Final Open Letter to the Town Board and Citizens of New Castle re: Chappaqua Crossing
Thursday, October 24, 2013
by Steve Coyle
I believe that the Town Board’s naïveté has greatly benefited Summit Greenfield and potentially set up a dangerous and potentially costly situation for the Town. Town Board members really need to re-examine their views as regards allowing retail uses at Chappaqua Crossing and they need to do it quickly. Since the Town Board is racing to approve a grocery and retail use at Chappaqua Crossing, let me begin by explaining what will likely happen if they approve rezoning.
Step 1 would be for Summit Greenfield to procure the retail zoning. They need that first. Once they receive this zoning, they will move on to – Step 2—seek site plan approval. If you have retail zoning, it is then much easier to litigate over a denied site plan approval. They can argue that:
(1) the cupola building is not landmarked,
(2) keeping the building would prohibit them from executing a lease with a potential tenant, and
(3) because the site is zoned retail, that they have the right to construct a commercially viable retail product that fits within the existing retail zoning overlays for similar sites.
Without a current master plan in place, this is even easier to argue. And with a master plan hastily changed to match the developer’s design, it is a foregone conclusion.
Most recently, I’ve read that the Town Board is tailoring the draft zoning to target a mid-size grocery of between 36,000 and 50,000 square feet. In this business, generally you want square footage ratio for satellites (what the Town Board calls “ancillary retail,” which are there for the traffic the grocery store would generate) to be about one-to-one, so you would expect 40,000 square feet of a grocery anchor to be matched by 40,000 square feet of satellite space. If a developer builds a greater percentage of satellite space, you tend to have higher vacancies, as it becomes increasingly difficult to attract strong tenants when the ratio of satellite space is higher than 1:1. So depending on the size of the anchor grocery, some proportion of the proposed 120,000 square foot “outer limit” on retail space is designed to struggle and/or fail.
As part of the on-going discussions surrounding retail at Chappaqua Crossing, I have written several pieces that detail my objections to this proposed use. The first of these was an open letter that I sent directly to the Town Board on May 6, 2010. A copy of that letter can be found here: http://www.newcastlenow.org/index.php/article/index/new_ltr._to_town_board_board_members_are_reckless_to_suggest_retail_use_at
As further information came available regarding the proposed project, my objections to the proposed retail uses intensified. So I wrote two open letters on May 14th and September 24, 2013. They can be found in the links below.
Since I have written those letters, numerous residents and one Town Board member, Jason Chapin, have commented on them. Also, in the ensuing period, the final SEQRA Supplemental Findings Statement has been released, and a Candidate for Supervisor, Penny Paderewski, published “Open Letter to the Community: My Vision for Chappaqua Crossing”, where she publicly supported a 120,000 neighborhood retail shopping center at Chappaqua Crossing.
I would like to address a number of these issues in this, my final Open Letter to The New Castle Town Board and to the Citizens of New Castle Re: Chappaqua Crossing.
Until Ms. Paderewski publicly stated that she supported Chappaqua Crossing, I had not endorsed any one in the Town elections, nor had I made up my mind as to whom I would vote for. However, since Ms. Paderewski has announced her support of retail at Chappaqua Crossing, I now know that I will definitely not be voting for her. Plain and simply, I am opposed to Chappaqua Crossing because I believe that it is an ill-conceived project for our town. For me, personally, this is not a political issue, but I cannot support a candidate who would approve or seek to approve a retail center at Chappaqua Crossing. Thus, I will judge each of the remaining candidates based upon their votes and their views, with retail at Chappaqua Crossing being a vital issue. In general, I believe that the “benefits” of the project have been grossly overstated.
I would like to address a few of Mr. Chapin’s responses to my letter.
First, while it is true that commercial taxes will go up if retail is constructed at Chappaqua Crossing, three important factors must be considered.
(1) the commercial tax base in New Castle represents just 1% of the entire tax base. Thus, it is de minimis, and will remain de minimis even if the retail center at Chappaqua Crossing is completed;
(2) there is little evidence that constructing a 120,000 square foot retail center with a 45,000-60,000 square foot grocery anchor will lead to additional office leasing at Chappaqua Crossing. In fact, my experience as a real estate owner and investor suggests that retail will likely make it harder to lease the existing office space, as it will likely lead to parking, traffic, and other issues;
(3) the level of rents that are achieved does matter, as rents, occupancy and cap rates (a.k.a. real estate yields) drive values, and values are what drive tax revenues. I have spoken with several leasing brokers in Westchester County who believe that the pro forma rents and occupancies used in the tax analysis are grossly overstated.
Tree removal and water-related issues
Another issue that Mr. Chapin addresses is the removal of trees. While it is true that the developers will need to fund the Tree Bank Fund to make up any deficit, this does not replace trees on the site. With any new development, there is typically an increase in water run-off. When there is a large tree deficit, as there will be at the Chappaqua Crossing Retail Center, then the water run-off will be further increased. Our town already faces many water related issues. I know, for example, that residents on Pin Oak Lane have been dealing with water related issues for years. They are likely to face new water-related issues as a result of the proposed development at Chappaqua Crossing. Mr. Chapin, I suggest that you take a fresh look at the materials that were presented. There are both pros and cons in the report. I must say it is interesting, (and very disturbing to me), that you have focused only on one side of the issues and have not looked at other, alternative uses in your analyses.
