A proposed 24-story hotel and conference center that was promoted as a tourist destination, a commanding gateway to New Rochelle and the biggest hotel project in Westchester in 20 years, is floundering.
The developer, WP Realty Acquisition III, filed for bankruptcy Sept. 11, citing management and litigation disputes.
WP badly needs Chapter 11 relief, manager Jonathan Sacks states in an affidavit, “to put the ”¦ project back on the correct footing.”
The question is: Who actually controls WP?
The hotel is the dreamchild of D”™Wayne Prieto, of Ward Capital Management, Dobbs Ferry.
He formed WP in 2016 and purchased a wedge of land on Cedar Street at the Exit 16 interchange of the New England Thruway (I-95) that includes a 4-story, 1905 building that once housed Don Coqui, a Puerta Rican restaurant operated by Prieto”™s wife, Jewelle.
The plan is to convert the building to a conference center and build a 225-room hotel and parking garage that would by operated by Wyndham Hotels.
In 2019, the New Rochelle Industrial Development Agency granted Prieto nearly $3.3 million in mortgage and sales tax exemptions and 20-year tax abatement reportedly worth $16.7 million.
The project “will be completely transformative,” the city”™s commissioner of development, Luiz Aragon, told the IDA board. “It will change how people perceive our city.”
Prieto had hoped to begin construction in 2019 and open the hotel this year or next.
But the project has stalled, according to Sacks.
Sacks”™ company, 188th St. Development LLC, became WP”™s majority partner in 2018 and now holds an 88.9% interest in the company, according to his affidavit. He invested $1.5 million and loaned $610,713 to launch the project, and he assumed full management control this year.
But real estate developer Bradley Gold claims he owns WP. Gold loaned $100,000 to Prieto in 2016, for an interest in future real estate projects. Prieto defaulted on the loan, according to court documents, and in 2019 Gold got a court judgement against WP for $154,000.
This past March, Gold removed Prieto as WP”™s manager, citing terms of a 2016 “strategic relationship agreement,” claimed 100% interest in the company, and appointed himself as the manager.
Sacks claims in WP”™s lawsuit against Gold that he had no knowledge of the loan when he invested in WP. In any event, he says, the strategic relationship agreement is “illusory” and has nothing to do with WP and the New Rochelle hotel project.
Sacks asserts that the liens should be vacated, because when Prieto acknowledged his debts to Gold, he signed papers as president and sole member of WP, when in fact he was the manager and owned 20%.
Prieto admits in a court filing that his “confessions of judgment” to Gold were erroneous.
But Gold claims in a lawsuit against Prieto and Sacks that they conspired to buy the Cedar Street property and that Sacks knew or should have known about the loans.
WP has no chance of raising capital for the project, according to Sacks, unless the Gold claims are addressed.
The goal of the Chapter 11 case is to move the litigation to bankruptcy court and expedite the rulings, Sacks states, “so the project can begin to move forward without a cloud of uncertainty.”
The petition lists $4,177,531 in assets, consisting mostly of the Cedar Street property, and $4,674,590 in liabilities.
WP in represented by Manhattan attorneys Kevin J. Nash in the bankruptcy case and Edward P. Gilbert in its lawsuit against Gold. Prieto is represented by Manhattan attorney Bernard H. Jackson III. Gold is represented by Eastchester attorney Clifford H. Greene.
Good riddance, $20 Million is far too much for New Rochelle to give away on tax breaks.
Why is it only small time homeowners have to pay the mortgage tax?
The city should concentrate on projects that benefits the public