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POKO’s status in doubt; Council members say ‘that’s it’

Norwalk Planning Committee 15-0205 020

Norwalk Councilman Bruce Kimmel (D-At Large), left, and Planning Committee Chairman Doug Hempstead (R-At Large) end a long meeting Thursday with thoughts about POKO Partners’ Wall Street Place.

 

NORWALK, Conn. – If POKO Partners has gotten the construction loan it needs for Wall Street Place in time for the deadline laid out last summer, Norwalk Common Council members and the Norwalk Redevelopment Agency do not know it.

At Thursday’s Planning Committee meeting, Council members said they believe POKO is in default of the terms of the extension to the Land Disposition Agreement that was granted in August. POKO is required to show proof of financing within 150 days of the extension, and the last update received by the Redevelopment Agency was on Nov. 30.

This is murky, though – not only are Council members not sure when the 150-day mark is, Mayor Harry Rilling last week said he believed POKO had the financing. Rilling was expecting to have a meeting with POKO this week.

Redevelopment Agency Executive Director Tim Sheehan said in a Tuesday email to NancyOnNorwalk that he expected to meet with POKO this week, but on Wednesday RDA Senior Project Manager Susan Sweitzer said Sheehan was out of town.

Sheehan has said at multiple meetings that he believed the 150-day deadline fell on Jan. 30.

“I am pretty sure they are moving forward. I don’t know if they provided proof yet but I know that Tim and the law department are working on it,” Rilling said on Jan. 30.

Then he said he is “relatively sure.”

“I don’t see them not moving forward, especially when he applied for foundation permit and all of that. … I think everybody is cautiously optimistic,” Rilling said.

On Jan. 21, POKO won the Zoning Commission’s approval for an amended design for the development.

Council members on Thursday, in a meeting staffed by Sweitzer, said that there was nothing to be done – POKO is in default.

“I have had one opinion that said we do nothing because he can’t do anything so it’s done. He has not provided the material. There is nothing to do because he has already violated the agreement,” Planning Committee Chairman Doug Hempstead (R-At Large) said.

Hempstead equivocated, saying that he wasn’t sure about the exact date of the 150-day deadline because he didn’t know when the agreement was signed. Councilman Bruce Kimmel (D-At Large) said that if it is 150 days after the vote to approve the extension, POKO has missed it.

“Great. Two years arbitration,” Councilman John Kydes (D-District C) said.

“If (the deadline) passes and we do not get a request for an extension, that’s it,” Kimmel said. “Unless we were to get a request for an extension with mitigating circumstances, which he would have to explain, and then our law department would have to look at it.”

“It still would take a vote of the Council to approve an extension, and what I heard last time, nobody had the stomach for that,” Hempstead said.

Council President Jerry Petrini (R-District D) said last week that he’d be reluctant to vote for an extension.

“I hope he’s got all his eyes dotted and Ts crossed because I made a promise that I was not going to vote for another extension. If you know anything about me … I make a promise, I don’t go back on it,” Petrini said.

Councilman Rich Bonenfant (R-At Large) said at Thursday’s meeting that he wanted to get something on the record, something that the Council members have said privately.

“We have to stop conveying land over the paperwork and tie it to actual construction because we are looking at two different projects here, getting burned in two different ways,” Bonenfant said.

He was referred to Norwalk’s other famous LDA, the one for Reed Putnam Urban Redevelopment Plan parcels 1, 2 and 4, otherwise known as 95/7. Norwalk approved a mixed use development for the property but Spinnaker Partners sold it to General Growth Properties, a mall developer. Norwalk is negotiating the terms under which GGP might be allowed to build a mall on the land.

Norwalk granted POKO ownership of a Wall Street parking lot when that LDA was signed.

“We gave away things and one person wants to change the scope of the project, and another person owns a parking lot that he didn’t have to build,” Bonenfant said. “Land shouldn’t be conveyed until there is actual construction.”

21 comments

John Hamlin February 6, 2015 at 7:31 am

Something this important to the city and our so-called leaders don’t have a clue what’s going on. And no one is accountable. Is there any better argument for serious charter reform (as opposed to reform to keep clueless, dysfunctional politicians in office longer)?

Just another view from a Norwalk resident February 6, 2015 at 8:46 am

“… the Council Members aren’t sure when the 150 day mark is” Really?