What would I support at Chappaqua Crossing?
Some of the comments to my last letter came from an anonymous source “Magic Wand.” While I do not typically respond to anonymous questions, I thought that his or her questions regarding what uses would I support at Chappaqua Crossing were valid. Personally, I believe that the site is best developed as a mixture of office uses, single family residential, and townhomes. I believe that if the townhomes were primarily one and two bedroom units, that this would limit the impact on the schools. Further, part of the site could be limited to age restricted housing. Another fine option for the site would be a portion that would be geared toward an assisted living/independent facility. I would love to see the site partially developed as a Town recreation and government center; unfortunately, however, I do not see this as a commercially viable option. (Unless the town and its residents support taking on more debt and facing higher taxes).
Magic Wand stated that he or she hoped that development could begin by 2014. I believe that this is unlikely, as the current ownership structure lacks the capital to proceed with development. More likely is that the site will be sold to the next owner/developer who will likely undertake development. While I realize that many in town would like to see the site remain undeveloped, I do not believe that this is a viable or supportable option either. The site warrants development; however, I do not believe that a retail center is in the best interest of the town, its residents or its merchants.
In response to Ms. Paderewski
Why the office space remains unleased
As to Ms. Paderewski’s Open Letter, I would like to address several issues. First, the vast majority of the office space at Chappaqua Crossing remains unleased for three reasons:
• First, the project has been challenging economically for the fund that owns it, with the equity having been evaporated and little to no monies left to fund tenant improvements, leasing commissions and free rent for tenants. Without proper capital reserves, it is virtually impossible for an owner of a property to attract brokers and tenants to their property.
• Second, the office market in Westchester County has been, and remains, quite weak. This further limits the ability to lease the vacant office space.
• Third, Summit Greenfield has not renovated or sought to renovate much of the office space at the project, due to extremely limited capital reserves and a weak office market. In my professional experience, adding a supermarket to an office complex almost never increases demand for office within a project. In fact, it is often a competitive and disruptive use.
Razing the cupola building
In her letter, Ms. Paderewski states that “Summit Greenfield could tear down the Cupola building and put up a new, glass box office building under our current zoning, and if it is left with nothing but obsolete buildings, it may have no practical choice but to do so.” In my mind, the likelihood of this happening is virtually nil.
• Firstly, Summit Greenfield does not have the capital necessary in their current joint venture to fund construction of a new office building.
• Secondly, as stated above, the Westchester County office market is quite weak. Current rents and occupancies do not justify new construction costs.
• Thirdly, there is very little chance that Summit Greenfield could borrow capital to fund such a re-development.
Ensuring that stores will not duplicate or compete with existing merchants
Ms. Paderewski states in her letter that “I will work with the Town Board to ensure that the types of stores that will be developed will not duplicate or compete with the unique charm and appeal of what our existing merchants offer – but will instead provide complementary offerings to our existing stores – in ways that won’t create direct competition that might harm their businesses.”
I do not believe that this is a viable solution, nor do I believe that it is legal. While the Town Board can change zoning laws such that only certain types of retail are allowed within the retail zoning laws, government can not dictate what tenants an owner can lease to, nor can those zoning restrictions be too far reaching if the use is within the basic parameters of that zoning use (in this case retail).
Attempting to drive and limit tenancies invites litigation, in my opinion. Further, any such zoning restrictions would need to be well thought-out and legally tested. In my opinion, they would need to be part of the comprehensive master plan for the Town. Unfortunately, as we all know, work on this document is only nearing its starting point!
In her conclusion, Ms. Paderewski, in part, states, “As a leader, I truly believe in standing up for what I think is best for our Town – and I would go all out to do so - but I will not let resentment or anger towards Summit Greenfield lead us back to years of costly litigation which, if we win, leaves us with a deteriorating office facility.” Ms. Paderewski’s statements very much mischaracterize my objections to retail at Chappaqua Crossing.
Personally, I have no resentment or anger toward Summit Greenfield. If I were in their shoes, I would likely be pursuing a similar course of action. (However, I would like to think that I would never have purchased the Reader’s Digest Campus in the first place).
Also, I am professional acquaintances with a few of the players involved. They are neither bad nor evil men, they are, simply, investors who are seeking to make the best out of what has turned out to be a bad situation. Regardless, retail at Chappaqua Crossing, is, in my personal and professional opinion, bad for the Town and is a questionable use for the site.
These are facts, not “unsubstantiated rumors and misconceptions”
Ms. Paderewski’s final statement is “Chappaqua Crossing has had a polarizing effect on our Town with unsubstantiated rumors and misconceptions about its impact, but it is an important issue that we must address with fact—not fear—and understand the implications, benefits and opportunities that it also presents for the future of New Castle.”
Over the past several months, I have spent countless hours analyzing and studying the materials that have surfaced regarding Chappaqua Crossing. I have sought to provide facts and thoughtful analysis in examining this project that will have long-lasting impacts on our town. I am not alone in these efforts, as others have voiced similar concerns. For Ms. Paderewski to label concerns regarding the impacts of Chappaqua Crossing as “unsubstantiated rumors and misconceptions,” ignores the thoughtful analysis that others, and I, have done. Further, it ignores many of the facts as they have been presented in the studies that the Town has received.
I was really struggling as to whom I would vote for in the upcoming election for Town Supervisor. I know now whom I will be voting against.