Domino Sells

06/21/2012 | 1 Comment

DUMBO-based Two Trees has closed their deal for the Domino sugar refinery site, for what appears to be $185 million ($20 million more than the price that Two Trees supposedly went into the negotiations at). According to the Times, the price increase came after co-owner Isaac Katan made an offer with developers Chetrit Group and David Bistricer for $185 million. The price is a handsome return for co-owners CPC Resources and Katan, who bought the property in 2004 for $55 million and spent 6 years securing a rezoning for the residential use of the site (though Katan apparently doesn’t think it’s such a great return).

What does the new owner have in mind for the project? Two Trees principal Jed Walentas is quoted in the Times as saying that there are “probably some opportunities to make improvements on the plans”. The Rafael Viñoly plans shown during the public review for the site’s rezoning are non-binding, so a redesign of the building skin is certainly possible (and I’d bet likely). So too is a redesign of the Landmarks-approved addition to the Refinery building (the current model was designed by Beyer Blinder Belle).

But what of all the promises that CPCR made to the local community during the rezoning process? The open space is largely codified into the zoning for the site (and by general waterfront access plan requirements), as are the building heights and general uses (retail, office, residential).

But the big promise – the one that brought a lot of community into CPCR’s fold – was affordable housing. 660 units of it. Rob Solano, a supporter of the CPCR rezoning told the Times: “It’s extremely important that the Domino project is built with all the affordable housing that was promised”.

The Daily News asked the question that is on the minds of CPCR’s community supporters, and the response should not be reassuring:

The new developer of the iconic Domino Sugar Factory hedged Thursday on whether the new deal would include affordable housing.

“There were promises made by another developer. We literally just brought the property today so I don’t know,” said Stefan Friedman, a spokesman for Two Trees Management Co.

Two Trees is an experienced developer (unlike CPCR), but they are an experienced developer of luxury and market-rate housing. As I’ve said before, they are a good fit for this project in that they have experience with old buildings, experience with big (and complicated) developments, a commitment to good design and a very long-term investment philosophy (and they are certainly better than Katan-Chetrit-Bistricer partnership would have been). But affordable housing is not their thing, and if, after two or three weeks of due diligence on a $185 million deal, they are being coy on the affordable question, that should make people in the community pretty nervous. Maybe Two Trees is thinking about who to partner with to do the affordable housing (a smart move), but it’s a pretty good bet that they are also looking at the number or percentage of units.

Two Trees is right – the promises were made by another developer. That other developer was able to secure a zoning density that far exceeded what any other developer on the waterfront was able to get, and in exchange for that, they promised to build a lot of affordable housing. But those promises were not binding on CPCR and they are not binding on Two Trees.

City Reneges on Promised Brooklyn Waterfront Parks

06/19/2012 | Comment

Wsj map

Source: Wall Street Journal

I’d been meaning to write a wrap-up post on last week’s City Council hearing on the status of the 2005 rezoning of the Williamsburg & Greenpoint waterfront, including the many articles that led up to the hearing. Happily, the Working Harbor Committee has done that for me – written a concise, informed wrap-up of the many articles already written. So I’ll just link to that, put up this very excellent graphic prepared by the Wall Street Journal and pull a particularly good quote from Council Member Steve Levin:

This is about credibility, doing what you say you’re going to do,” said Levin. “You have no concrete plan. When you want to do something, you have a plan.

OK – and I’ll add this: since the 2005 rezoning was based on environmental assessments that assumed that the city would build parkland, at what point does the city’s failure to build that parkland (or even make good faith progress toward doing so) make the EIS a faulty instrument?

Related, Silverstein Also Looked at Domino

06/12/2012 | 1 Comment

The Commercial Observer has more information on the Two Trees acquisition of the Domino site, including the fact that two other major developers – The Related Companies and Silverstein Properties – were interested in the site.

The Observer seems to agree with everyone else (myself included) that Two Trees is a good fit for the site. But the paper also seems to misunderstand some of the issues that make the property so hard to develop:

Landmark protections at the sugar factory require that its main buildings, a square structure with the Domino logo on its facade and a behemoth brick property with a towering smokestack, be preserved. Those familiar with the site say that it would likely cost many millions of dollars to renovate and make them habitable. CPC also struck a deal with the city to build 30 percent of the project as affordable housing, a larger than normal percentage that people familiar with the development said cuts into the project’s profitability.

The refinery (the “behemoth brick property with a towering smokestack”) is a landmark, but the bin structure (the “square structure with the Domino logo on its facade”) is not a landmark. As part of its landmark approval for the refinery, CPCR did agree to move the (not very historic) Domino Sugar sign to the refinery. But the building that the sign is attached to is toast.

As for the affordable housing, there was no “deal” to develop 30% of the project as affordable housing. CPCR promised to do so, but significantly, neither the city nor CPCR’s community supporters thought it necessary to make that commitment binding. As I noted yesterday, there is a strong incentive for 20% affordable housing on the site, but technically, there is no requirement for any affordable housing as part of the project.

[via Brownstoner]

Community Anxious Over Possible Domino Sale

06/11/2012 | Comment

Crain’s has some follow up community reaction to the news that Two Trees might be buying the Domino site. Apparently the community, or at least Isaac Abraham, is “anxious” about the sale:

Any developer or investor who wants to purchase Domino without committing itself to the 660 affordable units, should really think twice,” said Isaac Abraham, a Williamsburg community leader and housing advocate

Not to worry, says CPC, the parent company of bankrupt developer CPC Resources:

CPC Chief Executive Rafael Cestero, told Crain’s New York Business on Sunday that the new owner would be required to follow the zoning guidelines, which among other things would mean providing the affordable housing.

