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Lincoln Square: many unite for as-of-right project.

With construction in New York City virtually ground to a halt, the promise of Lincoln Square as an as of right development has brought together attorneys, developers financiers, architects, and numerous others, all eager to make the dream a reality.

Nobody is as happier about all of this than Philip E. Aarons, the lively former president of New York City's Public Development Corporation and a partner in Millenium Partners, the entity which is acting as developer of the $234 million venture.

The other partners are Philip Lovett and Christopher M. Jeffries, who is also the general partner for Lincoln Metrocenter Partners, the owner of the 800,000-square-foot development. All three have been involved in city development in the past.

The mixed-used project, consisting of an 85-foot high commercial base and a tall, slender residential tower topping off at 545 feet, will take up the entire trapezoid-shaped block bounded by Broadway, Columbus Avenue, 67th Street and 68th Street. It will be built over the next two and and one-half years under the supervision of Lehrer McGovern Bovis as construction manager.

Sail Van Nostrand, executive vice president of Lehrer McGovern Bovis, said they provided some early financing. The Peninsula and Oriental Steam Navigation Company, its parent company, provided completion guarantees to add confidence in the lending community and to entice them to finance the project.

While constructing financing is being obtained from two German lenders, J.P. Morgan is providing financial advice, and will own six floors of the 38 floors of residential units. Other floors are being rented by the Lincoln Metrocenter Partners while I.T. Properties and a group comprised of the Zeckendorf Company, Sumitomo Real Estates Sales New York and Goldman Sachs will purchase the upper floors of condominium units.

The building base, which will cover the entire block and rise eight stories, has already been pre-leased or sold to include a commercial Imax theater; a 900-seat theater and party space owned by Columbia Pictures to be used for premieres; a 10-screen movie house; a Barnes & Noble; Gap clothing stores; a Reebok Sports Club and store; a Coconuts music store; and the Ansonia Post Office, which recently relocated to the former Bank of Leumi building two blocks away while construction is underway.

Van Nostrand observed that Lincoln Square could be the last high-rise built in the city this century. In times such as these, he said, it is a tribute to the developer to have the ability to make this ideal.

"To cause a building like this to happen is a result of people setting their mind to do it," he said.

Van Nostrand said tenants will be able to move into Lincoln Square by the spring of 1994 with everyone in by that December.

Van Nostrand said it is a very complicated structure with 19 escalators and a handful of elevators. Aarons said the project was designed to comply with all Americans With Disabilities Act provisions, and one of the elevators is strictly to provide handicapped access to the mezzanine level projection booths in case one of the projectionists is handicapped.

The most unusual feature of the project, Van Nostrand said, is that the bottom nine floors are made out of steel and the top is poured concrete.

"Apartments are traditionally done in concrete and facilities like the bottom done in steel but mixing the two systems is more of an aberration," he said.

This also means that the trades that build the first nine floors are not the same as the trades that construct the top so many different construction workers will be employed on the project.

Aarons explained that while the residential tower is tall, "it has a very narrow and very elegant perspective when you look up from Downtown." Only 70 feet wide, that portion has a footprint of 11,000 square feet, nearly in the center of the oddly shaped block's 55,000 square feet.

"It's a small tower surrounded by a lot of light and air on all sides," Aarons said. Because of zoning requirements and to maintain the as of right nature of the project, he said they were unable to step back the eight story wall of street frontage or create a plaza.

Star Team

About 18 months ago, Aarons recalled, they assembled what he deemed "one of the best teams in terms of professional assistance that has ever been put together to do a major real estate project in New York City."

Architects, zoning consultant, transaction attorneys environmental lawyers and financial advisors, hired by the developers as well as prospective tenants, came together to ensure the planning of a project that could be built on an as of right basis.

"You could have replicated the Real Estate Board dinner by one of our ordinary working sessions," Aarons joked.

Even other developers, such as Bill Zeckendorf, Sumitomo Real Estate Sales, and Goldman Sachs, who are purchasing condominium portions, and Marty Raynes took part in the discussions. At one time, sources said, a group led by Zeckendorf and including Raynes had an option on the site, which was purchased from ABC Capital Cities. "There are a lot of people in the industry and in the business who helped us to get where we wanted to be," Aarons added.

