Fears sour reaction to Domino deal
Posted on June 22, 2012 at 14:27 PM EDT
A day after Two Trees Management agreed to purchase the sprawling Domino Sugar factory site on the Williamsburg, Brooklyn waterfront for a reported $185 million, the big question is whether the new owner follows the plans carefully cobbled together by the original developers, CPC Resources Inc. and The Katan Group, or makes changes. Five years ago, Katan and CPC partnered to buy the 11.2-acre sugar-factory site for $55 million and converted it into a $2 billion, mixed-use development that would feature 2,200 apartments, 30% of them affordable, and four acres of open space. Those plans also called for restoration of the 100-year-old industrial landmark's famous sign, which looms over the East River. They faced many difficulties, including a long and costly effort to have the site rezoned to residential. Two Trees has not disclosed any details on what it has planned for the site, but Jed Walentas, the firm's principal did tell The New York Times that he thought it was likely that there are "some opportunities to make improvements on the plans." Experts note that if Two Trees wants to make any significant changes, such as changing its size, that could require zoning changes. In that case the developer would have to go through the entire lengthy public review process, which could drag on for months. If the changes are in design rather than scale, the need for reviews could be avoided. Meanwhile, the community remains concerned over whether Two Trees will deliver on the 660 units of affordable housing the previous owners had long promised. "If they are not going to comply they will have a fight on their hands," said Isaac Abraham, a Williamsburg community leader and housing advocate. Beyond the details, most acknowledge that Two Trees, the developer that transformed the Brooklyn waterfront neighborhood of Dumbo into a thriving community, is the right developer to take on Domino. "I think with their development experience they are a good fit for the site," said Ward Dennis, co-chair of Neighbors Allied for Good Growth, a community advocacy group that had opposed the rezoning of the Domino site because of the scale of the proposed buildings. "It is a big complicated project." After trying to salvage the Domino project by trying to find a deep-pocketed developer to inject more cash into the project and work out a deal that would make the project's lender, Pacific Coast Capital Partners, an equity partner, CPC decided to unload the site . In a statement, CPC's Chief Executive Rafael Cestero said: "CPCR's goal for Domino Sugar has always been to bring to the project a well-established, reputable real estate company that knows New York and is committed to building neighborhoods and creating communities. Two Trees is just that." The Katan Group, CPC's partner, disagrees and the firm's lawyer, Y. David Scharf of law firm Morrison Cohen, said in a statement, "We have serious reservations about the propriety of the Two Trees deal and the process through which it was struck. We are evaluating the contract, its terms and ramifications alongside what seem to have been offers with superior terms." Despite Katan's opposition, Mr. Cestero said the deal can go through because under their joint venture agreement CPC just needs to consult its partner on the deal and does not need its approval. The partners have had a contentious relationship for some time. In May, Katan had sued CPC for mismanaging the project and asked the court to block CPC's earlier efforts to salvage the project. Last month, the court ruled against Katan, but since then, Katan has appealed and filed other suits against CPC .
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