Pfizer Sells, But Not to Local Groups

Pfizer has sent a letter notifying Community Board 1 that they have reached an agreement to sell the last remaining large parcels of land from the drug giant’s ancestral home. The agreement is with a group called 306 Rutledge Street II LLC, a “company acting on behalf of investors who have deep roots in the local community”. The LLC, which has a mailing address of 173 Wallabout Street, appears to have formed within the past week or so.

I have been told that these investors are not the coalition of community groups who had offered Pfizer $10 million for the properties, with plans to develop the sites as affordable housing. Although Pfizer’s letter offered few details, they specifically did not mention housing, affordable or otherwise.

77 Commercial Street Sells

04/13/2012 | Comment

According to the Real Deal, Manhattan-based Chetrit Group has purchased the 95,000 sf warehouse at 77 Commercial Street in Greenpoint. The property is one of the northernmost waterfront parcels that were rezoned to residential in the 2005 rezoning, and the potential development on the site could in a big, bigger or biggest development scenario.

It will be interesting to see how this plays out. What is the market for housing at this location, and how much of a market is there? First off, the site is, in the words of the broker on the deal, “‘not the most centrally located’ site in Brooklyn”. This site is basically at the very end of Manhattan Avenue, a long walk from either the bus, subway or ferry. The property does have 220 feet or so of water frontage, and will have great views and (hopefully) a beautiful city park next door. But – that water frontage is all along the mouth of Newtown Creek; a lot of those views are of Queens (and eventually more towers across the creek in Hunters Point South); and, the City has yet to acquire the adjacent property for a park, let alone fund clean up and capital costs. (It’s also worth asking when the developer plans to building – they’ve completed one project in the area, at 175 Kent, but have at least one other large development site, at Union and Metropolitan, that they’ve been sitting on for a few years now.)

The second question is how big will the developer go here? The base zoning – as with all the waterfront parcels rezoned in 2005 – is relatively low, but there is a sizable floor area incentive under inclusionary zoning for a developer to add 20% affordable housing (without any public review). Beyond that, though, there are also a ton of air rights available from the adjacent parcel at 65 Commercial Street (300,000 sf, according to the Real Deal). Those air rights come with strings attached – in addition to a full ULURP review, the purchasers are supposed to build an additional 200 units of affordable housing (15% of the new affordable housing committed to by the city). And the rights are supposed generate at least $12 million (in 2005 dollars) to create a $2 million “Greenpoint Williamsburg Tenant Legal Fund” as well as provide $10 million to help offset costs associated with creating inclusionary housing on other waterfront properties.

Which raises a third question (largely related to the first one), is there even a market for these air rights? Either with this developer, or the developer of the other adjacent parcel at 37 Commercial.

Domino Falls Down

Molly Heintz, in A|N:

[New CPC head] Cestero will be responsible for addressing Domino’s future as well as the bigger question of whether, given its mission, CPC-CPCR should have been involved with such a project in the first place.

CPCR Donated Over $100k to Local Supporters

03/28/2012 | Comment

According to the Brooklyn Paper, Community Preservation Corporation Resources, the for-profit developer leading the effort to redevelop the Domino Sugar site, paid out at least $100,000 to local groups over a two-year period. The neighborhood groups, which include El Puente, Los Sures, and Keren Ezer, received $10,000 each. (A fourth neighborhood group – Churches United – which is now defunct, received $30k.)

Not surprisingly, each of these groups was among the most vocal and active supporters of the Domino rezoning.

This really shouldn’t be a surprise to anyone – CPCR surely spent more than that on “public reputation” over the 5 or 6 years they spent getting the rezoning approved (including, for instance, T-shirts, box lunches and buses for the supporters they brought in from places like East New York). The period during which these payments were made (February 2008 through December 2009) doesn’t even cover the public review process in 2010, in which CPCR was able to bring out large blocks of supporters to a series of public hearings before CB1, the Borough President, City Planning and the City Council.

The article certainly seems to indicate that CPCR spent more than this, as it cites at least $20,000 (or maybe two $20,000 payments – the editing is not clear) going to Churches United for Fair Housing in late 2010 and 2011. (CUFH is a different entity from the defunct Churches United that received $30k from CPCR. CUFH’s members were also the most vocal supporters of the project.) If CPCR didn’t spend any more money than the article documents, they got a very good deal.

The recipients of CPCR’s largesse are, of course, vigorously contesting all assertions of impropriety, saying that this type of thing happens all the time (which is certainly the case), that they supported the project before any money changed hands, and that, of course, they would never sell their support. All this may be (and probably is) true, but whether or not anything improper did happen, the taint of impropriety is redolent.

As Norm Siegel told the Brooklyn Paper:

If the developer was giving community groups money five or 10 years before their mission, that would be one thing, but if the developer is giving money for the first and perhaps the last time, it raises the question whether the donor is buying recipients support and it raises questions about the community groups themselves.

