“At one point earlier this year, about 15 contractors had filed more than $3 million worth of liens in Pitkin County – in less than three months – against the base developer [Related Westpac].”
“There was no bidding war and little drama Wednesday during what is believed to be the largest foreclosure sale in Pitkin County history, according to Tiffany Wancura, chief deputy treasurer and public trustee for Pitkin County.
The morning auction in Aspen ended with noteholder The Related Companies LP retaining the rights to six Snowmass Village properties — the Snowmass Center, Snowmass Mountain Chalet, Snowmass Inn and three Sonnenblick units. Related Companies bought the deeds of trust on these properties in June from Bank of America for what has been suggested by sources as a below-market value.
Related’s combined bids Wednesday totaled $100,980,000, or about $11.5 million less than the loan and interest amount, according to the treasurer’s office. The properties were used as collateral by Related WestPac when it made the majority of its Snowmass Village purchases in 2007. (Related Companies is Related WestPac’s managing partner.)
“Today’s purchase of assets will allow us to continue to move forward and work with the town and the community on a plan for the long-term vitalization of the Center and West Village,” said Related spokeswoman Joanna Rose.
“It’s all about stabilization,” echoed Related WestPac President Dwayne Romero, who noted that “these are important assets and they need stabilizing.”
With stabilization has come some collateral damage in the form of an anticipated financial loss by local owner and long-time Snowmass Village resident Mark Moebius, whose family has owned the Snowmass Inn for more than 30 years.
In May 2007, Moebius entered into a partnership with Chaffin, Light and Wilhelm, forming the CLWM limited liability company. The partner’s idea was to redevelop the Snowmass Inn and connect it to the Snowmass Real Estate office, which was located one level above the Daly Lane lodge. “We were going to be the catalyst to the mall rehabilitation,” Moebius said.
In early 2008 , that partnership “cut a deal” with Pat Smith and Related WestPac, and bought out Chaffin, Light and Wilhelm’s assets in this LLC, Moebius said. Unbeknownst to Moebius, however, Related WestPac mortgaged the Snowmass Inn property.
Moebius said he “got some cash” from the initial deal but “left the majority of the money in. As near as I can tell, that evaporated” as a result of the foreclosure. Related WestPac spokesman Steve Alldredge confirmed that the partnerships that were foreclosed upon did lose their assets. Moebius said he hoped to speak with representatives from either Related Companies or Related WestPac about whether he was due compensation.
“We’re collateral damage in a much bigger wreck,” Moebius said. He also noted a bit of irony about the auction day.
“My dad bought the Snowmass Inn 33 years ago when it was in foreclosure.”
The auction took place on these same courthouse steps. Elected officials from Snowmass Village recognized that a family who contributed greatly to the formation of the resort may have gotten a raw deal.
“[Moebius]‘ family has invested heavily in Snowmass. Love, sweat, tears and blood. Unfortunately, the legal system doesn’t recognize that,” said Snowmass Village Town Councilman John Wilkinson.
While sympathetic, Mayor Bill Boineau said that unfortunately “it’s business,” and “these partnerships have to get wiped out” in order for a developer to reset his dial and move forward.
Dreams dissolved
Leading the charge to buy the properties during the go-go days of real estate was former Related WestPac president Pat Smith, who also turned out Wednesday for the auction. In the near future, Smith said he will be concentrating on investments around Santa Barbara, Calif., where he also owns a home.
Smith said if he had any regrets it’s that “we lost a lot of money. At the time, the ambition to be master developer for Snowmass was needed. Everybody that was involved really believed that.
“I’m not sad or sorry at all that I was involved from the beginning. It was my dream” to contribute to the town’s renaissance, Smith said. But the “catastrophic turn of [economic] events” was not something that could have been foreseen.
Smith said he remains a part-owner with Related WestPac. Romero said that the company is still working on completing Base Village, operating Aspen/Snowmass Hospitality and doing day-to-day management of the aforementioned assets.
“From our perspective, not much has changed,” Romero said. Except the value of these assets, of course, which are “not the same as when they were purchased in 2006 and 2007,” he acknowledged.
The breakdown of the successful bids for the parcels are as follows: $52,470,000 for the Snowmass Center and environs (except the gas station and four single-family lots behind Woodbridge); $30,240,000 for the Snowmass Mountain Chalet; $13,440,000 for the Snowmass Inn and a pocket park; $2,280,000 for Sonnenblick units 1 and 5 and $2,550,000 for Sonnenblick unit number 4.
Pitkin County will receive $172,000 plus change as its fee for acting as a public trustee, according to Wancura. In doing a search back to 1994, on behalf of two local newspaper reporters, she determined that Wednesday’s foreclosure sale was by far the largest, at least in recent years.
The town of Snowmass Village will not, however, benefit directly from the sale. According to Town Clerk Rhonda Coxon, foreclosures are exempt from real estate transfer tax collections.”
SALES AT FORECLOSED CITYPLACE TOWER CONTINUE AT SNAIL’S PACE
BYLINE: Kim Miller
SECTION: LOCAL; Pg. 2B
LENGTH: 431 words
It’s been five months since the 20-story CityPlace South Tower in downtown West Palm Beach went into “friendly” foreclosure after selling just 39 of 420 units.
While sales have continued in the finished building, they’re less than gangbuster. As of mid-month, 55 units had sold, 13 percent of total inventory.
Another 10 units are under contract with closing dates set before Christmas, said Steven Kerr, a managing director at Scotia Capital, which acquired title to unsold South Tower units after the foreclosure.
The Related Group had contracted to sell 367 of the units while the building was under construction, but the housing market tanked and buyers walked away.
Betsy McCoy, vice president and associate general counsel for The Related Group, said about 25 contract holders have filed lawsuits trying to get back security deposits of as much as $50,000.
“Some people just bought these condos thinking they were going to flip them, and they reached a point where there was no one left to flip to,” McCoy said. “Another root problem is people can’t secure condo financing and they get caught in a real hard place.”
South Florida Business Journal
November 25, 2009 Wednesday
Related Group of Florida repays $13M loan
BYLINE: Brian Bandell
LENGTH: 260 words
The Related Group of Florida fully repaid its $13 million mortgage covering some undeveloped property in Miami Beach.
The loan covers 13 parcels at 834 Commerce St., which is near Related’s Apogee project. No construction has taken place. A Related official wasn’t immediately available for comment.
Related’s affiliate, TRG Alaska III, had its mortgage with Wachovia Bank modified at $13 million for the properties in November 2006. Two years later, it sold part of the land to a developer for $5.5 million. No other sales were recorded.
Among the largest condominium developers in South Florida, Related is trying to close out sales and repay large mortgages in Icon Brickell, 500 Brickell and the Trump Towers in Sunny Isles Beach. Its Trump Hollywood and St. Regis Resort & Residences at Bal Harbour are under construction.
Last month , the Business Journal reported that Related had negotiated with its lenders to offer a 30 percent discount to the majority of its contract holders in its 1,800-unit Icon Brickell project.
In June , the Business Journal reported that a lawsuit had been filed on behalf of 80 buyers at Trump Towers in Sunny Isles Beach asking that their contracts be cancelled and more than $20 million in deposits returned.
That suit alleged that the developers — Related Group and New York-based Dezer Development — used the Trump name to attract buyers, but did not obtain a license agreement for the associations or purchasers to use the Trump name, so it will likely be changed once the developers are no longer involved with the project.
The Miami Herald
September 12, 2009 Saturday
Miami Dolphins owner Ross approved for bank; may bid on Corus assets
BYLINE: DOUGLAS HANKS AND MONICA HATCHER, dhanks@MiamiHerald.com
LENGTH: 880 words
Miami Dolphins owner Stephen Ross has won permission to form a bank that may help him bid for assets of troubled condo lender Corus Bankshares, which was seized by federal regulators on Friday, according to recently released documents.
The documents say Adolfo Henriques, a longtime Miami banking executive, would be CEO of SJB National Bank. The bank’s name is an apparent nod to the first initials of Ross and his two partners in the venture: Jeff Blau and Bruce Beal Jr.
But Henriques said Friday he did not think Ross would actually create SJB since bank regulators have decided to split Corus’ assets into deposits and real estate holdings. That would let a real estate investor like Ross pursue the condo towers in the Corus portfolio without having to form a bank in order to take on the deposits and checking accounts, too.
“They’re not forming the bank now,” Henriques said of Ross and partners. “There are no plans to do so.”
Blau and Beal are top executives at the Related Cos. in New York, where Ross is chairman and CEO. The New York company owns a minority stake in the Related Group, the Miami condo development firm headed by Jorge Perez.
Should Ross buy the Corus portfolio, he would obtain the loans for a number of troubled South Florida projects, including the vacant Trump International Hotel and Tower in Fort Lauderdale and the Tao condo complex in Sunrise. That could mean a central role for Related of Florida. Ross and Perez are close friends, and Perez recently took on the position of vice chairman at the Dolphins.
Henriques was recently named chairman of the Coral Gables-based Gibraltar Bank, and serves as vice chairman of the Related Group of Florida under Perez. Henriques said he doesn’t know if the Miami’s Related Group would be involved if Ross obtained Corus. A Ross spokeswoman declined to comment, and Perez could not be reached immediately Friday evening.
Ross, Blau and Beal would own most of the voting shares in the proposed SJB National Bank, according to a notice dated July 31 that was posted Thursday on the website of the Comptroller of the Currency. Related Cos., the closely held New York-based real estate developer, won’t have any stake, the notice said.
The Related Cos. executives are considering a bid for Corus, the Chicago lender crippled by construction loans for condominiums, people familiar with the situation have said. SJB will have at least $750 million of capital and may buy assets of banks seized by the Federal Deposit Insurance Corp., according to the notice.
