Rise to the Future A Redevelopment Reflection – Part II Written by Joe Nardelli

Rise to the Future
A Redevelopment Reflection – Part II
Written by Joe Nardelli
Resident Shareholder WVH
I was asked a question recently by a fellow WVH shareholder who lives on Site #3.
Does anyone know why they [Wykoff] have halted construction again [on the Whitehall
project] now for several weeks?
This shareholder and other WVH shareholders have asked many questions about the
status of the Whitehall project, which over the last year, seems to have intensified
awareness of the diminishing quality of life here at WVH as well as general interest in
real estate development in the far West Village.


My thoughts, initially fueled by my own ideas about redevelopment were reignited by
statements made by our own newly appointed “real estate exploratory committee” at
the April 18th, 2012 bi‐annual Shareholder’s meeting ‐ hosted by the board. The new
committee reminded me it was now time to present RISE TO THE FUTURE: A
Redevelopment Reflection ‐ Part II. Here I pose yet another view of potential
redevelopment here at West Village Houses.

(Future Architectural Illustration-West Village Houses ‐ Site #3- by Francesco Orazzini)


The following is not necessarily a direct answer to my fellow shareholder’s question,
but as I said, it reignited many thoughts I will share with you in these next few
paragraphs. I’ll start by saying I recently commissioned an Italian illustrator, Francesco
Orazzini to create a dream complex that would replace the WVH buildings that stand
behind, or in front of (depending where you stand), the Whitehall project on Site #3.
I believe Site #3 is among the smallest of properties owned by WHV, yet Francesco’s
architectural illustration includes a school, a community center and outdoor space.
The size of the Site #3 property is approximately 40’ x 170’ for a total of 6,800 square
feet of ground space. If this block is still zoned for 12 stories of air rights, as I believe it
is, there would be an total of 73,440 square feet of developable property, not including
10‐20,000 square feet of potential underground development.
Our exploratory real estate committee recently shared some research, which indicated
that the current market value of existing property in the West Village is selling for
anywhere from $1,200 ‐$4,000 per square foot.
For the calculations I propose within this reflection I’m going to use the market value
of $2,000 as a numeric per square foot property value as a reference.
At this number the estimated gross resale value of Site #3 is potentially as high as $146
million dollars to a developer. But since I have no idea how much a developer would
actually pay for a property estimated at this value, I’m going to assign an arbitrary
“offering” price of $73 million dollars or half of the estimated gross resale value.
Here it can get very emotional and begs the question: If WVH were to sell the buildings
on that site where would the residents go and who would get the money?
There are 23 residential units on Site #3. Right? Well, if we sold this property for $73
million and offered a “buy‐out” deal to the WVH residents living at Site #3, could we
come up with a fair offer, and what would a fair offer look like?
Since these residents are “victims” of the pain of living in the middle of a war zone due
to the construction of the Whitehall complex that flanks them on the west, shouldn’t
this offer be at least enough to allow them to reestablish comfortable residency in the
West Village in a similar or better accommodation? And shouldn’t an offer take into
consideration the projected value of apartments in our complex on March 10th, 2018
So, I’ll take the liberty of proposing two offers based on these projections. I will also
use 1,200 square feet as the average area of an apartment on site #3 and 1.5 times the
estimated value per square foot for residential real estate in the West Village.
My first offer will be for $3.6 million to any WVH resident at Site #3 who is willing to
relinquish their shares and vacate their apartment. Let’s say 12 residents accept this
offer costing us $43.2 million.
My second offer will be for $1 million and includes a first right of refusal to return to
the WHV complex at a future date when an opportunity to do so arises. Lets say 11
residents accept this offer costing us $11 million.
Now that WVH is left with a vacant property to sell to the highest bidder, lets assume
that within weeks we accept an offer of $73 million for the outright sale of Site #3.
After paying off the residents on Site #3 for a total of $54.2 million. And after paying a
capitol gains tax totaling $3.76 million, our net revenue is approximately $15 million.
Do you know what we can do with $15 million? Not much in the way of West Village
redevelopment, but it’s a start and it gets even more interesting.
Creating a strategy to leverage $15 million to “begin” a redevelopment venture of our
GARAGE can now be taken seriously because this money will attract more money. It
also sets into motion the initial stages toward demolishing the entire WVH complex.
Right?
How? We partner with an architect and a developer to take on the entire
redevelopment project.
Once we break ground on the garage it will take 2‐4 years to complete. By March 10th,
2016 we can begin the process of relocating all WVH residents into the ne complex
including those residents who previously lived on Site #3, opting to hold over for a
couple of years on the $1 million dollars we offered them, in exchange for regaining an
equivalently sized apartment in the new complex, at NO additional cost to them. And
WVH couldn’t be happier because it was their sacrifice that allowed us to enter into
this redevelopment deal.
This simple step would be the first step in a venture to take the entire WVH complex to
the ground while initiating an opportunity to design a world‐class complex that sets
standards that change the future landscape of the West Village and all of NYC,
something that is beginning to happen all around us whether or not we elect to
participate.
So, read on fellow shareholders to decide if you think this is seriously worth
considering.
I mentioned that Site #3 was among the smallest footprints WVH owns at 73,440 sq ft.
Well, here are some numbers that have been keeping me up at night ‐ Site #1 is
588,960 sq ft. Site #2 is 73,440 sq ft. Site #4 is 36,720 sq ft. Site #5 is 183,600 sq ft. Site
#6 is 440,640 sq. ft.
There is an additional total of 1,323,360 square feet of development potential at WVH.
If we use $2,000 per sq. ft, the total estimated gross real estate resale value based on
the current market value previously determined, the value of WVH is approximately
$2.6 billion excluding the garage.
Remember, $2,000 per square foot is a median price. New construction in the West
Village will be worth so much more in 2018, especially when the complex we redevelop
is a five‐star complex with full amenities, roof top swimming pool, exercise facility,
parking garage, river front views, etc.
This complex will attract the best architects and developers in the world and when
considering the projected value of our property, and the very wealthy residents who
will want to join us as owners we will likely be able to get $5‐6,000 per square foot in
pre‐sales beginning in 2018.
Now, lets consider this in lay terms by estimating the value of the shares each of us
owns.
Currently there is a total allocation of 200,000 shares. If you divide this number into
the estimated (low end) total gross real estate value of $2.6 billion the average
estimated value for each share we own is $13,233. That means that the 401 shares I
own would be worth over $5 million by March 10th, 2018.
If you happened to buy Apple stock in 1990 when it was trading for around $30 per
share, the shares you own in WVH stock today, equivocally will have earned twenty
times more than the apple shares did if you sold your Apple share at today’s market
value. A value that financial experts say are among the most valued shares in the world.
What would they say about the shares of our corporation? Can we take a
redevelopment deal like ours public?
There is good reason for so much confusion around the topic of real estate holdings
here at West Village Houses, because there is a lot to consider. Especially when we look
at the way this cooperative has been divided into factions by certain people over the
years, the inequities that exist at WVH, the development politics in NYC and what we
should be considering first.
In my next reflection I will present yet another scenario that takes a look at all of the
issues surrounding the sale of the garage. And how we have three viable options, all of
which are realistic and can be achieved within the lifetime of many of our
shareholders.
Please remember that my first reflection, which was published online at
http://www.WestVillageWatchdog.com was completed in November 2011. I wrote the article
months earlier, immediately following our April 2011 General Shareholder’s meeting.
However, it didn’t actually make it to Watchdog, due to technical difficulties on my
part, until January 5th, 2012.
That reflection was written with a RISE TO THE FUTURE view of a life for all
shareholders and renters at WVH. A quality of life I am convinced can be dramatically
improved if we come together in purpose and action.
That reflection did not have the creative, financial maturity this reflection suggests.
And it didn’t touch upon the details of the advantages of considering selling one parcel
of WVH at a time.
However, it did manage to get a dialogue going among shareholders (and renters)
about the development potential we sit on. Now, all we have to do is begin to dream a
little bigger than we sometimes think we are allowed to. It is the mental focusing of our
dreams that mark the beginning of the reality we create for ourselves.
Here at WVH ‐ even though we are only a footprint in the landscape of real estate
development in NYC, we are a behemoth in the potential imprint our RISE TO THE
FUTURE will make in the landscape of the West Village of our dreams.
Thanks for reading through…
Written by Joe Nardelli
Bank Street Shareholder
Candidate for a seat on the board WVH 2012‐13
May 1st, 2012


