Astoria Cove: It's not gonna happen

From Politico:

A massive waterfront housing development in Astoria that required low- to moderate-income apartments prior to a citywide mandatory affordable housing policy has been scuttled. It's a disappointment for Mayor Bill de Blasio, who had boasted that the project would be a "real game changer" in affordable housing.

From the time the 2.2-million-square-foot Astoria Cove project passed the City Council in November of 2014, developers questioned the economics of the project. Several speculated the builder, Alma Realty, would have a hard time obtaining financing for a development in which 27 percent of the 1,723 planned apartments — 459 units — would be rented to people paying less than the market rate in a neighborhood that does not command top-dollar rents.

Alma had also agreed to pay union rates for construction work, which can significantly drive up the cost of any project.

One developer who has been closely following the project said his firm repeatedly looked at the financial details of the project, only to conclude it would be nearly impossible to find a lender.

Flushing West won't be financed

From the Queens Tribune:

Community Board 7 brought together city agencies, developers and community members to discuss potential impacts of the rezoning and development anticipated for Flushing West at a public forum last Tuesday.

The meeting highlighted the incredible amount of coordination and planning that would need to go into development in the area, which could see about 1,000 new units in the neighborhood at 13 projected development sites. An additional 13 sites and 1,000 units are not likely to be developed before 2025.

If the planned rezoning from a industrial into a residential area passes a City Council vote several months down the line, Flushing West will be one of the first neighborhoods to see Mayor Bill de Blasio’s affordable housing plans, Mandatory Inclusionary Housing and Zoning for Quality and Affordability, implemented.

But the most existential concern was whether the development could even happen in the first place.

Developers from F&T Group and Triple Star said their banks told them their projected profit margins were not large enough for them to approve loans.

MIH does not have any inbuilt subsidies for developers. In many neighborhoods, however, developers may be able to negotiate for additional height or other concessions to help them finance the affordable housing, if need be. But because of Flushing Wests’ proximity to LaGuardia airport, building up is not an option, and due to the high water table, neither is building down. CB 7 Chairman of the Land Use Committee Joseph Sweeney said that he was worried about how that would impact developer’s desire and ability to build.

“If it doesn’t work for the developers, it’s not going to work at all,” Sweeney said. “I’m afraid that you’re going to end up with a dust bowl.”

The 421-a tax breaks for affordable housing are also no longer in effect, something that could further hurt developers’ bottom line all around the city.

And none of this matters, so long as Claire Shulman's group got grant money to study the area. Ain't life grand?

Developer receives loan for St. John's hospital conversion

From The Real Deal:

A group of Asia-based developers led by Steven Wu secured a $32 million construction loan that will finance the completion of the final stage of the St. John’s Hospital conversion in Elmhurst, Queens. Madison Realty Capital provided the loan, which lined up an earlier $38 million acquisition loan for the property.

Leasing at the 266,322-square-foot property – which the developers bought in December 2013 for $55 million – will commence soon, Madison Realty Capital co-founder Josh Zegen told The Real Deal.

No major renovations were needed at the former hospital, which is located along Queens Boulevard between 57th Avenue and Woodhaven Boulevard, Zegen said. The development will ultimately hold 144 rental apartments divided among 148,109 square feet and will include about 118,213 square feet of commercial and community space.

Studios, one- and two-bedroom units will be located on the third through sixth floors, with a penthouse on the seventh floor with 15-foot ceilings. The penthouse will be one of eight such units in the building, and each will have a private roof terrace. The second floor will hold a community space, with retail space located on the ground floor and in the basement.

The building at 90-02 Queens Boulevard also comes with an 89,601-square-foot parking garage across the street that can hold around 290 spaces that will be used for the building’s future tenants as well as the commercial component of the development.

So what's up with Flushing Commons?

From Crains:

In 2005, Flushing-based TDC Development, backed by the blue-chip Rockefeller Group, won the rights to knock down a five-acre city-owned parking lot on the edge of downtown and build 600 apartments, plus 420,000 square feet of retail and office space. For good measure, the developer would throw in a 62,000-square-foot YMCA, 36,000 square feet of community space and 1,600 parking spaces.

First to hold up the project was Comptroller John Liu, then the local councilman. He threatened to oppose the plan until developers added more parking. Not until 2010 did Flushing Commons finally win needed City Council approval.

Having cleared that crucial hurdle, Flushing Commons still has gone nowhere. TDC's website still projects a completion date of 2013 or 2014, but that is highly unlikely given that construction is expected to take more than three years.

Even worse, a spokesman for the city's Economic Development Corp., which is selling the lot to the developers, said that TDC has yet to raise enough money to buy the land from the city.

The most recent public update about the project came in July, when TDC Development President Michael Meyer said that traditional funding had dried up and that he was trying to secure loans from Chinese businesses in what is the city's largest Chinese neighborhood.

