White Plains lender forecloses on New Rochelle self-storage project

A White Plains firm that claims it is owed more than $2.7 million on a taxpayer-subsidized self-storage project wants to foreclose on the New Rochelle property.

The 360 CB Fund I filed the foreclosure action against New Rochelle Birch Development LLC and Ira Schwartz, the managing partner who guaranteed the loan, July 20 in Westchester Supreme Court.

New Rochelle self-storage — 2 Birch St. as it appeared in 2018. Photo by Bill Heltzel

The developer planned to build a $25 million self-storage warehouse at 2 Birch St., near a New England Thruway interchange, Kings Highway and Main Street for ExtraSpace Storage of Salt Lake City.

New Rochelle Birch is affiliated with BlackMountain Partners LLC, an Albany real estate investment firm that specializes in self-storage facilities.

In October 2017, the 360 CB fund advanced $2,550,000 for the project, for a year. The fund is affiliated with 360 CB Capital Funding, a White Plains firm that makes construction loans and other short-term commercial loans.

A year later, the New Rochelle Industrial Development Agency approved $2.5 million in tax subsidies.

“Without the use of such benefits,” IDA consultant Kevin F. Gremse advised the agency, “the development would likely not proceed.”

The plan was to demolish a former Rotanelli frozen foods facility and build a five-story, 152,000-square-foot warehouse with 1,182 storage units.

The work was to begin in 2018 and to be done by the end of 2019.

The loan was extended four times, eventually to Jan. 2, 2020, according to the lawsuit, but New Rochelle Birch defaulted. As of May 1, the developer owed $2,721,063, including principal, interest and a 20% per annum default rate, and accruing at $1,417 a day.

The lender is demanding that the property be sold to pay off the loan.

The lawsuit does not explain why the project stalled.

Schwartz”™s attorney, Steven B. Rothschild of Spring Valley, did not respond to an email asking for the developer”™s side of the story.

The IDA approved a $175,000 mortgage tax exemption. New Rochelle Birch bought the property in 2017 for $3,350,000, according to a county property record, and paid no mortgage tax.

The IDA also approved an estimated $703,500 sales tax exemption, on materials to be bought during construction, and a 10-year property tax abatement plan worth about $1.6 million that would have kicked in when the project was finished.

The developers agreed to donate to the city a nearby vacant lot that was part of the Rotanelli property. The parcel was deeded to the city last October, according to a county property record.

The 360 CB fund is represented by White Plains attorney John C. Re.