Deal Secures Luxury Condos at Former Bulova Watchcase Factory

Posted on 29 September 2011

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Financing for the condominium project at the former Bulova Watchcase Factory may be secured sometime in the next two weeks, according to Cape Advisors project manager David Kronman. That news came on Tuesday night after the firm was granted changes to its 2008 approval by the Sag Harbor Village Planning Board.

Among the changes to Cape Advisors approval was an amendment to its payment schedule of over $2.5 million to the Sag Harbor Community Housing Trust in lieu of providing on-site affordable housing. Three years ago, this was one of the most hotly debated issues during the project’s review by the village.

Citing economic turbulence in the period since the project was approved, last month Cape Advisors founder Craig Wood asked the planning board to consider changing the payment schedule. He requested that his firm be able to make payments to the trust in equal increments following the closing sale of each of the 65 units within the condo project.

The planning board originally required Cape Advisors to pay $582,600 into the trust upon receipt of its building permit. Following the first payment, $194,200 was to be paid when the developers received certificates of occupancy for the first five units, and the same amount each time they received a certificate of occupancy for the 10th to 15th units.

According to planning board chairman Neil Slevin, after Wood’s request last month, the village and Cape Advisors renegotiated the payment schedule.

“I think I am speaking for all of the board when I say this was not a completely easy decision to make,” said Slevin on Tuesday night. “We were all concerned.”

Slevin said board members were hesitant to subvert the creation of the housing trust fund, but at the same time did not want to put the Bulova project at risk. Last month, Wood said that after failing to find financing for the project for over two years, changing the affordable housing payment schedule was crucial to move the project forward.

In the new agreement, the planning board agreed to allow Cape Advisors to pay $582,600 to the housing trust in five equal payments of $116,520 at the closing sale of the first five condominium units. A second payment of $194,2000, in equal payments of $38,840 would follow with the sale of the next five units and the remaining $1,747,800 would be paid in 54 equal payments of $31,778.18 upon sale of the remaining 55 units.

The village will be allowed to accrue interest on the first $582,6000 upon the issuance of a building permit for the project at two points above the 10-year treasury rate as of the first of each year, with the principal sum reduced after each payment. For example, after the first payment of $116,520, the principal balance the village will be able to charge interest on will be $466,080.

Cape Advisors will be prohibited, under the planning board’s resolution, from transferring each unit’s certificate of occupancy to the new homeowners without making payment. Additionally, the housing money will now be protected by a covenant, which will run with the land should the firm sell the property, until the full $2.5 million has been paid to the trust.

Cape Advisors was also given exemption from providing a crossing guard at the now closed Stella Maris Regional School, unless that school is reopened, and will only need to provide either a bond or letter or credit to the village before beginning construction.

“I think everyone views this as a reasonable alternative,” said Slevin.

“Certainly, the amount we are asking for is the same plus we are getting interest on the money and the covenants we are implementing at this time secures the payments,” said planning board member Greg Ferraris. “And we are not jeopardizing the approval in any way.”

In addition to the village creating a formal liaison committee to work with developers as construction begins, Slevin said Mayor Brian Gilbride has agreed to hire a professional engineer to work on behalf of the village to ensure the project is completed to satisfaction.

The Bulova Watchcase Factory restoration and redevelopment is for a 65-unit luxury apartment building in the historic factory building and seven townhouses, which will contain 16 of the units. A recreation center, with indoor pool, and an underground parking facility is also planned for the project, which estimates have shown could cost nearly $100 million to complete.

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