January 29, 2010
by Christine Yeres
A team familiar to New Castle residents spoke in White Plains on January 14 to the Commercial and Investment Division of the Westchester-Putman Association of Realtors about the future of the Reader’s Digest site, now called Chappaqua Crossing.
David Walsh, a former employee of Reader’s Digest and current site manager of the property for owner-developer Summit Greenfield; Andy Tung, planning consultant for the project; and John Marwell of Mt. Kisco’s Shamberg Marwell Davis & Hollis, P.C, Summit Greenfield’s outside attorney, told a breakfast audience of about 20 that Summit Greenfield is now in the last stages of preparing a final version of the draft environmental impact statement (DEIS). The trio estimated that Summit would submit its final DEIS to the New Castle town board within two to three months.
A brief history of Summit Greenfield’s applications to develop Chappaqua Crossing
In its first application in 2005, Summit Greenfield applied for approval from the town of New Castle to build 348 condominium units alongside the existing 700,000 square feet of commercial rental space, for which occupancy by three tenants in addition to Reader’s Digest was permitted. That application got only part way down the long road of environmental review before the town board, in December of 2006, declined to hear it further, offering as explanation that residents had expressed a strong preference for keeping the property a commercial tax-generator.
Seven months later, in July of 2007, Summit Greenfield returned with a plan to construct 278 condominium units, and, in addition, asked for removal of the three-tenant cap to permit an unlimited number of smaller tenants to share the business space alongside Reader’s Digest’s 225,000 square feet, increased to 295,000 square feet eighteen months ago.
Chapter 11 bankruptcy changes the game
In the fall of 2009, Reader’s Digest filed for bankruptcy protection. According to its recent bankruptcy settlement, Reader’s Digest is set to decamp to White Plains and New York City in late 2010, making their 295,000 square feet of office space at Chappaqua Crossing available.
“We were thrown a curve ball,” Walsh said, when Reader’s Digest not only declared bankruptcy, but declined to accept Summit Greenfield’s offer of a new lease on the space at six dollars less per square foot than the space they were headed for in White Plains.
According to New Castle Town Supervisor Barbara Gerrard, the town board has not heard from Summit Greenfield concerning the loss of Reader’s Digest as a tenant. “We do regard Reader’s Digest’s intended departure as a changed circumstance brought about by the decisions of the bankruptcy court,” said Gerrard, “and, as to the [requirement that] 225,000 square feet [be leased by one tenant], I believe the town board would be willing to re-examine that piece of the legislation, given the current climate of commercial real estate.”
History of space restrictions at Chappaqua Crossing
In 2005, when Summit Greenfield bought the property and its 700,000 square feet of office space for $59 million, it negotiated a 20-year lease-back to Reader’s Digest for the 225,000 square feet its offices already occupied, and planned to fill the remaining space with one large tenant, Pepsico. When that tenant backed out, Summit, citing the difficulty of finding another tenant of such size on short notice, requested that the town board raise the “one additional tenant” requirement to three. The town board did so, but required that, of the four tenants, one – then Reader’s Digest – occupy at least 225,000 square feet of space.
Now, said legal counsel Marwell, “much of the space is vacant because of the town board’s restrictions.”
“That’s true, in a sense,” said Supervisor Barbara Gerrard, in an interview this week, “if they mean that the town board granted their request at the time they purchased the property to increase the permissible number of tenants, which originally was only one occupant – Reader’s Digest – and after the amendment was four tenants including Reader’s Digest. Then yes, we granted that request.”
Summit Greenfield reached the four-tenants cap in 2009. Its tenants now include Fiber Media, with 35,000 square feet; Mt. Kisco Medical Group, with 25,000 square feet; and Northern Westchester Hospital, with 35,000 square feet, in total, 95,000 square feet.
In its pending application for permission to develop the property, Summit Greenfield has proposed a reduction in the amount of office space from the current 700,000 square feet to 520,000 square feet if the residential component of its plan is approved. With Reader’s Digest occupying 295,000 square feet when it reached its four-tenant cap, Summit Greenfield had rented, in total, around 80% of the 520,000 square feet of office space proposed in its plan. But then Reader’s Digest bailed out.
It remains a requirement, however, that one single tenant occupy at least 225,000 square feet of office space. That’s nearly impossible to do, stated Walsh, “because in today’s market or in any market it will be difficult to find a tenant over 200,000 square feet. Westchester is, historically, a small-tenant market.”
Questions from the audience of realtors
To an audience member who asked, “Has the town board ever articulated a rationale for the limit on the number of tenants?” Marwell responded, “If it’s multi-use rather than one tenant, the board may fear more traffic. But in our 17 alternatives [included in their Draft Environment Impact Statement], traffic generation for multi-tenant is no greater than that for a single tenant,” an argument that Marwell and Tung made to New Castle’s zoning board of appeals on July 29, 2009. See NCNOW.org’s article of August 7, 2009, “Chappaqua Crossing developer reps brief ZBA on request for unlimited tenants.”
Marwell reiterated his standard speech about age restriction enforcement. “There’s a lot of concern that the project would overrun the school system,” he said, “but we have a legal basis for age restriction and have given the town board a legal memo describing the legal basis under federal and state law that says [these age restrictions] are enforceable.”
Another audience member asked whether town officials had asked Summit Greenfield to make road improvements in order to mitigate traffic. Tung responded that Summit Greenfield had offered some improvements, mentioning one specifically, a right hand turning lane for southbound vehicles on Route 117 to turn onto Roaring Brook Road.
He also noted that office, residential and school traffic have different peak hours. “Certainly on Saturday traffic will be more active [than it is now],” he acknowledged. He mentioned that Summit Greenfield “already runs a shuttle between Reader’s Digest and the train station.” Future traffic, said Tung, “will be different, but not overly detrimental.”
Marwell reminded the audience of Summit Greenfield’s continuing legal argument, that if the campus were to remain entirely commercial, “we can build more BRO [business, residential, office] space. For full use of that acreage [according to town zoning regulations] we can add another 300,000 square feet [to the existing 700,000 square feet].” Tung added that in this economic climate, however, it would not be wise to add additional office space.
Asked this week whether Summit Greenfield now needed two different restrictions lifted – both the cap of a total of four tenants and the requirement that one of the four tenants take up at least 225,000 of some part of the office space, Walsh responded in the affirmative, adding that the space to be vacated by Reader’s Digest would not require a great deal of renovation to make it suitable for smaller tenants.
With arms extended, Walsh smiled and asked the audience, “Well, what next? Any suggestions?” He described the developer’s biggest challenge as “somehow to divide up the original building” to accommodate smaller tenants. “What do you say to a tenant who wants three, four or five thousand square feet?” he asked. “Do you say, ‘OK, but we have to get town board approval?’ How long is a tenant willing to hang around [to find out]?”
_________________
To view NCNOW.org’s archives of all articles and letters to the editor on the subject of Reader’s Digest and Chappaqua Crossing, click HERE.
Copyright 2012 NewCastleNOW.org