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Wall Street Place, stalled for 18 months, faces uncertain future amid criticism

Construction on Wall Street Place stopped in August 2016. Sources say owner Citibank has a deadline: its $8.64 million in tax credits expire late this year.

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.”

29 comments

Piberman March 1, 2018 at 6:15 am

Why is Norwalk seemingly continually plagued by local development snafus. Maybe its time to hire some major professional talent at City Hall to guide the process. Using prof. search to hire really top talent. Rather than “friendlies”.

Al Bore March 1, 2018 at 6:55 am

Nothing but empty shirts at city hall taking developer donations for election dollars which should be illegal. Like I said many times before the developers run city hall, lest we forget all these hair-brain projects get approval from planning, zoning, and the common council. Norwalk is being ruined one apartment building at a time. Good work city hall. Bring in the professionals we need help!

Dave McCarthy March 1, 2018 at 7:21 am

This is a monument to Bob Duff and Harry Rilling. Duff got them $5M of your money to waste and Rilling forced the approval through the council for his buddy when it was well known it could never work. It’ll stand until someone takes it down. It won’t be those do-nothings, that’s for sure.

U.S. Blues March 1, 2018 at 8:54 am

Omg, so where are all the politicians that were pictured just months ago promising a future?!?!?
Looking at the do for nothing duff and less than zero rilling…
Um, thanks norwalkers who voted for them…

Nonpartisan March 1, 2018 at 9:21 am

The underlying problem Zisis Norwalk’s obsession with subsidized housing

20% does not work on a cash flow basis. Never did. Never will.

Whomever thinks this can work without a serious haircut and a reduction to 10% is ignorant. Reduce the requirement to 0- without tax credits- and the building could be complete by the end of the year , occupied next year and the transformation of wall stree can begin.

Bryan Meek March 1, 2018 at 10:03 am

So, the City can give $13 million of Norwalk taxpayers money to this one project that will need to be knocked down at some point, but we can’t seem to elect a Council or a Mayor who can keep a campaign promise. The schools are now debating on whether it should keep a dozen security guards or a dozen teachers, while the city has a new Spin Doctor on its payroll to help the electorate believe that things like Poko just need more time and more taxpayer dollars to work.

Bill Nightingale Jr March 1, 2018 at 10:24 am

Many years ago the Redevelopment Agency removed a default notice letter from Citibank to Poko from an information packet after I pointed it out to the Planning Committee. The red flags were there. The Redevelopment Agency purposefully removed that disclosure from the public domain.

One thing is for sure, the Redevelopment Agency has screwed this up beyond belief. It is an embarrassment to Norwalk – much less the financial cost. Redevelopment Agency should not be allowed to have anything to do with it going forward and any staff there who had anything to do with it should be held accountable and removed from their job.

Nancy McGuire March 1, 2018 at 10:58 am

Convince the State/City to re-open the Wall Street Train Station. Allow a reduction in the number of low-income units in the development so that some of the costs can be recovered by the developer. Reduce the parking requirement even if it means that the final building will have fewer units. Its too big anyway, and grew in density as a response to the City’s parking and low-income demands. The cost of a train platform is minimal compared to the money lost by having civil service professionals negotiate complicated real estate deals. And investors will love an apartment complex near a train station.

I don’t understand Norwalk’s politicians and resident’s reluctance to let its city center thrive. I have read about the neighbors in East Norwalk resisting the approval of huge apartment blocks in their neighborhood, but here on Wall Street, we welcome this density. Wall Street is a city center, but everyone seems to be doing everything they can to ignore it.

Patrick Cooper March 1, 2018 at 11:35 am

This is how Norwalk “works” – with our current political operative mayor, and the 1-party common council that capitulates to his every desire, then and now – complicit in the mess. Your first clue? They stop talking to the press….and they look to “make it go away” behind closed doors.

“Ireland didn’t reply to an email requesting information about the most recent inspection”.

“Neither Rilling nor Sheehan responded to a request for comment on Hempstead’s criticisms and the project’s status”.

“Rilling hasn’t responded to emails asking why a confidentiality agreement is needed”.

Just like he lied about supporting the schools – Harry promised to fix how land use decisions would be made going forward. That his first act would be to put cronies on the commissions – direct them to award a spot zoning change to one of his developer buddies – and forever screw-up East Norwalk should speak volumes about what to expect over the next 18 months (before he loses the next election – he likely won’t run…). The damage will last lifetimes.

Let’s also recall his “1/2” promise to push for a Wall Street Train Station. @Michael McGuire – one of the developers who actually invests in Norwalk – has touted this investment as a quick solution towards making the area ripe for growth and development that will add to our grand list. But now that’s only a quaint idea – we can’t seem to leverage the Walk Bridge to gain benefits to the city because we don’t want to make problems for the Hartford democratic machine.