SJB wouldn’t start operations until its bid for an institution is accepted by the FDIC, the letter said. Final approval depends on getting Federal Reserve and FDIC membership, the notice said.
U.S. regulators told Corus it was undercapitalized as of May 1, and said they might place the bank into receivership if it failed to satisfy capital requirements, according to a May 18 filing with the U.S. Securities and Exchange Commission. The bank told investors in April that its survival was in doubt.
The government took over Corus Friday evening and sold its deposits to Chicago-based MB Financial Bank.
Craig Studnicky, president of International Sales Group, an Aventura-based sales and marketing company for the development industry, said Corus’ collection of condo projects was mixed bag of both solid and distressed properties.
Some sold out long ago, while others remain in limbo, such as the ultra-luxury Paramount Bay, whose units were priced at $900,000 and up at peak, Studnicky said.
Earlier this year, however, Corus, forced to contend with brutal market conditions, allowed some developers to slash prices in order to recoup what they could.
Among them was Key International, developers of The Ivy and Mint. In May, with Corus’ blessing, Key International slashed unit prices at The Ivy, 90 SW 3rd St., Miami, to the mid-$200 per square foot, down from about $500 per square foot at presale. The strategy led to a flurry of sales, nearly selling out the building.
Ultimately, however, the bank was unable to bear the losses, said Inigo Ardid, vice president for Key International.
Ardid said Corus’ failure would be a good thing for the market and for sales in its South Florida projects, such as Mint, which sold out during its pre-construction phase, but later fell victim to the market. Many buyers, who put 20 percent down, are reluctant to close.
“Whoever controls those notes is going to be at a very discounted value and that will be good for pre-sale buyers and new buyers,” who could see greater discounts, Ardid said.
Studnicky predicted sales would be frozen in Corus’ former projects, such as Paramount Bay, for the next two to three months, as the new owner assessed the status of the bank’s assets.
Curbed LA
September 21, 2009 Monday 1:32 PM EST
Awaiting the Thaw, Grand Ave Project Going Nowhere
The Downtown News is out with their check of what’s happening with downtown’s real estate projects, and notably, save for the park portion breaking ground next summer, there’s absolute no movement on the Frank Gehry-designed Grand Ave project, that big mixed-use development. Bill Witte, West Coast president of Related Companies, tells the paper the company “is waiting out the current recession and the frozen lending markets, and will still need an estimated $700 million construction loan. The projects entitlements will remain in place until February 2011.” The delay means that Related will continue to fork over a $250,000 a month penalty until ground is broken. Additionally, the green condo tower that is 655 Hope is now giving an October opening date (although they have missed previous opening dates), and at least in the short-term, downtown will be spared another Tuscan-themed building–due to the economy Orsini developer Geoff Palmer’s Pierro II has been put on hold. And if you were wondering if that “paint-splattered sign advertising” Park Fifth has been taken down, no, it has not.
ArabianBusiness.com
June 15, 2009 Monday
UAE, US venture to identify real estate projects
BYLINE: Martin Morris
LENGTH: 269 words
Gulf Capital, the Abu Dhabi asset management firm, and Related Companies, the US-based real estate company, confirmed on Monday the launch of a new regional real estate development venture that will focus primarily on high-end, mixed-use real estate destination developments in the Gulf.
The new pan-GCC company, “Gulf Related”, will be based in Abu Dhabi and will identify and pursue several large-scale mixed-use real estate development opportunities, initially in Abu Dhabi and Saudi Arabia, followed by a Middle East and Northern Africa (MENA) wide regional expansion at a later stage.
Gulf Related’s initial capitalisation is AED180 million ($50 million) and is expected to rise to over AED1 billion by 2012.
The company raised its profile in 2007 when it aligned itself with a consortium of international partners through a $1.4 billion equity and debt investment by Goldman Sachs, MSD Capital, Kuwait Investment Authority, The Olayan Group and Mubadala Development Company.
Gulf Related’s senior management will be led by Kenneth A. Himmel, President and CEO of Related Urban, the mixed-use division of Related Companies.
Commenting on the new venture, Hareb Al Darmaki, Chairman of Gulf Capital, said: ”The GCC enjoys a robust macro-economic outlook, significant liquidity and a young growing population.”
Stephen M. Ross, Chairman, founder and CEO of Related Companies said: ”It is our firm belief that the GCC is one of the fastest growing and most promising regions in the world and we are confident that together we will identify and unlock select exemplary and sustainable development opportunities.”
Daily News (New York)
May 31, 2009 Sunday
Correction Appended
SPORTS FINAL EDITION
YOU CAN COLOR THE CITY COUNCIL GREEN Politicians often help those who fill campaign war chests
BYLINE: BY BENJAMIN LESSER and ERIN EINHORN DAILY NEWS STAFF WRITERS
SECTION: NEWS; Pg. 8
LENGTH: 1557 words
MONEY TALKS in New York’s historic City Council chambers.
Year after year, powerful interests shower Council members with campaign contributions, hoping for – or perhaps expecting – a little something in return.
A month-long Daily News investigation found their dreams often come true.
. Many real estate developers gave money before – or after – their plans were approved. Two of the biggest gave more than $100,000 each.
. Council members sponsored laws benefiting some of their donors.
. Taxpayer dollars were funneled to nonprofit groups whose employees made sure to write campaign checks.
Real estate developers were among the biggest donors, pumping at least $1.5 million into Council campaign coffers in the last four years, often while seeking approval of building projects. A company at the center of a corruption investigation gave Council members at least $70,000.
“One has to be concerned that [campaign money] distorts the approval process,” said Brad Lander, former director at the Pratt Institute for Community Planning and a candidate for City Council.
Some examples:
. Councilwoman Melinda Katz, head of a committee that reviews development, got at least $480,000 from real estate interests in the last four years.
. Councilwoman Maria del Carmen Arroyo got $33,500 from employees of a developer building a 600-unit apartment complex and shopping center in the Bronx.
Thirty-eight of the 51 Council members got some campaign cash from nonprofits to which they steered millions of dollars in taxpayer funding. The News found contributions of at least $200,000 from nonprofit employees and some board members in the last four years.
Nearly all the donations are legal, but special-interest donors often skirt the law by bundling checks from a company or corporation to raise more money. It is illegal for the bundler to repay the “donors” because that would mask the source of the funds.
Veteran lobbyist George Arzt and his colleagues at George Arzt Communications have given more than $23,000 to 17 Council members since 2005.
He concedes that as long as people believe they need to contribute to have influence, the money will flow – and some pols will take advantage.
“There are elected officials who, believe it or not, will hand you [an invitation to] a fund-raiser when you leave their office [after a lobbying visit],” Arzt said. “I’m genuinely embarrassed when that happens.
“Are there people that I give [money to] because I have to give? Sure, but most of the time that is not the case,” he said, adding that he thinks the problem is more a matter of perception than reality.
Reform measures to further restrict donations took effect last year, following reports of members steering taxpayer money to nonprofits run by relatives and campaign donors.
Starting in February 2008 through December, maximum donations from any entity doing business with the city, including city vendors and developers seeking approval for projects, were reduced dramatically. For City Council candidates, that meant a drop from $2,750 to $250.
The News found that developers needing Council approval for specific projects wrote hundreds of campaign checks right up to – or a bit past – the reform deadline.
When a project includes zoning, parking and other changes, it needs approval from community boards, the borough president, the City Planning Commission and finally the Council.
Cash & endorsements
Melinda Katz (D-Queens), chairwoman of the committee that reviews development and a candidate for controller, got 31 donations totaling $65,000 from officers of the Real Estate Board of New York, a group that hired lobbyist Stanley Schlein to press the City Council.
Last week, Schlein helped get Katz the endorsement of the Bronx Democratic Party in her bid for controller.
Katz’s spokesman said she “is the only candidate who has forced developers to create more units of affordable housing and who has protected dozens of neighborhoods from the dangers of overdevelopment.”
Affluent firms like The Related Companies and Rudin Management each donated more than $100,000 to Council members who have approved their projects. Midsize developers like Two Trees – which two weeks ago sought Council approval for a new tower next to the Brooklyn Bridge – gave $63,000.
‘Bundles’ for Arroyo
Some donations are specific.
Maria del Carmen Arroyo (D-Bronx) got $33,225 last year from 30 donations raised by employees of Jackson Development. That’s 16% of the $205,000 she’s raised since 2006.
The contributions, worth up to $50,025 when public matching dollars are factored in, all arrived on March 12, 2008, just as the Planning Commission was considering approving Jackson’s proposed shopping and residential complex on St. Ann’s Ave.
The commission signed off on the project two weeks later, and the borough president followed suit April 24. The Council approved the rezoning on July 23, and the project is underway.
Arroyo said she supported it because “it takes property that had been vacant and underutilized for probably more than two decades [and] brings to the community affordable housing.”
“I do not have intimate knowledge of who contributes what to my campaign,” she said.
Jackson donors did not return calls.
It’s all ‘Related’
One of the biggest givers is Atlantic Development Group, a firm at the heart of a city Department of Investigation inquiry into allegations of bribery and influence peddling.
A prime example of Atlantic’s timely campaign donations can be found in the Kingsbridge Armory in the Bronx.
In early 2006, the city decided the huge white elephant should be converted to housing and commercial real estate. Councilwoman Maria Baez (D-Bronx) was named to a task force to determine the armory’s fate.
Then Atlantic pitched turning the building into a shopping and housing development. Two months later, Baez got two Atlantic contributions worth $5,000.
