Developer Quits Pier 57 Project, a Big Setback

January 25, 2008 at 11:48 pm Leave a comment

 Developer Steven Witkoff has withdrawn from the development of Pier 57, putting an end to the estimated $400 million project that would have transformed the old waterfront into a landscaped public space replete with a bridge to the High Line, a marina, a museum, and a gourmet banquet hall. The move sets back by at least two years any future development there.Last week, the Witkoff Group alerted the Hudson River Park Trust — a state and city agency charged with developing the 5-mile Hudson River Park — that it was formally withdrawing its involvement.

The project has been marred by delays centered for the most part on the Witkoff Group’s involvement in the Manhattan district attorney’s investigation of a former chairman of the New York Republican County Committee, James Ortenzio, who is also a former chairman of the Hudson River Park Trust. In November Ortenzio pleaded guilty to a felony tax violation and failure to make a financial disclosure under the state’s Public Officers Law.

Mr. Witkoff’s business relationship with Ortenzio drew the notice of law enforcement investigators last year while they were in the process of making the tax evasion case against Ortenzio, a source said. Investigators found no evidence of wrongdoing by Mr. Witkoff. According to a source with knowledge of Ortenzio’s business dealings, in 2005, two years after Ortenzio had stepped down as chairman of the Hudson River Park Trust, he received a Mercedes from Mr. Witkoff.

Messages left for Mr. Ortenzio’s lawyer seeking comment were not returned.

“The Ortenzio investigation by the DA did affect the Trust’s willingness to conclude the deal. The trust wanted to know that the RFP process was beyond reproach,” Mr. Witkoff’s government and community relations adviser, James Capalino, said. “And the investigation to the best of my knowledge did not find any problems with the RFP process and was judged, by everyone, to be ethical.”

Mr. Witkoff’s decision to withdraw involvement now forces the Hudson River Park Trust, which initially awarded the project to a partnership of Mr. Witkoff and the Cipriani restaurant three years ago, to start from scratch.

“Although the withdrawal of the Witkoff Group from the development project is a disappointment, the Hudson River Park Trust will re-evaluate its options in moving forward with the ultimate goal, as always, of fulfilling its mission of completing the park,” the trust said in a statement.

Responding to questions via e-mail, a spokesman for the trust, Christopher Martin, said the board was in the process of considering its next step, but said the trust did not expect to see any construction on the pier for at least two years.

“At this point the Board has to weigh their options. Certainly it is a possibility that they will recommend issuing another RFP, but they need to discuss it,” he said in an e-mail message.

The project’s delay represents a setback for Hudson River Park, the narrow, five-mile stretch of grassy lawns and bicycle paths running between Chambers Street and 59th Street along the far West Side, created in 1998.

The park’s overseers, the Hudson River Park Trust, have sought to leverage private sector money to rebuild and open to the public the crumbling piers that stretch out into the river. A decision about how to develop Pier 40, near Houston Street, is stalled due to community concerns regarding a plan by the Related Companies to build a permanent New York City home for Cirque du Soleil. A decision is expected soon. In court, park advocates have been trying to oust the 30th Street Heliport on the grounds of excess noise and noxious fumes.

Mr. Capalino said the decision to withdraw was based on the lengthy amount of time that had passed from when the project was originally designated and the increasing costs of developing and maintaining waterfront structures.

“It is very expensive to maintain and it was his position that this is a highly unfavorable financing market for a project that is this adventuresome because it is putting a lot of retail on the waterfront,” he said.

According to Mr. Capalino, the total cost of the project could have exceeded $450 million, and he estimated Mr. Witkoff had already spent between $1 million and $2 million on pre-development costs.

A major blow to the project was sustained in September 2006, when the Cipriani family, led by Giuseppe Cipriani, dropped out of the Pier 57 project. The original plan called for the Ciprianis to run a major banquet hall on the pier.

The decision also comes as the financial outlook for New York City and the nation becomes increasingly bleak and, according to Mr. Capalino, may serve as undesirable harbinger of things to come.

“Look, if the markets continue in this fashion is it going to have an effect on these large scale projects? You bet.”

NY Sun

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Entry filed under: Go Coastal, Manhattan, Public Waterfront. Tags: , , , , , , , .

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