Crain’s New York
October 14, 2012
By Amanda Fung
The long effort to redevelop the big Domino Sugar factory site along the Williamsburg waterfront into a vibrant mixed-use community has been a bitter one, featuring at one time or another fierce community opposition, a mortgage default and warring partners. Now a new developer will pick up the pieces.
Two Trees Management, the developer credited with transforming Brooklyn’s once-gritty Dumbo into a hip and happening neighborhood, is expected to close on its purchase of the 11-acre site in the next few days, sources said. The deal follows months of fierce legal wrangling between the current owners of the site, CPC Resources and the Katan Group, which paid $55 million for it in 2004. Two Trees has kept mum on the details of its plans for the site, for which it is expected to pay more than $180 million, but in recent weeks company principal Jed Walentas has been meeting with community groups as well as City Councilman Stephen Levin, the area’s representative, to solicit their feedback.
“It is important that we’ve started a dialogue,” said Mr. Levin, who opposed the original Domino plan because of its bulk. “There is an opportunity here for a new beginning.” The project was later scaled back.
Mr. Walentas declined to comment on his plans. In the past, Two Trees has been involved in several controversies, most recently one over its now-approved plans to build a 17-story condominium on Dock Street in Dumbo that many insisted would obscure the view of the Brooklyn Bridge.
In the Domino case, community leaders want to make sure that affordable housing is still part of the plan. In the original proposal, 660 affordable units were promised. The community wants Two Trees to honor that pledge, but the developer has no obligation to do so. Community officials report that in initial talks, Two Trees has signaled a willingness to include affordable apartments, but just how many remains to be seen. Meanwhile, hints of a community space, a school and more open space have been encouraging.
“I am excited to see what they bring forward,” said Ryan Kuonen, director of organizing for Neighbors Allied for Good Growth. “It probably will be better than what we had before. We always thought the old plan was the least creative.”
Since acquiring the site eight years ago, CPC and Katan spent millions to rezone for residential use the place where Domino refined sugar for decades. In 2005, the city approved the rezoning, paving the way for the partners to build a $2 billion, 2,200-apartment development with four acres of open space. But when the market collapsed in 2008, the project hit a wall. When its $125 million loan came due late last year, there wasn’t any money to pay it back.
In June, after an attempt to have its lender convert its loan to an equity stake in the project, CPC Chief Executive Rafael Cestero told Crain’s that this was the right time to sell the property and that Two Trees was the right buyer.
“Two Trees understands waterfront development, is well-capitalized and is the best chance for this site to get developed into the mixed-income, mixed-use community it was intended to be,” he said at the time.
Katan, which earlier had sued CPC for multiple things, including mismanagement, sought to block the sale in court but failed. Two Trees, meanwhile, is completing Mercedes House, its $600 million, 32-story residential project on Manhattan’s West Side.