Some of those include attorneys Paul D. Selver and Victor Morrera of Brown & Wood; Michael Bailkin of Stadtmauer Bailkin Levine & Masyr; Robert S. Davis of Berle, Kass & Case; the firms of Stroock & Stroock & Lavan; Sandy Lindenbaum of Rosenman & Colin; and Battle Fowler; building architect Peter Claman, of Schuman, Lichtenstein, Claman & Efron and design architects Kohn Pederson Fox associates.

Lindenbaum said he has been working on the assemblage since the mid-80's when it nearly became the site of the ABC headquarters and then later when a condo was among the proposals made by a Zeckendorf-led group.

"It is exciting that at this point in the history of New York we can have a project like this starting," he said." It's a real signal that users and buyers and bankers and lenders have the confidence and are willing to take the risk on the project."

Lindenbaum said making a project as-of-right is never easy and they took it through a zoning resolution to ensure the compliance.

Aarons said everybody pulled together to answer the question: How can we take what the city says they want on the site and how can we make sure our particular building fits into what the City of New York has said belongs on that site?

"Not everyone approaches the site and says, |What does the zoning call for?, What are the requirements?, What is the zoning designed to achieve?, How can I make my building fit what the city has indicated it wants on this site through its existing zoning?,"' Aarons said.

Bailkin said, "and one in which the developer deserves a great deal of credit." Bailkin said the project is only going forward because it is a user deal, put together with the cooperation of the tenants, the city and the unions, and obtained financing because of pre-leasing and sales of blocks of condominiums.

"On the one hand it does not signal that financing is coming back," Bailkin warned, "but is a tribute to the highly skilled way the developer put it together."

Robert Davis agreed, saying it was a tremendously complicated group effort by a lot people who worked together. "We worked very closely with the counsel and the city agencies," he said adding that it was unusual in that attorneys were not confined to a single discipline.

"The developers made sure that the process kept information flowing,' he added.

Leonard Boxer, head of the real estate department at Stroock & Stroock & Lavan, which represented the developers from the outset, said this kind of as right development represents the wave of the future.

"It's a fabulous development not only for the city but the community as a whole," he said. "It sends a message to the entire country that you can still do a deal in New York. The city should be proud of this transaction and that it actually occurred in these dismal times."

Boxer mentioned Roger Roisman from his office who did a "yeoman job" and a dozen other Stroock attorney who were actively involved. "We were very cautious that it was built as of right," Boxer added.

Steven Spinola, president of the Real Estate Board of New York, said Lincoln Square is a good example of some creativity on the developer's part. He said condominiumizing and financing the different elements through the leases and pre-selling is the only way of "doing" a building any more. He applauded the way they handled the design to keep it as of right, so as to avoid discretionary decisions that would have prolonged and increased the cost of the project. "It's wonderful that it's going ahead and will create construction jobs, "Spinola added.

Because as an of right development does not require community approval, that aspect of the project is being scrutinized by the Borough President of Manhattan, Andrew Breslau, a spokesperson for Borough President Ruth Messinger said they are looking at "how as of right the as of right is." If it is, Breslau said, "the developer is most welcome to begin digging his hole in the ground and begin constructing his building. If not, then it may be up to the courts to decide. It's not up to us we're just observers"

While Aarons admits the community has not been too happy, he believes the city has to decide if it wants to have as of right development in New York.

"And of right means as right,' he emphasized. "It means you can do what the zoning allows you to do and nothing more but it does not involved a public review process. There are people who feel that a public review process is essential for every large building and that may be, it's another side of the coin and a decision the city has to make."

Meanwhile, he said, when there is a chance to do a building like this on as of right basis it should be supported. "The importance of real estate in New York City's economy is something we are going to learn the hard way," Aarons said. "We need this one critical engine in the economy. Tourism is lost, there are not too many dominant forces and our industry is one."

Lincoln Square will create 1,600 construction jobs, 500 permanent jobs, and pay hundreds of millions of dollars in future property taxes. The project qualifies for 421a benefits through the transfer of certificates but only a legislative action would enable it to take advantage of a tax deferral program through the Industrial and Commercial Incentive Program. Such an action was stonewalied by local legislators who wanted to use the incentives as a bargaining chip to reduce the size of the building.

Aarons said Lincoln Square "is a very, very significant boost to an otherwise horrible, horrible construction economy, and professional economy. People's lives are hurting because construction has come to a standstill.'
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Title Annotation:development project planned for Lincoln Square, New York, New York
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Aug 5, 1992
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