This tells me these Council Members don’t know how to run the city. Come on Council Members, you have let the Poko development drag out far too long. If it’s not apparent to you, it is to this taxpayer and voter that Poko does not have the ability to fulfill its part of the LDA. The time has come and gone for the City to move on to find a developer who can complete this project.

This is about the competence of the Common Council and mayor and not about charter reform and extending the terms of our elected officials. Their “accountability” is at the voting booth every two years.

jlightfield February 6, 2015 at 8:59 am

To be fair to the council committee, the Executive Director of the Redevelooment Agency was not there to answer the question, another staff member was there but it privy to the status.

The question of when the 150 days centered on whether the count came from the vote at the committee or an execution agreement in the extension.

There was evident frustration clearly, but it was based on a lack of information. In an ideal world a status report for the committee should be provided, but maybe that’s just too corporate.

Oldtimer February 6, 2015 at 11:16 am

Hard to believe council does not have the exact date the 150 day period started and ends. Hempstead is smarter than that. I would think he would have spoken to corporation counsel during the week, so he would have the info with him when the council met. This sounds like they think POKO has gotten a lot of money, and some permits, but is not ready to start construction. Not impossible, but highly unlikely. Why wasn’t somebody from POKO there ?

Michael McGuire February 6, 2015 at 11:22 am

Norwalk only has Norwalk to blame for this one. By insisting that this project provide 30% plus of social-do-good, then requiring that it contain all the parking on site via an underground parking garage it was doubtful this would get off the ground, particularly post 2008.

If the City had competent, pro-active planning (which it doesn’t) it would have been relatively easy to determine if this project could be successful.

A competent planner would have told the council this project has less than a 10% chance of success as designed. Then a pro-active planner could have pushed the CC to revise the LDA based on the fact that this is not going to work. And hey, by the way, why don’t we use the grossly underutilized Yankee Doodle garage for the parking requirement.

What really troubles me is that we, the City, still don’t know. The City should have insisted that a City representative sit at the table with POKO, as POKO’s partner, in every bank negotiating meeting/e-mail/etc. This way we would know where we stand.

Prior to our City tossing out POKO, finding a new developer, and revamping this plan I would hope the CC would replace the Planning & Zoning Director with someone with the skill sets necessary to protect the interests of the Norwalk Taxpayer.

The Planning & Zoning Director needs to be a qualified planner with the skill sets to proactively determine the highest and best use, and provide the CC with guidance, cost-benefit studies, likely outcomes etc. We don’t have that now and as Bruce Kimmel stated he votes major projects by “closing my eyes and hope for the best (paraphrase)”.

We don’t need high priced consulting firms. You need a knowledgeable Planning & Zoning Director with these skill sets.

Now for the next question – how long will it take to revamp this project and get a new developer in place? Oh, that’s right, we don’t know because we have not PLANNED for this contingency.

Has anyone considered tearing up the LDA, fast tracking a revision process on this deal and getting POKO to place where the project can be developed? This might be the best avenue to pursue.

Recommendations –

1. Drop the social do good to 10% as is the City’s norm.

2. Revamp the project to use the underutilized YD garage (use all your assets).

3. And Partner with POKO every step of the way.

4. Finally – take your lumps politically since you created the mess.

LWitherspoon February 6, 2015 at 11:42 am

Council members are volunteers, nearly all of whom have full-time day jobs. I can forgive Council members for not thinking to ask about some detail in advance of a meeting. Mayor Rilling, on the other hand, is a full-time mayor supported daily by a staff of full-time city employees. Our mayor is certainly adept at accepting credit for redevelopment projects, much like a rooster taking credit for the sunrise. Yet at Thursday’s meeting, the only person who seemed to know POKO’s deadline was Nancy Chapman.

John Hamlin February 6, 2015 at 12:12 pm

@LWitherspoon — so these volunteers on the Council are responsible for running the city — no wonder nothing gets done — excuse them because they have day jobs, sure, but change reform the charter so we have a strong mayor/city manager or some other FUNCTIONAL form of government. Unless the goal is to keep the status quo and make sure nothing happens.

Taxpayer Fatigue February 6, 2015 at 12:22 pm

I don’t think it is simply a matter of the city “finding another developer” and tossing POKO out. POKO owns the land – the City gave the parking lot to them and the rest of the land POKO bought. It’s easy to say throw them out, but the alternative, which it sounds like is going to happen, is years of litigation over the parking lot, and we all get to look at a hole in the ground until POKO decides to sell or build something else. The City could take the land by eminent domain, but I don’t think we have a spare few million dollars lying around to do that with.