Domino Fight Turns Sour

Eliot Brown, in the Wall Street Journal fills in a few important blanks on the Domino saga:

[After defaulting a $125 million loan] CPC cut a tentative deal with [lender] Pacific Coast Capital, in which CPC agreed to give the company an 84% stake in the property in exchange for forgiving the debt… Under the deal, CPC would have day-to-day control over the project for now. But Pacific Coast Capital would have final say over major decisions such as sales and new partnerships…

And then there’s this:

The financial troubles of the Domino project also raise questions about some of the pledges CPC made when it won city approval for the project. According to city officials and [CPC CEO Rafael Cestero], the developer’s commitment to fulfill its pledge with regard to affordable housing isn’t binding… Mr. Cestero said CPC is still committed to developing the project as pledged. But he also acknowledged that the owners would be open to selling the project if the price were high enough. He said he doesn’t expect this to happen.

Reading between the lines, it sure sounds like Pacific Coast is in control of which entitlements will be taken (and which promises are fulfilled).

Domino is Not For Sale

CPC Resources tells the Brooklyn Paper that they are not selling out, just looking for a “reputable developer” experienced in waterfront development and affordable housing to partner with on the project. Which is to say, they want to sell part of the project. CPCR also acknowledged that they are working to renegotiate a $120 million loan – the same loan they apparently defaulted on in late 2011.

Meanwhile, the developer has officially pushed back the start date for phase one of the project to a very squishy “end of 2013”. That puts it a full two years behind the original schedule, and a year and half behind the most recent party line.

Things Get Worse at Domino

03/21/2012 | Comment

Crain’s reports this morning that the partners in the Domino project are in court, with Isaac Katan, the long-silent partner in the deal, alleging mismanagement, “misdirection and inaction” on the part of CPC Resources. According to Katan, CPCR has nothing to show for the over $100 million in equity and financing that the project has received. Now CPCR is trying to restructure the project’s $120 million in debt, in a deal that (according to the plaintiff) leaves Katan out in the cold:

Last month, CPC Resources told Katan it would enter a Letter of Intent that would allow Pacific Coast to restructure its debt. Under the arrangement, Pacific Coast would be able to convert its loan into an equity interest in the project, therefore reducing Katan’s interest in the project to 8% from 50%. Katan said in the filing that it never consented to such an agreement. Also, the new structure would give the lender the right to remove the current partners in the development from the project at any time and without reason.

But, at the same time, leaves CPCR with a guarantee of something:

But CPC Resources would still be paid an annual management fee of about $750,000, plus expenses.

Suddenly, even CPCR’s supporters seem to be having second thoughts:

“The tenants associations and the area residents, who worked hard to support Domino with its 660 affordable housing [units], are shocked that this project is now in jeopardy of collapse because of the spending spree and unaccountability by CPC,” said Isaac Abraham, a Williamsburg community leader and housing advocate. “Residents hope and pray that 660 affordable units and the entire Domino project doesn’t go up in the refinery smokestack.”

Of course, the 660 units were never guaranteed, and are certainly not part of the entitlements that CPCR has been looking to protect.

Sweet Movie

Aaron Short interviews the makers of the Domino Effect, a (still) topical documentary about the New Domino approval process. I’ve seen the picture in preview, and it is very well done and quite powerful.

Lured by Profits

03/15/2012 | Comment

Charles Bagli has an in-depth piece in today’s Times on the fall of Community Preservation Corp. There is not much in here that I hadn’t been hearing in bits and pieces over the past few months, but still, seeing it all together is jus incredible. Real estate deals like Domino (though Domino is far from the only one) have almost shut down one of the most important conduits for funding affordable housing in the NY region. As I’ve said in the past (and despite their claims to the contrary), CPC is a funder of affordable housing, not a builder of housing – clearly they lost focus on their core mission.

For anyone who thinks CPCR (the for-profit arm at the root of the problem) is going to do the Domino project, let along do it as the community was promised, this has to be pretty sobering.

Domino for Sale

03/12/2012 | Comment

In news that should surprise no one (but is surprising nonetheless), the Observer reports that the Domino site is on the block. Apparently, the Katan Group and their development partner CPC Resources have been shopping all or part of it to potential buyers.

A spokesman for CPCR told the Observer:

We are pursuing various options that will achieve our goals: to realize value for ourselves and our partners, and to insure that development is consistent with all project entitlements

Chief among the entitlements CPCR received (and of primary value to them, their partner and any potential buyers) was approval from the City to redevelop the site for as many as 2,400 housing units. In exchange, CPCR promised to build 660 units of affordable housing, a lot of open space and a public school, all (nicely) designed by architects Rafael Viñoly and Beyer Blinder Belle. Most of this of these benefits were not guaranteed – something that was a very big issue for people opposed to the project back in 2010.

Hopefully we were wrong.