Count on at least one long debate tonight when the City Council takes up the issue of whether Hallmark Partners Inc. has met its obligation to document a $30 million investment in the 220 Riverside and Unity Plaza project in Brooklyn.
The city in 2007 entered into two agreements with Hallmark to develop a mixed-use residential and commercial project and a second phase including retail, condominium and hotel components requiring a minimum $30 million investment.
The project was modified to include apartments, retail space and development of a public open space surrounding the stormwater retention pond at the corner of Riverside Avenue and Forest Street in Brooklyn.
The city agreed to provide a Recapture Enhanced Value grant of up to $4.9 million for the original $90 million project, and a $750,000 contribution for the long-term maintenance of the public space.
The agreement requires Hallmark to provide documentation of a binding loan agreement for the $30 million investment.
That's where the problem lies.
Attorney Steve Diebenow, representing Hallmark Partners on Monday before the combined council Finance and Recreation and Community Development committees, said there is no loan agreement because Hallmark has $500 million in cash and is building the project without borrowing money.
Diebenow said Hallmark has provided to the city a $28.6 million building permit for the project; a $2.5 million closing statement for the land required for the development; an earnings statement from Tennessee-based Mid-America Apartments, Hallmark's partner on the apartment segment, stating Mid-America will invest $39.5 million in the project; and an affidavit from Hallmark principal Alex Coley that the developer is investing $30 million in the project.
City General Counsel Cindy Laquidara said the city is following the terms of the agreement as written and the documents provided by the developer do not meet the criteria for the city to release the incentives.
"I have seen no bad faith," said Laquidara. "But this is typically not something a business lawyer would take."
She said if the city accepts the documents already provided as proof of a $30 million investment, it could increase the financial risk to the city.
"Even with the best intentions, projects don't get finished," Laquidara said.
She advised the committee members it would be "safest for the city" to wait until 220 Riverside and Unity Plaza are finished before authorizing transfer of the incentives.
Diebenow said $15 million already has been spent on the apartment development and "nothing is holding us up from completing the big building. The cranes are moving every day."
After the committee adjourned without a resolution or even a recommendation for action, Diebenow said Hallmark will depend on council President Bill Gulliford to discharge the bill from the committees at today's council meeting and put the question of whether Hallmark has satisfactorily documented the $30 million investment on the floor for a vote.
Coley said the delay already has made it impossible for Unity Plaza to open by July 4 as planned.
"If we don't get out of here tomorrow, we're not going to make Labor Day, he said.
(904) 356-2466