Updated, Oct. 16: Pdfs added. Updated, 6:29 a.m.: Copy edits.
NORWALK, Conn. – The battle between Citibank and Norwalk over the derelict state of “POKO Phase I” is heading for mediation, and Citibank has been advocating a larger project than originally designed, according to correspondence obtained by NancyOnNorwalk.
A June 1 letter from city officials to Citibank declared the company in default of its agreement because it has missed its deadlines to complete Wall Street Place, a redevelopment project on the former Isaac Street municipal lot planned to include 101 apartments. The company subsequently asked for a 180-day extension, which was refused on Oct. 2. Both parties are advancing the mediation process, Norwalk Communications Manager Joshua Morgan said Thursday.
Citibank has evidenced little attention or investment in restarting construction on Wall Street Place despite initial assurances when “the project as underwritten financially collapsed,” Redevelopment Agency Executive Director Tim Sheehan and Corporation Counsel Mario Coppola wrote to Citibank on Aug. 6. The letter went on to explain that Citibank is instead seeking to build a larger, more complex project using “Phase II” properties, which it doesn’t own.
Citibank and its preferred developer, JHM Group, and the Richman Group, a rental apartment owner that works with JHM, have been pushing a larger strategy for the development of Phases I and II of the Wall Street Place Project, the letter states.
“However, that effort has been ongoing since March of 2017, but to date has not realized an implementable plan. Further, the terms put forward by the Owner relating to additional financial commitments on the part of the City to advance said development are unacceptable to the Public Parties,” Sheehan and Coppola wrote.
Real estate broker Jason Milligan bought Phase II properties from Richard Olson of POKO Partners in May. Citibank in June declined to exercise its right to buy Milligan’s Phase II and Phase III properties, Coppola and Sheehan wrote.
“Meanwhile, the existing structure on the Phase I property remains only partially constructed and has been left to become a significant source of blight on the Wall Street commercial area and a public health and safety concern for the City,” they wrote. “The Public Parties have made the Owner aware of these serious issues of concern at various times during the past year. Unfortunately, the Owner has never provided the Public Parties with a definite plan for resolving these issues of concern nor demonstrated that it is currently taking any action. The JHM Group indicated on a conference call on July 31, 2018 that such proactive action to ‘enclose’ the building would ‘never’ be advanced by the Owner prior to there being an approved development plan, seemingly the one currently favored by the Owner.”
Construction on Wall Street Place stopped in 2016 after POKO Partners principal Ken Olson fell gravely ill and Citibank, issuer of the $31,880,000 construction loan, identified a budget gap, putting the project into default and stopping the pipeline of money.
That gap was $9,853,181, Citibank’s August 2016 default letter to IWSR Owners LLC, a POKO entity, states. Citibank has since taken ownership through a deed-in-lieu transfer, a friendly foreclosure on the construction loan, under Municipal Holdings LLC.
Norwalk on Sept. 18 issued a notice of blight on the property, which gave Citibank/ Municipal Holdings LLC until Oct. 18 to address mold, rot and other issues or face a $100 a day fine.
The Aug. 6 letter demanded “certain information and documentation” within 30 days, including a plan for Phase I that involved only Phase I properties, with a project timeline and no request for no additional city funding, in order to get the 180-day extension. Citibank was also told that it must present a plan to complete the construction of the windows and the façade before inclement weather starts.
That information was not provided, the Oct. 2 letter states, explaining that the 180-day extension was therefore denied and the public parties were requesting mediation before the American Arbitration Association.
Citibank has responded to that request, Assistant to the Mayor Laoise King said Thursday evening, and “We are in the process of finalizing our selection of a mediator, once that is agreed upon a date will be set.”