Board Designates Developer For St. Paul's
By Stephanie Mariel Petrellese

Another chapter in the St. Paul's saga unfolded at the October 4th Garden City Board of Trustees meeting, and it is not a happy one for members of the Committee to Save St. Paul's (CSSP).

In a 5 to 3 vote, the Garden City Board of Trustees ratified the decision made by the Mayor's Committee on St. Paul's to designate AvalonBay Communities, Inc. as the exclusive developer of the St. Paul's property. They also voted to drop the Committee to Save St. Paul's/Canus Corporation from consideration, calling the potential risk to the Village "unacceptable."

A public meeting has been scheduled for Wednesday, October 24th from 7 to 10 p.m. in the Middle School auditorium. The focus of the presentation will be an analysis of proposals from AvalonBay and the CSSP/Canus Corp. by Karen Backus & Associates, the Mayor's Committee's consultant. AvalonBay representatives are not expected to attend. Copies of both proposals will be available soon at the Garden City Public Library.

AvalonBay is a publicly traded, national equity Real Estate Investment Trust (REIT) that acquires, develops or redevelops, and manages high-end apartment communities. Their proposal calls for the conversion of the historic Main Building site into 99 luxury rental apartments. They have designated 12,600 square feet of building space, including the chapel, for public use. A dual-level parking structure with stalls above and below grade is also included in their proposal.

"Overall, the Committee found the AvalonBay proposal to be very attractive," said Deputy Mayor John Mauk, who serves as chairman of the Mayor's Committee on St. Paul's. "The development has the potential to enhance the Village in many ways, in addition to achieving our primary objective of preserving the front facade and other historic features of the Main Building."

Deputy Mayor Thomas Lamberti and Trustees Donald Brudie and John Watras voted against the designation of AvalonBay. Lamberti agreed that the CSSP/Canus proposal posed too great a risk for the Village, but also felt that the AvalonBay plan was not attractive. He said residents are entitled to a side-by-side comparison of both proposals.

Trustee Brudie said he was "not fearful" of the CSSP/Canus proposal and expressed concern that the Mayor's Committee had not been in communication with them since May. He believes the building should be kept for public use and proposed renovating the first and second floors and mothballing the upper levels. "God isn't making property anymore in Garden City," he said.

Even those trustees who voted for ratification did so reluctantly. Mayor Peter Bee acknowledged that it was not an easy decision but said of the two proposals, he felt more comfortable choosing AvalonBay. He emphasized that ultimately discussions with AvalonBay may not be successful.

If discussions with AvalonBay do break down, it is likely the historic Main Building will be demolished. "I want to emphasize the [Mayor's] Committee's collective opinion, based on the exhaustive and lengthy process we have just been through, that the only clear alternative we see to entering into some kind of development agreement with AvalonBay, is demolition of the building," said Mauk. "Unless all of us residents can find a way to come together to remove the parkland alienation and enter into agreement with AvalonBay, we have no doubt that the building will come down."

Mauk said he was "distressed" with the lack of alternatives and blamed the market. The Mayor's Committee received only seven responses to its Request For Proposal issued in June 2006. The project proved too risky for most developers, so in the end only three, the Albanese Organization, CSSP/Canus and AvalonBay, made it to final consideration by the Mayor's Committee.

According to Mauk, the Albanese Organization proposed a "very attractive, high-end project expected to cost $100 million to develop," but required "an unacceptable investment by the Village." They considered the Mayor's Committee's request to scale back the project, but ultimately said it was not feasible and dropped out of consideration.

Mauk listed several reasons why CSSP/Canus Corp. was eliminated, with a major reason being that their plan required the Village to subordinate its ownership of the property to Canus' lender. "If Canus defaults, the lender's foreclosure would cause the Village to lose control over the project, and to lose control of the property itself."

