Light at the End of the Tunnel for Parcel 1A as Sound Shore Medical Eyes Space in Trump Plaza of New Rochelle

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TrumpPlazaThe New Rochelle Industrial Development Agency approved a request from Capelli Enterprises to modify their agreement with regard to Trump Plaza of New Rochelle, clearing the way for a deal with Sound Shore Medical Center to lease 23,000 square feet in the largely vacant space on the first two floors of the building.

The lower two floors comprise 140,000 square feet of space. The New York Sports Club has leased 45,000 square feet. With final negotiations underway with Sound Shore Medical Center for 23,000 square feet and a second potential tenant considering 11,000 square feet, the day when Trump Plaza's lower two floors would be more than 50% occupied is now visible on the horizon.

Under the terms of the modifications last night the agreement between the NRIDA and Capelli-Enterprises will be modified to say "retail and commercial" rather than just retail, extending the current sales tax exemption until 2016 and adjust the amount eligible for the sales tax exemption to account for the additional cost to ready what would have been retail space as commercial space.

The major change which occurred at last night's meeting was NRIDA agreeing to allow Capelli-Enterprises to lease the space to commercial tenants. Under the terms of of the original deal, the NRIDA required retail tenants only. As a result of the vote last night, Capelli has the option to lease to retail or commercial tenants.

Capelli also sought and received an extension of the sales tax exemption, set to expire this month, to 2016. The extension is worth about forty to fifty thousand dollars, money Capelli spokesman Joseph Apicella says can be used to help attract desireable tenants to New Rochelle.

"New Rochelle has to compete with other communities in the area that offer this benefit," said Apicella.

The value of the sales tax exemption is calculated by estimating the cost to build out the space for tenants. Capelli uses the figure of $50 per square foot. With 95,000 square feet currently vacant that comes out to $4.75 mm. Of that $4.75 mm, Apicella estimates that 40% would be for building materials or about $1.9 mm.

The sales tax in New Rochelle is 8.375%. That money goes to New York State which then gives New Rochelle back 2.5% of the taxable amount of the transaction. On $1.9 mm at 2.5% that would come out to be about $47,500.

Contained in the package given to IDA Board Members was a report from Cushman-Wakefield, the leading real estate firm in Westchester County which showed that the commercial vacancy rate in the county stands at 17% with New Rochelle almost 50% higher, in the mid-twenties. Rents have flatlined and there has been a "negative absorption" rate in Westchester for the past 8 years.

City Manager Charles B. Strome endorsed the move to allow commercial tenants in Trump Plaza.

"Retail was the desire of the City but it may have been unrealistic," said Strome. "We have been players in the inability to fill this space."

Apicella conceded that Trump Plaza was not working as a retail structure but resisted the notion that retail was never a viable option noting that the market conditions in 2006 were very different than they are today. He added that allowing commercial did not preclude retail and that Capelli would be happy to lease to a retail tenant at market rates.

Capelli expects that there will be 3-4 employees per square foot in the commercial space, creating jobs in New Rochelle which is a key rationale behind the IDA structure. Based on that rate, the Sound Shore Medical space would mean somewhere between 69 and 92 jobs.

The debate on the Capelli petition became animated with IDA Member David Lacher asking many questions but ultimately the vote to approve the petition was passed unanimously.

There were two particularly interesting points that Talk of the Sound intends to explore further next week with New Rochelle City Manager Charles Strome and New Rochelle Development Commissioner Michael Freimuth. One is increasing the amount of commercial space in New Rochelle's blend of retail, commercial and residential space. The other is the positive financial impact, for the City of New Rochelle, of having locked in 2006 market rates in a PILOT (payment in lieu of taxes) program on the Trump Plaza deal. More on that next week.

The changes last night still require that the street-facing space be reserved for retail tenants. A sign in the window of Trump Plaza indicates a wine store is coming soon.

Commenting on this Blog entry is closed.

