RCBJ-Audible (Listen For Free)
New York REIT SL Green To Take Ownership Of HNA Palisades Training Center; Town Hoping REIT Will Negotiate With Tapped Developer Reveil
By Tina Traster
The Town of Orangetown has relinquished its role in trying to steer future development on the HNA Palisades Training Center site.
The Town in late July voted to withdraw its efforts to take the 106-acre site by eminent domain. Specifically, the board withdrew the “EDPL (Eminent Domain Procedure Law) Determination and Findings,” ushering in the latest era for a prospective sale and redevelopment of the site. Only now, it is SL Green, the New York-based REIT, and not HNA, that owns the property.
The case arose from effort of an affiliate of SL Green to confirm an arbitration award it secured for $185 million against HNA Group (International) Company Ltd., and collect that debt against HNA’s assets.
This latest development caps a two-year effort on the part of the town to recruit and work closely with a developer to reimagine the site on Route 9W, which has largely turned fallow and blighted since HNA shuttered the hotel during the pandemic. Over time, the Town’s hopes were constantly dashed as HNA seemed unwilling to come to terms with selling the property to Reveil, two California developers who’d won the town’s bid to name a development team after an extensive bidding process to tap the right team.
While negotiations between Reveil, which had town support, and HNA floundered, the property fell into disrepair. Insiders say Reveil had been willing at some point to pay $30 million for the property, and the team was underway with seeking financing. Insiders say the property has been appraised for roughly $18 million in 2019, years before the building fell into disrepair.
However, stalled talks worried the town, leaving it with little choice but to take the property through condemnation. The town had deemed the site unsafe and dangerous, saying it was a public safety hazard, and had slapped HNA with a series of violations for lack of maintenance. There has been a petroleum spill, sinkholes, impassable roads making it difficult for emergency vehicles to access the property, leaking fire hydrants, burst pipes and a dumping ground for illegal fill. The property has become a target for vandals and trespassers, necessitating several police calls.
If it had followed through with condemnation, the Town would have had to pay fair market price for the property and bond for the purchase, which would have impacted taxpayers. The town set down that route because it had been firmly committed to the recruitment of a development team and because it wanted to retain a role in how the site would be developed in the future. The large parcel is zoned for hotels/conference centers, office, professional uses, and research labs.
Reveil has been planning an updated hotel and conference center, glamping, event spaces, a working farm, test kitchens, co-working, and 20 to 30 townhouses. Residential development would require a zone change.
SL Green was successful in the Southern District of New York and secured an order compelling HNA to transfer the property in partial satisfaction of the $185 million it is owed.
Town Supervisor Teresa Kenny is hopeful SL Green and Reveil will strike a deal, though real estate insiders say they are likely to face competition as interest in the former IBM and hotel property has been stoked by the recent twist.
“The Town’s outside counsel has been in contact with counsel for SL Green and, as of now, we remain hopeful that SL Green will be moving forward to sign a Purchase and Sale Agreement with Reveil,” said Kenny. “If they do not sign with Reveil, SL Green is free to do what it wants with the property, subject to Orangetown Zoning Codes.”
The town originally inserted itself into the process of bringing a buyer to the table after a $40 million deal between HNA and a Brooklyn buyer fell through three years ago. The previous buyer left an $8 million down payment behind after unsuccessful litigation. However, ZVG @ Palisades LLC, which took an assignment from the failed buyer, filed a lawsuit in Rockland County Supreme Court to force HNA to close on the $40 million contract that HNA says ZVG defaulted on in 2020. ZVG’s lawsuit was dismissed by Justice Thomas Zugibe based on the lack of an enforceable contract.