Other reasons Mauk cited include: they have no experience with a project of comparable size and complexity; the organization is thinly capitalized; Canus' project financing structure is complex and "stretched to the breaking point"; Canus has declined to provide its financial statements; and the project depends on an annual payment of nearly $1 million from the Village that would continue for the 99-year life of the project.

"All of us who have seen the evidence concur: Even if AvalonBay were to remove itself tomorrow from further consideration, we would still not entertain any possibility of doing a deal with Canus," said Mauk.

Mauk acknowledged the CSSP's ability to thwart a possible deal between the Village and AvalonBay. One of the biggest and initial obstacles the developer will face is obtaining the necessary Home Rule legislation and relief from Parkland designation from state legislators. Senator Kemp Hannon has emphasized that he will only go forward in Albany to secure the necessary Home Rule legislation and relief from Parkland designation if he sees widespread public support for one proposal. Without the legislation, the land can strictly be used for public purposes only. It is possible the CSSP, whose members have established a relationship with Senator Hannon, could exert their power to show that there is not public support for AvalonBay's plan.

Mauk's announcement was met with public outrage. Peter Negri, president of the CSSP, said his group was "disturbed and dismayed" because the process was "flawed" and the ultimate selection of AvalonBay is "poor." The process was flawed because Negri claims the public was not offered "extensive community input" as promised. He also argued that the public deserves more than one proposal. "Negotiating 101 says it's tough to negotiate with one party when the other finalists have been knocked out," said Negri.

Negri said AvalonBay is a poor choice because they are too large. AvalonBay is a developer with 16 projects under construction, six more under reconstruction in 10 states. They also hold future development rights for 56 more projects. Canus is considered to be mid-size, and can offer the Village the "focus and flexibility" needed for such a project. He suggested that the Mayor's Committee keep Canus as a possible developer and allow for "meaningful" public input.

Trustees had an opportunity to listen to some members of the public as the overwhelming majority expressed their opposition to the Board's vote. Thomas Poole said he "has never been more upset with how residents have been treated." Poole was one of three residents, including Negri and James Edmund Keating, who filed a lawsuit in January of 2006 against the Village claiming the expenditure of public funds to market the sale or lease of the Main Building to a private developer was illegal. That lawsuit was ultimately dismissed.

Michael Ciaffa, a member of the CSSP, said the public should be allowed to see both AvalonBay and the CSSP's proposal side-by-side so they can be compared. He said the Village has a history of "making wrong decisions." In December 1997, the Village tried to lease the Main Building and several surrounding acres of land to CareMatrix. It was legally challenged by four residents (Kenny et al. v. The Board of Trustees). The court ruled that the land is held in a public trust and cannot be leased to a private developer without Home Rule legislation. Ciaffa said the CSSP's proposal had the best chance of getting widespread public support and Home Rule legislation.

Pat DiMattia said as a resident she is "very upset" because she claims the public is not being involved in the process. As the president of the Central Property Owners' Association, she stated that the board of directors had voted to save St. Paul's and would be outraged if the building is destroyed.

Maureen Traxler, the CSSP's administrative and communications director, told The Garden City News after the meeting that the group will continue their mission to save the building. "The Committee to Save St. Paul's will explore all reasonable and productive options in our continuing efforts to find a solution for St. Paul's."

In other St. Paul's news, the Board voted 5 to 3 to retain Barry C. Ross, Esq. of Bryan Cave, LLP to handle real estate matters concerning St. Paul's. Ross had requested a waiver of actual or potential conflicts of interest arising out of the representation of the Village in transactions with AvalonBay. Trustee Brudie argued that the Village should not "walk an ethical tightrope" by hiring a firm that has worked with Avalon. Mauk said he viewed it as an asset that the firm has negotiated contracts against AvalonBay since they already have an understanding of the developer. Trustees Brudie, Watras and Lamberti voted against the retainer.

The Board also voted 5 to 3 (Brudie, Watras and Lamberti against) to extend consultant Karen Backus' contract through December 2008. The Board approved a slight increase in her hourly fee and set a limit for additional expenditure at $60,000.