A Durst Organization affiliate, Durst Fetner Residential, is expected to sell a $32.5 million note on a stalled 1 million-square-foot residential development site on the East River in Long Island City to the property’s owner.
The sale is a signal that the long-delayed project on the site of the East River Tennis Center, first dreamed of in the 1970s, is finally going forward. But it would be a blow to Durst Fetner’s hopes to develop the site.
Durst Fetner, a residential development company, bought the note on the six-acre, vacant site at 44-02 Vernon Boulevard in November 2009 from a Texas bank, one of the site’s developers Marshall Weisman said.
Durst purchased the note at a discount, Durst Organization spokesperson Jordan Barowitz said. He would not divulge the price.
Weisman, managing member of the New Jersey-based property owner Vernon Realty Holding, said he expects to close on the note purchase in the first or second week in March, and must pay the full face value of $32.5 million.
“[Durst Fetner] bought the note. They made some interest money on it, which is nice. And we are buying it,” Weisman said. Vernon Realty, along with controversial landlord Baruch Singer, is developing the site.
Durst Fetner purchased the note hoping it could take control of the project and develop it, Barowitz said.
“If they buy it back, that is fine. If they don’t, we believe it is a terrific site and we look forward to developing it. Clearly we would prefer the latter,” Barowitz said.
The plan for the stalled development calls for a total of 910 units in two, 28-story towers and four, eight-story buildings on the six-acre site.
Just half the project will begin this year following the recent securing of $241 million in construction financing, Weisman said. The foundation construction on the northern portion of the development, with one of the tall towers and one of the short ones with a total of 561 units, will begin in June or July, he said. The balance of the project will go forward once additional financing is obtained, he said.
So far, the development has cost about $50 million, including demolition, environmental and permitting work, Weisman said. Vernon Realty bought it in 2003 for $26 million, city records show.
Singer was reported to have offered $190 million for the site. He never closed but his deposit remained invested with the project, Weisman said. Singer did not return calls seeking comment.
The stalled site has become a safety issue, Department of Buildings documents show. The city’s Environmental Control Board has issued the site seven violations with a total of $4,950 in penalties. Of that, they have paid $2,450, the DOB site indicates.
Most recently, a full stop work order was issued in November 2009, and an Environmental Control Board violation was issued in January noting a “large excavation now flooded at abandoned job site.”
Weisman said the flooded area would be drained when weather permitted.
Joseph Conley, Community Board 2 chairman, said currently the site was, “An accident waiting to happen.” He cheered any news that would lead to it being cleaned up.