Future Architectural Illustration
West Village Houses ‐ Site #3
by Francesco Orazzini
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2 thoughts on “Rise to the Future A Redevelopment Reflection – Part II Written by Joe Nardelli

  1. Hi Joe,
    Clearly you’ve done a lot of hard thinking and in-depth research about all this, which are to be commended. But I have to ask, wouldn’t this make us part of the high-rise-ification and gentrification problem that’s afflicting the West Village? And wouldn’t these behemoth high-rises run contrary to the very reason we converted to coops to begin with?
    But can I ask: would it be possible to do this with smaller, well-built buildings that are low-rise, to preserve our low profile and tight sense of community (so important to the West Village)?
    Thanks for the consideration,
    Linda

    • Hi Linda,
      Thanks for your reply!

      The estimated value I refer to $2.6 billion dollars, is actually based on developing only seven stories, which is what most of our complex is zoned for. There are only two buildings the garage and those on Site #3 that are zoned for 12-14 stories of air rights development.

      Could you imagine the value if we were to develop a full twelve stories?

      I think the future of development in the West Village will dramatically change as we get closer to the days when the Freedom Tower is finally completed. I think the only thing that has a chance of stalling redevelopment of the West Village as we know it are the many rent stabilized and rent controlled buildings that surround us.

      I can not say for certain, which is why I refer to mine as a reflection.

      Thanks so much!
      JN

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