One Madison lender offers to complete remaining construction, provided receiver given expanded control

New York /
Apr.April 21, 2010 06:28 PM

Lender iStar Financial has told a state Supreme Court judge that it would fund the remaining construction at the One Madison Park condominium if the court-appointed receiver is granted expanded powers since it says the developer could not be trusted to complete the project. (Note: correction appended)

The remaining construction includes finishing the lobby, an indoor pool, fitness center, and other construction to get temporary certificates of occupancy on the upper floors of the 50-story tower.

The lender urged Judge James Yates to allow Jonathan Newman, the newly appointed interim receiver, additional powers to oversee the building amid concerns that the current developers, led by Slazer Enterprises president Ira Shapiro, have not fully accounted for millions in missing funds or resolved other problems.

“For the record, lender will not agree to fund construction or other expenses through protective advances or otherwise if the mortgaged property remains, to any extent, in the possession and under the control of borrower and its principals (including defendant Shapiro),” wrote attorney Matthew Parrott, who is representing iStar Financial.

As previously reported, Judge James Yates last week named an interim receiver to take over collection of common charges at One Madison Park. However, the court allowed lead developer Ira Shapiro to remain in charge of the project and resume sales, which had been halted by Attorney General Andrew Cuomo.

IStar claims the developer failed to pay $12 million in interest between October 2009 and February 2010, and that it owes the bank more than $200 million on the senior mortgage loan. The project, located at 23 East 22nd Street in Manhattan, includes a 69-unit tower.

The developer abandoned plans to build a 13-story south tower designed by Dutch architect Rem Koolhaas in 2009 after running into financial difficulties. A lawyer for iStar has said has said that tower is not feasible unless the borrower can get financing or raise additional equity to repay outstanding loans.

Burton Dorfman, lead attorney for Shapiro, said the developer believes that if the judge fails to dismiss the current foreclosure complaint, he should at least maintain the existing order leaving him in charge of the project.

“I think the order should be along the same lines,” Dorfman told The Real Deal.

The developers are facing numerous lawsuits from individuals who are claiming title to apartments that were pledged in return for loans by them to the developer. Marc Jacobs, the co-developer on the project, claimed in legal documents that signatures for him and his wife were forged on promissory notes for some of those loans. He has since publicly split from Shapiro and hired his own attorney.

The bank also alleged in court documents last week that the signature of a sitting judge in Rockland County was forged on notarized documents related to the project. The Rockland County district attorney is investigating these allegations.


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