Updated, 8 p.m.: Comment from Tim Sheehan.
NORWALK, Conn. — It’s loomed over Wall Street for a year and a half, a Tyvek-wrapped box-like symbol of frustration for many Norwalkers.
“Citibank owns it, they can’t get anybody to finish developing it because the costs are way too high,” Common Council member Doug Hempstead (R-District D) said of the stalled Wall Street Place. “Unless Citibank, I guess, is willing to take a huge haircut. Otherwise I think you would have seen people jumping on it. The numbers don’t add up.”
Hempstead has always been a critic of the mixed used development spearheaded by POKO Partners principal Ken Olson, who touted the underground, automated parking garage he had planned.
“I always said this guy was playing with other people’s money and the parking garage underneath was totally insane,” said Hempstead on Feb. 21.
Construction on Wall Street Place, always a controversial project, halted in August 2016. Although Mayor Harry Rilling at the time said, “We have been advised that the project will be moving forward. It may be slow until they sort ‘it’ out,” the partially completed building has sat there.
When construction stopped, city officials said privately that Olson was gravely ill. Olson died in November at the age of 58.
Redevelopment Agency Executive Director Tim Sheehan in September 2016 publicly attributed the halt to a “budget gap” discovered by Citibank, which funded the project with a $31.9 million construction loan, according to city documents.
Hempstead offered a different version on Feb. 21.
“(Olson) altered it. From what I understand, there’s a lot more steel in that building than he originally told the bank. That’s why he went belly up,” Hempstead said.
Citibank foreclosed on the property in early 2017, with the intention of restarting construction “as soon as possible and to retain previous capital commitments,” Sheehan said in September.
“The numbers don’t add up,” is a phrase used by others who have closely studied the project’s financial details.
Wall Street Place Phase I, which includes a commitment for 20 percent affordable housing, was granted this funding, according to state officials:
- $8.64 million in 9% Low Income Housing Tax Credits (net proceeds)
- A $3.5 million Department of Housing loan
- A $5 million Connecticut Department of Community and Economic Development DECD grant
The tax credits “will expire at the end of 2018,” Connecticut Housing Finance Authority spokesperson Lisa Kidder said.
NancyOnNorwalk was not successful in determining what that means for the project or for taxpayers. Kidder did not answer further questions, but did disclose that Citibank bought the tax credits through a syndicator, National Equity Fund (NEF).
National Equity Fund did not reply to a Tuesday request for answers to the meaning of the expiring tax credits.
Citibank declined to comment for this article.
The tax credits “are in default since the property was never placed into service when it needed to be,” a local real estate professional said, declining to be identified.
“Wow – this is a big mess. This is a workout that will take a while to resolve. The tax credit default is problematic never mind the loans and grants,” the real estate professional said.
Hempstead has previously attacked the $5 million DECD grant, calling it “strictly for the automated underground parking garage.”
That garage has not been installed although the project’s foundation was developed to accommodate it, Sheehan wrote in January.
POKO spent $3,321,811 of the grant for “construction-related expenses,” with $1,678,189 available for a new developer, DECD spokesman James Watson said in October.
A dated document on POKO’s website states that Wall Street Place was also aided by federal new market tax credits, and federal and state historic tax credits. Sheehan said that’s inaccurate, that those funding sources are not in the city’s records.
The city committed $4.4 million to Wall Street Place in a tax exempt municipal bond to cover City infrastructure costs, Sheehan said.
Before Citibank foreclosed, multiple developers were approached and asked to take over the project but they looked at the costs and declined, Hempstead said on Feb. 21.
Clay Fowler of Spinnaker Real Estate Partners said he hadn’t considered it; Paxton Kinol, developer of the Waypointe District, did not respond to a request for comment.
“The numbers unfortunately just don’t make sense for a traditional developer to come in and finish the project. There needs to be some changes,” said Jason Enters, who is part of the M.F. DiScala team.
JHM Development, a Stamford-based developer with a history of working on mixed-use, affordable housing developments, has reportedly been interested in Wall Street Place. No one from JHM responded to an inquiry from NancyOnNorwalk.
“I heard last take, going back a few weeks, they still weren’t getting any takers,” Hempstead said on Feb. 21.
“Now, it’s been sitting there exposed to the elements for the last two years. That’s not a good thing either. Who knows if the insides are any good anymore?” he said.
Asked about the building’s condition, Norwalk Chief Building Official Bill Ireland wrote in an email, “I have an inspection there next Wednesday I can let you know what I see after the meeting.”
Ireland didn’t reply to an email requesting information about the most recent inspection.
Hempstead said the concrete might be cracked, or things might have frozen.
“We don’t know what’s inside the wrap. I don’t know how far they got inside of there,” he said.
Neither Rilling nor Sheehan responded to a request for comment on Hempstead’s criticisms and the project’s status.
Sheehan, at Thursday’s Planning Committee meeting, said he is still confident that construction will resume.
“We’re in the process of working on a confidentiality agreement relative to the negotiations…it’s among all parties to the discussion,” Rilling said in January. “We’re trying to get that moving forward. I know we were hoping that it would be already last spring. We were hoping that it would be moving forward, that when the warmer weather started we would have enough agreement that we could get this going. But there are some challenges but we’re still aggressively working on that as well.”
Rilling hasn’t responded to emails asking why a confidentiality agreement is needed. Hempstead said he hadn’t heard of it.
The project dates to the Knopp administration.
Before the election last fall, Rilling said, “I know a lot of people now have come forward and say, “It was a bad project from the beginning.” My answer to that is back in 2003 or 2004, it passed the money test. Citibank and other investors, with their risk managers, looked at that as a good, viable project that was going to breathe new life into the Wall Street area.”