” for next year, “we’re hopeful of having a functional lower pier with a number of rides on it for the summer,” Taylor said. “We have to be optimistic.”

Opening about 15 of the normal 35 rides should produce just short of half the pier’s typical summer revenue -- enough to survive, he said.

‘Real Question’

Reopening is only part of the battle.

“The real question is when the surrounding area is going to be completed -- all the devastation around us,” Taylor said. “We depend on people who come down to rent homes. The question is whether our patrons will be able to come back to Seaside.”

Seaside Heights is seeking bids to replace its storm- wracked boardwalk, and “we expect to have a crew on the ground” by the first week in January, with completion by Memorial Day, which next year falls on May 27, Akers said. The town, whose typical budget is about $12 million, approved an emergency appropriation of $14.7 million, the mayor said.

In Seaside Park, Mayor Robert Matthies said he is waiting to hear what the owner of FunTown Pier, the town’s No. 1 taxpayer, intends to do. The owner, William Majors, who operates a construction company in nearby Toms River, didn’t return telephone calls seeking comment on his plans.

In 2006, Majors considered replacing the 83-year-old pier with condominiums. “Amusements are not profitable anymore,” Carmen Ricci, his consultant at the time, told the borough council, according to the Ocean County Observer newspaper. The plan to build 105 three-story units was criticized and Majors abandoned it, Matthies said.

Boardwalk Businesses

“The pier has been a good neighbor,” Matthies said. “Rebuilding the pier is vital to the economic balance sheet of the borough.”

Akers said he’s concerned about FunTown Pier’s future because it’s on the border with Seaside Heights. Businesses along his town’s boardwalk depend on the pier to draw in customers, he said.

“I know they have a good owner,” Akers said. “I don’t know what his situation is, but I haven’t heard as many positive comments on or information in general about what’s going to happen down there. That’s going to reflect on the businesses around them that have signed these long-term leases based on FunTown Pier being there.”

Operators also are waiting to find out how much of their repairs will be covered by insurance.

Insurance Payouts

“There will be a lot of money coming in from the insurance industry,” said Howard Mills, chief adviser of Deloitte LLP’s insurance practice. “But that does not necessarily mean they can restart the rebuilding process right away, because there will be a lot of planning that will have to happen beforehand.”

Taylor said he expects most if not all of the bill for Casino Pier to be covered by its insurer, Munich-based Allianz SE. (ALV) One hitch may be if the government requires that the pier be reconstructed using material stronger than wood, such as concrete, which would add to costs, he said.

Jacqueline Maher, an Allianz spokeswoman, said the company doesn’t discuss clients’ coverage because the information is confidential.

Insurance is an issue for the entire Jersey Shore, not just the hardest-hit towns. With Sandy’s floodwaters invading places they’d never gone before, operators -- almost exclusively small, family-owned companies -- are bracing for a jump in premiums that may make it tougher for them to stay in business.

Steel Pier

“If you have losses your premiums go up, and at some point they override the net income and you have to decide whether or not it’s worth going forward,” said Joe Addison, chief executive officer of Aon Risk Solutions Global Entertainment Group, which brokers policies for amusement companies. “These guys on the shore are going to have the same challenge.”

Anthony Catanoso, owner of Atlantic City’s Steel Pier, said a premium increase of 50 percent to 100 percent “wouldn’t be outrageous after a disaster like this.”

That might come even though his property, made of steel- reinforced concrete strong enough to support a 20-story hotel, escaped Sandy with only minor damage. Insurance, he said, is his biggest cost after payroll and accounts for about 15 percent to 20 percent of expenses.

Insufficient coverage was one reason the wooden pier in Long Branch and its popular Haunted Mansion attraction were never restored after a fire in 1987, according to its owner.

“I had a $2 million blanket policy,” Pat Cicalese said. “I never thought everything would burn at one time.”

‘Success Stories’

It took 10 years to sort through his debts and lawsuits before he was in a position to rebuild, he said. When he went to city planners with a proposal for an oceanfront water park, they had another idea. Cicalese said he lost the property through eminent domain, and the amusements were replaced by Pier Village, an upscale resort and shopping area.

Elsewhere on the shore, there are “a lot of good success stories,” said Robert Hilton, executive director of the Jersey Shore Convention and Visitors Bureau.

One is Keansburg, about 40 miles (64 kilometers) north of Seaside Heights and home to the state’s oldest beachfront amusement area. Keansburg Amusement Park was devastated during Sandy when a protective berm was breached, sending water and sand surging onto the property, said Hank Gehlhaus, president of Jersey Shore Beach and Boardwalk Co., the operator. A photograph of its indoor carousel -- mired in debris, with horses askew -- was sent around the world and became one of the storm’s signature images.

Still, Gehlhaus said he expects the park to be fully operational when beach season starts -- including the carousel.

‘Miracle’ Carousel

“When I first saw it, I said, ‘That ride’s a goner,’” he said. “But the more I studied it, the day after the hurricane, I thought, my God, everything looks good. So I played a hunch, and once I got the water out, and got rid of all the garbage underneath, it returned to its shape. It was a miracle.”

He estimated uninsured costs of about $5 million, which will be paid for with a small increase in admission prices, said Gehlhaus, whose family has been involved in the park since 1904.

As long as the berm is unrepaired, the park will remain vulnerable, he said.

“It takes three years for a berm to gain strength” through plantings and trees, Gehlhaus said. “If we get another major storm, we will flood. The town will flood. This storm was a devastating blow. The next one will be the knockout.”

Tourism Dollars

Tourism statewide generated $38 billion in spending last year, close to the 2007 peak, according to a study done for the New Jersey Amusement Association, a trade group that includes most of the boardwalk attractions. The industry employs 312,000 people and pays $9.6 billion of wages, the study showed. Including jobs indirectly related to tourist spending, the number rises to 486,000, almost 10 percent of New Jersey’s total employment.

The leisure and hospitality industry is the state’s third- biggest employer, behind trade, transportation and utilities, and professional and business services, according to the U.S. Bureau of Labor Statistics.

“The numbers speak volumes about the importance of our effort to rebuild,” said Kimberle Samarelli, the amusement association’s executive director. “The amusement industry is generational, both the customers and the operators. Grandpa did it, we did it, and our kids did and our grandchildren too. We can’t afford to lose that.”

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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