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CityLine: September 25, 2000

Tishman Speyer locked in: must build exactly 21 theaters in Town Center. If nature of businesses change, city must reapprove.

City does not have "right of recapture." T-S can sell property and specific approved development right to third party. Tishman Speyer said to spend $20 million to date.

City options: buy back building or take property through
right of eminent domain, risking long judicial process.

City cannot "shop" the Main & Mamaroneck parcel because it does not own it.

White Plains downtown merchants on month-to-month leases
thrown into uncertainty.

WPCNR Newsroom Analysis:

WPCNR has learned from persons with precise knowledge of the city's site plan approval terms with Tishman Speyer that the developer cannot change the nature of the Town Center project by decreasing the number of theaters in the complex.

If the developer changes the nature of the Town Center mix from theaters to another tenant, or varies the restaurant and retail, they must submit a revised new site plan to the city. They are locked in.

Currently, City Hall is waiting for word from Tishman Speyer on possible progress in the financing problems the developer is facing over investor skepticism about Loews Cineplex ability to pay for construction of its theaters in the project.

Loews Cineplex is reported to be in no way contemplating backing away from the project.

Robert Greer, Common Councilman, told WPCNR Thursday afternoon that a source in direct contact with Loews Cineplex, has told Mr. Greer that Loews Cineplex is still very "eager" to be in the Town Center.

City options.

WPCNR has inquired about how a site plan approval works in White Plains.

City of White Plains sources told us that if Tishman Speyer does not start construction on the project by July 10, 2001, the City of White Plains can purchase back the Main & Mamaroneck parcel Tishman Speyer Properties acquired from the city.

For the city to acquire the property on good terms with Tishman Speyer,

Tishman Speyer may want in access of $20 million to sell the plan back to the city. WPCNR's basis for this it that sources involved in the project negotiations have said Tishman Speyer has invested an additional $8 million in the project for removal of asbestos and interior work on the site. This amount is an addition to the $12.3 million Tishman Speyer bought it for three years ago.

Private and official sources say property now worth less.

A city source closely monitoring what Tishman Speyer has done to the building, told WPCNR that the interior of the building at Mamaroneck and Main street has been disconnected from all utilities, parts of the interior altered, and is not as readily usable by a prospective buyer or tenant when Macy's vacated. "They have significantly diminished the value and attractiveness of the building," our source said.

Tishman Speyer may persuade its investors that Loews Cineplex is indeed good for its part in the project. However 9 months is a very short period of time to put things in order, provided investors are assured Loews can handle its responsibility. Loews Cineplex has no immediate "fix" in sight, according to WPCNR's investment community expert at Standard & Poor's Corporation.

Current situation:

No financial contracts have been signed by either party.

No schedule of payments by the city or Tishman Speyer have been contractually agreed to.

No demolition is scheduled to begin any time soon until Tishman Speyer pulls together the financing.

Tishman Speyer told Mayor Delfino the news last Monday, that financing is no longer in place due to lenders' concern about the financial condition of Loews Cineplex.

Tishman said the project was to begin the first week in August. Then WPCNR was told by city hall demolition would start the first week in September. This was followed by last Monday morning's shock call to Mayor Joseph Delfino that Tishman Speyer was not going to start the project due to inability to finance it.

What could happen in 9 months when site approval runs out.

If Tishman Speyer fails to begin construction by July 10, 2001, one year from the date of the original approval by the Common Council:

1. Tishman Speyer has the option of requesting a renewal of the site plan approval.

2. The developer could submit a new plan for development for city approval.

3. The city may refuse to grant an extension of the site plan approval.

The city faces a dilemma: they do not own the centerpiece property of the city. Tishman Speyer Properties does. Therefore the city cannot tout the site for another development plan or offer the old Macys as a parcel that another developer could acquire to augment another project nearby -- residential, say -- as long as Tishman Speyer owns the property.

Possibilities if site plan approval expires with nothing happening.

1. Tishman Speyer Properties could sell the property to the highest bidder, if the city chose not to renew the site plan approval.

