Tag: development

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.

Stapleton is the New Williamsburg

Correction: March 18, 2012

In an earlier version of this article, a timeline misidentified a Williamsburg diner in a photo from 2000. The restaurant was Relish, not Miss Williamsburg Diner.

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.

Whole Foods Confirmed

Aaron Short – who is clearly on a roll – confirms the Whole Foods on North 4th Street rumor. Commence the all-out Williamsburg-is-over discussion.

Passing the Sugar

Aaron Short does some good reporting to advance the Domino story. Among the enticing new nuggets is word that the owners had a deal to sell the project for $200 million back in December. According to Short, that deal fell through after some of the 15 investors on the buyer’s side “got skittish about the project’s finances and zoning variances”.

Another Whole Foods in Williamsburg Rumor

03/14/2012 | Comment

The empty hulk of a building at North 4th and Bedford is the site of the latest Whole-Foods-in-Williamsburg rumor.

The Post reports that the property has changed hands, with the Backer Group having sold to new owners. The new owner confirms that “several national tenants are interested” in the property (isn’t that always the case?), and the Post says that “sleuths have ferreted out” that Whole Foods is the intended tenant.

This latest rumor has a bit more heft than the recent vague rumors of a Whole Foods on Kent Avenue. The fact that the property has new owners also lends some credence to the idea (the Backer Group had previously floated CVS, Marshalls, Starbucks, Capital One and other national chains for their various properties on this block of Bedford Avenue).

Still, some things don’t quite add up. The Post has the new owner saying that the development will be 150,000 square feet, a third of which will be luxury rentals. According to city records, the whole site (lots 6 and 24) is 47,400sf – at an FAR of 2.0, that only yields a tad less than 95,000sf (maybe I’m missing something with the MX M1/R6B rules). But others are telling the Post that Whole Foods will occupy about 40,000sf, and New York Sports Club another 15,000sf on the second floor. That works out to about two-thirds of the development, in line with the owner’s estimates.

Other numbers that have to be worked out are the size of the market itself. 40,000sf is, believe it or not, on the small side for a Whole Foods – both their Union Square store and their proposed Gowanus Store are 50,000sf or more. And while there will certainly be plenty of foot traffic at North 4th and Bedford, between customers and deliveries, a market of this size will make the vehicular traffic in this corner of the neighborhood even worse.

And I wonder what Williamsburg Food Town (a Backer Group tenant) thinks of all this? (Or Retro Fitness, for that matter, which is just opening up a 20,000sf fitness center around the corner on North 3rd and Berry.)

[via Brownstoner]