Soon it was clear two major developers were ahead of the pack – Atlantic and The Related Companies. On Oct. 15, 2007, Baez received three more Atlantic donations worth $8,000, as well as $8,000 from Related executives.
Two weeks later it was official: Atlantic and The Related Companies were the finalists. On March 31, 2008, Related won. A month later, Baez got another $1,000 from Related.
Baez did not return calls. An Atlantic spokesman said all of the contributions were legal.
The restrictions apply only to top company executives and “senior managers” – but not to their relatives. After the $250-per-donor restriction on land-use donations took effect Dec. 3, relatives of Atlantic’s executives gave contributions ranging from $1,925 to $2,750 to Ruben Diaz and Arroyo.
“
Graphic: SOME BIG DONORS COULD REALLY COUNT ON THESE COUNCIL MEMBERS
COUNCILWOMAN
MARIA DEL CARMEN ARROYO
GOT: $33,500
FROM: Employees of a developer
COUNCILWOMAN
MARIA BAEZ
GOT: $22,000
FROM: The Related Companies and Atlantic Development Group
COUNCILMAN
DANIEL GARODNICK
GOT: $35,000
FROM: Development opponents
COUNCILWOMAN
MELINDA KATZ
GOT: $480,000
from: Real estate interests
COUNCILMAN
ERIC GIOIA
GOT: $14,850
FROM: Interests tied to
Silvercup Studios
Phoenix New Times (Arizona)
May 14, 2009 Thursday
CityNorth: With Nordstrom Gone, Phoenix Fights for the Right to Bail Out Abu Dhabi
BYLINE: Sarah Fenske
LENGTH: 1417 words
No doubt about it: Phoenix is broke. Mayor Phil Gordon is flying to Washington to beg for federal bailout bucks so frequently, he should probably register as a lobbyist.
So it’s downright bizarre that, in the midst of this nightmare, city leaders are fighting desperately to give away $97 million to wealthy investors. Never mind all the neighborhoods in this burg that have lost senior centers, bus routes, and library hours – we’re hoping to give our money away to an Arab emirate, a wealthy Saudi family, and even Michael “Dude, You’re Getting a” Dell.
Reading that, you might guess that I’ve got new details about CityNorth. You’d be correct. And if you thought this deal was infuriating before, just wait ’til you read this.
Here’s the backstory, nutshell version: Phoenix agreed to give Chicago-based Thomas J. Klutznick Company half the sales tax generated at CityNorth, Klutznick’s new shopping center off the Loop 101 and 56th Street, for 11 years. But the giveaway was so over the top that it inspired state legislation to stop such subsidies in the future, a lawsuit from the Goldwater Institute, and, finally, an appellate court opinion that struck down the deal in no uncertain terms.
Clearly, this one stunk. That’s why it’s so weird that Phoenix
continues to fight to keep it. Records show that we’ve spent $551,229 on legal bills to defend the subsidy.
We’re not done yet. In February, the City Council voted to appeal the loss to the Arizona Supreme Court. The court will decide in June whether to give the case a hearing.
But as the economy continues to flail and we learn more about the backers of CityNorth, I think the Supremes’ decision may get easier.
As it turns out, we’re not simply trying to give our tax dollars to some guys in Chicago. We’re also trying to line the pockets of some of the wealthiest investment groups in New York City, Saudi Arabia, and Abu Dhabi.
CityNorth’s developer is, in fact, Klutznick. But, as is usually the case, the financing for this project is complicated.
Records show that Klutznick is developing CityNorth with one of the nation’s top real estate development firms, Related Companies. And in December 2007, Related took on its first outside investors: Goldman Sachs, MSD Capital, the Olayan Group, and Mubadala.
We’ve all heard of Goldman Sachs, but the others are equally
affluent. MSD Capital is computer titan Michael Dell’s personal
investment account. The Saudi Arabia-based Olayan Group was founded by Suliman Olayan, who was 38th on Forbes’ list of the world’s richest when he died in 2002. And Mubadala? That’s an investment fund owned by the oil-rich state of Abu Dhabi.
The world economy is complicated, and it should surprise no one that international money is backing the CityNorth project. But the list of filthy-rich investors only makes it clearer why Arizona’s Constitution bars public funds from going to private entities for private purposes.
If we can’t afford to keep the city pools open and the parks
maintained, we have no business giving away tax dollars to Michael Dell and Goldman Sachs.
And if the people can’t afford bread, why the heck should they be forced to buy the rulers of Abu Dhabi a three-layer cake?
Last December, the Arizona Court of Appeals spanked the city of Phoenix so hard, the bruises should still be there today.
As the three-judge panel explained in its unanimous decision, the populists who wrote the Arizona Constitution didn’t like the citizenry being taxed to make the rich richer. Their “gift clause” decrees that neither the state nor any municipality shall “make any donation or grant by subsidy or otherwise” to private parties.
As the Supreme Court explained in 1925, the idea was “to prevent the use of public funds . . . in aid of enterprises apparently devoted to quasi- public purposes but actually engaged in private business.”
The “quasi-public” purpose on the CityNorth subsidy is tax dollars. The city has argued that its giveaway will allow developers to sign quality retail outlets (read: Nordstrom) that would otherwise land in Scottsdale.
Even if Phoenix must give away a staggering sum, the argument goes, we’ll still end up with more revenue than we’d have without the development.
But that’s not necessarily true. CityNorth sits in one of the
toniest areas in Phoenix. Something commercial would surely have been built there, even without a subsidy.
Indeed, as the appellate judges noted, by the time Phoenix officials began negotiating with Klutznick, “the major infrastructure for the area had already been constructed.” Doesn’t sound like the fields would lie fallow without government aid.
And, as it turns out, even the promise of a massive infusion of government money can do only so much. Last week, the Phoenix Business Journal reported that Nordstrom is officially pulling out of the project. Company officials cited the bad economy.
Of course, the Phoenix tax giveaway wasn’t predicated on Nordstrom’s presence. Staffers know that to get around the gift clause, they have to pretend they aren’t just handing over tax dollars to a developer. Typically, that means paying for sewer lines or other infrastructure.
But because this project was so far under way by the time
negotiations began, the city had to couch its donation in convoluted terms: The city would pay for a parking garage that could be used by park-and-ride transit users.
Staffers barely bothered to pay lip service to the pretext. In its agreement with Klutznick, the city failed to ensure that public transit users would get prime spaces – or even dedicated ones. As the appellate judges wrote, “There may be times when guests, customers, employees, vendors, and suppliers of the shopping center will occupy all the spaces. The agreement also provides that CityNorth has the right to change which spaces are designated for city use.”
In other words, we pay for a parking garage; CityNorth’s owners get to do whatever they like with it.
Fortunately, the appellate justices saw through the smokescreen. “Simply asserting that [the city's tax remittances] are made to obtain ‘public parking’ does not mean the payments will serve a public purpose,” they noted. “In this case, the ‘public’ that will use the spaces are actually the private customers of CityNorth, who will be parking their cars so that they can do business with CityNorth’s retail tenants.”
As the justices concluded, “We think these payments are exactly what the gift clause was designed to prohibit.”
Tom Simplot was one of two opposition votes to the CityNorth subsidy when it was up for approval in 2007 and, more recently, the only one to vote against appealing the case to the Supreme Court.
Simplot’s been amused by news coverage suggesting that worthy public programs could be in trouble if the decision stands. (The Arizona Republic, bizarrely, wrote a story suggesting that cities could no longer give block grants to neighborhood groups in light of the CityNorth decision – as if helping a neighborhood has anything in common with giving zillions to developers.)
The hysteria is coming from the top, Simplot says. The city’s
attorneys “will tell you the sky is falling, that the world is going to end if we allow this decision to stand.
“Well, I for one read the opinion and, while I’m not an expert on this, what I read was the court’s frustration with the extent of this incentive,” he says. “They were saying, ‘You guys went too far over the line. Somebody needs to bring you back.’”
Simplot has it exactly right. The appellate verdict doesn’t strike down all subsidies; it strikes down this subsidy. And it strikes down this one for good reason. The city went too far. It gave away too much.
Don’t take my word for it. Talk to Scottsdale Mayor Jim Lane. He’s asking his city council next week to consider a “friend of the court” brief to the Supreme Court.
It’s a gutsy move, because Scottsdale would be filing in opposition to Phoenix. It would be asking the court to let the verdict stand, to declare the subsidy unconstitutional.
Scottsdale has figured out what Phoenix refuses to admit: Giving away so much money on a deal this silly helps no one – except the developers and their investors, that is.
The sky really is falling in some parts of this city. But that has nothing to do with Klutznick and his backers not getting their payday. This giveaway was a bad idea when times were flush; now it’s pure idiocy.
The appeals court gave us a get-out-of-jail-free card. Only in Phoenix would we rather spend tens of thousands rotting in our cell than use it.
SECTION: Section RE; Column 0; Real Estate Desk; BIG DEAL; Pg. 2
LENGTH: 406 words
WHILE some developers have cut asking prices and made concessions to soothe the fears of anxious buyers, the Related Companies, the developer of some of New York’s most expensive residential real estate, including the Time Warner Center in Columbus Circle, is holding firm.
It is now completing work on the Brompton, a 22-story red-brick and limestone building designed by Robert A. M. Stern, on East 85th Street and Third Avenue. So far, 60 buyers at the Brompton have paid more than $125 million to take title to their apartments, ”all at the original contract price,” said Joanna Rose, a vice president for corporate communication at Related. The building has about 180 apartments, and most, including many of the largest, are in contract.
This has caused angst among a group of buyers who are looking for price concessions or a chance to back out of their contracts without losing their deposits.