Fifth Ave Guy on Mon, 12/19/2011 - 15:05

Too bad Bramson chased away Walmart when the Trump Tower was 1st discussed we could use the sales tax revenue now.  Just another bad decision by New Rochelle.  Who can Bramson blame that on? 

Who cares about these low level jobs anyway?  New Rochelle is primarily a bedroom community to NYC and always will be.  That's where the jobs and money are. 

Wykagyl Joe on Mon, 12/19/2011 - 23:01

 Macy's is negociating with River Bay Corp. a new four story store in Coop City to be built in 2012.

Where is BID of New Rochelle when those opportunities are on the table. At least go and get a Walmart.

 

WolfWithTheRedRoses on Mon, 12/19/2011 - 02:55

I heard a rumor that North Shore (Long Island) is looking to create a presence in Westchester and has considered purchasing Mt. Vernon Hospital, a Sound Shore facility.  Could the medical building in New Rochelle be the presence they are looking for? Can anyone investigate this or shed light on the possibilities?

 

Abe Lincoln on Sun, 12/18/2011 - 17:08

When that building was proposed, the city specifically said that the lower floors would contain some retail.  Once again, we are screwed.  Retail brings a double tax benefit: both sales and property tax.  We were lied to again with this latest deal.  It is no wonder we just got this massive tax increase since they never bring in any retail.

hudson park on Sat, 12/17/2011 - 06:17

The building that sits behind the trump building i heard is going to be medical offices also.

NROld Timer on Fri, 12/16/2011 - 21:49

Capelli gets a tax break on $1.9 million, a spot zoning change and an extension to his Payment In Lieu Of Taxes (PILOT) / reduced property taxes until 2016 for a one-time $47,500 payment to the City of New Rochelle? 

Sound Shore is tax exempt; how will this effect current taxes and future taxes after the PILOT expires?

Give aways and more give aways which tax city services. I guess we should be prepared to terminate 12 firefighters and absorb another increase in the refuse "fee" in 2013 while Trump, Capelli, Apicella, Strome and Bramson dine on steak tartar and chocolate moose. 

Robert Cox's picture
Robert Cox on Sat, 12/17/2011 - 01:26

Cappelli is not getting a tax break on $1.9mm. They are getting a break on $47,500 and it is not a "one-time" payment but the amount they will NOT have to pay in sales tax for New Rochelle's end of the sales tax IF they buy building materials over the next four years as part of a buildout for a new tenant.

I am not sure why Sound Shore being tax exempt would make Capelli tax-exempt by renting space to Sound Shore but I will ask about that at City Hall.

The problems with the deals New Rochelle has made, in my view, have to do with how they were originally structured. At this point, Cappelli says they have Sound Shore on the line to close a deal this spring and that will mean more jobs in New Rochelle, getting that empty space rented and generally be beneficial to the City. Since Cappelli only gets the benefit of the sales tax exemption if they actually lease out the property it is one case where the City is actually getting something for their money.

 

 

NROld Timer on Sat, 12/17/2011 - 03:47

 This is why the democrats want the Industrial Development Agency (IDA) to remain as is. No one understands these deals and council can hide behind the IDA to claim they never approved tax abatements. I never said the property would become tax exempt because SSMC is tax exempt I questioned if and or how this may effect the deal. 

Capelli and Apicella claimed to have Target and Kohl's "on the line" for New Roc City just before they sold out. The deal breaker was the "per square foot" (PSF) charge which is nowhere near $50 PSF Capelli calculates to inflate his abatements. Ask Ralph DiBart what the going rate PSF is in downtown New Rochelle and it will be in the $35 PSF neighborhood. That's a 40% contradiction.

Capelli can't be trusted as a master magician excelling in slight of hand Capelli constantly applies a bait & switch sales pitch while Apicella is his snake oil salesman professing to cure all of New Rochelle's ailments with Dr. Capelli's magic potion.

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