What is shocking is that the same people that put this lousy deal together on behalf of the city, the Redevelopment Agency, is still staffed with all the same people, and still has the same mediocre law firm that put the contracts in place that gave our land away. All the same players that did the same thing with the land we gave to Spinnaker for 95/7, with no strings attached.

Big Tex February 6, 2015 at 12:37 pm

Councilman Kimmel is onto something here, “Norwalk needs better qualified elected officials.” How unsettling is it that the same elected leaders are being hood winked into building more redundant retail in the form of a shopping mall with the least amount of due diligence?

Incompetence should be no excuse. Any major projects or proposed development should be paused until these deficiencies are corrected with individuals who have the right skill sets to tackle these issues.

Great job NoN for reporting the many dysfunctions in city government!

cc-rider February 6, 2015 at 1:23 pm

Michael McGuire sums it up very succinctly. He echoes what M Mushak has been saying for years about P&Z.

Julie February 6, 2015 at 2:14 pm

So noone, noone at the meeting knew the expiration date but a reporter? Our reporter, Nancy? But of course, NoN pays attention, many are not accustomed to having someone actually pay attention. Nancy for common council?

Rowayton February 6, 2015 at 2:25 pm

There must be some language in the agreement that gives us the parking lot land back if Poko never gets financing ? I thought we gave them the land so they could secure the loan ? The new Wall Street Theater is on track to open this year. Walking from yd garage is an option but Like SoNo we could end up with a lot of great tenants but not enough convenient parking to make it a desirable destination. If Poko deal falls apart can we focus on at least getting the parking lot property back ?

Michael McGuire February 6, 2015 at 2:39 pm

The current government format calls for the City to be run by the CC who are ordinary citizens volunteering their time. This format works if, and only if, the CC has good advisors on Staff.

Can you imagine our School system if it were solely run by the Board of Education? Well that’s what we have in the Planning area of the City. RDA is not, I REPEAT, not part of the City. The City needs its “Manny Rivera” equivalent to head up P&Z. Without this we are destine to continue making colossal planning blunders which are costing us millions of dollars some of which are outlined below.

Epic Planning Blunders (brought to the Norwalk taxpayer by lack of Planning).

• POKO, (overloaded with social do good and project killing parking costs)
• Duleep’s Blight,
• NPA’s business sapping policies,
• An out of date LDA on 95/7 (now creating month(s) of delay),
• A restricted industrial zone that reflects an industrial market from the 1970s and stagnates contractor business growth,
• Thoughtless housing development in our prime waterfront neighborhoods,
• Master plans and other expensive reports simply dismissed,
• Enterprise zones in the wrong areas (for a mall…really),
• The mosque debacle,
• BJ’s,
• Good developers who shun Norwalk,
• And smart development policies squashed.

I am publically calling upon the Mayor, the Common Council members, and Planning and Zoning Commissioners to replace our current Planning & Zoning Director with a competent, and qualified professional with the requisite skill sets to provide the necessary guidance needed in this form of government.

The following statement is made with no malice. Not one individual in the positions noted above (Mayor, CC & ZC and the entire Planning and Zoning Staff) has the skill sets needed to quantify and understand the magnitude and duration of the direct and indirect negative economic impact our Epic Planning Blunders burden Norwalk with.

This is the core of many of Norwalk’s problems and has been for the past 3 decades. This is why we are the “hole in the donut”.

Taxpayer Fatigue February 6, 2015 at 2:48 pm

Rowayton, it is my understanding that POKO used the parking lot land we gave them as collateral to secure a loan from Citibank to buy the other properties that they needed for the project – not to get financing for the construction of the project. The once city-owned parking lot now has a mortgage on it – the city would have to get in line behind the mortgage-holder for its claim on the parking lot. I may not have all the facts straight on this but it is a tangled mess.

Don't Panic February 6, 2015 at 3:05 pm

This story is four days late. It should have been printed on Groundhog Day, because here we go again…

Regarding the deadline, NON published a story in November, which detailed all the benchmarks that came out of the famous 150 day extension voted upon last August (http://www.nancyonnorwalk.com/2014/11/poko-still-awaiting-citibank-financing/)

That story included the following:
On Aug. 13, POKO was granted an extension to its 10-year-old Land Disposition Agreement with the city, to include benchmarks: By 150 days after Sept. 1, the company’s financing must have been closed up, it must have obtained the required permits, an environmental assessment of the site must have been completed and any subsequent mitigation plan must have been completed and approved.