Last week, Adam Leitman Bailey, a lawyer, began circulating the first of a series of lawsuits he said he planned to file on behalf of 17 buyers in contract at the Brompton who have refused to close without concessions from the sponsor. They cite falling Manhattan market values and problems getting financing for their apartments.
The suit, to be filed this week, will ask for a court order preventing an escrow agent from giving the developer the $1.15 million deposit paid when the contract for a $5.7 million condo was signed in 2007. The suit is also seeking the return of the deposit and at least $5 million in damages.
In the papers, Mr. Bailey contends that the developer did not permit an engineer retained by the buyers, Marc M. Rossell, a securities lawyer, and his wife, Florencia Masri, to inspect the building’s common area, and had misrepresented the views from the 3,600-square-foot apartment.
Related acknowledged that it had rejected the inspection request, and its lawyers said they had no legal obligation to help Mr. Bailey conduct a ”fishing expedition.” Ms. Rose said that Mr. Bailey had made a similar argument before, only to see his clients close, rather than risk losing an apartment in the building.
The Race to the Bottom
February 18, 2009 Wednesday 12:00 PM EST
In re Centerline Holdings Co., Sec. Litig. and Scienter
In In re Centerline Holdings Co., Securities Litigation, No. 08 Civ. 505 (S.D.N.Y. Jan. 12, 2009) the court granted Centerlines motion to dismiss because the plaintiffs failed to argue particularized facts sufficient to demonstrate scienter. Plaintiffs alleged that Centerline Chairman Stephen M. Ross and Managing Trustee Jeff T. Blau violated Section 10(b) and Rule 10b-5 by engineered a fraudulent transaction with The Related Companies, L.P., (œRelated) to increase their voting control over Centerline and increase their dividends.
Centerline is a trust company with holdings in tax-exempt affordable housing. In early 2007, it began transforming the company into an alternative asset management company. As part of the process, the Centerline entered into an agreement with Freddie Mac (NYSE:FRE) to sell its tax-exempt bonds. Centerlines largest shareholder, the Related Companies, L.P., would provide $131 million in financing in exchange for 12.2 million shares of convertible preferred stock that would pay an 11 percent dividend. It was not until December 28, 2007, nearly a year later, that Centerline made this plan public and announced that it would cut dividends from $1.68 to $0.60 per share. The announcement resulted in a 25 percent drop in the its stock price.
Plaintiff sought compensatory damages for losses under Section 10(b) and Rule 10b-5 of the Securities Exchange Act. As part of Plaintiffs claim, they must prove that Centerline acted with scienter when omitting the plan from its investors; scienter may be shown with particularized facts indicating motive and opportunity to commit the fraud.
Plaintiff alleged that Ross and Blau were motivated to commit the fraud because of the increased voter control and dividends. The United States District Court for the Southern District of New York, held that Plaintiffs allegations of motive were insufficient because the allegations amounted to evidence of why Ross and Blau would want to invest, but not why they would conceal the information. The Court pointed out that it would have been more advantageous to release the information sooner so they could negotiate a better stock price. For example, Relateds common shares were converted at a price of $10.75 before the announcement; Centerlines shares dropped to a price of $7.70 after the announcement. Therefore, since Related could have negotiated for a more favorable share price, Ross and Blau lacked the motivation to conceal the information. Since the complaint lacked particularized facts that Ross and Blau acted with scienter, the court granted defendants motion to dismiss.
US States News
August 25, 2008 Monday 4:35 AM EST
CITY ATTORNEY AGUIRRE ADVISES CENTRE CITY DEVELOPMENT CORPORATION ON CORRECTING CONFLICT-OF-INTEREST VIOLATIONS
BYLINE: US States News
LENGTH: 274 words
DATELINE: SAN DIEGO
The office of the San Diego City Attorney issued the following news release:
In a memorandum sent today to the Chairman of the Centre City Development Corporation (CCDC), San Diego City Attorney Michael Aguirre stated that the organization must take “new official action” to correct conflict-of-interest violations by its former executive director Nancy Graham.
“California’s Government Code section 1090 is quite strict and expressly provides that every contract made in violation is void,” said City Attorney Aguirre. “In order to clear up the violation, a government body must take new official action without the participation of any conflicted officials,” Aguirre added.
At issue is the CCDC’s approval of a $409 million mixed-use condominium and hotel development project known as Seventh & Market. In March, 2007, CCDC selected Related of California, an affiliate of Related Co., a large New York real estate development firm. Because it was going to include an affordable housing component, an $8.7 million city subsidy was also earmarked for the project.
Questions arose earlier this year about a possible conflict-of-interest Graham had due to a business relationship with the Florida affiliate of the Related Co. It was discovered that N-K Ventures, a Florida development company owned by Graham and her husband Kevin Lawler, received payments of $7 million as part of a 2002 condominium development deal with the Related Co.‘s Florida affiliate, and the Lennar Corporation.
Graham did not disclose any of the income she received on her Statement of Economic Interests as is required by state and local law. She resigned from CCDC on July 24.
LA Weekly (California)
August 21, 2008 Thursday
Grand Avenue Drenched in Misdirection;
L.A. politicos don’t understand what they vote on. Taxpayers are on the hook
BYLINE: Tibby Rothman
LENGTH: 818 words
The Luxe Grand Avenue Project, if ever built on a hunk of taxpayer-owned land downtown, will feature a glittery five-star hotel and the curious involvement of the wealthy royal family of Dubai, who control a tiny Gulf oil nation cited by the U.S. State Department for human rights abuses.
One thing the public project does not feature, however, is transparency.
In a series of moves unusual even for the cloaked deals that precede official rubber-stamping of controversial projects in Los Angeles, key politicians in City Hall and the County Hall of Administration will not – or maybe cannot – answer basic questions about a project that will receive up to $158 million in taxpayer subsidies.
In recent days, City Councilwoman Jan Perry and County Supervisor Gloria Molina, two main drivers behind the Grand who sit on the obscure Grand Avenue Authority, which oversees the $3.1 billion project, refused to answer a fundamental question posed by the Weekly: Had these two powerful women actually read the existing deal with the private developers before they both agreed to delay the groundbreaking yet again?
The developer, the nationwide Related Companies, says it needs more time because the construction loan market is virtually frozen. That sounded logical – at first. Loans are so hard to get right now that Related Companies is being required to produce significantly more project-cost information to the banks. In the past, the “construction documents” required by banks had to be 50 percent completed. But now, Related is being required to provide far more detailed information and submit documents that are 80 percent complete.
The spin from Molina, Perry and other politicos sounds simple – Related just needs several extra months to do the unexpected paperwork. But the truth is, the existing agreement clearly shows that in 2007 the developer promised it could provide all this documentation within a six-month time frame. Now it has been granted 10 months.
Why? Bill Witte, president of Related Companies, told L.A. Weekly that the delay is being caused by something else – challenges they face over how to build the Frank Gehry-designed complex of shops, condos and a hotel adjacent to Disney Hall. It’s the “most complicated design … L.A. has ever seen,” Witte says.
In addition, he says, they needed more time to deal with the unexpected soaring costs of materials. But an expert familiar with such large projects says that the costs of materials “has been off the charts” since late 2005 or early 2006. It’s not a recent phenomenon, as Witte claims.
Supervisor Molina and Councilwoman Perry, who have voted repeatedly for taxpayer funding for the project, initially ducked the Weekly’s queries on the obvious discrepancies in explanations offered about the lagging groundbreaking, now more than two years late. A Perry aide eventually e-mailed the Weekly to insist that Perry had read the existing contract with Related before giving the company an extra four months, but the aide could not explain why Perry thought the developer should have more time to complete long-expected work.
Perry and Molina insist that the project’s smattering of affordable housing units and its “Civic Park” plan – actually just a heavily paved retooling of the County Mall – are extra goodies that justify the public help being poured in. But in fact, the affordable housing and the retooled square are not extra public “benefits” arising from a private project. Both are being extensively paid for by the taxpayers.
In a bizarre recent move, $30 million from a housing fund created by California voters to help house the poor and battered women was diverted to help cover the price of the 16-acre “Civic Park” that’s recently emerged as little more than a square with a few trees and is clearly designed for commercial uses.
In a government e-mail obtained by the Weekly, one city expert on housing subsidies also sharply questioned the taxpayer help pouring into the Grand’s affordable housing component. The private e-mail from a staffer at the Community Redevelopment Agency, dated August 1, 2007, notes that Related Companies got a hefty $10 million in taxpayer funds to subsidize 100 affordable units at the Grand. By comparison, a developer in an unrelated project got $8 million to subsidize 259 affordable units.
But from the beginning, the numbers on the Grand never penciled out.
“Nothing would give me more pleasure than to say that this thing’s a crock and it’s going to die, but I don’t think it’s true,” says one real estate expert familiar with the Grand. Because Related strikes so many public/private deals with other city halls across the country, it can’t be seen as abandoning a flagship project. “They can’t be perceived to be ‘walking away,’” the expert notes.
“What does strike me,” he warns, “is that the pattern of this project has been to ask for progressively more public support and assistance.”
Related Companies Defaults Nationwide
Developer follows same game plan across country
Promise, Amend, Bankrupt, Promise, Amend…
———————————————————————————————
Aspen Times, November 24, 2009, “More Legal Woes for Base Village”
“At one point earlier this year, about 15 contractors had filed more than $3 million worth of liens in Pitkin County – in less than three months – against the base developer [Related Westpac].”
