Tribeca Five rendering
[Updated 3:33 p.m., with comment from the New York State Office of Alcoholism and Substance Abuse Services] Developer Brad Zackson is finalizing a deal to sell his stalled Tribeca Five condominium to Minnesota’s famed Hazelden center for drug and alcohol abuse, for as much as $10 million, The Real Deal has learned.
Hazelden beat out a number of condo developers for the six-story property at 283 West Broadway between Canal and Lispenard streets, which has been the subject of foreclosure proceedings since 2009 and was thrown into bankruptcy by developer Brad Zackson. The property is expected to be converted into a sober residential facility with multiple beds, along with some treatment, officials said.
Hazelden officials have met with the field office of the New York State Office of Alcoholism and Substance Abuse Services, according to Jennifer Farrell, an agency spokesperson; however, they have yet to submit a formal application for the facility. The agency would have to review the application before the residential facility could get final approval.
A state Supreme Court judge in October appointed a receiver to oversee the six-story condominium at 283 West Broadway, which had been in bankruptcy proceedings since January 2010, before going back to state court. The developer owes about $14 million in delinquent loans, fees and other expenses related to the property.
“The case is going forward,” said Greenberg Traurig attorney Steven Sinatra, who represents senior lender Inland Mortgage Capital. “If there is an interim resolution that interrupts the sale, that may or may not obviate the need to go forward with the foreclosure.”
Zackson, after borrowing the funds from Inland in 2005, got two loan modifications and later went into default on nearly $12.8 million in loans, court documents show. They also show he failed to make monthly payments by the October 2008, failed to get a certificate of occupancy from the Department of Buildings by September 2008 and lenders claim he allowed the building to sustain structural damage from a leaking room.
Zackson, in court documents filed in U.S. Bankruptcy Court, blamed the default on Inland Mortgage, claiming that the bank, which had little to no experience with residential condos in New York, subjected his team to “onerous demands” and eventually cut off his construction funds, leading contractors to walk out.
“We complained bitterly in numerous phone calls to Inland about the unwieldy procedures being employed,” Zackson said in an affidavit.
Roland Levin, a vice president at Prudential Douglas Elliman and the exclusive listing broker on Tribeca Five, said that several buyers were willing to buy at the condo, but the bank made completing the project difficult for the developer.
“I signed several contracts but unfortunately the building fell victim to economic conditions and difficulties that the banks caused for developers,” Levin said.
Zackson was not immediately available for comment, nor were officials at Inland Mortgage.
Hazelden, which operates a treatment facilty at 322 Eighth Avenue and 26th Street, has contacted officials at Community Board 1 about the proposed site. The site would be in addition to the existing facility, he said.
“They said they would welcome the opportunity to appear before our Tribeca [Committee] on Jan. 12, said Noah Pfefferblit, district manager of Community Board 1.
In 2005, Hazelden sold a site at 233 East 17th Street for $10.2 million to developer Christopher Prokop of DDG Partners, who converted the property into a condominium called Landmark 17.
Christine Andersen, spokesperson for Hazelden, confirmed that there were discussions, but did not have any immediate comment beyond that. Kevin Nash, the attorney for Zackson, also confirmed that the negotiations are ongoing, but said they had not been completed. A spokesperson for Inland Mortgage was not immediately available for comment.