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City Announces Deal to Sell Two Downtown Buildings for Nearly $250M

By  Jill Colvin and Irene Plagianos | March 5, 2013 4:43pm | Updated on March 5, 2013 5:57pm

LOWER MANHATTAN — The city announced plans Tuesday to sell two of its most prominent landmarked buildings in a deal that will bring in nearly $250 million in cash.

The former Emigrant Industrial Savings Bank at 49-51 Chambers St. will be sold to the Chetrit Group for $89 million. The building, where the City Council held its meetings while City Hall was under renovation, will be turned into high-end residential units, with public retail space on the ground floor, Joseph Chetrit said.

Nearby, the 120-year-old white marble 346 Broadway, which is now used by the New York City Criminal Court, will be converted to condos and a boutique hotel by The Peebles Corporation.

As part of the $160 million deal, the developer has agreed to build a 16,000-square-foot, state-of-the-art media center that will be open to the community seven days a week, where kids can go for digital arts classes and after-school programs and local artists can display their work.

In addition to bringing cash to the city, the deal "will spur the continued renaissance of Lower Manhattan as a vibrant, 24-hour business and residential neighborhood," said Mayor Michael Bloomberg, who made the announcement in a room in the former bank.

The sales are part of an effort by the city to consolidate its unused office space to save money. About 30 percent of 49-51 Chambers St., for instance, is currently sitting empty or being used as storage — a major waste, Bloomberg said.

The plan to sell the buildings had originally been criticized by many Lower Manhattan residents.

After the proposal was announced, Manhattan Borough President Scott Stringer vowed to halt the sales, arguing the city could use the space for new public schools, affordable housing or community facilities instead of selling it off to the highest bidder.

"It is the responsibility of the city to think beyond the highest market value. They need to consider what public benefit these properties can provide," Stringer said at the time, arguing that “Lower Manhattan doesn’t need another hotel. It needs schools and affordable housing.”

But Stringer, who is now running for comptroller, said that, in the end, he was pleased with the deal that was reached by the city, which includes some community use for the space.

"Through negotiation, through our own community-based planning process, we came up with something that's reasonable," Stringer said. "I think this helps us financially for the city, speaks about workforce consolidation, and also gives the community something to hold onto that will be meaningful for our young people."

The chairwoman of Community Board 1, Catherine McVay Hughes, agreed with Stringer, calling the inclusion of public space "terrific news" and a "major victory."

CB1 had voted in October to approve the sale, with the provision that community space would be carved out — initially, there wasn't any guaranteed public space in the deal, Hughes said.

CB1 had asked for 50,000 square feet of public space in their resolution, which could have been used for a new school, a community center or a performing arts space.

But after ongoing negotiations with the mayor's office and elected officials, CB1 members were told they would likely be offered only 10,000 square feet of space — so the 16,000 square feet announced Tuesday was something of a boon.

"We're didn't get everything we wanted, but we're certainly happy," said John Fratta, chairman of CB1's Seaport/Civic Center Committee.

The other good news, Fratta and Hughes said, is that the city will provide "significant funding" for the construction of the community arts space, though a specific figure has not been announced.

Bloomberg had originally tried to include a third building — 22 Reade St., the headquarters for the Department of City Planning — in the package deal. But the sale was blocked by the City Council, which must approve the plans.

The council had hoped that the space would be used instead for a museum for the African Burial Ground, which is located around and underneath the site.

“Speaker [Christine] Quinn is supportive of the concept of a museum for the African Burial Ground being located at 22 Reade Street and having that concept incorporated in any future actions for this building,” a spokesman for Quinn said in a statement.

Without the sale, the space will continue to be used by the city.

"Twenty-two Reade will remain a city asset for future administrations to deal with," Deputy Mayor Cas Holloway said.

The city aims to pocket $120 million from the deal after the costs of moving, in addition to saving an estimated $120 million in operating expenses over the next 20 years.

In 2010, the city set a goal of getting rid of 1.2 million square feet of office space by 2014.

The exterior and ground floors of both the former Emigrant Savings Bank and 346 Broadway, the former New York Life Insurance Building, were designated landmarks in the late 1980s, so those parts of the building cannot be drastically changed.