One developer in the trio of redevelopment partners in downtown Yonkers has financially fallen. Another is beset by liens and lawsuits by project partners, property owners and contractors claiming they are owed more than $200 million in all.?Yet the roughly $1.5 billion project planned by Struever Fidelco Cappelli L.L.C. in Yonkers has not been affected by the developers”™ flux in fortunes, according to the New Jersey partner in SFC.
Marc E. Berson, founding chairman of The Fidelco Group Inc. in Millburn, N.J., said Struever Bros. Eccles & Rouse Inc., a leading developer in Baltimore, Md., and oft-lauded pioneer in the redevelopment of that city”™s harbor waterfront, pulled out of the SFC partnership about a year ago. Berson said he and SFC”™s prominent third partner, Louis R. Cappelli and his Cappelli Enterprises Inc. in Valhalla, took over Struever”™s equity interest in the project.
Struever Bros. CEO C. William Struever, a once-regular, plaid-shirted visitor on the Hudson waterfront, did not return a call for comment on his company”™s involvement in Yonkers. The Baltimore Business Journal, which named Struever its Businessperson of the Year in 2000, over the last year has chronicled his company”™s financial fall and withdrawal from several East Coast development projects as credit markets tightened and then froze and new equity partners for the debt-heavy developer could not be found in the recession. Struever told the paper last June he was trying to avoid bankruptcy while limiting his business to fee-based consulting work for other developers.
The Baltimore business weekly last October reported Struever Bros. had shed nearly 30,000 square feet at its corporate offices in a former Procter & Gamble plant the company had redeveloped as a high-end business park. Struever Bros. last fall was reduced to less than 100 employees from more than 350 workers at its height in 2007, when Struever himself was named the Mid-Atlantic region”™s CEO of the year.
“Struever”™s not in business” as a developer, Berson said at his New Jersey office. “They have a tiny skeleton crew working on their workouts” with lenders.
Berson said Struever”™s exit “has no effect whatsoever” on the Yonkers project. “By no means has there been any hiccup associated with the project.”
“In the selection of this team to do the project,” Berson said, “the city took account of the entrepreneurships that Louis (Cappelli) and I have had” at the head of their respective companies. “As issues evolve, successful developers are fluid.”
Berson said SFC ”“ the name will remain ”“ to finance the project might “bring an additional partner or partners to the table to fill the hole in the gap. You”™ve got to figure out how in a development environment to make things work.” He declined to name any prospective partners.
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Cappelli said recently the Yonkers partners likely will replace Struever with another partner “because it”™s a gigantic project. It needs a lot of financing.”
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Cappelli said the SFC partners to date have invested $24 million in equity in the project and have too large a stake to pull out of Yonkers. “It”™s teed up for Yonkers,” he said. “I”™m committed to doing the project there one way or another.”
Cappelli, however, and his various development entities in Westchester and the Catskills face mounting financial and legal challenges. Most recently, Entertainment Properties Trust, a publicly traded real estate investment trust in Kansas City, Mo., and Cappelli”™s partner and majority owner at two retail entertainment complexes, City Center in White Plains and New Roc City in New Rochelle, went to federal court seeking payment of $163.1 million for loans on which Entertainment Properties claims Cappelli has defaulted.
At the center of the partners”™ dispute is Cappelli”™s stalled Concord Resort and Entertainment City development in Sullivan County, where Entertainment Properties wants to be released from its equity commitment and seeks repayment from Cappelli of a $133.1 million advance on a $225 million loan for resort development.
Cappelli also is being sued for $5 million and $11.2 million by two groups of property owners in downtown New Rochelle with whom the developer made purchase deals to clear the way for his company”™s stalled LeCount Square redevelopment project. Entertainment Properties in its recent lawsuit claims Cappelli owes $20 million in loans related to the New Roc City and LeCount Square projects. The partner also seeks payment of a $10 million loan at City Center.
In 2009, nine contractors on Cappelli projects sued in Westchester County to collect a total of $773,000, according to the Journal News. The Times Herald Record in Middletown recently reported 24 contractors at the stalled Concord development have filed liens totaling approximately $24 million.
The largest creditors supplied steel and aluminum and did demolition at the former Concord Hotel site at Kiamesha Lake, where work stopped in late 2008 when Cappelli was unable to close on construction financing. Cappelli has said those contractors will be paid once construction financing is in place.
In Yonkers, with all required city approvals in place, “We”™ve only in the last 60 days been able to think in the real development mode,” Berson said. “We”™re now in a mode that”™s very simple ”“ talk to tenants, get serious about construction issues and fine-tune the project. We anxiously are moving forward with what we think will be a great project.”
Berson said SFC is focused first on its mixed-use River Park Center development off Getty Square rather than Palisades Point, a high-rise luxury condo development that would rise on the waterfront south of City Pier. “I think Palisades Point, though the waterfront is phenomenal and the residential is the future of that area, the for-sale residential market is softening dramatically,” he said. Banks will not finance such a project and buyers are backing off at that housing price, he said.
“This redevelopment project was about changing the downtown,” Berson said. “The way you”™re going to change the downtown is with mixed-use development.” The 13-acre River Park Center site would include about 715,000 square feet of retail, restaurant, movie theater and office space and a 6,500-seat sports stadium.
Berson said the city”™s downtown and waterfront redevelopment to date has had no significant retail mix. “We haven”™t at this point achieved another supermarket, another new drug chain,” he said. “It”™s our hope that with the retail, we”™ll fuel the residential” development.?Berson said his company has continued to fare well in the recession. “We don”™t have at Fidelco any open, unsold units,” he said. “We don”™t have any vacancies at any of our properties.”
For River Park Center, “We firmly believe that the banks and institutional investors will be around” with construction financing, Berson said. “They”™re going to build not on spec, but on signed leases.”
