HUSH-HUSH: DEVELOPER SOUGHT CHANGES
By Kevin Boyle
Maybe it’s time to call a mistrial on the courthouse deal. Progress appears deadlocked and it appears evidence has been withheld from the jury otherwise known as the Community Board.
For those new to Rockaway, there’s a building at Beach 90-01 Beach Channel Drive, which seems like it’s part of the movie Groundhog Day, in which a character is stuck in a time loop and lives through and repeats the same day, every day. In this never-changing story, the main character is what is known as the old Rockaway Courthouse.
Still managing to be stately and iconic on the outside, the building is doing nothing other than celebrating its 40th anniversary as an unused, neglected symbol of untapped potential.
As Rockaway enjoys a construction boom and ferry boats are full of interested and eager visitors, the courthouse is more of a blight than ever with its unsightly scaffolding and sidewalk shed.
This was not supposed to be the case when the New York City Economic and Development Corporation (EDC) selected the Harmony Group in April 2013 to transform the building into a state-of-the-art medical center. The City announced that it would transfer the property for $50,000 with the understanding the Harmony Group would invest some $10 million in a major overhaul. A group of doctors were to be the main leaseholders. Local elected officials hailed the news.
But nothing happened for almost two years. On March 6, 2015 the property was finally transferred to the new investors. Just two months later, however, Uri Kaufman of Harmony emailed the EDC to say, “The Doctors terminated the lease. It seems clear we will not be doing this with the doctors. Of course, we have many other ways to get this project done, and that’s what I’d like to discuss with you.”
In the weeks following, emails (secured through a Freedom of Information Request by The Rockaway Times) reveal that Kaufman proposed the courthouse be used for childcare and Universal pre-K. There was also language about having a medical tenant “but no ambulatory surgery.”
The email exchanges indicated there was no pushback from the City on the new direction. David Eisenman of the EDC told Kaufman that once EDC reviewed and approved changes, Kaufman would “have to go back to the Community Board and present the updated project before we could finalize any modifications of our deed covenants.”
Which has never happened.
Community Board 14 has never been fully informed or updated on changes, according to CB14 Chair Dolores Orr. In fact, Orr said on Tuesday, that the Community Board is on record opposing childcare or school as a use for the building.
At one point, the EDC seemed concerned about the Community Board. In October 2015 Eisenman emailed Kaufman: “We received from an inquiry from CB14 about the status of the project. As we have discussed, please check in with us before discussing the child-care use publicly. We will get back to you this week with proposed talking points on the project status if that is OK.”
The “proposed talking points” never quite went public. In fact, a month later, in November 2015, Kaufman told The Rockaway Times that plans were before the Buildings Department and that he hoped to break ground in the spring of 2016. He was consulting with a general contractor and a “Space for Rent” sign was installed on the building. At the time, Kaufman did not indicate that the plans were for anything other than a medical center.
Two months later, in early January 2016, EDC asked Kaufman in an email if he had made any progress on “construction financing.” Later that month, T.K. Franz, who had taken over for Eisenman for EDC, emailed Kaufman stating, “I’m trying to buy as much time I can but we’ll need a financing commitment soon. Any luck on the leasing end?”
Kaufman replies: “No change on the leasing front. We have someone that's expressed strong interest but we won't have anything firm for 60-90 days.”
This exchange makes clear that almost three years after being awarded the courthouse, the developer did not have tenants lined up.
Days later, Franz becomes a bit more concerned. “Uri: I can’t stall on your behalf anymore. A meeting has been called to discuss the status of your project today. As you know according to the deed you are in violation of the 75 percent leased covenant and financing covenant. I really hope your bank can come through for you.”
Kaufman asks if EDC will approve a daycare to be run in the basement.
Franz replies: “I can’t go to the Board asking for the school in the basement approval while you’re in violation of the financing covenant.”
Kaufman replies that he has a financing option with terms that “aren’t great” and is “rounding third base” with a Department of Buildings permit.
Although this is almost nine months after Kaufman first alerted EDC that the medical doctors were out and that an alternative use was suggested, Franz seems to be catching up. In February 2016 Frantz asks what the space will be used for “under the new proposal.”
He then quotes the original: “The Purchaser shall be required to rehabilitate, reconstruct and expand the existing Building and convert it into an ambulatory surgical center with a minimum of 28,000 square feet of space used for medical purposes, of which a minimum of 10,000 square feet is to be used for the provision of medical services. The project shall contain a minimum of three operating rooms and one procedure room. It is anticipated there will be multiple pre-operation and recovery rooms, as well as laboratory, pharmacy facilities.”
Although Franz is just getting up to speed, it is clear that the medical center proposal – which was instrumental in getting Harmony the property for just $50,000 – was no longer in the works.
By March 2016 an email revealed that a daycare, Harmony Kids, was one planned use. Harmony Kids, according to Kaufman, was a separate entity from the Harmony Group that originally secured the property. In a later email, Kaufman identified himself as a 99 percent owner in Harmony Kids. In addition to Harmony Kids, Kaufman was seeking other tenants and identified a company called Rockaway Fast Health & Rad as a potential tenant.
In June of last year, The Rockaway Times asked Kaufman if there was any news on the building. “No, but soon,” was his reply. In September, The Rockaway Times inquired again. Any news? “Unfortunately, no.” On Tuesday of this week, more than four years after the City chose Harmony to transform the courthouse, we asked Kaufman if there was any news to report. He said in an email “Expecting something very, very soon.”
Neither the EDC nor Harmony ever made public the news that the courthouse might be used as anything other than a medical center. Of course, such a use is hardly a community need now. In the years since the courthouse was awarded to the Harmony Group, construction on another medical center is well underway on Beach 105th Street and Rockaway Beach Boulevard.
When Harmony struck a deal with the City, it had construction deadlines to meet. It’s clear such deadlines were never met. We asked EDC why Kaufman retains control. We asked why not retake possession and put out a new Request for Proposals (especially since a medical center is no longer needed and a daycare was rejected by the Community Board).
The EDC Public Affairs response was hardly illuminating: “We are working with the development team to activate and revitalize this historic property. While one of the original tenants left the project, the team that was originally awarded the development remains intact. Also, the project involved a land sale, so the property is currently privately owned.
“Regarding the use of the site, we remain committed to working with local stakeholders and seeing the former courthouse brought back to life in a way that will serve the Rockaway community.”
The "privately owned" aspect seemed a bit curious. We asked the EDC: “They got a building for $50,000 simply because they promised to put millions into it. And if they fail to do so?”
The EDC spokesperson said, “The deed also requires the owner to comply with specific construction milestones. There are also safeguards that would allow the City to take stronger action against the owner if deed provisions are not met.”
In a call right before press time, an EDC official insisted no modifications have been made to the original plan or deed and that Uri Kaufman was still searching for potential tenants and the courthouse was still set to be a medical center. And yes, EDC would alert Community Board 14 if any modification were likely to get City approval.
So what will happen? We'll have to wait (as we usually do when it comes to the courthouse).
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