Correction, 8 p.m.: Headline adjusted; 5:30 p.m.: Proposal narrative written by Carmody Torrance Sandak & Hennessey.
NORWALK, Conn. –The proposal to restart Wall Street Place “comes at great cost, and notably, little, if any, monetary recovery” to Citibank, documents released Thursday state.
If completed, the modified development would provide 50 or 60 parking spaces to the public, falling short of the 100 required under the current Land Disposition Agreement (LDA) for the property. Citibank would pay the City $22,000 for each space that is short of what is required; the math on that totals $880,000 to $1.2 million. Citibank expects to lose $14 million of the nearly $20 million it has already invested in Wall Street Place, often called “POKO.”
“This is the final and best offer that can be made. Should the proposed development not be accepted the bank will be forced to confront the economic reality of having to sell the asset,” a proposal narrative submitted by the legal firm Carmody Torrance Sandak & Hennessey states. The firm represents Citibank’s proposed redeveloper, a company commonly referred to as “McClutchy” but officially named JHM Group.
“I recently had my staff meet with five highly respected and reputable stakeholders in Norwalk to ask their feedback on the proposal,” Mayor Harry Rilling said in an email. “To a person, they felt the project was good for Norwalk and should move forward.”
The Common Council Planning Committee will consider the proposal at 7 p.m. Tuesday in Council chambers, located in City Hall at 125 East Ave, where JHM representatives will review the plan. This is not a public hearing, but public participation is invited. The difference is that the public will not hear the presentation before being allowed to speak on the topic.
The ‘best offer’
The documents explaining the proposal are in the Council packet available online, thus making the proposal public after months of speculation. Many of the details were made public Thursday by a NancyOnNorwalk story that explained the 100% affordable housing aspect of the proposal.
The sources for that story said that City funding for the project would remain at the previously agreed upon levels; the LDA calls for the City to invest $4 million in infrastructure not just on Wall Street Place phase I but for phases II and III. The proposal is only for phase I, as Citibank does not have control over the phase II and III properties.
Wall Street Place is the stalled development on the corner of Wall and Isaac Streets, a Tyvek-wrapped hulk for more than two years. Citibank’s subsidiary Municipal Holdings LLC took ownership by foreclosing on its $31.9 million construction loan and has been negotiating with the City and Norwalk Redevelopment Agency to come up with what it calls a “carefully conceived, financially feasible, and well-designed project,” just for the partially completed building, phase I of the development.
Proposal highlights are listed in the packet:
- Six stories (same as, using existing building frame)
- 165,339 square feet
- 101 Units
- 10,233 square feet of ground floor commercial space (“street activating uses, as allowed under Zoning”)
- 180-190 parking spaces (140-150 at 17 Isaacs St., 40 onsite)
· 50-60 +/- parking spaces available to the public
· 130 fulfill project zoning requirements
- “Redeveloper will pay the City a $22,000 fee for each parking space short of LDA required 100 public parking spaces
- “As part of the public infrastructure improvements 29 additional on-street spaces will be made available by the City that will not count toward any required development parking”
- 34 units at 40% Area Median income (AMI), renting to those with a maximum income of $43,000-$52,000 a year, depending on family size
- 32 units at 60% AMI (max Income $65,000-$78,000, depending on family size)
- 35 units at 80% AMI (max Income $86,000-$104,000, depending on family size)
Tax Credit Equity
- “Project is contemplated as a 4% Low Income Housing Tax Credit (LIHTC) deal which is anticipated to yield $27.6 Million in equity”
Citibank’s New Investment
- “Citibank will provide an additional $35.3 million in construction financing and $16.9 million of term debt and $27.6 million of new equity in order to complete the project.
- “Citibank anticipates losing roughly $14 million of the nearly $20 million it has invested in the project to date.”
Garden Cinemas ‘would be sold regardless’
Citibank will demolish the Garden Cinemas and build a parking garage on the property, to provide 140-150 of the needed parking spaces.
Garden Cinemas owner Richard Freedman in a June 6 letter to JHM states that the cinemas would be sold no matter what happens.
“Parking has always been a main concern during negotiations,” Rilling wrote. “Unfortunately, acquisition of other parcels made it very challenging to deal with the parking issue.”
Real estate broker Jason Milligan bought phase II and III properties more than a year ago, from owner Richard Olson of POKO Partners. The pair are being sued by the City and Redevelopment Agency over this transaction.
“Municipal Holdings and JHM encountered a significant obstacle in restarting the Phase I development when there was a sudden, unexpected and unauthorized acquisition by a third party of the land that comprised most of the Phase II project site,” the proposal states. “This action seriously compromised the ability to provide adequate parking to support the Phase I development. That problem was partly mitigated when the Garden Cinemas site became available for purchase.”
A ‘sole mandate to reinvest in communities served by Citibank’
The plan was derived from “thoughtful calculations and analysis” by Citibank’s Municipal Holdings, the proposal states.
“Importantly, financing for Wall Street Place was not provided by Citibank’s conventional Real Estate Group, but rather by Citi Community Capital – whose sole mandate is to reinvest in the communities served by Citibank with lending and investments that are specifically targeted to developments that include benefits to low and moderate income residents,” the proposal states.
The proposal implies that Citibank’s reputation is at stake, as it “is actively involved in redevelopment project financings throughout the nation and consistently leads the industry in that sector of finance.”
“It is with that business focus in mind that Citibank remains committed to pursuing a good outcome for the Wall Street Place development. There is no path for the bank to recover the funds it has thus far invested – even the most optimistic proforma indicates a loss of $14 million+ of the $19.5 million invested to date, assuming all goes well from here,” the proposal states.
“Citibank is backing this proposal out of a genuine interest in seeing the Wall Street Place development completed in a way that will benefit the City of Norwalk and its citizens. It is important to note that Citibank and JHM have spent a tremendous amount of time and effort to present a proposal that meets the goals and objectives of the City and its stakeholders,” the proposal states.
‘Our kids cannot afford to live here’
Rilling released this statement:
“The Wall Street Place Project (“POKO”) has impeded the redevelopment and revitalization of Wall Street for over a decade. When I first ran for Mayor in 2013, I committed to the community that I would get this project moving and did. Despite setbacks, I am excited to see this project is once again moving forward.
“The Wall Street area should be a more vibrant downtown and a larger part of Norwalk’s success. To make that happen, we need to finish stalled projects. We also need more people, as this area is one of the least populated Census tracts in the area. Bringing more talented and dynamic people to the Wall Street area will be a win for local businesses and our community.
“We all know the high cost of living in Lower Fairfield County. We know that our kids cannot afford to live here. They move back in with us after school, or, unfortunately, are forced to move away. I am in favor of mixed-income housing in this development. Many jobs in sales, social services, entertainment, education, health care, math, and engineering, fall within the income guidelines for this project. Mixed-income neighborhoods create economic and cultural diversity. They create vibrancy.
“Wall Street Place is a complicated project with unique circumstances. Many people have had ideas of what to do with Wall Street Place but the challenges were tremendous. We’ve been working with Citibank and speaking with stakeholders to find a solution that works for the neighborhood and our City. I invite the public to review the plans with an open mind and share their opinions at various public forums in the coming weeks. I know they will see, as I do, that this project has great potential for Norwalk.”