I’m sure arson has occurred to some – but they had to be reminded it’s all steel & concrete.

No – exhibit “A” in the case for a total dismantling the Redevelopment Agency is POKO. Even so, nothing on earth is going to return the 5 million already down the drain.

Last point – I imagine we can expect imaginative fables to be spun by the new minister of propaganda – the just confirmed communications position – who apparently might have a grant writing side hobby. I imagine there will be stories of how we saved an unknown number of at-risk water fowl, city birds, and urban environment loving marsupials by creating this “sanctuary” in the center of their ancestral home, a marsh in 1825.

Paul Lanning March 1, 2018 at 12:40 pm

Welcome To Downtown Norwalk!
Wall St Place
Duleep’s building
Wall St Theater dark and empty

Michael McGuire March 1, 2018 at 2:21 pm

POKO Solutions – the most prudent thing the City can do at this point is to have DOT and MTA approve the private sector development (no cost to the State or City) of the Wall Street Train Station.

Having a train station within 200 feet of the POKO project dramatically changes the feasibility of this project.

This will require that City leaders insist upon this (Train Station) as a mitigation point for the Walk Street Bridge Project.

Next step would be to cut the low income requirement to 10% and factor in a revised parking scheme based on what can be done.

Don’t dwell on what was not done! Work the problem.

Result – POKO gets built, the Wall Street area gets revitalized, the Grand List (at least from this area) is increased significantly, and Norwalk leadership wins one for the home team.

Cost to Norwalk – $0.00

Patrick Cooper March 1, 2018 at 2:43 pm

@Michael McGuire – somewhere in city hall – The Talking Heads song “Girlfriend is Better” is playing at volume 10 – “Stop Making Sense”.

Debora Goldstein March 1, 2018 at 2:46 pm

Candidate Rilling in 2013:
“I support the Wall Street redevelopment project approved for POKO,” he said. “The plan rightly envisions Wall Street as an urban residential village that includes both the recently built Avalon market-rate rental units and the affordable workforce housing envisioned by POKO. The plan is based on both historic preservation of beautiful old 19th century structures and public access to the waterway.”

“The POKO firm has invested $15 million of its own funds in purchasing the key properties on Wall Street.” He continued. “It is irresponsible to say ‘pull the plug’ on such a massive private investment in an area of Norwalk that remained without a plan, without an investor and without a vision for decades prior to 2005. Any candidate or incumbent who turns his back today on $15 million worth of private investment in an urban downtown project is plainly foolish. We need the jobs and tax revenue generated by this project. ‘Pulling the plug’ would set back Wall Street’s redevelopment by 10 years.” https://www.nancyonnorwalk.com/2013/07/rilling-points-to-shrinking-grand-list-backs-poko-extension/

Rilling in 2014:
“We are continuing to meet with POKO to push this project forward once and for all. None of us are pleased with this delay that spans at least 8 years. However, pulling the development rights from POKO might not result in the outcomes desired and mentioned here. POKO owns the property involved and pulling those development rights might result in more years and years of inactivity. Rest assured we are pushing forward with a view towards movement as soon as June of this year. When the tough decisions need to be made, they will be but only after careful deliberation with city staff to ensure we act in the best interest of the city.” https://www.nancyonnorwalk.com/2014/05/norwalkers-say-no-to-pokos-2022-date-rilling-advises-caution/

Rilling in 2015:
“I’m extremely happy this funding is now in place and the project is moving forward. Persistence, patience and diligence has paid off. This project, together with Head of The Harbor marks the beginning of the rebirth of Wall Street,” Rilling said in a text message. “My team is also moving towards a proposal that will incentivize developers and property owners to invest in the area as well. Norwalk is on the rise and I thank Senator Duff, my Corporation Counsel and my Economic Development Team, all who have played a significant part to get to this point.” https://www.nancyonnorwalk.com/2015/07/rilling-poko-loan-essentially-closed/

For anyone not familiar with the long and painful history for this project (financing has been an issue throughout) and the City has given many extensions to try to get this off the ground, see all four pages of articles from NON on the subject: https://www.nancyonnorwalk.com/page/1/?s=poko

Bryan Meek March 1, 2018 at 3:07 pm

Thanks Tobin. I stand corrected, we gave $21 million of public money away. How much is it going to cost to tear down? Maybe that’s what we are hoarding the rainy day fund for. Who needs security guards at schools anyway, when we can give that money to failed projects and get our picture in the paper?

Secondhandrose March 1, 2018 at 3:10 pm

Paul Lanning – Wall Street Theater “dark and empty”?? Check their website! There’s a whole slew of events coming up this month.

Bill Nightingale Jr March 1, 2018 at 3:19 pm

Thank you Debora for the rehash of this nightmare. What a joke to claim Poko ever contributed $15m. Fact is they never really had any significant equity in this. Very similar to how there is zero equity in Norwalk Theater (which the city will have to take ownership of sooner than later).

