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Rilling declares Milligan acquisition ‘disappointing;’ Norwalk considering litigation

The parking lot purchased by Jason Milligan, at 23 Isaac St., on Friday.

A Google image of the 23 Isaac St. parking lot, taken in August.

NORWALK, Conn. — Developer Jason Milligan has purchased “POKO Phase II,” a group of Wall Street buildings approved for replacement with 99 apartments, commercial space, and parking.

He indicated that he doesn’t consider that a good plan under the circumstances, calling Phase I a “complete failure.”

Norwalk officials in a statement called Milligan’s purchase of the three Isaac Street properties “surprising” and “disappointing,” declaring that it proceeded in violation of the Land Disposition Agreement signed by the City and POKO Partners, the original developer. Mayor Harry Rilling said litigation is possible and indicated that he’s standing by the requirements for the approved Wall Street Place development.

Milligan on May 18 announced that he had contracts to purchase 83 and 97 Wall St., and 21, 23 and 31 Isaac St. The Wall Street contracts are contingent on the Zoning Commission changing the regulations for the properties, the two Fairfield County Bank buildings. The Isaac Street property sales would go through if Citibank didn’t make a better offer by May 30, he said.

Milligan on Friday said the sales for the Isaac Street properties had closed, for a total purchase price of $5.2 million. A press release from Norwalk Communications Manager Joshua Morgan confirmed the sales.

Milligan said that he had already removed the fencing that was blocking usage of part of the Isaacs Street parking lot and removed the construction materials that were stored inside the fence. NancyOnNorwalk witnessed two drivers arrive at the now-open parking area, pause to study the lot, smile and then drive through to the Leonard Street driveway on the other side.

That parking area has been closed since POKO Partners began its ill-fated construction on Wall Street Place Phase I, construction that halted nearly two years ago. Citibank in early 2017 foreclosed on its $31.9 million construction loan to POKO for Phase I, with the intention of restarting construction “as soon as possible and to retain previous capital commitments,” Redevelopment Agency Executive Director Tim Sheehan said in September.

POKO’s Tyvek-wrapped half-building is a source of frustration to Norwalkers, with Milligan and Wall Street stakeholders decrying the stalled project, the loss of parking, and a non-disclosure agreement signed by the city in its negotiations with Citibank to restart the project.

On Friday evening, Milligan wrote:

“POKO Phase I is a complete failure. On the way down the tubes the zoning commission approved like 40 parking spaces to be moved from phase I to phase II. Phase I is horribly short on parking!

 

“It is supposed to provide 100 public parking spaces. How do they plan on doing that? Let’s remember that the city basically gave the large public parking lot to the developer for next to nothing!

 

“I think that is premature to consider any part of phase II of a completely failed project when phase I is in such horrible condition.”

 

 

The property at 31 Isaac St., now owned by Jason Milligan.

“I want to fix up the buildings that are worth saving and I want to have tenants in there,” Milligan said in a phone conversation, adding that he has people who are interested in renting from him.

Morgan’s press release offered the City’s position on Milligan’s purchase:

 

“On Friday June 1, the City of Norwalk and the Redevelopment Agency learned that an entity controlled by Jason Milligan has become the owner of Phase Two of the Wall Street Place development, often referred to as Poko. A Land Disposition Agreement was put in place more than 10 years ago requiring that the ownership of the POKO property could not be transferred unless and until the proposed transfer was first approved by the Redevelopment Agency to ensure any future owner has the capability to complete the project per the requirements of the Land Disposition Agreement. The purpose of the agreement is to ensure the pitfalls that have plagued this development for years do not happen again. When the City and Redevelopment Agency found out about the potential sale, both the seller (POKO) and the buyer (Mr. Milligan) were reminded that the property could not be sold unless and until the transfer of ownership was approved by the Redevelopment Agency, and that an unauthorized transfer of the property would result in a breach of the City’s and Redevelopment Agency’s rights under the Land Disposition Agreement and the City and Redevelopment Agency would be forced to initiate legal action.”

 

“It was – and continues to be – my hope to see the Wall Street Place project completed,” Rilling is quoted as saying in the release. “I know residents and business owners are not happy with the lack of progress – and I share in their frustration. It’s disappointing the property owner would proceed knowingly in direct violation of the agreement, as he received notice of the Land Disposition Agreement transfer requirements again on May 25.”

 

The “objection letter” provided by Morgan, from Attorney Aviva Yakren of Sidley Austin LLP wrting on behalf of Citibank to Attorney Thomas Katon of Susman, Duffy and Segaloff, P.C., does not list Milligan as one of the recipients. Rich Olson of POKO is a recipient.

Objection to Right of First Refusal 05302018

“I am not a party to any agreement with the redevelopment agency!” Milligan wrote in an email. “And I never received any documentation about this transaction from the Redevelopment Agency! Ever! They may have sent documents to Poko, but I never received anything from them until after I closed.”