150 days after Sept 1st is Jan 30th.

The RDA was specifically told that Citibank would be in communication with the City when the approval for the extension was sought: http://www.nancyonnorwalk.com/2014/08/norwalk-rda-green-lights-poko-extension/

Quoted:
Torrano asked Sheehan if Citibank would have an ongoing dialogue with Norwalk. The answer was yes.

And yet the City is first finding out that RDA is awaiting an update from POKO since November and nobody has picked up the phone to talk to Citibank?

And, as the pitchman used to say on late night commercials “Wait, there’s more!”

Both the Mayor and Mr. Kimmel are on record as reluctantly supporting the 150 day extension request because it would have strengthened their court case in the event of default (http://www.nancyonnorwalk.com/2014/08/rilling-poko-extension-if-given-would-bolster-norwalks-case-in-court/).

Which means that starting on New Year’s day the city should have been preparing a possible court filing and the contact with POKO and Citibank should have been daily to determine whether the deadline was going to be made by the end of the month.

They should have been prepared to file the day after the default, unless they were on a conference call clearing the loan closure at that very moment. Here we are a week later and nobody knows whether the deadline was missed?

Quoted in article:
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.”

Quoted in comments:
Mr Kimmel: 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.

All of the discussions with Citibank and paperwork provided were projecting that the financing would close in late Nov/early Dec. How is it that we did not start taking steps going into the end of the year to prepare for a possible default? Last time they may not have forseen the need to police the deadline, but this time, we established the clock, the rules and the ref.

BTW, back then, the CC was worried about 180 days of arbitration (same article). How did we get to two years?

Then there was the parade of smiling pols, celebrating a month after the last extension was granted: http://www.nancyonnorwalk.com/2014/09/poko-beginning-demolition-monday-for-norwalk-wall-street-place/

I’ll say what I said last time again:
The City should have begun shoring up its legal position the day after the last extension was granted, knowing that this was a possibility.

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.

And a word to Mr. McGuire: There is no evidence–NONE–that the “do good” requirements in this project are the barrier to closing the financing. Citibank did not express any concerns when they assured city officials that the 150 day timeline was reasonable. Nobody has produced a closing checklist that includes that as an issue. If that were the obstacle and the only obstacle, then I think we’d have heard about it by now. As it stands, the developer should not be rewarded with more favorable conditions unless he has shown extraordinary efforts on this. Otherwise, we’d just be encouraging other developers to do the same thing.

Michael McGuire February 6, 2015 at 3:25 pm

@Taxpayer Fatigue – I agree with you. Our best bet is to all (POKO included) sit at the table together and figure out how to best complete this development deal. We have to remember that we made the deal so we are just as responsible as POKO for its failure.

Everything should be on the table – start with the assumption that the current LDA will be scrapped by bi-laterally agreement. Let Jerry Petrini call the shots on this – he’s smart, level headed, and the right guy for this.

Michael McGuire February 6, 2015 at 3:36 pm

@Don’t Panic – Use some common sense – of course the failure here is the social do good AND the high cost of the underground parking garage. How else are all these other developments getting done locally (Stamford/Norwalk) and across the country. I do this work for a living, I understand the economics of these projects. RDA gave me a copy of the pro forma on the project (or one version of the project).

So your telling me that 30+% subsidized housing and the most costly underground parking garage in CT’s history are not killing this project? If not those issues than what other issues can there be?

Kevin Di Mauro February 6, 2015 at 5:31 pm

@Michael McGuire

The biggest reason this project seems to be dead in the water is a lack of cash. At the time this thing was approved, POKO was claiming they didn’t need to borrow any money, and that the entire project could be funded using tax credits. Pretty hard to believe and probably the reason for the 30%+ subsidized housing units.

I understand POKO has pulled a foundation permit. Don’t do anything until the permit expires. When it does, use the blight ordinance on the unsightly hole in the ground. Possibly POKO will become more motivated to find a partner or just sell.

Michael McGuire February 6, 2015 at 6:33 pm

@ Kevin Di Mauro – good points but a good project can always attract capital – both debt and equity. This is just not a good project.

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