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St. John's Terminal-Pier 40 Deal May Be In Jeopardy, Report Says

By Danielle Tcholakian | September 20, 2016 8:39am
 A report in Crain's suggests the St. John's Terminal developer may go commercial because of flagging residential sales.
A report in Crain's suggests the St. John's Terminal developer may go commercial because of flagging residential sales.
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DNAinfo/Danielle Tcholakian

HUDSON SQUARE — The deal to save Pier 40 and develop a five-building complex of retail, condos and affordable housing across from it may be in jeopardy due to the flagging residential market and the lapsing of the 421-a tax incentive, according to a report in Crain's New York.

The plan to demolish the St. John's Terminal at 550 Washington St. and replace it with 1.7 million square feet of retail, condos, affordable and senior housing and potentially office or hotel space is currently undergoing a mandatory public review known as ULURP (Uniform Land Use Review Process) because it requires zoning changes to build residential.

READ MORE: Here's How the St. John's Terminal-Pier 40 Deal Got Done

The development would be made possible by the purchase of 200,000 square feet of air rights from Pier 40 for $100 million. The funds are badly needed to repair the rotting piles under the pier, which is much-used by youth sports leagues.

The City Planning Commission held a hearing on the development plan last month, and is expected to vote on the project — and potentially demand changes to it — by Oct. 17, before it moves on to review by the City Council.

READ MORE: Planning Commission Questions Affordable Housing at St. John's Terminal

But now the majority owner of the site at 550 Washington St., Westbrook Partners, is looking for a new development partner for an "office-focused redevelopment as a backup plan," according to Crain's.

The search is motivated by doubts about the developers' ability to sell the luxury condo units in the plan as the city's residential housing market flags, and exacerbated by the lapse of the popular 421-a tax incentive.

READ MORE: What the 421-a Tax Break Stalemate in Albany Means for NYC Housing

The developers have always had a backup plan for an as-of-right development of a 50-story hotel plus office, retail and event space, in the event that they can't get the required approval for their residential project through ULURP.

PLANS: Here's What the St. John's Terminal Development Might Look Like

And until now, they have seemed so confident about their residential project — unveiled with laudatory quotes from city officials and planned for nearly two years with the city's involvement — that they put money in escrow that is already being used to fix the Pier 40 pilings.

Abandoning the project would deal a heavy blow to the mayor's affordable housing goals, as the development is expected to include over 400 units of affordable housing for low- and middle-income New Yorkers and seniors.

Spokesmen for the developers and the Hudson River Park Trust declined to comment on the Crain's story after it was published on Friday, but a city official insisted the project is not in jeopardy.

“As recently as this morning, the development team made very clear its intention to pursue this project as outlined to the community," said Melissa Grace, a spokeswoman for City Hall. "They’ve in no way altered plans to continue engaging with the community and local officials to hone the residential project proposed, and deliver vital funding to Hudson River Park.”