 

Morgan’s press release quotes Rilling as saying:

 

“The city is willing to work with any property owner of Phase One and Phase Two, as long as it is within the bounds of the agreement. To ensure these contractual obligations are not disregarded we are considering all of our options – including litigation. This is not personal, as any party who sought to buy this property is bound to this agreement.

 

“This development is key to bringing Wall Street back to prominence. That is why any future plans need to be thoughtful, purposeful, and realistic – and not made in haste without careful consideration. It does not matter who ultimately brings this project across the finish line. What is truly important is that all parties work together to realize a solution that is in the best interest of our residents.”

 

Milligan was recently the target of a lawsuit filed by the Norwalk Public Library Board of Trustees, appealing a Zoning approval he won for apartments on property he owns next to the library, on Mott Avenue. The lawsuit was settled when the city agreed to pay Milligan $460,000 for a six-year purchase option for that property, and the space is now utilized for library parking. Milligan said recently in a comment on NancyOnNorwalk that he did not profit on this deal, as it was “at best a reset to zero” after years of effort and investment. If the city bought the property he would make money, he said, calling that eventuality “unlikely” because he would prefer to collaborate with the city.  He characterized the option price as “high by design” to encourage that result.

Morgan’s press release quotes Sheehan as saying:

“This came as a surprise, as all parties were keenly aware of the requirements of the Land Disposition Agreement. Poko knew any transfer of the property without Agency consent would be a violation of this agreement. This agreement was put in place to protect Norwalk residents and to enhance the quality of life on Wall Street. We are eager to hear what the plans are for this property, as it must be developed in a manner consistent with the agreement. Our goal has always been to grow Wall Street into an active and vibrant area for our community and we hope that happens.”

 

A 2007 rendering of “POKO Phase II.”

Milligan said the city’s reaction is disappointing because he is ready to work with them. His plan for his properties is to think about what the best plan would be.

“Do we have to build all new buildings? Do people want that? They don’t,” he said, referring to “me too” developments like Waypointe.

That area has a “cool vibe” with artistic people around, and should be a “big music scene and arts scene,” he said. “Let the cool people be there, everyone else will come… let the cool people be cool. They are awesome.”

On Friday evening, Milligan released this statement:

“I like and respect Mayor Rilling, and I would like to give him time to digest what has happened. I very much hope to work with him to find solutions for Wall St that are a benefit to the community and the city. I hope that the more aggressive members of his staff can be kept at bay. Lawsuits are rarely a good use of tax payer money, and they take a long time. It is disappointing that is the initial reaction.

 

“POKO is a failure! Everyone should recognize that by now. Stop trying to resurrect it. Time to chart a new course. POKO was not Mayor Rilling’s idea and he does not deserve the blame. It was dreamed up long before he became Mayor.

 

“He does own the decisions he has made and continues to make, and he can be responsible for helping solve it.

 

“Signing a non disclosure agreement so the city can hide from the public was a bad decision. How can a city both comply with Freedom of Information laws and at the same time be bound not to disclose any discussions? Thankfully the NDA has expired.

 

“Harry has my number. Hopefully soon he will be ready to talk, and hopefully we can start making some good decisions.”

22 comments

Jlightfield June 2, 2018 at 6:00 am

So there you have it, the Redevelopment Agency has stated it would rather a failed project keep failing. Ten years of inaction, stagnant development instead of encouraging new energy. If the Agency had done its job, it wouldn’t have approved a crappy contract that gave away the Issac Street Parking lot for a $1 with no recourse when things went sour.

And here’s the irony, Milligan just restored access to parking despite being stymied by the City on Mott street.

Lisa Brinton Thomson June 2, 2018 at 8:18 am

One more thing…

It seems city hall is only happy if they are 1) giving away land 2) overpaying for land 3) issuing tax credits for land or 4) involved in a lawsuit about land. Just letting free enterprise work – doesn’t factor into the equation these days.

carol June 2, 2018 at 11:04 am

another brilliant move by the city,Mr.Milligan has the means and desire to make wall street better but,redevelopment will always try to stop something good. Come on Mayor Rilling lets be progressive and get this done with a willing partner.NOT THE CITY AND REDEVELOPMENT.

Patrick Cooper June 2, 2018 at 11:22 am

Something stinks here. Riddle me this batman – why does our mayor & the redevelopment agency consider “private” development a “disappointment”? POKO has been, and continues to be – a failure. The details are kept from the stakeholders – the taxpayers who funded the giveaways (oh where oh where is the $5 million?) – through a questionable NDA. The one Harry say’s he was reluctant to sign. Does anyone believe that? Anyone?