All of the affordable housing? Or just “the affordable housing” required under the inclusionary program (which amounts to 440 units – 20%)? CPCR was never bound to provide 30% affordable housing. Even the 20% is optional – though, as at other waterfront sites, the incentives are deep enough to make that 20% a very attractive deal. The other 10%? The community supporters of CPCR – and the city – gave that away. Hopefully someone steps up to keep CPCR’s word, but nothing is guaranteed.

Remember – 20% is the baseline. Neither CPCR nor Two Trees (nor any other developer) is obliged to build a single unit more. No one in the community should be surprised if a third party developer does’t live up to CPCR’s unsecured promises. If it wasn’t binding on CPCR, why should it be binding on anyone else?

Two Trees to Buy Domino?

06/10/2012 | Comment

The Daily News and Crain’s are reporting that CPCR has reached a deal with Two Trees to sell the Domino project for $160 million. CPCR and its partner Isaac Katan bought the Domino site in 2006 for $55 million. Since then, they have rezoned the property for residential use and gotten stuck in a morass of bankruptcy and lawsuits. The sale would allow CPC (the not-for-profit parent of CPCR) to pay off its subsidiary’s mortgages on the property (rumored to be $125 million) and go back to focusing on what they do best, which is providing financing for affordable housing.

If true, this latest development in the Domino saga bodes well for the fate of the overall project – not that that was ever really in question (prime waterfront real estate in a hot gentrifying neighborhood is a rare commodity, and someone was going to build there). Two Trees is an experienced developer that brings a wealth of expertise in developing mixed-use projects, and a long-term commitment to the neighborhoods they go into. It is particularly encouraging news with respect to the landmark refinery building – CPCR never had a viable plan for this wonderful structure and clearly saw its preservation as an impediment rather than an opportunity. Two Trees’ track record with historic buildings – including the stunning renovation of the Wythe Hotel – hopefully means that the refinery will no longer be an afterthought.

But when all is said and done, the New Domino project will be judged on the promises made to the community by CPCR. There was never any question that someone would develop this property. The question, still unanswered, is whether anyone will live up to CPCR’s unsecured promises for massive amounts of affordable housing and other community benefits that too many in the community bought into.

Two Trees is not a developer of affordable housing1 – what does that mean in terms of the promises made to the community? Certainly Two Tree can partner with an experienced affordable housing developer – but how much housing will they build, and how affordable will it be?

1. But then again, neither is CPC – and its for-profit subsidiary, CPCR, never had the depth of experience needed for a project of this scope.↩

LPC Warehouse RFP Issued

Brownstoner has published the full text of the press release for the Landmarks Warehouse RFP. This is the site at 337 Berry between South 4th and South 5th Streets that was promised as affordable housing in the 2005 rezoning. CB1 pushed hard to get the City to agree to some additional community benefits, most notably a local presence on the development team. And lo, HPD delivered:

As part of the RFP’s threshold criteria, at least one Principal of the development team must also be a locally-based development company

That probably does not mean that a local partner is required, but it comes darn close. Los Sures should have the inside track here, assuming that they can put together a viable proposal and convince the city that they can pull the project off.

The Finger Sells

Two of Brownstoner’s five biggest sales last week were at the ~~Finger~~ ~~Albero~~ 144 North 8th Street. Penthouse #2 tops the list at over $2.5 million, while Penthouse #1A is #5 on the list at $1.8 million (must be a real dump).

Wythe Hotel

05/22/2012 | Comment

80 Wythe
Theobald Englehardt (1900)
Morris Adjmi Architects (2012)
Photo: brooklyn11211

Matt Chaban in the Observer:

This was, is and will be the greatest thing Williamsburg has ever seen. It is the pinnacle, the acme, the end. The story of gentrification, at least in this oft-buzzed about corner of Brooklyn, is over — checked at the curved-glass-and-carefully-rusted-steel door outside the Wythe. If Francis Fukuyama needed a hotel room in Brooklyn, this would be it. Thank you, and good night.

Matt & I disagree somewhat here. Not on the fact that the Wythe Hotel is great – it is. And not on the fact that the building itself “is the nicest thing ever built in Williamsburg” – if it isn’t that, it’s damn close. Morris Adjmi’s design of the new, the old and the integration of the two is almost perfect (Theobald would have been proud).

But the pinnacle? The acme? The end? Let’s hope not – we need more nice things like this.

Katan Loses Domino Suit

05/04/2012 | Comment

The Observer reports that Isaac Katan failed to secure an injunction against his partner in the $1.5 billion Domino development from selling a majority stake in the project.

The decision appeared to clear the way for the Community Preservation Corporation, a joint owner of the site, to proceed with a deal to hand the majority stake to the project’s senior lender, Pacific Coast Capital Partners, LLC… Mr. Katan secured the Domino Sugar Factory in 2006 in a whirlwind deal largely negotiated over a single weekend to buy the site with CPC for about $50 million from the sugar company, which decades ago [actually, less than a decade ago] used the factory as one of its largest sugar refineries in the world.

Which means that Katan’s (and CPCR’s) stake in the project drops from 50% to 8%. The difference between 50% of $1.5 billion and 8% of $1.5 billion explains why Katan, through his attorney, is promising to continue his legal fight.

[again, via Brownstoner]

AG Sues Developer of 57 Maspeth

Shoddy construction from circa 2006, the real boom times in Williamsburg condo construction. Based on the number of condos that went up between 2004 and 2008, the fast pace of construction and low level of oversight, this is probably not an outlier.

Schneiderman is seeking $1.3 million in payback for unit owners – to cover the alleged damage and $75,000 in legal and professional fees – as well as an $85,000 penalty that would go to the state, and an order that would effectively permanently ban Schwartz from selling condos in New York State.

[via Brownstoner]