Orangetown Accedes To “Emergency” Request From Developer Who Wants To Build 342 Units At Former IBM/HNA Palisades Training Center

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To Avoid Sale To A “Nonprofit,” Town Officials Agree To Much Denser Housing; Town Also Conditionally Greenlights Tax Refund To SL Green In Settlement Of HNA’s Tax Certiorari Cases

By Tina Traster

The Town of Orangetown on Friday held an “emergency” meeting to clear the path for a developer to move forward with the purchase of the HNA Palisades Training Center on Route 9W in Palisades.

The town board voted unanimously to amend a “memorandum of understanding” that gives the California-based developer REVEIL a greenlight to proceed with a proposal to rehabilitate a dilapidated hotel and build 342 townhouses and apartments – ten times more than the original proposal three years ago.

The town board also agreed to settle five years of tax certiorari challenges filed by HNA from 2019 to 2023. The back taxes on the property are nearly $9 million, which would be paid to Rockland County at closing this week. The agreement contemplates refunds back to SL Green, specifically: $1.8 million from the school district, $670,000 from the town, and $192,000 from Rockland County.

This agreement only materializes if there is a closing on the property next week, Town Board Supervisor Teresa Kenny said. If there is no closing, the tax litigation would continue in Rockland County Supreme Court.

The approval – which will give the developer a de-facto path to getting a zone change from hotel and office use to include residential use on the 106-acre bucolic parcel – came with strings. The developer has agreed to restrain from “flipping the property” to a “nonprofit” entity for two and a half years after the purchase is complete. REVEIL LLC, a Delaware Limited Liability Company, is expected to complete the purchase early this week from SL Green, the New York REIT that gained the property after the Chinese-government-backed HNA lost it in a bankruptcy case.

“They have to wait two and a half years to sell it to a nonprofit, and the town has the first right of refusal for five years if the developer opts to sell the property to anyone else, including a nonprofit,” said Orangetown Supervisor Teresa Kenny.

Worries about who will own the property and how it will be used, stem back to the town’s initial endeavor to insert itself in the redevelopment of the property after HNA’s sale to a Brooklyn-based Hasidic group fell through. Ultimately HNA shuttered the now-distressed property during the pandemic.

In 2021, the town played a leading role in tapping a developer, shortly after the former Nyack College campus was sold to a yeshiva group. During that transition, the Village of South Nyack dissolved, partly worried about the cost of future litigation. Orangetown’s assertive move to step in and help engineer the HNA property’s fate stemmed from worries that the property would be turned over to a “nonprofit,” group, an oft repeated phrase that many take to mean a religious use.

During the protracted search for a developer, the town boiled down the pool to three contestants. Two were local: Financier Billy Procida of Piermont had proposed 180 townhouses and a hotel. Kenny on Friday said Procida’s plan was not chosen because of disparaging remarks Procida made about HNA publicly. She also said his offer of $18 million was not something HNA was going to accept. Rick Cook of Palisades, a notable New York architect, envisioned an ambitious spread of movie studios and 430 housing units. At the time, the community voiced opposition to the property becoming a large residential community.

In 2022, RCBJ reported REVEIL had said in a capital request that it was in contract to purchase HNA for $33 million. Kenny said the negotiations were protracted and HNA could “not get out of its own way.”

Originally, REVEIL, which included partners Mark Kitching and James Pelayo, envisioned an updated hotel and conference center, glamping, event spaces, a working farm, test kitchens, co-working, and 20 to 30 townhouses.

Now, the housing portion of the proposal is much denser – ten times the original design.

Kenny on Friday said many things have changed since the 2021 proposal, including the degradation of the property and increases in construction costs.

“It’s unreasonable for REVEIL to stand by what they said,” Kenny added.

Last Tuesday, with little to no notice, REVEIL’s enlarged team, which now includes investors Joseph Santullo and Pegah Ebrahimi made a presentation, urging the town to update the MOU in time for its anticipated closing with SL Green. REVEIL said time was of the essence; they conveyed to town board members that there needed to be an understanding that the proposed project would be far more scaled up than the 30 townhouses originally proposed.

It appears town officials felt the pressure, and responded to the urgency to lock in the tacit approvals, repeating again that commercial tax-driven development is preferable to a “nonprofit” buying the property. By nonprofit, town officials are essentially alluding to the possibility of the property being purchased by and used for a religious school.

“As we speak, time is of the essence,” said Kenny. “If they (REVEIL) don’t meet the date (to close with SL Green) they will default.”

Kenny said on Friday that a hotel/conference center, schools, offices and testing labs, are permitted by right on the property tucked away on Route 9W.

The updated MOU does not guarantee the project’s zoning requirement: a zoning text amendment will be needed to update the zone to include a residential component. Detailed plans must still be reviewed by the town and its planning professionals. The developer and the town have agreed the hotel must be open and operating before residential zoning and construction will be approved.

The updated MOU will be held in escrow until the ink dries on the purchase agreement between REVEIL and SL Green. No closing means no updated MOU and no settlement of the tax claims.

“I do believe it is REVEIL’s intention to develop the property,” Kenny added.

The hidden property at 334 Route 9W was first home to IBM’s hotel and conference center, and later owned by the Chinese government-backed HNA, which shuttered the property during the pandemic and subsequently lost the property to the REIT SL Green in a bankruptcy case.

Santullo, owner of Systems2000Plumbing in New York City, told the town board and a small group of residents attending last week’s meeting that the development team hopes to create a “crown jewel” for the community. The plumber has been involved in high-profile New York City developments including the Beresford, the Printing House, and the Future Building.

The plan includes refurbishing the 425,000 square-foot, 200-room hotel, restaurant, spa, wellness center, bar and lounge, collaborative workspaces, a coffee shop, gourmet market and “creative spaces”, as well as trails and walkways. Part of the original hotel structure will be converted from hotel space to apartments.

Santullo said the original plan was not viable in the current economic climate, explaining why the developers have added housing density.

“A lot of people are saying it’s too big, it’s overwhelming, but today, to sustain a piece of property like this, you need a certain amount of density,” he said.

Santullo, said the property would be an asset to the community, with its walking trail, a place to go for a cup of coffee, a venue for a special occasion.

Palisades, a small hamlet, is made up of mostly single-family residences. It is one of the wealthiest enclaves in Rockland County.

“This is like another community we’re building,” said Liz Bailey, at last week’s town board meeting. “This will change the entire complexion of Palisades.”

On Facebook, several commenters pointed out that adding 342 housing units along Route 9W will impact traffic. Others lamented that a site designed to be a beautiful hideaway will be converted to housing. Further, many said the Town and County are suffering from a severe lack of affordable housing, wondering why the town is proceeding with a luxury housing project without any talk of a set aside for affordable units.

Still, Orangetown officials have hung in for three years, continuing to support the developer they tapped.

In 2023, the town began the process of eminent domain to take the property through condemnation, but it was always clear that town officials hoped a deal would materialize.

Read also: Developer Of Former IBM/HNA Center Presents Revised Plan With Additional Housing Density