This is just another day – just another bad land use decision on the part of our mayor, his legal support, and Tim Sheehan. They are running a private club for cronies – and apparently, Jason hasn’t passed the blood oath loyalty pledge where the shady side of our townies is kept in the vault. You know – RICO and all that stuff.

In short: we have a private developer who wishes to use private funds to invest and develop a part of our city that truly needs it – and our mayor and his sycophants immediately want to stop it – because, {…} Disgraceful.

Jason – you should simply promise to underwrite the mayors ball – and you’ll be set.
Edited to remove an instance of ascribing motives without proof, a violation of the comments policy.

Bujji June 2, 2018 at 2:51 pm

You know why this is disappointing for our Mayor? Because the Mayor didn’t get to give it to one of his preferred developer buddies/cronies. How about we give Milligan a chance first? It can’t any worse than what we currently have there! Can any long time local really recall such failure as we have with the POKO project?

And yes – what about that 5 million!?!?

Diane Lauricella June 2, 2018 at 2:54 pm

Mr. Milligan appears to be a doer, not a talker. I hope City can work out a compromise.

The time has come to take a look at what can be modified immediately without Charter Change concerning Redevelopment Agency relationship to other existing City entities.
Collectively these entities could/should address this Poko situation more assertively: don’t forget that the the Council Planning Committee and the Planning Commission could have and should have a much bigger influence to avoid what happened…including previous administrations.

Can the Council Planning Committee and Planning Commission have a joint meeting in front of Norwalk citizens without going into Executive Session, and include the following agenda items:

1. Transfering certain Redevelopment Agency responsibilities to Planning and Zoning Department, Planning Commission and Council Planning Committee
2. Expanding Council Planning Committee oversight for ENTIRE City with P&Z staffing included
3. Poko Project: Phase I
4. Poko Project Phase II

This would move things along…

Hugh Sling June 2, 2018 at 3:27 pm

Yes, a private club, and we’re not in it. We just pay the dues for it. City government bending over in the service of unelected agencies. Just like on TV, except here the bad guys win in the end every time. Next election they all need to be Kicked out.

Rick June 2, 2018 at 3:43 pm

Thank you Jason , for me the jury was still out on your plans or motive,

I’m in Ill bring a weak unorganized militia for a support rally maybe burgers and dogs but don’t want you to get whacked by the health board now that they have to their job.

Now the wall st gang I trust is supportive Im not a card player but when you have a good hand in Norwalk sometimes it best to wait before public opinion .

Redevelopment Agency has a few ongoing issues that have brought the agency to the fore-front of conversation in South Norwalk on issues that should of never of taken on without professional’s in field that would over see money the agency is handling.

Just drove by a wall street pizza place ringed with emergency vehicles sitting in traffic thinking anything you do would be a plus the damage to surface utilities is rather significant, concerning ,even more if it just happened all at once.

a favor . if there is anything you can do for those who make The Treasure house so rewarding please do , we saw no compassion from any of those who cut the ribbon on the parking garage.

I like Rilling as well but not as mayor.

U.S. Blues June 2, 2018 at 5:41 pm

Harry, Harry, Harry…just stop. Let it go. We all get it, your nose is out of joint. You’ve been shown up by someone smarter with a plan.
Just try and do the right thing and stop wasting our freakin’ money. You have done enough damage to this city it’s absolutely disgusting.
Just.
Stop.

Mitch Adis June 2, 2018 at 5:58 pm

The fact that the Mayor is disappointed means this is good Norwalk. Hurray for Jason!

Karl June 2, 2018 at 7:01 pm

Could someone please tell me when this whole Poko fisco is going to be investigated at a criminal level ????? The taxpayers of Norwalk need some answers ! It is just a complete joke !!!!

Danna DiElsi June 3, 2018 at 2:18 pm

As a native Norwalker and business owner on Main Street for 20 years I find it extremely frustrating that after 10 years The Poko project has turned out to be such disaster.

Meeting after meeting..contracts, rules…Norwalk seems to be its own worst enemy…I can remember a vibrant Wall Street with many great shops it was a bustling place at one time. How many more years of ridiculous excuses???

I recently met Jason Milligan at the Wall Street Association neighborhood meetings. I was instantly impressed with his enthusiastic and well thought out plans to bring back our town!!!
He has a plan and unlike our present administration at City Hall has an agenda and wants this to happen quickly ..Time is not on our side. Its time to pick up the ball and run with it!!!!! Jason Milligan is the man for the job!!! Let the person who knows how to get the job done do it!!!

