West Water Street Developers File for Chapter 11 on the Defunct Condo Property

Posted on 17 October 2012

It has been over three years since East End Development, LLC — the team of developers behind the now defunct condominium project at 21 West Water Street — have paid workers to complete any work at the 19-unit building.

It has sat, more than half way finished for years, a large box of tiles on one of the building’s balconies unmoved, slowly disintegrating to literal dust.

Last week, the future of that project was dealt another blow.

On October 12, East End Development, LLC filed for chapter 11 bankruptcy in United States Eastern District Bankruptcy Court. Emil Talel is listed as the managing member of the LLC, with Michael Maiden and Terry Soderberg also listed as co-debtors in the filing.

According to a copy of the filing, East End Ventures debt associated with the 21 West Water Street property is estimated at $35,344,415.89. The filing states that East End Ventures assets include the half finished 21 West Water Street condominium building, which they value at $27,300,000.

The only other asset listed in East End Ventures documentation is $206.53 in a JP Morgan Chase Bank account.

The 1, 3 and 5 Ferry Road parcel, which the same developers unsuccessfully attempted to develop into condos under East End Ventures LLC — a case that resulted in a lawsuit between the firm and the Village of Sag Harbor — is not listed as one of the company’s assets as it was managed under its own limited liability corporation.

Twenty-six mechanics’ liens are listed against the 21 West Water Street property from creditors holding secured claims in the bankruptcy case totaling $34,653,840.52 with an additional $7,353,840.52 in unsecured claims made by the same companies.

The largest mechanic’s lien filed against the property is by the Longview Ultra Construction Loan Fund through Amalgamated Bank — East End Venture’s loan provider. They have filed a $30,484,011 lien on their own.

On Tuesday afternoon, a representative from Amalgamated Bank declined to comment on the Chapter 11 filing.

Several local companies have also been impacted by the project. Bridgehampton Steel & Welding has filed a $76,092 mechanic’s lien, Pristine Pool Construction Corp. has filed a $71,703 mechanic’s lien against the project, Southampton Brick & Tile has filed a $94,340 lien, Southampton-based Squire, Pierson & Sons, Inc. has a $94,239.47 lien and Water Mill Building Supply, Inc. has a lien of $213,949.

Unknown claims may be made from the Internal Revenue Service, the New York State Department of Finance and the New York City Department of Finance, according to the filing.

“Unsecured” and “non-priority claims” amount to $690,575.17, including $11,060 owed to local Sag Harbor attorney Dennis Downes — the attorney who helped secure approval for East End Development for the 21 West Water condominium project. An additional $20,076 is owed to Bridgehampton architect Kathryn Fee, $277,139.94 is owed to RLW4 Construction out of Southampton, and even the Village of Sag Harbor is owed $523.75.

As East End Ventures has filed for Chapter 11, not Chapter 7, it is attempting to reorganize its debt rather than liquidate, although under bankruptcy law Chapter 11 proceedings can move to Chapter 7 proceedings.

However, on Tuesday, Talel remained optimistic that despite the years long delay in getting the project off the ground that it would in fact move forward some time this winter, in part, because East End Development filed for Chapter 11.

“We will settle with everyone involved and negotiate to the best of our abilities,” said Talel. “This will allow us to go back to construction as quickly as possible. Nothing has changed and the project will be completed in an expeditious way.”

The 21 West Water Street condominium project was originally proposed in 2006 and was approved in 2008, with residents and village boards alike largely supporting the project, in large part because the condos would take the place of a nightclub and restaurant just on the edge of a residential district.

The project included 19 condos and a rooftop swimming pool.

While they were gaining its final approvals for 21 West Water Street, Talel and Maiden proposed a condo project at 1, 3, and 5 Ferry Road, under the East End Ventures corporation.

While failing to find support for a number of different versions of that project, in 2009 the village’s zoning code changed, drastically reducing the number of condominium units allowed on the Ferry Road parcel and requiring affordable housing be worked into the project.

In September of that year, Talel and East End Ventures filed a $30 million damages suit against the village as well as an Article 78 suit, claiming they were led to believe the project would be exempt from the new code, similar to the approved condominium project at the former Bulova Watchcase Factory.

While both suits would ultimately be dismissed in 2011, as of fall 2009 workers were already walking off the job at 21 West Water Street for non-payment and by July of 2010 there were over $3 million in liens recorded with the Suffolk County Clerk’s office against the property.

According to the Chapter 11 filing completed earlier this month, Amalgamated Bank has already begun foreclosure proceedings against East End Development, which is still in court.

For Sag Harbor Mayor Brian Gilbride, after three and a half years of watching the 21 West Water Street building fall further and further into decline, he said he was not optimistic about the project’s future. But at the end of the day he hopes someone resurrects the project to protect that section of the village from further blight.

“There is not a day I walk into Schiavoni’s that someone doesn’t ask me about this,” said Gilbride.

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5 Responses to “West Water Street Developers File for Chapter 11 on the Defunct Condo Property”

  1. Neil Frisch says:

    Does anyone else ever wonder how they get loans for this kind of sum. 34Million for that building? Seriously!? Put that thing in upstate NY and you couldn’t sell it for one million. Judging from the liens it is only worth about three hundred thousand. Yet somebody approved a loan for 34 million dollars. Is there any wonder this country is suffering from a financial crisis? But yet people still say, with a straight face, that it was all caused by low income loans, to poor people.

  2. Robert says:

    Turn this into a community center.


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