Aspen Times, August 19, 2009, “Electrician Sues Snowmass Base Developer”
Aspen Times, April 29, 2009, “Snowmass Reacts to Foreclosures”
Aspen Times, August 27, 2009, “Sold! Back to Lender”
———————————–
from the Snowmass Sun, August 27th, 2009
“There was no bidding war and little drama Wednesday during what is believed to be the largest foreclosure sale in Pitkin County history, according to Tiffany Wancura, chief deputy treasurer and public trustee for Pitkin County.
The morning auction in Aspen ended with noteholder The Related Companies LP retaining the rights to six Snowmass Village properties — the Snowmass Center, Snowmass Mountain Chalet, Snowmass Inn and three Sonnenblick units. Related Companies bought the deeds of trust on these properties in June from Bank of America for what has been suggested by sources as a below-market value.
Related’s combined bids Wednesday totaled $100,980,000, or about $11.5 million less than the loan and interest amount, according to the treasurer’s office. The properties were used as collateral by Related WestPac when it made the majority of its Snowmass Village purchases in 2007. (Related Companies is Related WestPac’s managing partner.)
“Today’s purchase of assets will allow us to continue to move forward and work with the town and the community on a plan for the long-term vitalization of the Center and West Village,” said Related spokeswoman Joanna Rose.
“It’s all about stabilization,” echoed Related WestPac President Dwayne Romero, who noted that “these are important assets and they need stabilizing.”
With stabilization has come some collateral damage in the form of an anticipated financial loss by local owner and long-time Snowmass Village resident Mark Moebius, whose family has owned the Snowmass Inn for more than 30 years.
In May 2007, Moebius entered into a partnership with Chaffin, Light and Wilhelm, forming the CLWM limited liability company. The partner’s idea was to redevelop the Snowmass Inn and connect it to the Snowmass Real Estate office, which was located one level above the Daly Lane lodge. “We were going to be the catalyst to the mall rehabilitation,” Moebius said.
In early 2008 , that partnership “cut a deal” with Pat Smith and Related WestPac, and bought out Chaffin, Light and Wilhelm’s assets in this LLC, Moebius said. Unbeknownst to Moebius, however, Related WestPac mortgaged the Snowmass Inn property.
Moebius said he “got some cash” from the initial deal but “left the majority of the money in. As near as I can tell, that evaporated” as a result of the foreclosure. Related WestPac spokesman Steve Alldredge confirmed that the partnerships that were foreclosed upon did lose their assets. Moebius said he hoped to speak with representatives from either Related Companies or Related WestPac about whether he was due compensation.
“We’re collateral damage in a much bigger wreck,” Moebius said. He also noted a bit of irony about the auction day.
“My dad bought the Snowmass Inn 33 years ago when it was in foreclosure.”
The auction took place on these same courthouse steps. Elected officials from Snowmass Village recognized that a family who contributed greatly to the formation of the resort may have gotten a raw deal.
“[Moebius]‘ family has invested heavily in Snowmass. Love, sweat, tears and blood. Unfortunately, the legal system doesn’t recognize that,” said Snowmass Village Town Councilman John Wilkinson.
While sympathetic, Mayor Bill Boineau said that unfortunately “it’s business,” and “these partnerships have to get wiped out” in order for a developer to reset his dial and move forward.
Dreams dissolved
Leading the charge to buy the properties during the go-go days of real estate was former Related WestPac president Pat Smith, who also turned out Wednesday for the auction. In the near future, Smith said he will be concentrating on investments around Santa Barbara, Calif., where he also owns a home.
Smith said if he had any regrets it’s that “we lost a lot of money. At the time, the ambition to be master developer for Snowmass was needed. Everybody that was involved really believed that.
“I’m not sad or sorry at all that I was involved from the beginning. It was my dream” to contribute to the town’s renaissance, Smith said. But the “catastrophic turn of [economic] events” was not something that could have been foreseen.
Smith said he remains a part-owner with Related WestPac. Romero said that the company is still working on completing Base Village, operating Aspen/Snowmass Hospitality and doing day-to-day management of the aforementioned assets.
“From our perspective, not much has changed,” Romero said. Except the value of these assets, of course, which are “not the same as when they were purchased in 2006 and 2007,” he acknowledged.
The breakdown of the successful bids for the parcels are as follows: $52,470,000 for the Snowmass Center and environs (except the gas station and four single-family lots behind Woodbridge); $30,240,000 for the Snowmass Mountain Chalet; $13,440,000 for the Snowmass Inn and a pocket park; $2,280,000 for Sonnenblick units 1 and 5 and $2,550,000 for Sonnenblick unit number 4.
Pitkin County will receive $172,000 plus change as its fee for acting as a public trustee, according to Wancura. In doing a search back to 1994, on behalf of two local newspaper reporters, she determined that Wednesday’s foreclosure sale was by far the largest, at least in recent years.
The town of Snowmass Village will not, however, benefit directly from the sale. According to Town Clerk Rhonda Coxon, foreclosures are exempt from real estate transfer tax collections.”
mosberger@snowmasssun.com
Palm Beach Post (Florida)
November 30, 2009 Monday
FINAL EDITION
SALES AT FORECLOSED CITYPLACE TOWER CONTINUE AT SNAIL’S PACE
BYLINE: Kim Miller
SECTION: LOCAL; Pg. 2B
LENGTH: 431 words
It’s been five months since the 20-story CityPlace South Tower in downtown West Palm Beach went into “friendly” foreclosure after selling just 39 of 420 units.
While sales have continued in the finished building, they’re less than gangbuster. As of mid-month, 55 units had sold, 13 percent of total inventory.
Another 10 units are under contract with closing dates set before Christmas, said Steven Kerr, a managing director at Scotia Capital, which acquired title to unsold South Tower units after the foreclosure.
The Related Group had contracted to sell 367 of the units while the building was under construction, but the housing market tanked and buyers walked away.
Betsy McCoy, vice president and associate general counsel for The Related Group, said about 25 contract holders have filed lawsuits trying to get back security deposits of as much as $50,000.
“Some people just bought these condos thinking they were going to flip them, and they reached a point where there was no one left to flip to,” McCoy said. “Another root problem is people can’t secure condo financing and they get caught in a real hard place.”
South Florida Business Journal
November 25, 2009 Wednesday
Related Group of Florida repays $13M loan
BYLINE: Brian Bandell
LENGTH: 260 words
The Related Group of Florida fully repaid its $13 million mortgage covering some undeveloped property in Miami Beach.
The loan covers 13 parcels at 834 Commerce St., which is near Related’s Apogee project. No construction has taken place. A Related official wasn’t immediately available for comment.
Related’s affiliate, TRG Alaska III, had its mortgage with Wachovia Bank modified at $13 million for the properties in November 2006. Two years later, it sold part of the land to a developer for $5.5 million. No other sales were recorded.
Among the largest condominium developers in South Florida, Related is trying to close out sales and repay large mortgages in Icon Brickell, 500 Brickell and the Trump Towers in Sunny Isles Beach. Its Trump Hollywood and St. Regis Resort & Residences at Bal Harbour are under construction.
Last month , the Business Journal reported that Related had negotiated with its lenders to offer a 30 percent discount to the majority of its contract holders in its 1,800-unit Icon Brickell project.
In June , the Business Journal reported that a lawsuit had been filed on behalf of 80 buyers at Trump Towers in Sunny Isles Beach asking that their contracts be cancelled and more than $20 million in deposits returned.
That suit alleged that the developers — Related Group and New York-based Dezer Development — used the Trump name to attract buyers, but did not obtain a license agreement for the associations or purchasers to use the Trump name, so it will likely be changed once the developers are no longer involved with the project.
The Miami Herald
September 12, 2009 Saturday
Miami Dolphins owner Ross approved for bank; may bid on Corus assets
BYLINE: DOUGLAS HANKS AND MONICA HATCHER, dhanks@MiamiHerald.com
LENGTH: 880 words
Miami Dolphins owner Stephen Ross has won permission to form a bank that may help him bid for assets of troubled condo lender Corus Bankshares, which was seized by federal regulators on Friday, according to recently released documents.
The documents say Adolfo Henriques, a longtime Miami banking executive, would be CEO of SJB National Bank. The bank’s name is an apparent nod to the first initials of Ross and his two partners in the venture: Jeff Blau and Bruce Beal Jr.
But Henriques said Friday he did not think Ross would actually create SJB since bank regulators have decided to split Corus’ assets into deposits and real estate holdings. That would let a real estate investor like Ross pursue the condo towers in the Corus portfolio without having to form a bank in order to take on the deposits and checking accounts, too.
“They’re not forming the bank now,” Henriques said of Ross and partners. “There are no plans to do so.”
Blau and Beal are top executives at the Related Cos. in New York, where Ross is chairman and CEO. The New York company owns a minority stake in the Related Group, the Miami condo development firm headed by Jorge Perez.
Should Ross buy the Corus portfolio, he would obtain the loans for a number of troubled South Florida projects, including the vacant Trump International Hotel and Tower in Fort Lauderdale and the Tao condo complex in Sunrise. That could mean a central role for Related of Florida. Ross and Perez are close friends, and Perez recently took on the position of vice chairman at the Dolphins.
Henriques was recently named chairman of the Coral Gables-based Gibraltar Bank, and serves as vice chairman of the Related Group of Florida under Perez. Henriques said he doesn’t know if the Miami’s Related Group would be involved if Ross obtained Corus. A Ross spokeswoman declined to comment, and Perez could not be reached immediately Friday evening.
Ross, Blau and Beal would own most of the voting shares in the proposed SJB National Bank, according to a notice dated July 31 that was posted Thursday on the website of the Comptroller of the Currency. Related Cos., the closely held New York-based real estate developer, won’t have any stake, the notice said.
