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Rilling: POKO extension, if given, would bolster Norwalk’s case in court

Mayor Harry Rilling

Norwalk Mayor Harry Rilling speaks to Common Council Planning Committee members last week.

NORWALK, Conn. – A 150-day extension for POKO Partners in its long-delayed Wall Street Place development would serve Norwalk well if the matter goes to court, Mayor Harry Rilling said.

Saying no to giving POKO a 150-day extension would result in 180 days of arbitration, Common Council members said. There’s ample evidence POKO developer Ken Olson has faced challenging hardships in his effort to live up to the deadlines set in the 10-year-old Land Disposition Agreement (LDA) with Norwalk, Rilling said. An extension is a good-faith effort on the part of the city – if Olson can’t come through in 150 days, the city will have a much stronger case when the matter goes to court, Rilling said.

The extension is on the agenda at both Tuesday’s Common Council meeting and Tuesday’s Norwalk Redevelopment Agency (RDA) meeting. Norwalk is out of time for discussion, as the LDA expires Sept. 1. It’s time to either say no and deal with the inevitable arbitration, or give POKO 150 days to meet the first of several deadlines laid out in the extension written by the RDA.

Council members voted 4 to 3 Thursday to advance the extension request to the full Council, with Republicans voting against it and Democrats voting for it. Planning Committee Chairman Doug Hempstead (R-At Large) said he planned to send it to the council either way. “It’s too big of an issue in my eyes for just one committee to be able to control this,” Hempstead said.

Hempstead is no fan.

“There have been extensions asked before, requested before, and given before,” Hempstead said. “The problem is the extensions were always asked, as in this one, at the very last minute, they wait until the nth hour, feel the pressure and then there is the question knocking on the door … It’s just been a history of saying things but not doing things. Presenting plans at the last minute but they’re not quite the plans and never really going forward. So my faith in the ability of this developer to go forward with this project – I don’t have it.”

Hempstead had another bone to chew – Olson said at the July Planning Committee meeting that he expected a preliminary credit commitment from Citibank on July 31. The only thing approaching a letter of commitment the committee had was one written by RDA Executive Director Tim Sheehan, which is attached below.

Citibank officials said, in a meeting with Rilling and Sheehan, that they don’t provide letters of commitment, according to Sheehan. The June 5 letter that had been provided by POKO was a “restated term sheet and nothing more,” Sheehan quoted a Citibank official as saying. However, bank officials said, 93 percent of loan applications are approved as they jump through the final hoops. The major problem would be if the city or state backed out, Citibank officials told Sheehan and Rilling. If the loan is approved, it will be within the 150-day threshold in the proposed extension, Sheehan said.

“Then we have the new memo that says we are going to kind of start the process but we won’t have that until October,” Hempstead said. “I am just saying I am not in favor of extending this just because I have been on enough votes extending this down the process, and by the way this is his second demolition permit, not his first. I just don’t have confidence on the deliverables just because of how much money has had to come just between the tax credits and state subsidies to make this work and I think there is still a significant gap that is going to have to be covered.”

But Rilling referred to the perception given to a judge in a possible court case.

“If we refuse to give him the extension now they’re going to look at ‘well, the delay for the zoning appeal, the 2008 recession, all these things impacted his ability to perform.’ Now we’re giving him, in good times with financing seemingly in place, we’re giving him 150 days more,” Rilling said. “The court is going to look at that fact as well, saying, ‘You guys, you did everything you could to allow that to move forward.’ They’ll look at the actions of the parties and say, ‘You tried. He still defaulted.’ So I think we would be in a much better place 150 days from now than we are now.”

Councilman Bruce Kimmel (D-At Large) said the city had botched a suit concerning an HVAC system at Silvermine Elementary School.

“We didn’t have our proper documentation and our case was very weak even though we had lots of anecdotal evidence … we couldn’t win in court because we hadn’t prepared,” Kimmel said. “…We find ourselves in a situation now where, if we were to say no, our chances of prevailing in the arbitration process are pretty low because he has a rather strong case that can be made.”