Rick March 1, 2018 at 4:21 pm

No one ever says anything about those awesome people from Norwalk hospital who are stiuk in a catch 22 with no help on parking or convenience its not they draw a check for the work they do.

The ones drawing a check for this mess should leave office,

maybe the mall will stall just like wall st and then we will have bookends as it is the mall is not part of the assets until finished just ask Stantec they work with Brookfield out of the same Canadian office setting,,,gutting ct ave as the city is focused on crap. GGP owes Norwalk nothing its what then city owes them is the kicker.

Hey its a great conspiracy theory to go along with all the drama Duff and Rilling produce daily. When they bring in Murphy and Himes its a series pilot for disaster.

What does this have to do with wall st? Its all political the problems all started after the ribbon was cut and the deals were made by whom?

Duff will return to Hartford no sense in changing captains of the Norwalk Titanic he has probably taken all the life vests and hidden them for his city hall pals.

Its said this started during Knopp days Duff wasn’t around then? Don’t you love how the blame is displaced ?

How much to tear down? Just give those who have stolen off of day st ice rink Riches building next to the police station and the new mall a shot at gutting it and give those city hall pals a break.

Debora Goldstein March 1, 2018 at 5:34 pm

Thanks Mr. Nightingale,

The developers play chess while Norwalk plays tiddly-winks. In a year when we are developing our 10 year master plan (POCD – Plan of Conservation and Development), we didn’t even have the good sense to put a moratorium in place.

The state gave us $125k for a TOD study around the East Norwalk train station. Whoosh! In comes a developer to ask for a TOD zone for ONE property–based upon zero study of the area.

Much like the parking near the library that the city overpaid for after an ill-advised zoning approval, more taxpayer money will be needed for any staging the DOT needs to do on this property, since this zone change will raise the market value of any easements they might need.

Checkmate!

Paul Lanning March 1, 2018 at 5:52 pm

Secondhand Rose:

https://wallstreettheater.ticketfly.com/calendar

There are 2 events in March. 5 in April. 1 in May. A paltry, non-competitive offering that has no chance of sustaining a 1,000 capacity venue.

Compare this schedule to FTC, Capitol Theater in Port Chester, Ridgefield Playhouse, Stamford Palace.

Norwalk taxpayers are on the hook for $1.7 million advanced by the state for this theater.

Milly March 1, 2018 at 7:36 pm

Norwalk already has 3 train stations (Rowayton, South Norwalk, & East Norwalk) we do not need another train station or any more apartment buildings.

John Levin March 2, 2018 at 7:48 am

Four train stations: Merritt 7. And I see no problem with another one if it can be reasonably justified. Michael McGuire’s arguments seem pretty compelling, but I don’t know what the counterarguments are except for yours, which seems to be general opposition to the number 4 (or maybe now number 5).

Apartment buildings are great. Higher density is much better for both the environment and the community. Let the market decide anyway.

Bob Welsh March 2, 2018 at 8:30 am

Deb Goldstein:

Are you aware of the DOT needing to take or utilize any portion of this potential development site for staging? I wonder how that would affect the project timeline.

I’m glad the hotel for dogs is staying. East Norwalk boasts a beach, a library, a train station, PLUS a hotel for dogs, all in the same neighborhood. Fancy!

Education101 March 2, 2018 at 8:54 am

I’m much in agreement with the mayor on this (i.e. unforseen circumstances)and hind sight is always 20/20. Unfortunately, redevelopment is not a risk free endeavor . . glad we have Mayor Rilling at the helm to oversee this and somewhat intellectually dishonest for all the arm chair quarter backs to point fingers on him.

Milly March 2, 2018 at 9:11 am

Apartments are better for the environment? How much waste does a huge apartment building produce? How about a couple of summers ago when the city sent out the code red call because of lack of rain and the city having a drought conditions – where is all the water going to come to accommodate all these apartments and a mall?

Gordon March 2, 2018 at 9:36 am

As I observed it’s inception under the Knopp administration, the major selling point was 20% affordable. As “nonpartisan” stated, 20% affordable just doesn’t work without massive subsidies. It was pie in the sky from day one, and all the subsequent city officials have tried to make it work. I don’t understand why they didn’t cut the affordable percentage to 10% long ago. We would then have some affordable housing, while now it is likely we will get 0%.

Jerry March 18, 2018 at 9:54 am

Just another reason to NOT invest in Norwalk. Thankfully I learned my lesson (it only took 2 years) but we’re out. Having a former policer officer as mayor is never a good idea. You need a business man or woman that knows what it takes and how to work the deal.

I invested a ton of money in this city and I’m kicking myself for doing so. This city is plagued. Good luck!

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