NORWALK, Conn. – No one is lined up to take over the construction of Wall Street Place, Norwalk Redevelopment Agency Executive Director Tim Sheehan said last week.
“There is a bunch of information out there, I don’t know what is true, what is not true,” Common Council member Doug Hempstead (R-At Large) said at the Planning Committee meeting, beginning to elicit information from Sheehan. “What does Redevelopment know at this time, besides there’s nobody working on it?”
Sheehan first gave his standard line, “There is a project gap in terms of the total project cost that POKO (Partners) has brought forward to Citibank. Citibank is in the process of reviewing that.”
Sheehan progressed to, “What I can tell you, what I know, is that there is a high degree of uncertainty around the numbers that have been presented to date.”
That was a response to Hempstead’s suggestion that the gap is rumored to be between $4 million and $6 million.
The actual budget gap is proprietary information, a matter between POKO and Citibank, Sheehan said.
POKO did not respond to a Friday email from NancyOnNorwalk.
There’s been little to no construction activity at Wall Street Place for a month, Sheehan said.
Citibank has cost estimators examining the line items POKO has identified as associated with its cost gap; Citibank is not allowing POKO to draw down money, except to fund “asset stabilization,” Sheehan said.
The needed “asset stabilization” was the topic of a Thursday meeting between Citibank, POKO and city officials, Sheehan said.
“When you leave materials exposed like that they have a window where they are no longer useful when they have been exposed to the elements. The framing that is there has got a defined life. (Norwalk Chief Building Official) Bill Ireland put that out there as a specific number of days,” Sheehan said. “That is the ‘asset stabilization.’ In order to protect what is there now and the investment to date these are the things that they need to do in order to ensure that the city is satisfied that the materials are not compromised.”
Ireland did not respond to a Friday email.
“They are shuttering the job for now, basically,” Hempstead said.
“No one has said to me, ‘shuttered the job.’ I believe they are still in negotiation on the gap that is remaining,” Sheehan said.
Hempstead suggested that POKO is in default of the Land Disposition Agreement (LDA) for the property.
“It’s clearly in default,” Sheehan said. “… The city could call for default in a variety of ways and corporation counsel is well aware of that.”
POKO sold tax credits on the project and got state bonding, Hempstead said.
“That’s a whole issue that the Connecticut Housing Financing Authority has been dealing with,” Sheehan said. “Obviously because of the timeline and the delay that has a huge impact on credits. I believe that one unit had to be in place by December, according to the credits and that obviously not going to happen.”
Council member John Igneri (D-District E) asked what the likelihood is of another investor coming in to take over the construction of the project.
“That’s highly speculative at this point and Citibank has made that clear, that everyone should have the firm understanding that POKO still owns the property, POKO still is the borrower of the bank and that the bank is working with POKO relative to the gap,” Sheehan said. “So to speculate that there is other developers coming in to complete the project and things like that, that is speculation at this point because Citibank has not advanced that, to that degree.”
If a new developer did come in, it would have to go through a process if it wanted to change the project, similar to that undertaken by General Growth Properties (GGP) when it bought the West Avenue property that had been approved for a housing project and wanted to build a mall, Sheehan said, answering a question from Council member Shannon O’Toole Giandurco (R-District D).
Hempstead suggested that maybe POKO had mislead the city when it submitted a budget and proof of financing, adding, “that was an underground discussion before this thing got started.”
POKO would then “really be in trouble,” Hempstead said, asking if the city had any recourse.
That’s a question for Corporation Counsel, Sheehan said.
“That’s a tough sell because it involved the competency of the bank, too,” Council member Bruce Kimmel (D-At Large) said.
It’s like telling a bank that it would cost $200,000 to build a house and then when it was half done saying would cost $500,000, Hempstead said.
“Everyone knows how I felt from day one on this but this is the last thing I wanted to happen on any project in Norwalk,” Hempstead said. Years ago, there was a building on Connecticut Avenue, behind Utopia, that had stuff dangling off of it, Hempstead said, explaining that it took a threat of demolition to get it taken care of.
“Nobody wants to see what has happened, happen but at the same token I don’t want to see the city in a position where they got so snookered,” Hempstead said.
“The discussions that I have had with Citibank, there has been a degree of commitment on part of bank that project will be completed,” Sheehan said.
Back to the default: the city would have to invoke default and give notice, Sheehan said.
“The city has not provided notice to my knowledge,” Sheehan said. “…. The city invoking a default versus allowing Citibank the time to work with the developer to figure out how Citibank, who is the larger investor into the project and the principal note carrier, to understand how they are going to deal with it, is the preferable path.”
“Sometimes the threat of default sometimes motivates lenders to salvage what they have got and move forward. Doesn’t always work the other way. Sometimes it becomes more a motivation and a subject of negotiation to move things along. It could work the other way,” Hempstead said.
“It could also scare away a potential investor that might come in,” Igneri said.
Sheehan suggested that Council members talk to Corporation Counsel Mario Coppola in an executive session.
Sheehan also said that the Department of Public Works has removed barricades on Isaac Place, opening it to two-way traffic.