He was referring to the two-year initial delay in getting the project going due to a court challenge, and the 2008 recession. “I’m thinking if I’m a lawyer for those guys I am in pretty good shape here. That’s the problem. We don’t want to be in that position,” Kimmel said.

Kimmel said there are elements of the LDA that are embarrassing. He referred to a meeting two years ago.

“I thought it was a joke that you could equate construction and demolition into being the same thing,” Kimmel said. “When we delved into what the LDA actually said I was wrong. It wasn’t clearly delineated. I am wondering in my mind ‘my gosh what happened.’ I felt foolish.”

Kimmel did not vote on the LDA. He said that in the future more care needs to be taken.

Councilwoman Shannon O’Toole Giandurco (R-District D) asked Sheehan if the remediation was under way in POKO’s Wall Street property. Sheehan said the asbestos was being dealt with. POKO is close to pulling a demolition permit, he said.

Majority Leader Jerry Petrini (R-District D) is not on the committee and had no vote, but attended to voice support for the extension. Petrini said that as a lifelong Norwalker and a Wall Street business owner, he has been waiting a long time for Wall Street to turn around.

“I think we have an opportunity here and I am also well aware of all the delays, all the put-offs for a lot of reasons, all the council members here can say enough is enough but with that being said, at this stage, to continue with POKO we need an extension,” Petrini said. “… Give him a chance to start – to start – what he started so many years ago.”

Wall Street is the heart of Norwalk, he said. Olson has faced many hurdles, and there are plenty of safeguards written into the extension, he said.

“It will give you a very clear indication on whether or not the gentleman is for real,” Petrini said. “I think it would be a shame if this one last chance was not extended because I really do believe this will be the quickest way to get Wall Street started, because without Wall Street the city has nothing.”

Sheehan to Planning Committee

POKO extension letter005

 

4 comments

Don't Panic August 12, 2014 at 8:17 am

And here we are, with the developer asking for another extension, as predicted.
.
Falling back on legal optics is really disappointing. The City should have begun shoring up its legal position the day after the last extension was granted, knowing that this was a possibility.
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Mayor Rilling should have also been advised that its possible that the court could view the history of extensions as a waiver of its right to enforce.
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I know the city took this turkey on before Mr. Rilling got elected, but its time to put it in the oven and turn up the heat, before it really starts to stink.

Bruce Kimmel August 12, 2014 at 10:22 am

To elaborate a bit on my remarks above: The city has recognized that the existing Land Disposition Agreement with POKO, which goes back to 2007, was poorly written; that it did not have hard and fast deadlines that had to be met. Because of that, we would probably not prevail if we declared POKO in default (for reasons discussed above) and went into mediation/arbitration. The extension we are voting on tonight, which has been signed by POKO, delineates a series of thresholds that the developer must meet. If they are not met, the city could pull the plug, declare default, and have a much better chance to win any arbitration.

Taxpayer Fatigue August 12, 2014 at 11:53 am

Mr. Kimmel hits the nail on the head: “The city has recognized that the existing Land Disposition Agreement with POKO, which goes back to 2007, was poorly written; that it did not have hard and fast deadlines that had to be met.” So, who is being held accountable for the “poorly written” agreement? Redevelopment staff? Redevelopment’s lawyers – Depanfilis & Vallerie? And don’t forget the “poorly written” agreement for 95/7 that gave away three public streets with no ability to get them back, which is why we are now getting a mall instead of mixed used development at the largest undeveloped urban site in Fairfield County. Who wrote the agreements? How are they being held accountable for squandering the public’s land and future developments? We are 40 miles away from Manhattan, the most valuable real estate in the country, which is filled with thousands of sharp land use and development attorneys who would never let deals like this happen. Let’s get the expertise we need before doing anymore deals. Have we had some smarter attorneys even look at this 150 day extension or is it full of more loopholes and pitfalls for the taxpayers of Norwalk?

peter parker August 12, 2014 at 12:05 pm

Blah, blah, blah… More of the same… It is a joke. Time to change our governing officials,or time to take flight. Simply a choice of one or the other. This is a do nothing government. Very sad.

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