He and TDC Chief Executive Michael Lee, a native of Taiwan, are also seeking to tap into the federal EB-5 program, which provides a path to green cards for foreigners in exchange for investments of $500,000 or more in development projects.

A spokesman for the EDC declined to say how much funding the developers had raised, but noted that under the original contract they are required to come up with the cash by "this fall," and must begin construction by year's end.

Flushing Commons financing still in doubt

From the Times Ledger:

Financing for large developments has dried up across the United States, so the firm behind Flushing Commons, an $825 million, mixed-use project slated to break ground next year in the heart of downtown Flushing, has turned to Chinese money for help in getting a shovel into the ground.

Since the project cannot move forward until the city approves a financing plan, the company is looking “outside traditional financing methods because those methods are not available,” according to TDC President Mike Meyer.

“Our project is $825 million. That’s a heavy lift,” he said. “Since the financial markets here are not financing ground development in any substantial way, we’re going to have to utilize unconventional forms of financing, such as going to China.”

TDC, a Chinese-American firm with offices in China, is taking a number of steps in hopes of securing Chinese loans, including hosting a delegation of Chinese developers and real estate companies in Flushing, where they will tour Onex Real Estate’s $1 billion Sky View Parc development on College Point Boulevard and share a large dinner at TDC’s Queens Crossing building on Main Street.

TDC, which is currently building a “world trade center” project in Nanjing, China, that is 2.5 times the size of the 800,000-square-foot Flushing Commons, is also pursuing funding through the federal EB-5 visa program, which provides immigrant investors — TDC is looking mostly to Chinese nationals — with a pathway to obtaining green cards for investing $500,000 or more in American projects.

Ignoring tax cheats

From the NY Post:

The city's list of tax breaks for homeowners targets the aged, the disabled, military veterans and members of the clergy.

But add a new category: the greedy.

The city, which admitted it doesn't check whether the requests for property-tax exemptions are legit, has awarded at least 45 homeowners four or more tax breaks on claims that the recipient is a cleric and veteran who is disabled and elderly, a Post review found.

And they get a fifth break, under the School Tax Relief Program (STAR), by claiming the property is their primary residence -- all without any proof they're eligible.

A Bronx homeowner, Holman Young, who claimed five tax exemptions, is not disabled or a clergyman, according to his own sister, Geraldine Maheira, who lives with him at 1692 Weeks Ave.

Maheira, who answered the door at Young's home recently, said her brother -- who was traveling out of the country -- is an Army vet.

The gravy train is conducted by the Department of Finance, which has admitted it grants the annual tax breaks on an honor system and does not ask for any documents before giving the handouts.

In fiscal year 2010, the city shelled out $300 million worth of exemptions to roughly 789,600 homeowners.

City can't afford Brooklyn Bridge Park maintenance

From Crains:

The slim chance that the 85-acre Brooklyn Bridge Park might be completed anytime soon is getting slimmer. A committee responsible for identifying ways to cover the estimated $16 million a year needed to maintain the space faces a deadline in a month, and how it will accomplish the goal is unclear.

“If we don't have a financial model, we won't be able to proceed with construction,” said Regina Myer, president of the Brooklyn Bridge Park Corp., the nonprofit charged with planning, building and maintaining the park.

The city, which assumed control of the project from the state last year, will contribute about $50 million more toward completing the park only if it can reach an agreement with BBPC on a program for self-sustained funding.

The initial plan calls for building six residential properties with a total of as many as 1,300 units, most of them along the edge of the 1.3-mile waterfront park. Residents would pay for the benefit with what amounts to a surcharge, which would help maintain the park at their doorstep.

Why did we take over this extremely expensive project without first having a way to pay for it? Why is the City denying other neighborhoods park space but prioritizing one that they'll never be able to maintain? Sounds like another High Line boondoggle.

SkyView Parc is really Mussed up!

From the Wall Street Journal:

In one of the largest cases of buyers remorse in New York, scores of people who agreed to purchase apartments in a new development in Queens filed suit Monday seeking the return of their deposits.

The suit, filed in federal court in Brooklyn, could throw a wrench into the marketing efforts of Sky View Parc, a huge shopping center and condominium development that is planned to eventually include nearly 1,100 apartments in six towers.

The complex is a few blocks from the heart of the Flushing commercial district. It has been controversial because of its size and the impact it might have on local business and traffic.

When the development was first marketed in 2008, prices ranged from $385,000 for studios to more than $1.2 million for three-bedroom units on a high floor. Some prices have been raised slightly and some trimmed slightly since.

The complaint was filed on behalf of 67 would-be buyers in contracts to buy 41 condos. The complaint said that buyers wanted their money back because they were unable to obtain loans after the "collapse of the mortgage market" and were unable to close.

