Thursday, May 04, 2006

In the News: As Waterfront Smolders, Attention Turns to a Failed Deal

The 10-alarm fire that broke out in the waterfront of Greenpoint, Brooklyn devastated the historic Terminal Market and decimated some of the most productive industrial property in the area. However, multiple articles are now focusing on the development history of the tract and several real estate deals that have criss-crossed its history. As with most waterfront real estate, the value has skyrocketed in recent years and developers have attempted to revitalize the property with plans for residential development. This eventually led to a tug-of-war between developers, conservationists, residents, elected officials and agency representatives over the best uses of our waterfront and who should decide whether these properties remain industrial or are converted to residential. This is indicative of many areas on our waterfront today writes the NY Times in the following piece. JB

May 4, 2006

By Michael Wilson

The 15 buildings at the Greenpoint Terminal Market in Brooklyn that were gutted in a
spectacular 10-alarm fire on Tuesday were at the center of a complex real estate deal gone wrong between established and, at times, controversial developers. They were tangling over property that was itself the target of neighborhood preservationists hoping to secure the district's legacy as a landmark.

Firefighters continued dousing the smoldering blocks along West Street and Noble Street on the Greenpoint waterfront yesterday. Officials suspect arson, and investigators were waiting for a chance to search for evidence.

The buildings are now in ruins and may be a crime scene, and even before the fire, they did not look like much to a passer-by, just relics from a bygone time when they produced bales of rope for the shipyards along the East River.

But the property's value skyrocketed last year, when a prospective buyer placed a $42 million down payment, a tenth of the entire $420 million deal, and by itself almost twice what the owner had paid for the property five years earlier. Now a lawsuit seeks the return of the $42 million and describes how the deal fell apart.

Preservationists, who had failed in recent efforts to secure landmark status for other Brooklyn buildings, started a campaign to keep the Greenpoint Terminal Market from being knocked down, seeking the support of the local city councilman, David Yassky.

Whether the site's value, its status as a landmark and the continuing legal battle have anything do with the inferno on Tuesday is unknown. Fire marshals have been unable to enter the site.
Other aspects of the investigation are already under way, however, including background checks and interviews with people connected to the warehouse complex. Nearby surveillance cameras are being examined, and investigators are checking neighbors' reports that squatters frequently used the buildings.

The buildings were owned by Joshua Guttman, 58, of Lawrence, in Nassau County, a longtime developer of industrial sites in Brooklyn, who bought the buildings in 2001 for about $25 million with an eye toward flattening them. He applied for demolition permits with the city's Department of Buildings in March 2001, but for the most part the buildings stood dormant.
That changed last year when the neighborhood zoning was revised from commercial to residential, sending brokers and prospective buyers hurrying to Mr. Guttman's door.

"Offers were being made daily on this piece," Joseph Kosofsky, a lawyer for Mr. Guttman, said yesterday. "Everybody wants to be your partner." One prospective buyer stood out: Baruch Singer, 52, a veteran developer. His offer did not have the sort of restrictive clauses and riders that Mr. Guttman found in the others, Mr. Kosofsky said.

"It was all cash," Mr. Kosofsky said. "It looked like a slam-dunk, in terms of a simple deal. They were going to buy it without any conditions or anything else."

Mr. Singer was involved in a dispute in 2000 with tenant groups and the federal Housing and Urban Development Department. The department blocked Mr. Singer from bidding on a Harlem property the department owned after it was alerted to a long record of complaints against him. Over the years, city housing officials have cited Mr. Singer's buildings for thousands of code violations.


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