The Related Cos. executives are considering a bid for Corus, the Chicago lender crippled by construction loans for condominiums, people familiar with the situation have said. SJB will have at least $750 million of capital and may buy assets of banks seized by the Federal Deposit Insurance Corp., according to the notice.
SJB wouldn’t start operations until its bid for an institution is accepted by the FDIC, the letter said. Final approval depends on getting Federal Reserve and FDIC membership, the notice said.
U.S. regulators told Corus it was undercapitalized as of May 1, and said they might place the bank into receivership if it failed to satisfy capital requirements, according to a May 18 filing with the U.S. Securities and Exchange Commission. The bank told investors in April that its survival was in doubt.
The government took over Corus Friday evening and sold its deposits to Chicago-based MB Financial Bank.
Craig Studnicky, president of International Sales Group, an Aventura-based sales and marketing company for the development industry, said Corus’ collection of condo projects was mixed bag of both solid and distressed properties.
Some sold out long ago, while others remain in limbo, such as the ultra-luxury Paramount Bay, whose units were priced at $900,000 and up at peak, Studnicky said.
Earlier this year, however, Corus, forced to contend with brutal market conditions, allowed some developers to slash prices in order to recoup what they could.
Among them was Key International, developers of The Ivy and Mint. In May, with Corus’ blessing, Key International slashed unit prices at The Ivy, 90 SW 3rd St., Miami, to the mid-$200 per square foot, down from about $500 per square foot at presale. The strategy led to a flurry of sales, nearly selling out the building.
Ultimately, however, the bank was unable to bear the losses, said Inigo Ardid, vice president for Key International.
Ardid said Corus’ failure would be a good thing for the market and for sales in its South Florida projects, such as Mint, which sold out during its pre-construction phase, but later fell victim to the market. Many buyers, who put 20 percent down, are reluctant to close.
“Whoever controls those notes is going to be at a very discounted value and that will be good for pre-sale buyers and new buyers,” who could see greater discounts, Ardid said.
Studnicky predicted sales would be frozen in Corus’ former projects, such as Paramount Bay, for the next two to three months, as the new owner assessed the status of the bank’s assets.
Curbed LA
September 21, 2009 Monday 1:32 PM EST
Awaiting the Thaw, Grand Ave Project Going Nowhere
BYLINE: Dakota
LENGTH: 215 words
Sep. 21, 2009 (Curbed delivered by Newstex) –
The Downtown News is out with their check of what’s happening with downtown’s real estate projects, and notably, save for the park portion breaking ground next summer, there’s absolute no movement on the Frank Gehry-designed Grand Ave project, that big mixed-use development. Bill Witte, West Coast president of Related Companies, tells the paper the company “is waiting out the current recession and the frozen lending markets, and will still need an estimated $700 million construction loan. The projects entitlements will remain in place until February 2011.” The delay means that Related will continue to fork over a $250,000 a month penalty until ground is broken. Additionally, the green condo tower that is 655 Hope is now giving an October opening date (although they have missed previous opening dates), and at least in the short-term, downtown will be spared another Tuscan-themed building–due to the economy Orsini developer Geoff Palmer’s Pierro II has been put on hold. And if you were wondering if that “paint-splattered sign advertising” Park Fifth has been taken down, no, it has not.
ArabianBusiness.com
June 15, 2009 Monday
UAE, US venture to identify real estate projects
BYLINE: Martin Morris
LENGTH: 269 words
Gulf Capital, the Abu Dhabi asset management firm, and Related Companies, the US-based real estate company, confirmed on Monday the launch of a new regional real estate development venture that will focus primarily on high-end, mixed-use real estate destination developments in the Gulf.
The new pan-GCC company, “Gulf Related”, will be based in Abu Dhabi and will identify and pursue several large-scale mixed-use real estate development opportunities, initially in Abu Dhabi and Saudi Arabia, followed by a Middle East and Northern Africa (MENA) wide regional expansion at a later stage.
Gulf Related’s initial capitalisation is AED180 million ($50 million) and is expected to rise to over AED1 billion by 2012.
The company raised its profile in 2007 when it aligned itself with a consortium of international partners through a $1.4 billion equity and debt investment by Goldman Sachs, MSD Capital, Kuwait Investment Authority, The Olayan Group and Mubadala Development Company.
Gulf Related’s senior management will be led by Kenneth A. Himmel, President and CEO of Related Urban, the mixed-use division of Related Companies.
Commenting on the new venture, Hareb Al Darmaki, Chairman of Gulf Capital, said: ”The GCC enjoys a robust macro-economic outlook, significant liquidity and a young growing population.”
Stephen M. Ross, Chairman, founder and CEO of Related Companies said: ”It is our firm belief that the GCC is one of the fastest growing and most promising regions in the world and we are confident that together we will identify and unlock select exemplary and sustainable development opportunities.”
Daily News (New York)
May 31, 2009 Sunday
Correction Appended
SPORTS FINAL EDITION
YOU CAN COLOR THE CITY COUNCIL GREEN Politicians often help those who fill campaign war chests
BYLINE: BY BENJAMIN LESSER and ERIN EINHORN DAILY NEWS STAFF WRITERS
SECTION: NEWS; Pg. 8
LENGTH: 1557 words
MONEY TALKS in New York’s historic City Council chambers.
Year after year, powerful interests shower Council members with campaign contributions, hoping for – or perhaps expecting – a little something in return.
A month-long Daily News investigation found their dreams often come true.
. Many real estate developers gave money before – or after – their plans were approved. Two of the biggest gave more than $100,000 each.
. Council members sponsored laws benefiting some of their donors.
. Taxpayer dollars were funneled to nonprofit groups whose employees made sure to write campaign checks.
Real estate developers were among the biggest donors, pumping at least $1.5 million into Council campaign coffers in the last four years, often while seeking approval of building projects. A company at the center of a corruption investigation gave Council members at least $70,000.
“One has to be concerned that [campaign money] distorts the approval process,” said Brad Lander, former director at the Pratt Institute for Community Planning and a candidate for City Council.
Some examples:
. Councilwoman Melinda Katz, head of a committee that reviews development, got at least $480,000 from real estate interests in the last four years.
. Councilwoman Maria del Carmen Arroyo got $33,500 from employees of a developer building a 600-unit apartment complex and shopping center in the Bronx.
Thirty-eight of the 51 Council members got some campaign cash from nonprofits to which they steered millions of dollars in taxpayer funding. The News found contributions of at least $200,000 from nonprofit employees and some board members in the last four years.
Nearly all the donations are legal, but special-interest donors often skirt the law by bundling checks from a company or corporation to raise more money. It is illegal for the bundler to repay the “donors” because that would mask the source of the funds.
Veteran lobbyist George Arzt and his colleagues at George Arzt Communications have given more than $23,000 to 17 Council members since 2005.
He concedes that as long as people believe they need to contribute to have influence, the money will flow – and some pols will take advantage.
“There are elected officials who, believe it or not, will hand you [an invitation to] a fund-raiser when you leave their office [after a lobbying visit],” Arzt said. “I’m genuinely embarrassed when that happens.
“Are there people that I give [money to] because I have to give? Sure, but most of the time that is not the case,” he said, adding that he thinks the problem is more a matter of perception than reality.
Reform measures to further restrict donations took effect last year, following reports of members steering taxpayer money to nonprofits run by relatives and campaign donors.
Starting in February 2008 through December, maximum donations from any entity doing business with the city, including city vendors and developers seeking approval for projects, were reduced dramatically. For City Council candidates, that meant a drop from $2,750 to $250.
The News found that developers needing Council approval for specific projects wrote hundreds of campaign checks right up to – or a bit past – the reform deadline.
When a project includes zoning, parking and other changes, it needs approval from community boards, the borough president, the City Planning Commission and finally the Council.
Cash & endorsements
Melinda Katz (D-Queens), chairwoman of the committee that reviews development and a candidate for controller, got 31 donations totaling $65,000 from officers of the Real Estate Board of New York, a group that hired lobbyist Stanley Schlein to press the City Council.
Last week, Schlein helped get Katz the endorsement of the Bronx Democratic Party in her bid for controller.
Katz’s spokesman said she “is the only candidate who has forced developers to create more units of affordable housing and who has protected dozens of neighborhoods from the dangers of overdevelopment.”
Affluent firms like The Related Companies and Rudin Management each donated more than $100,000 to Council members who have approved their projects. Midsize developers like Two Trees – which two weeks ago sought Council approval for a new tower next to the Brooklyn Bridge – gave $63,000.
‘Bundles’ for Arroyo
Some donations are specific.
Maria del Carmen Arroyo (D-Bronx) got $33,225 last year from 30 donations raised by employees of Jackson Development. That’s 16% of the $205,000 she’s raised since 2006.
The contributions, worth up to $50,025 when public matching dollars are factored in, all arrived on March 12, 2008, just as the Planning Commission was considering approving Jackson’s proposed shopping and residential complex on St. Ann’s Ave.
The commission signed off on the project two weeks later, and the borough president followed suit April 24. The Council approved the rezoning on July 23, and the project is underway.
Arroyo said she supported it because “it takes property that had been vacant and underutilized for probably more than two decades [and] brings to the community affordable housing.”
“I do not have intimate knowledge of who contributes what to my campaign,” she said.
Jackson donors did not return calls.
It’s all ‘Related’
One of the biggest givers is Atlantic Development Group, a firm at the heart of a city Department of Investigation inquiry into allegations of bribery and influence peddling.
A prime example of Atlantic’s timely campaign donations can be found in the Kingsbridge Armory in the Bronx.
In early 2006, the city decided the huge white elephant should be converted to housing and commercial real estate. Councilwoman Maria Baez (D-Bronx) was named to a task force to determine the armory’s fate.
