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Earlier Appraisals And Offer Prices Show Great Spread In Potential Value
By Tina Traster
A June 2019 appraisal ordered by Vasco Ventures, the Brooklyn group that tried unsuccessfully to purchase the HNA Training Center in Palisades in 2019 from its Chinese owner, reported that the 106-acre Town of Orangetown property’s “as is” value was worth between $18 and $20 million as a hotel/conference center.
However, the appraisal also said the site’s value increased to $29 million, based on the prospective buyer’s intention to build 200 65-plus independent-living senior housing rental units, even though they would have needed a zone change.
The appraisal was conducted by LWHA Hospitality Advisors. (RCBJ has seen only a portion of the appraisal. A source close to the original deal with knowledge of the 150-page appraisal said the values varied from the $18 million to above $40 million.)
Concerning the hotel use, the appraisal says, “based on the current condition and age of the property, that upon a sale, the property would complete a renovation during year-one.” Based on renovation of similar properties, they are assuming a renovation cost of $10,000 per key, or per room, and a projected reserve of 4 percent of total revenue to cover future capital projects and renovations.
As for senior living, the appraisal, which assumes the buyer will secure necessary zoning changes and that real estate taxes remain the same, the property could be worth $29 million. Several senior housing proposals are being considered in both Orangetown and Clarkstown, including the Toll Brothers’ plan to build 40 55-plus senior townhomes on Gatto Lane in Pearl River.
The HNA property, located at 234 Route 9W, includes a hotel and conference center, sits on a secluded tract of 106 bucolic acres. The portion of the appraisal RCBJ has examined does not cite development opportunities on vacant portions of land.
In recent months, Orangetown has inserted itself into the future outcome of the property sale or redevelopment. The town put out a Request for an Expression of Interest (RFEI), which calls for a “preferred developer or preferred development team” to facilitate the town’s redevelopment goals, which may include rezoning the site to enhance rateables.
HNA is in arrears on school, town and county taxes in excess of $2 million including penalties.
As the March 15th deadline approaches for the submission of bids to redevelop the Orangetown property, it is worth noting the previous seller had a signed contract for $40 million.
Although there were more than a dozen prospective developers at a property walk-through last month, one source close to the process said there won’t likely be more than a handful of offers, adding the property is complicated, or at least that’s the case if a developer tries to working with the existing buildings.
It is unlikely a new development plan would focus solely on maintaining the hotel/conference center on site, though HNA has the right to ultimately decide to whom it sells. The hotel/conference center needs a major upgrade – in the tens of millions, according to sources. Given the way COVID has changed the way in which business is conducted, at least in the short term, it seems unlikely a continued use of the property would be viable.
In late 2019, ZVG@Palisades LLC, an entity affiliated with Vasco Ventures, tried to buy the property. The deal ultimately fell apart because the buyer did not have the roughly $40 million purchase price at the original closing deadline on July 10, 2019. The entity left an $8 million deposit on the table.
Shortly after the pandemic started, and Gov. Cuomo called for lockdowns, HNA shut down its hospitality functions. It never reopened though the site has been used for film production.
The town says it is working in cooperation with HNA Palisades Center to seek a developer to re-envision the site.
“We’ve been in close coordination with HNA,” said Michael Zarin, of Zarin & Steinmetz in White Plains. “HNA has deferred to Orangetown to take the lead on a public-private partnership.”
On Oct. 1, the Town of Orangetown board hired engineering/planning firm AKRF and attorneys Zarin & Steinmetz to assist with the marketing and sale of the parcel.
Once the town receives its bids, it plans to select a developer in mid-April.
Orangetown, which is hoping to play an influential role in the future fate of the privately-owned HNA Palisades, envisions both development and environmental conservation. Specifically, the site could be developed for a bevy uses including residential, commercial, recreational, movie studio, senior assisted living. But the list also includes what the site is or has recently been used for: hotel, conference center, or a corporate headquarters.
Taking a proactive approach to shaping development on a significant parcel is not entirely unusual, and if successful it could be used as a template for parcels in need of redevelopment in Rockland County.
HNA is free to market its parcel independently, and retains control over whether it accepts an offer, given that the parcel is privately owned. But the town, which appears set on taking control of the parcel, says it does have one tool in its kit: eminent domain.
The threat of utilizing eminent domain amounts to a rather bold claim considering Orangetown would need to re-appraise the property and would have to pony up the value of the property. The threat of the Town utilizing its condemnation authority to acquire the property could effectively dampen the market for private buyers and devalue the property.