However, Tishman can only sell the building and property site plan approval. The Martine Avenue Parking garage, connecting tunnel option, and city agreement to help finance a new garage are not included in the site plan approval. More to the point, the rights to use Martine Avenue Parking for parking are not transferrable according to the city, only the building plan for the Macy's property is transferrable.

2. The city could chose to attempt to reacquire the property itself, if the city wished to find developers of the property. Should the city choose not to grant an approval extension, they would face two options, according to sources familiar with municipal zoning law.

City does not have "Right of Recapture."

Another factor entering in, according to Carl Austin, a realtor specializing in commercial real estate, is the right of recapture which, if a site plan is not built, the rights to the property revert back to the city. Our city source has confirmed the city does not have this right of recapture.

If Tishman Speyer decided to cut its losses and attempted to sell the right to develop the Town Center, any buyer would have to be approved by the city and the site plan would have to be followed by that buyer, our city source said.

Tishman Speyer may not recover their money out of a resale.

Tishman Speyer may be hard pressed to get its money out of a sale of the former Macy's property.

Eugene Albert, owner of Albert Valuation Group of Tarrytown, who has been appraising commercial properties for 50 years in Westchester, told WPCNR that the Macy's property as it presently is constituted is very difficult to evaluate.

He assumes Tishman Speyer bought the property on speculation of development, so he said the firm might have overpaid for the property when they purchased it in 1997.

Another analyst of White Plains business activity source gave WPCNR a similar "take" saying he'd been told by building owners in the downtown, that the former Macy's property now is worth less than the $12.3 million Tishman Speyer paid for it. The WPCNR City-source said the property is definitely worth less than they paid for it.

Albert, the professional appraiser, said that the Macy's building at present is around 350,000 square feet, multi-story, and has been vacant for a long time. He speculated that it requires a lot of renovation for a single tenant to occupy and said it could only be attractive to someone who would tear it down to build a new structure, should Tishman Speyer wish to resell the building.

City involving eminent domain a last resort.

Another option the city has if it chooses not to renew Tishman Speyer's site plan in July 2001 is to seize the property through the Urban Renewal Corporation by power of eminent domain and move on.

A legal source commenting on eminent domain seizures said the owner of an property condemned by eminent domain could then sue the city for its perceived value of the property. Such a suit one source said could tie up the keystone corner of the city in the courts for years.

City frustrated. Like everyone else.

Paul Wood, Public Information Officer for the Mayor's office, told WPCNR Wednesday of last week that the Mayor's Office "is as frustrated as everybody else." Mr. Wood said the city has had no indication how far along in the financing process Tishman Speyer was before encountering reluctance to lend among their financiers because of the Loews Cineplex financial position.

Wood did not know if other tenants were being considered by Tishman to replace the Loews Cineplex role in the tenant mix. He also said there is no indication how much more financing Tishman Speyer needs to obtain commitments for.

WPCNR asked Wood if Mayor Joseph Delfino going take a proactive role in pitching the viability of the project and the attractiveness of the White Plains to potential Tishman finance partners. The Mayor at permission of the council was able to woo Loews Cineplex back into the Town Center deal last May. Wood said that the Mayor could only take a more active role in promoting the project to investors, if he was directed to do so by the Common Council.

WPCNR asked if the city was being asked to fund more of the project. Wood said it was too soon to speculate.

Downtown merchants who rent gloomy and uncertain.

Meanwhile, Mark Schuyler, Director of the White Plains Business Development Corporation, said many merchants operating in proximity to the Town Center site are shocked. He said many are on month-to-month leases in anticipation of the Town Center project opening in 2003 as scheduled, and some had expressed doubt as to whether they would maintain operations if the project remained at a financial impasse.

Schuyler said he could not estimate how many retail merchants in the immediate vicinity of the proposed Town Center were on a month to month lease basis. He commented that the perception of the Town Center as being helpful to their situation was very strong, and now the present delay has turned confidence in the future the Town Center promised for them into serious short-term worry.

Reported by John Bailey

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