Then Atlantic pitched turning the building into a shopping and housing development. Two months later, Baez got two Atlantic contributions worth $5,000.
Soon it was clear two major developers were ahead of the pack – Atlantic and The Related Companies. On Oct. 15, 2007, Baez received three more Atlantic donations worth $8,000, as well as $8,000 from Related executives.
Two weeks later it was official: Atlantic and The Related Companies were the finalists. On March 31, 2008, Related won. A month later, Baez got another $1,000 from Related.
Baez did not return calls. An Atlantic spokesman said all of the contributions were legal.
The restrictions apply only to top company executives and “senior managers” – but not to their relatives. After the $250-per-donor restriction on land-use donations took effect Dec. 3, relatives of Atlantic’s executives gave contributions ranging from $1,925 to $2,750 to Ruben Diaz and Arroyo.
“
Graphic: SOME BIG DONORS COULD REALLY COUNT ON THESE COUNCIL MEMBERS
COUNCILWOMAN
MARIA DEL CARMEN ARROYO
GOT: $33,500
FROM: Employees of a developer
COUNCILWOMAN
MARIA BAEZ
GOT: $22,000
FROM: The Related Companies and Atlantic Development Group
COUNCILMAN
DANIEL GARODNICK
GOT: $35,000
FROM: Development opponents
COUNCILWOMAN
MELINDA KATZ
GOT: $480,000
from: Real estate interests
COUNCILMAN
ERIC GIOIA
GOT: $14,850
FROM: Interests tied to
Silvercup Studios
Phoenix New Times (Arizona)
May 14, 2009 Thursday
CityNorth: With Nordstrom Gone, Phoenix Fights for the Right to Bail Out Abu Dhabi
BYLINE: Sarah Fenske
LENGTH: 1417 words
No doubt about it: Phoenix is broke. Mayor Phil Gordon is flying to Washington to beg for federal bailout bucks so frequently, he should probably register as a lobbyist.
So it’s downright bizarre that, in the midst of this nightmare, city leaders are fighting desperately to give away $97 million to wealthy investors. Never mind all the neighborhoods in this burg that have lost senior centers, bus routes, and library hours – we’re hoping to give our money away to an Arab emirate, a wealthy Saudi family, and even Michael “Dude, You’re Getting a” Dell.
Reading that, you might guess that I’ve got new details about CityNorth. You’d be correct. And if you thought this deal was infuriating before, just wait ’til you read this.
Here’s the backstory, nutshell version: Phoenix agreed to give Chicago-based Thomas J. Klutznick Company half the sales tax generated at CityNorth, Klutznick’s new shopping center off the Loop 101 and 56th Street, for 11 years. But the giveaway was so over the top that it inspired state legislation to stop such subsidies in the future, a lawsuit from the Goldwater Institute, and, finally, an appellate court opinion that struck down the deal in no uncertain terms.
Clearly, this one stunk. That’s why it’s so weird that Phoenix
continues to fight to keep it. Records show that we’ve spent $551,229 on legal bills to defend the subsidy.
We’re not done yet. In February, the City Council voted to appeal the loss to the Arizona Supreme Court. The court will decide in June whether to give the case a hearing.
But as the economy continues to flail and we learn more about the backers of CityNorth, I think the Supremes’ decision may get easier.
As it turns out, we’re not simply trying to give our tax dollars to some guys in Chicago. We’re also trying to line the pockets of some of the wealthiest investment groups in New York City, Saudi Arabia, and Abu Dhabi.
CityNorth’s developer is, in fact, Klutznick. But, as is usually the case, the financing for this project is complicated.
Records show that Klutznick is developing CityNorth with one of the nation’s top real estate development firms, Related Companies. And in December 2007, Related took on its first outside investors: Goldman Sachs, MSD Capital, the Olayan Group, and Mubadala.
We’ve all heard of Goldman Sachs, but the others are equally
affluent. MSD Capital is computer titan Michael Dell’s personal
investment account. The Saudi Arabia-based Olayan Group was founded by Suliman Olayan, who was 38th on Forbes’ list of the world’s richest when he died in 2002. And Mubadala? That’s an investment fund owned by the oil-rich state of Abu Dhabi.
The world economy is complicated, and it should surprise no one that international money is backing the CityNorth project. But the list of filthy-rich investors only makes it clearer why Arizona’s Constitution bars public funds from going to private entities for private purposes.
If we can’t afford to keep the city pools open and the parks
maintained, we have no business giving away tax dollars to Michael Dell and Goldman Sachs.
And if the people can’t afford bread, why the heck should they be forced to buy the rulers of Abu Dhabi a three-layer cake?
Last December, the Arizona Court of Appeals spanked the city of Phoenix so hard, the bruises should still be there today.
As the three-judge panel explained in its unanimous decision, the populists who wrote the Arizona Constitution didn’t like the citizenry being taxed to make the rich richer. Their “gift clause” decrees that neither the state nor any municipality shall “make any donation or grant by subsidy or otherwise” to private parties.
As the Supreme Court explained in 1925, the idea was “to prevent the use of public funds . . . in aid of enterprises apparently devoted to quasi- public purposes but actually engaged in private business.”
The “quasi-public” purpose on the CityNorth subsidy is tax dollars. The city has argued that its giveaway will allow developers to sign quality retail outlets (read: Nordstrom) that would otherwise land in Scottsdale.
Even if Phoenix must give away a staggering sum, the argument goes, we’ll still end up with more revenue than we’d have without the development.
But that’s not necessarily true. CityNorth sits in one of the
toniest areas in Phoenix. Something commercial would surely have been built there, even without a subsidy.
Indeed, as the appellate judges noted, by the time Phoenix officials began negotiating with Klutznick, “the major infrastructure for the area had already been constructed.” Doesn’t sound like the fields would lie fallow without government aid.
And, as it turns out, even the promise of a massive infusion of government money can do only so much. Last week, the Phoenix Business Journal reported that Nordstrom is officially pulling out of the project. Company officials cited the bad economy.
Of course, the Phoenix tax giveaway wasn’t predicated on Nordstrom’s presence. Staffers know that to get around the gift clause, they have to pretend they aren’t just handing over tax dollars to a developer. Typically, that means paying for sewer lines or other infrastructure.
But because this project was so far under way by the time
negotiations began, the city had to couch its donation in convoluted terms: The city would pay for a parking garage that could be used by park-and-ride transit users.
Staffers barely bothered to pay lip service to the pretext. In its agreement with Klutznick, the city failed to ensure that public transit users would get prime spaces – or even dedicated ones. As the appellate judges wrote, “There may be times when guests, customers, employees, vendors, and suppliers of the shopping center will occupy all the spaces. The agreement also provides that CityNorth has the right to change which spaces are designated for city use.”
In other words, we pay for a parking garage; CityNorth’s owners get to do whatever they like with it.
Fortunately, the appellate justices saw through the smokescreen. “Simply asserting that [the city's tax remittances] are made to obtain ‘public parking’ does not mean the payments will serve a public purpose,” they noted. “In this case, the ‘public’ that will use the spaces are actually the private customers of CityNorth, who will be parking their cars so that they can do business with CityNorth’s retail tenants.”
As the justices concluded, “We think these payments are exactly what the gift clause was designed to prohibit.”
Tom Simplot was one of two opposition votes to the CityNorth subsidy when it was up for approval in 2007 and, more recently, the only one to vote against appealing the case to the Supreme Court.
Simplot’s been amused by news coverage suggesting that worthy public programs could be in trouble if the decision stands. (The Arizona Republic, bizarrely, wrote a story suggesting that cities could no longer give block grants to neighborhood groups in light of the CityNorth decision – as if helping a neighborhood has anything in common with giving zillions to developers.)
The hysteria is coming from the top, Simplot says. The city’s
attorneys “will tell you the sky is falling, that the world is going to end if we allow this decision to stand.
“Well, I for one read the opinion and, while I’m not an expert on this, what I read was the court’s frustration with the extent of this incentive,” he says. “They were saying, ‘You guys went too far over the line. Somebody needs to bring you back.’”
Simplot has it exactly right. The appellate verdict doesn’t strike down all subsidies; it strikes down this subsidy. And it strikes down this one for good reason. The city went too far. It gave away too much.
Don’t take my word for it. Talk to Scottsdale Mayor Jim Lane. He’s asking his city council next week to consider a “friend of the court” brief to the Supreme Court.
It’s a gutsy move, because Scottsdale would be filing in opposition to Phoenix. It would be asking the court to let the verdict stand, to declare the subsidy unconstitutional.
Scottsdale has figured out what Phoenix refuses to admit: Giving away so much money on a deal this silly helps no one – except the developers and their investors, that is.
The sky really is falling in some parts of this city. But that has nothing to do with Klutznick and his backers not getting their payday. This giveaway was a bad idea when times were flush; now it’s pure idiocy.
The appeals court gave us a get-out-of-jail-free card. Only in Phoenix would we rather spend tens of thousands rotting in our cell than use it.
The New York Times
May 3, 2009 Sunday
Late Edition – Final
Brouhaha at the Brompton
BYLINE: By JOSH BARBANEL.
E-mail: bigdeal@nytimes.com
SECTION: Section RE; Column 0; Real Estate Desk; BIG DEAL; Pg. 2
LENGTH: 406 words
WHILE some developers have cut asking prices and made concessions to soothe the fears of anxious buyers, the Related Companies, the developer of some of New York’s most expensive residential real estate, including the Time Warner Center in Columbus Circle, is holding firm.