Their lawsuit said that the developers failed to file a disclosure statement. Such a statement is required in large developments under a federal law enacted in 1968 intended to help protect buyers from fraud in new real-estate subdivisions.

Financing Atlantic Yards

From Brownstoner:

According to Atlantic Yards Report, Ratner's going to be headed out on a dog-and-pony show to China to get a few hundred wealthy Chinese to cough up a million bucks apiece to finance Atlantic Yards. What do they get in return? A green card!

Luxury condos getting FHA help

From NBC:

The federal government may soon come to the rescue of stalled luxury condominiums in Manhattan.

Manhattan luxury condominiums known for posh amenities and high price tags are beginning to apply for Federal Housing Administration backing.

Condominium developers hope to open financing opportunities for their purchasers as well as guarantee a little protection for themselves. Not only will lending institutions be more willing to lend to purchasers with FHA backing, but the FHA will pay the mortgage should a home buyer default.

The FHA loosened the condo rules because of “market conditions,” Lemar Wooley, an agency spokesman told Bloomberg.com

The U.S. Department of Housing and Urban Development relaxed its financing rules in December, allowing the FHA to insure loans on new developments where only 30 percent of the rental units are in contract instead of 50 percent.

“Something has to happen for this product to be marketable,” Jonathan Miller said. “I just find the whole thing ironic that FHA is providing financing for luxury housing.”

Yeah, really. What happened to the free market?

Flushing Commons & Sky View Parc lack financing

From the Neighborhood Retail Alliance:

In last week's WSJ, the paper covered the city council vote on Flushing Commons and got the following interesting quote from an ebullient Mike Myer: "In Flushing, the council approved rezoning for Flushing Commons. The $850 million project includes 600 residential units, 185,000 square feet of offices, 235,000 square feet of retail space, 1,600 underground parking spots and a 1.5-acre public green space. In 2005, co-developers Rockefeller Group Development Corp. and TDC Development Corp. won the bid to build on the city-owned site, and have worked since on rezoning and a plan to compensate businesses that will be affected by construction. "It was a Herculean effort," said TDC President Michael Meyer before the vote. "We've gone through two real-estate cycles…Starting tomorrow, we'll go out and look for financing."

So, let's get this straight. The developer was awarded this bid and got city council approval without any guarantee that the project is financible in this current economic climate-and what happens in case of a default? Has EDC built into the disposition any fail/safe provisions that will allow the city to reclaim the property should TDC be unable to fulfill its obligations in a timely manner? But perhaps, the city planning to convey the property to the developer without any strings attached?

Now Mr. Myer, as clever and slippery a character as we have seen-full of false bonhomie- was asked repeatedly during the ULURP process about his organization's fiscal capabilities. And, according to those at the various hearings on the land use application, the ever shifty realtor did what he does best-he shucked and ducked. But that was land use-and now we are going to have to determine the procedures for disposing of the muni lot property-and questions of financial viability should be front and center.

In addition, there is the further potential that the developer will have its funding stream collapse in the middle of construction-after the parking structure is demolished-leaving only a Robert Moses style hole in the ground. Is the city protected in case of this eventuality? Even more so, are the Union Street and other Flushing merchants going to be indemnified-not by the city-but by the developer should this kind of parking disaster occur?

And what ever happened to the 17 stipulations that CB #7-and the Queens BP promulgated? Well, one thing we know for sure is that they have been disappeared in the course of the land use review. How do these entities feel about being totally ignored-after being used as "supporters" of Flushing Commons?" And, since they will be central to the borough board process, will they be looking to amend the disposition agreement to incorporate some of the stips that were agreed to?

And over at Sky View Parc...

From the NY Post:

The developer of the mam moth, $1 billion-plus Sky View Parc condo-retail complex in downtown Flushing is scrambling to borrow nearly $150 million so it can complete the first phase of the project -- drastically overbudget and behind schedule.

Sky View Parc was conceived as something new in Queens: a luxurious, 1,000-unit residential enclave designed to exploit Flushing's status as a thriving center of Asian and Asian-American life. Residents would enjoy a private elevated park and pool, and shoppers would flock to 795,000 square feet of big-box type stores.

But according to a summary for participants in a senior lenders' meeting on June 16, "total cost overruns" on Sky View Parc, which started work in 2007, were $160,802,000 as of last December -- compared to the original budget for the project's first phase, which a source estimated at $600 million.

Now, the project's general partner, Onex Real Estate Partners, is seeking to restructure a $519.3 million construction loan to extend the term by three years and to borrow an additional $144.6 million.

So far, several lenders have not yet agreed to a restructuring plan by Eurohypo Bank AG and Wells Fargo. While the original loan might have been exhausted, work continues, thanks to equity Onex pumped in -- but long-term restructuring is deemed critical.