Haverstraw wary on Encore project as developer hits financial rocks
Akiko Matsuda
The Journal News
HAVERSTRAW - As shares of WCI Communities took another sharp downturn last week, residents expressed concerns about the fate of a 500-unit housing project that would bring an immediate $35 million to the town.
WCI Communities, a Florida-based developer, has been planning to build a 55-and-older condominium complex, to be called Encore Palisades, on 163 acres at the former Letchworth Village.
Company representatives said in the summer that construction would begin within several months. But last month, the developer announced that it would postpone the project until the fall of this year.
On Friday, WCI's stock closed at $1.90 on the New York Stock Exchange, off 92 percent from its 52-week high of $24.20. WCI has been hit hard as demand for condominiums and houses in Florida, its major market, tumbled.
Financial analysts warned that WCI may be forced into bankruptcy and could face a "default-like event" as early as Wednesday if it is unable to renegotiate terms with its lenders. The company reported a $70 million net loss in its third quarter.
Upon selling the 163-acre property to the developer, the town would receive $35 million from WCI. Town Supervisor Howard Phillips said the money would be used to offset payments to Mirant Corp. to stabilize town taxes, being mindful of town residents who were hit by a recent school-tax increase.
Mirant successfully sued taxing jurisdictions in north Rockland and received refunds for overpaid taxes on its Bowline power plant in Haverstraw and Lovett plant in Stony Point. This year, Haverstraw issued bonds to pay about $26.9 million to Mirant and the county, which had paid Mirant's portion of the taxes to the town, as required by state law, for the years the company refused to pay taxes during its appeal of its assessments.
"This was certainly a good plan to offset increases in taxes as a result of Mirant. ... Right now, the economy is turning so bad that I just don't see it taking place for several years," said William Cahill, 65, of Garnerville, referring to Phillips' idea to use the $35 million to pay off the debt.
"As a taxpayer, I am very concerned. The cost of living is going out of sight, and obviously, taxes are a big portion of that," Cahill said.
Phillips said Friday that he was monitoring WCI's stock price.
"We are following them very closely," Phillips said, adding that the town was still trying to set up a meeting with the developer to discuss its plans and that he remained hopeful that the project might eventually work out.
Gabe Pasquale, vice president and chief marketing officer for WCI Communities' Northeast division, did not return a message left on his answering machine Friday.
Steven Silverberg, an attorney for the town's planning and zoning boards, said that as the final stage before closing the deal, the plat -a map showing features of the development, including roads and easements -had to be filed. He said he was communicating with the developer's representatives who were working on completing the plat.
The developer would be required to close the deal within 30 days of its filing the plat with the county, Silverberg said.
Phillips said this year's payment on the $26.9 million bond issue would be about $2 million. He said the town had built up a $6 million tax stabilization fund and a $2 million reserve, so this year's bond payment would be made from the reserve fund, without burdening taxpayers.
"We are watching every single expenditure, making sure that there are only necessary expenditures, trying to secure grants and looking for other ways to increase revenues," Phillips said. "And we're still providing excellent services."
Phillips said that once the town held a meeting with WCI and found out the company's intention, he would plan a public information meeting to discuss the matter with residents.
"I would pose the question to the residents: If the WCI does default, we have an option to go out and try to sell it to someone else right now or to hold on to the property for maybe another year and give a chance to the real estate market to come back," Phillips said.
"This property belongs to the taxpayers of Haverstraw," he said. "I would want to maximize the profit for the people of Haverstraw. If I go out now, I may not get nearly the true value of this property."
WCI Communities, a Florida-based developer, has been planning to build a 55-and-older condominium complex, to be called Encore Palisades, on 163 acres at the former Letchworth Village.
Company representatives said in the summer that construction would begin within several months. But last month, the developer announced that it would postpone the project until the fall of this year.
On Friday, WCI's stock closed at $1.90 on the New York Stock Exchange, off 92 percent from its 52-week high of $24.20. WCI has been hit hard as demand for condominiums and houses in Florida, its major market, tumbled.
Financial analysts warned that WCI may be forced into bankruptcy and could face a "default-like event" as early as Wednesday if it is unable to renegotiate terms with its lenders. The company reported a $70 million net loss in its third quarter.
Upon selling the 163-acre property to the developer, the town would receive $35 million from WCI. Town Supervisor Howard Phillips said the money would be used to offset payments to Mirant Corp. to stabilize town taxes, being mindful of town residents who were hit by a recent school-tax increase.
Mirant successfully sued taxing jurisdictions in north Rockland and received refunds for overpaid taxes on its Bowline power plant in Haverstraw and Lovett plant in Stony Point. This year, Haverstraw issued bonds to pay about $26.9 million to Mirant and the county, which had paid Mirant's portion of the taxes to the town, as required by state law, for the years the company refused to pay taxes during its appeal of its assessments.
"This was certainly a good plan to offset increases in taxes as a result of Mirant. ... Right now, the economy is turning so bad that I just don't see it taking place for several years," said William Cahill, 65, of Garnerville, referring to Phillips' idea to use the $35 million to pay off the debt.
"As a taxpayer, I am very concerned. The cost of living is going out of sight, and obviously, taxes are a big portion of that," Cahill said.
Phillips said Friday that he was monitoring WCI's stock price.
"We are following them very closely," Phillips said, adding that the town was still trying to set up a meeting with the developer to discuss its plans and that he remained hopeful that the project might eventually work out.
Gabe Pasquale, vice president and chief marketing officer for WCI Communities' Northeast division, did not return a message left on his answering machine Friday.
Steven Silverberg, an attorney for the town's planning and zoning boards, said that as the final stage before closing the deal, the plat -a map showing features of the development, including roads and easements -had to be filed. He said he was communicating with the developer's representatives who were working on completing the plat.
The developer would be required to close the deal within 30 days of its filing the plat with the county, Silverberg said.
Phillips said this year's payment on the $26.9 million bond issue would be about $2 million. He said the town had built up a $6 million tax stabilization fund and a $2 million reserve, so this year's bond payment would be made from the reserve fund, without burdening taxpayers.
"We are watching every single expenditure, making sure that there are only necessary expenditures, trying to secure grants and looking for other ways to increase revenues," Phillips said. "And we're still providing excellent services."
Phillips said that once the town held a meeting with WCI and found out the company's intention, he would plan a public information meeting to discuss the matter with residents.
"I would pose the question to the residents: If the WCI does default, we have an option to go out and try to sell it to someone else right now or to hold on to the property for maybe another year and give a chance to the real estate market to come back," Phillips said.
"This property belongs to the taxpayers of Haverstraw," he said. "I would want to maximize the profit for the people of Haverstraw. If I go out now, I may not get nearly the true value of this property."
This article was
written by Akiko Matsuda
and published by The Journal News
on Monday, January 14