Cirrus and USIF to Partner at Pacific Park

Pacific Park may soon get some new blood.

The U.S. Immigration Fund announced on Friday that it plans to partner with Cirrus Real Estate to co-develop the remaining sites at the Brooklyn mega-development.

The news comes after Related Companies backed out of the project. A representative for the partnership indicated that other co-development partners, in addition to Cirrus, are still being finalized. If approved, Cirrus would serve in both a funding and co-developer capacity.

It is not clear to what extent Cirrus — through a fund dubbed Cirrus Workforce Housing Advisors — will serve as co-developer, though a press release indicates that it would lead capitalization of the project. Cirrus is headed by Joseph McDonnell, who was formerly head of real estate at BlueMountain Capital, and Tony Tufariello, who served as head of real estate finance at Morgan Stanley and head of global real estate at Fortress.

A website for Cirrus provides little information on the company’s experience, including on large-scale development, though a spokesperson said McDonnell and Tufariello collectively have overseen “$150 billion in real estate finance transactions, $10 billion in real estate equity investments and more than 10,000 multifamily units.”

A lot has to happen before Cirrus and any other co-developers are officially added to the project. USIF still needs to foreclose on the property to transfer development rights over from Greenland USA, which is losing the project after defaulting on nearly $350 million in loans.

The state also has to sign off on any new developers and has not yet received a proposal from USIF and Fortress Investment Group. (Greenland borrowed funds from USIF, which raised capital for the project through the cash-for-visas EB-5 program. Fortress owns a stake in the debt.)

Any new developers will be taking over a large and complicated project, and after years of delays, state officials will likely want to ensure whoever steps in can finish the job. The plan for the remaining sites calls for more than 3,200 apartments to be built across six sites. The developers, however, will first need to build platforms over active train tracks.

They are also facing an impossible deadline set in 2014 to finish building nearly 900 affordable apartments by May. Failing to meet that deadline is supposed to result in millions of dollars in fines, but it is unclear if the state will waive that requirement.

In a press release, Cirrus and USIF indicated that their plan calls for “greater affordability than originally proposed,” but didn’t provide any details. A spokesperson for the partnership said the affordability levels and unit count will depend on negotiations with the state.

“This project is about delivering real results — affordable and workforce housing built with union labor to support New York’s working families,” USIF’s Nick Mastroianni II said in a statement.

The partnership has pledged to use all union construction labor. Cirrus partnered with construction union pension funds last year, pledging to invest $100 million in multifamily workforce housing and redevelopments, with a goal to eventually raise $400 million. Pacific Park may be one of those projects. The press release included praise from various union leaders for its emphasis on workforce housing. In a statement, Gary LaBarbera, head of the Building and Construction Trades Council, said the project is an example development that will “bolster our middle class, and the dignity of the workers who build it.”

The vision for the 22-acre project, formerly called Atlantic Yards, was first announced in December 2003. It faced years of delays due to local opposition and lawsuits, and then by developers, plagued by financial challenges and construction setbacks, that couldn’t ultimately hold onto the megadevelopment.