SFC still on track in Yonkers
John Golden
Mar-12-10, 06:33 PM
One developer in the trio of redevelopment partners in downtown Yonkers
has financially fallen. Another is beset by liens and lawsuits by
project partners, property owners and contractors claiming they are owed
more than $200 million in all.
Yet
the roughly $1.5 billion project planned by Struever Fidelco Cappelli
L.L.C. in Yonkers has not been affected by the developers’ flux in
fortunes, according to the New Jersey partner in SFC.
Marc E. Berson, founding chairman of The Fidelco Group Inc. in Millburn,
N.J., said Struever Bros. Eccles & Rouse Inc., a leading developer in
Baltimore, Md., and oft-lauded pioneer in the redevelopment of that
city’s harbor waterfront, pulled out of the SFC partnership about a year
ago. Berson said he and SFC’s prominent third partner, Louis R. Cappelli
and his Cappelli Enterprises Inc. in Valhalla, took over Struever’s
equity interest in the project.
Struever Bros. CEO C. William Struever, a once-regular, plaid-shirted
visitor on the Hudson waterfront, did not return a call for comment on
his company’s involvement in Yonkers. The Baltimore Business Journal,
which named Struever its Businessperson of the Year in 2000, over the
last year has chronicled his company’s financial fall and withdrawal
from several East Coast development projects as credit markets tightened
and then froze and new equity partners for the debt-heavy developer
could not be found in the recession. Struever told the paper last June
he was trying to avoid bankruptcy while limiting his business to
fee-based consulting work for other developers.
The Baltimore business weekly last October reported Struever Bros. had
shed nearly 30,000 square feet at its corporate offices in a former
Procter & Gamble plant the company had redeveloped as a high-end
business park. Struever Bros. last fall was reduced to less than 100
employees from more than 350 workers at its height in 2007, when
Struever himself was named the Mid-Atlantic region’s CEO of the year.
“Struever’s not in business” as a developer, Berson said at his New
Jersey office. “They have a tiny skeleton crew working on their
workouts” with lenders.
Berson said Struever’s exit “has no effect whatsoever” on the Yonkers
project. “By no means has there been any hiccup associated with the
project.”
“In the selection of this team to do the project,” Berson said, “the
city took account of the entrepreneurships that Louis (Cappelli) and I
have had” at the head of their respective companies. “As issues evolve,
successful developers are fluid.”
Berson said SFC – the name will remain – to finance the project might
“bring an additional partner or partners to the table to fill the hole
in the gap. You’ve got to figure out how in a development environment to
make things work.” He declined to name any prospective partners.
Cappelli said recently the Yonkers partners likely will replace Struever
with another partner “because it’s a gigantic project. It needs a lot of
financing.”
Cappelli said the SFC partners to date have invested $24 million in
equity in the project and have too large a stake to pull out of Yonkers.
“It’s teed up for Yonkers,” he said. “I’m committed to doing the project
there one way or another.”
Cappelli, however, and his various development entities in Westchester
and the Catskills face mounting financial and legal challenges. Most
recently, Entertainment Properties Trust, a publicly traded real estate
investment trust in Kansas City, Mo., and Cappelli’s partner and
majority owner at two retail entertainment complexes, City Center in
White Plains and New Roc City in New Rochelle, went to federal court
seeking payment of $163.1 million for loans on which Entertainment
Properties claims Cappelli has defaulted.
At the center of the partners’ dispute is Cappelli’s stalled Concord
Resort and Entertainment City development in Sullivan County, where
Entertainment Properties wants to be released from its equity commitment
and seeks repayment from Cappelli of a $133.1 million advance on a $225
million loan for resort development.
Cappelli also is being sued for $5 million and $11.2 million by two
groups of property owners in downtown New Rochelle with whom the
developer made purchase deals to clear the way for his company’s stalled
LeCount Square redevelopment project. Entertainment Properties in its
recent lawsuit claims Cappelli owes $20 million in loans related to the
New Roc City and LeCount Square projects. The partner also seeks payment
of a $10 million loan at City Center.
In 2009, nine contractors on Cappelli projects sued in Westchester
County to collect a total of $773,000, according to the Journal News.
The Times Herald Record in Middletown recently reported 24 contractors
at the stalled Concord development have filed liens totaling
approximately $24 million.
The largest creditors supplied steel and aluminum and did demolition at
the former Concord Hotel site at Kiamesha Lake, where work stopped in
late 2008 when Cappelli was unable to close on construction financing.
Cappelli has said those contractors will be paid once construction
financing is in place.
In Yonkers, with all required city approvals in place, “We’ve only in
the last 60 days been able to think in the real development mode,”
Berson said. “We’re now in a mode that’s very simple – talk to tenants,
get serious about construction issues and fine-tune the project. We
anxiously are moving forward with what we think will be a great
project.”
Berson said SFC is focused first on its mixed-use River Park Center
development off Getty Square rather than Palisades Point, a high-rise
luxury condo development that would rise on the waterfront south of City
Pier. “I think Palisades Point, though the waterfront is phenomenal and
the residential is the future of that area, the for-sale residential
market is softening dramatically,” he said. Banks will not finance such
a project and buyers are backing off at that housing price, he said.
“This redevelopment project was about changing the downtown,” Berson
said. “The way you’re going to change the downtown is with mixed-use
development.” The 13-acre River Park Center site would include about
715,000 square feet of retail, restaurant, movie theater and office
space and a 6,500-seat sports stadium.
Berson said the city’s downtown and waterfront redevelopment to date has
had no significant retail mix. “We haven’t at this point achieved
another supermarket, another new drug chain,” he said. “It’s our hope
that with the retail, we’ll fuel the residential” development.
Berson
said his company has continued to fare well in the recession. “We don’t
have at Fidelco any open, unsold units,” he said. “We don’t have any
vacancies at any of our properties.”
For River Park Center, “We firmly believe that the banks and
institutional investors will be around” with construction financing,
Berson said. “They’re going to build not on spec, but on signed leases.”
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