Travis Simms June 3, 2018 at 6:16 pm

I think everyone is ready for the betterment of Wall Street and waiting for the show to get on the road. No offense to Mr. Milligan or Mayor Rilling because I’m sure this can’t be the case, but it appears that Norwalk is for sale to the highest bidder due to the fact that there is no comprehensive plan in place. Norwalk Tomorrow and the POCD meetings across the City are a start, but will it be too late for community-suggested plans to come to fruition when we have situations like this? Redevelopment, Planning & Zoning, and Land Use & Building Management should begin planning together to create the Wall Street community that Norwalk wants until a City planner or a solid partner, private (Milligan) or otherwise, is in place to help the City overall. Is Smart Growth an option?

Nancy McGuire June 4, 2018 at 8:50 am

I am so glad to see a local business man with an interest in Wall Street buying these properties. Some of the property owners along the street are out-of-towners who have used the buildings for investment placeholders. For them, managing tenants would be too much work.

We have begun to see more people living life on the street. Younger people sprinting around the blocks as they cross train at Kong; men hanging out at their barber shops after a long week of work; neighbors sitting outside enjoying their lattes at Cafe Aroma, and limber athletes taking an hour out of their day to settle down into Yoga. Best of all, is the live music and entertainment in the growing number of restaurants and clubs. I am so glad to be a part of this progress!

Bill NIghtingale June 4, 2018 at 8:53 am

“Land Disposition Agreement was put in place more than 10 years ago requiring that the ownership of the POKO property could not be transferred unless and until the proposed transfer was first approved by the Redevelopment Agency to ensure any future owner has the capability to complete the project per the requirements of the Land Disposition Agreement.”

The above quote is so deeply disturbing given that the Redevelopment Agency is perhaps the most unqualified entity to perform credit analysis on project completion risk. They overlooked (and covered up) many red flags on Poko. The Redevelopment Agency needs to be abolished before making any further decisions on behalf of Norwalk.

Michael McGuire June 4, 2018 at 10:38 am

I can understand, and even applaud, the Redevelopment Agency’s desire to oversee and create a better environment for Norwalk and the Wall Street area. After all who would not want to make the Wall Street area a thriving downtown?

However, I don’t believe Redevelopment would bring about the best results. Why? Two main reasons. One- I don’t think Redevelopment has a strong enough understanding of commercial real estate fundamentals to know what the right questions to be asking are regarding redevelopment – hence all the costly studies. And, Two- their world view is one of government intervention to bring about “revitalization”. Combine the two and you get things like POKO.

Personally, I believe this project is not essential at all in bringing Wall Street back to prominence. How does an oversized, poorly designed housing project with 40 percent affordable housing bring back prominence? I’ve not seen that in my 35+ year’s in commercial real estate. Can Redevelopment or the City provide proof of this?

How about this plan (this is one suggestion among a whole lot of available options).

Cut out the 40% social do good in the POKO project to a market normal 10%.

Sell off the 1-5 floors as a separate entity and make the parking below a City Asset and manage it as such – use the rainy day fund to install the parking system. Allow the residents to choose parking at YD garage to the automated garage – between the two options you have way more than enough spaces.

Focus on building a train station at the Mechanic Street lot which, by its very presence, creates a significant increase in the value of the POKO site, maybe enough to satisfy Citibank so that they would sell for a reasonable return to them (Citibank).

Leave Milligan alone to do his thing. Refocus Redevelopment to what they do best – small projects (15-20 units and less), not major developments. Focus government on making it reasonable for developers to work in Norwalk.

The above plan of action would have a high probability of revitalizing Wall Street and provide significant growth to the grand list.

Al Bore June 4, 2018 at 1:23 pm

Keep all of Norwalk’s city government out of it, let Mr Milligan handle it and it will be great for all of Norwalk.

A Wall Street Business Owner June 4, 2018 at 8:03 pm

Ultimately free enterprise has always had a history of sorting itself out. However, I am one to recognize the immense amount of public funding that has gone towards the POKO project and can understand where the Town of Norwalk would want to protect it’s investment. However, hindering the ongoing development of any of the projects on Wall Street in order to protect 100% of its investment is asinine considering the immense losses already experienced by almost every party that has been involved with the project.

The fact that the project remains undeveloped hardly has to do with lack of interest but instead the amount of red tape surrounding the entire POKO project (POKO 1 specifically due to certain elements related to subsidized housing allotment). Any developer taking over POKO 1 would be beholden to either those same subsidized housing restrictions or have to refund the entire public investment (not a small amount of money).

What Town Hall has always lacked in creativity it more than makes up for it with bureaucratic red tape. Why the town does not make an agreement with a future purchaser in which the funds can be repaid over time contingent on units leased or sold is beyond me.

What I appreciate about Mr. Milligan is his view for the Wall Street area – although, to be fair – it is an investment in which he hopes to recoup and then more so. Perhaps the town is afraid that the elements of private investment would detract from the nature of the Wall Street area; businesses without walk by traffic, crime, and a garage that looks pretty at night when the LED lights are turned on.

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