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Orangetown Moving Forward On Eminent Domain, Says Town Supervisor Teresa Kenny But Whether Town Ultimately Facilitates Sale To California Developers Remains Uncertain
By Tina Traster
The fate of the dilapidated former HNA Palisades Training Center on Route 9W in Palisades remains uncertain. The property is the target of eminent domain by the Town of Orangetown, but it is also an asset that is part of an enforcement action for an uncollected judgment in favor of SL Green, a New York City-based REIT and against HNA Group International.
Orangetown Supervisor Teresa Kenny says the eminent domain plan remains on track, though SL Green is attempting to gain control of the 106-acre former hotel/conference center property in litigation in the Southern District of New York.
Last July, SL Green filed motions asking the District Court to restrict HNA’s ability to sell or transfer the Training Center, claiming the sale would deprive it of its ability to collect against US-based assets owned by HNA. District Court Judge John Koeltl is presiding over the collection of a $185 million judgment SL Green has secured against HNA.
In late May, Judge Koeltl entered an order directing HNA to transfer the deed to the HNA Training Center to SL Green in partial satisfaction of the outstanding judgment. HNA asked the Court to stay (or delay) the transfer while it appealed the order to the Second Circuit Court of Appeals.
Koeltl denied HNA a stay pending appeal but granted HNA ten days to file an appeal and seek a stay at the higher court. Though the first ten days have lapsed on that order, the temporary stay remains in effect while a three-judge panel of the Second Circuit considers a more permanent stay during the appeal.
“HNA got another 20 day extension of its TRO (temporary restraining order) on the title transfer, so the town will be moving forward with the next step of eminent domain,” said Kenny.
In late April, Orangetown initiated the process of eminent domain to take title to the former HNA Palisades Premier Training Center. The town has 90 days to collect its findings and publish them. At the time, Kenny said REVEIL, the California developers who’ve been tapped to redevelop the site, would not be bound by the contract it negotiated with HNA, but the developer would have the option to participate in the project going forward.
To date, HNA and REVEIL had not reached final terms on a sale contract. Sources have told RCBJ that REVEIL has offered HNA $33 million for the site.
But now, the litigation between SL Green and HNA throws a wrench into the plan, which was hatched two years ago when the Town injected itself into the search for a developer to reimagine the site. REVEIL has proposed an updated hotel and conference center, glamping, event spaces, a working farm, test kitchens, co-working, and 20 to 30 townhouses.
It is unclear what will happen next. If SL Green acquires the deed, it will be free to sell the property to a buyer of its choice.
“We have been told that SL Green has been in touch with REVEIL attorneys and is willing to move forward with them if they can provide proof of ability to finance the purchase,” said Kenny. “If they cannot, SL Green is free to move on to whomever they want to sell to.”
If HNA is unsuccessful in its appeal, and the Court orders HNA to transfer the asset to SL Green, SL Green would stand in HNA’s shoes. SL Green could make a deal with REVEIL. In that scenario, Orangetown could continue to work with REVEIL to facilitate the zoning changes necessary to redevelop the property in accord with its original vision.
Alternatively, SL Green could cure the conditions that prompted condemnation and put the property up for sale to the highest bidder. That may yield SL Green more money than REVEIL may be willing to pay for the devalued property, but the sale would likely be complicated should Orangetown be unwilling to change the zoning for SL Green’s buyer in the same accommodating manner it planned for REVEIL.
Or Orangetown could continue with the condemnation case and pay SL Green the same fair market value it was willing to pay HNA for the property. In that case, Orangetown could prevent the property going to a buyer that does not share Orangetown’s vision – -ultimately allowing it to decide who the new owner of the property will be and keeping it on the tax rolls and out of the hands of developers unfriendly to that plan. Orangetown’s secret weapon is the power it has over changes to zoning on the site, but whether this is relevant to an enormous REIT like SL Green remains to be seen. The site can still be developed by SL Green or its buyer under the existing zoning.