It is now completing work on the Brompton, a 22-story red-brick and limestone building designed by Robert A. M. Stern, on East 85th Street and Third Avenue. So far, 60 buyers at the Brompton have paid more than $125 million to take title to their apartments, ”all at the original contract price,” said Joanna Rose, a vice president for corporate communication at Related. The building has about 180 apartments, and most, including many of the largest, are in contract.
This has caused angst among a group of buyers who are looking for price concessions or a chance to back out of their contracts without losing their deposits.
Last week, Adam Leitman Bailey, a lawyer, began circulating the first of a series of lawsuits he said he planned to file on behalf of 17 buyers in contract at the Brompton who have refused to close without concessions from the sponsor. They cite falling Manhattan market values and problems getting financing for their apartments.
The suit, to be filed this week, will ask for a court order preventing an escrow agent from giving the developer the $1.15 million deposit paid when the contract for a $5.7 million condo was signed in 2007. The suit is also seeking the return of the deposit and at least $5 million in damages.
In the papers, Mr. Bailey contends that the developer did not permit an engineer retained by the buyers, Marc M. Rossell, a securities lawyer, and his wife, Florencia Masri, to inspect the building’s common area, and had misrepresented the views from the 3,600-square-foot apartment.
Related acknowledged that it had rejected the inspection request, and its lawyers said they had no legal obligation to help Mr. Bailey conduct a ”fishing expedition.” Ms. Rose said that Mr. Bailey had made a similar argument before, only to see his clients close, rather than risk losing an apartment in the building.
The Race to the Bottom
February 18, 2009 Wednesday 12:00 PM EST
In re Centerline Holdings Co., Sec. Litig. and Scienter
BYLINE: Justin Loyola
LENGTH: 480 words
Feb. 18, 2009 (The Race to the Bottom delivered by Newstex) –
In In re Centerline Holdings Co., Securities Litigation, No. 08 Civ. 505 (S.D.N.Y. Jan. 12, 2009) the court granted Centerlines motion to dismiss because the plaintiffs failed to argue particularized facts sufficient to demonstrate scienter. Plaintiffs alleged that Centerline Chairman Stephen M. Ross and Managing Trustee Jeff T. Blau violated Section 10(b) and Rule 10b-5 by engineered a fraudulent transaction with The Related Companies, L.P., (œRelated) to increase their voting control over Centerline and increase their dividends.
Centerline is a trust company with holdings in tax-exempt affordable housing. In early 2007, it began transforming the company into an alternative asset management company. As part of the process, the Centerline entered into an agreement with Freddie Mac (NYSE:FRE) to sell its tax-exempt bonds. Centerlines largest shareholder, the Related Companies, L.P., would provide $131 million in financing in exchange for 12.2 million shares of convertible preferred stock that would pay an 11 percent dividend. It was not until December 28, 2007, nearly a year later, that Centerline made this plan public and announced that it would cut dividends from $1.68 to $0.60 per share. The announcement resulted in a 25 percent drop in the its stock price.
Plaintiff sought compensatory damages for losses under Section 10(b) and Rule 10b-5 of the Securities Exchange Act. As part of Plaintiffs claim, they must prove that Centerline acted with scienter when omitting the plan from its investors; scienter may be shown with particularized facts indicating motive and opportunity to commit the fraud.
Plaintiff alleged that Ross and Blau were motivated to commit the fraud because of the increased voter control and dividends. The United States District Court for the Southern District of New York, held that Plaintiffs allegations of motive were insufficient because the allegations amounted to evidence of why Ross and Blau would want to invest, but not why they would conceal the information. The Court pointed out that it would have been more advantageous to release the information sooner so they could negotiate a better stock price. For example, Relateds common shares were converted at a price of $10.75 before the announcement; Centerlines shares dropped to a price of $7.70 after the announcement. Therefore, since Related could have negotiated for a more favorable share price, Ross and Blau lacked the motivation to conceal the information. Since the complaint lacked particularized facts that Ross and Blau acted with scienter, the court granted defendants motion to dismiss.
US States News
August 25, 2008 Monday 4:35 AM EST
CITY ATTORNEY AGUIRRE ADVISES CENTRE CITY DEVELOPMENT CORPORATION ON CORRECTING CONFLICT-OF-INTEREST VIOLATIONS
BYLINE: US States News
LENGTH: 274 words
DATELINE: SAN DIEGO
The office of the San Diego City Attorney issued the following news release:
In a memorandum sent today to the Chairman of the Centre City Development Corporation (CCDC), San Diego City Attorney Michael Aguirre stated that the organization must take “new official action” to correct conflict-of-interest violations by its former executive director Nancy Graham.
“California’s Government Code section 1090 is quite strict and expressly provides that every contract made in violation is void,” said City Attorney Aguirre. “In order to clear up the violation, a government body must take new official action without the participation of any conflicted officials,” Aguirre added.
At issue is the CCDC’s approval of a $409 million mixed-use condominium and hotel development project known as Seventh & Market. In March, 2007, CCDC selected Related of California, an affiliate of Related Co., a large New York real estate development firm. Because it was going to include an affordable housing component, an $8.7 million city subsidy was also earmarked for the project.
Questions arose earlier this year about a possible conflict-of-interest Graham had due to a business relationship with the Florida affiliate of the Related Co. It was discovered that N-K Ventures, a Florida development company owned by Graham and her husband Kevin Lawler, received payments of $7 million as part of a 2002 condominium development deal with the Related Co.‘s Florida affiliate, and the Lennar Corporation.
Graham did not disclose any of the income she received on her Statement of Economic Interests as is required by state and local law. She resigned from CCDC on July 24.
LA Weekly (California)
August 21, 2008 Thursday
Grand Avenue Drenched in Misdirection;
L.A. politicos don’t understand what they vote on. Taxpayers are on the hook
BYLINE: Tibby Rothman
LENGTH: 818 words
The Luxe Grand Avenue Project, if ever built on a hunk of taxpayer-owned land downtown, will feature a glittery five-star hotel and the curious involvement of the wealthy royal family of Dubai, who control a tiny Gulf oil nation cited by the U.S. State Department for human rights abuses.
One thing the public project does not feature, however, is transparency.
In a series of moves unusual even for the cloaked deals that precede official rubber-stamping of controversial projects in Los Angeles, key politicians in City Hall and the County Hall of Administration will not – or maybe cannot – answer basic questions about a project that will receive up to $158 million in taxpayer subsidies.
In recent days, City Councilwoman Jan Perry and County Supervisor Gloria Molina, two main drivers behind the Grand who sit on the obscure Grand Avenue Authority, which oversees the $3.1 billion project, refused to answer a fundamental question posed by the Weekly: Had these two powerful women actually read the existing deal with the private developers before they both agreed to delay the groundbreaking yet again?
The developer, the nationwide Related Companies, says it needs more time because the construction loan market is virtually frozen. That sounded logical – at first. Loans are so hard to get right now that Related Companies is being required to produce significantly more project-cost information to the banks. In the past, the “construction documents” required by banks had to be 50 percent completed. But now, Related is being required to provide far more detailed information and submit documents that are 80 percent complete.
The spin from Molina, Perry and other politicos sounds simple – Related just needs several extra months to do the unexpected paperwork. But the truth is, the existing agreement clearly shows that in 2007 the developer promised it could provide all this documentation within a six-month time frame. Now it has been granted 10 months.
Why? Bill Witte, president of Related Companies, told L.A. Weekly that the delay is being caused by something else – challenges they face over how to build the Frank Gehry-designed complex of shops, condos and a hotel adjacent to Disney Hall. It’s the “most complicated design … L.A. has ever seen,” Witte says.
In addition, he says, they needed more time to deal with the unexpected soaring costs of materials. But an expert familiar with such large projects says that the costs of materials “has been off the charts” since late 2005 or early 2006. It’s not a recent phenomenon, as Witte claims.
Supervisor Molina and Councilwoman Perry, who have voted repeatedly for taxpayer funding for the project, initially ducked the Weekly’s queries on the obvious discrepancies in explanations offered about the lagging groundbreaking, now more than two years late. A Perry aide eventually e-mailed the Weekly to insist that Perry had read the existing contract with Related before giving the company an extra four months, but the aide could not explain why Perry thought the developer should have more time to complete long-expected work.
Perry and Molina insist that the project’s smattering of affordable housing units and its “Civic Park” plan – actually just a heavily paved retooling of the County Mall – are extra goodies that justify the public help being poured in. But in fact, the affordable housing and the retooled square are not extra public “benefits” arising from a private project. Both are being extensively paid for by the taxpayers.
In a bizarre recent move, $30 million from a housing fund created by California voters to help house the poor and battered women was diverted to help cover the price of the 16-acre “Civic Park” that’s recently emerged as little more than a square with a few trees and is clearly designed for commercial uses.
In a government e-mail obtained by the Weekly, one city expert on housing subsidies also sharply questioned the taxpayer help pouring into the Grand’s affordable housing component. The private e-mail from a staffer at the Community Redevelopment Agency, dated August 1, 2007, notes that Related Companies got a hefty $10 million in taxpayer funds to subsidize 100 affordable units at the Grand. By comparison, a developer in an unrelated project got $8 million to subsidize 259 affordable units.
But from the beginning, the numbers on the Grand never penciled out.
“Nothing would give me more pleasure than to say that this thing’s a crock and it’s going to die, but I don’t think it’s true,” says one real estate expert familiar with the Grand. Because Related strikes so many public/private deals with other city halls across the country, it can’t be seen as abandoning a flagship project. “They can’t be perceived to be ‘walking away,’” the expert notes.
“What does strike me,” he warns, “is that the pattern of this project has been to ask for progressively more public support and assistance.”