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Ships + sailors = houses.

Nicholas G. Reisini, who has been trying for 18 months to organize a modular housing program and a retooling of oil bunkering bases in trade for surplus ships from the Russian Navy, said he has had no problems with the Russians.

"Our problems have been with the American government," he said. "We ran into gridlock with the Bush Administration."

While $800 million was appropriated through the Nunn-Luger Act, only $750 million was spent. Reisini's venture has now been assured jump start money out of this pool from the new Clinton administration, he said. "In [Clinton's] speech he said he would direct the funds."

Their project is on solid footing in Washington because, as coordinator Paul Thompson noted, they were able to come in with a complete proposal and were not asking for money to study anything.

The American's Newcon, Inc. has formed a joint venture with the Russian A/O Compass Corp., which is comprised of former Russian Navy and Army officers. Admiral Igor Mahonin, president of Compass Corp., also sits on the committee in the Russian government dealing with issues regarding housing.

Reisini's father was instrumental in formulating ventures with the Russian Navy and was involved in bareboat chartering with the Russian Merchant Marine.

The younger Reisini has extensive maritime and international finance experience and also built the Russian mission in Riverdale.

Compass controls several oil bunkering bases, 700 manufacturing factories, 700,500 metric tons of vessels and 160 nuclear submarines -- 80 of which must still be decommissioned. This is of great interest to Vice President A1 Gore, said Thompson, who met with the Americans last year and has been studying the proposal since the new administration took office.

Thompson said their project has a "great environmental spin" because it will ensure U.S. involvement in overseeing and disposing of the nuclear waste -- "The nuclear subs are an environmental accident waiting to happen" -- it will cleanup the oil facilities, which have already been criticized by Greenpeace; and work to develop energy efficient building methods.

"Under the Nunn-Luger act we've asked for $100 million to build scrap yards in Russia to dismantle these nuclear vessels," Thompson said.

The Murmansk scrap yard has been targeted to handle the subs, which are based nearby. Many of the vessels are going to be decommissioned through the Start treaties and Thompson said the government became involved with their plan since there are environmental and national security issues.

The former Navy personnel who live on vessels set for decommissioning will become the workforce for both dismantling the ships and building the homes that will be purchased by selling the scrap metal. Sites for 30,000 homes have been identified in the surrounds of Moscow and St. Petersburg.

They have also asked the Clinton Administration for $150 million in recoverable grants (a loan) to build the first 5,000 units so they can transfer the personnel off the first ships slated for decommissioning. Reisini has given a list of vessels to the American government which would act as collateral for a loan. "We have the ability to pay back a loan of more than $250 million," he noted.

"In parallel with the building," Thompson continued, "we will be matching American companies with specific Russian factories that produce bricks or modular housing." Those companies will be retooling factories and bringing them new technologies.

Reynolds Metals' Aluminum Structures division is already involved in the joint venture and is upgrading a facility in Samara for minimal investmentunder half a million dollars -- that will be producing aluminum window frames, door flames and other items.

"We are talking about a grand military conversion," Thompson added. "These sites need more than housing--they need kindergartens and meat factories and malls. We're looking at entire developments."

Asking the U.S. government for hundreds of millions of dollars also .requires assurances. "We will be accountable for every penny," Thompson said, noting the money would be going to an auditable, taxpaying U.S. entity.

"We showed them this is a triad--if they build the factories, in the same yards we will dismantle the conventional vessels and generate $300 million in revenue over five years selling the scrap so as not to saturate the market," Thompson said. "It gives us a reasonable cash flow. The $300 million gets put back in the joint venture housing industry and goes to build units in Russia. "

Thompson is undaunted by the current Russian political wheeling and dealing. "These guys will heckle back and forth for power," he said, "but the business will always be three steps ahead of the politics."
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Title Annotation:Nicholas G. Reisini plans trade of modular housing program and retooling of oil bunkering bases for surplus ships from Russian Navy
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Apr 7, 1993
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