Monday, November 11, 2019

Approval Of Construction Funding For FDR Hope Memorial Depicting President Franklin D Roosevelt In A Wheelchair On Agenda For RIOC Special Board Meeting November 12 - Also, Deferral Of Hudson Related Riverwalk Building 9 Rental Payment On Agenda Too

The Roosevelt Island Operating Corp (RIOC) is holding a Special Board of Directors meeting tomorrow, 5:30 PM November 11, at the Cultural Center (548 Main Street). Only 2 items are on the Agenda.

The first Agenda Item is deferral of rental payment from Southtown developer Hudson Related for the soon to start construction Riverwalk building 9 and the second is approval of construction funding by RIOC of the long delayed FDR Hope Memorial sculpture that depicts President Franklin Roosevelt sitting in a wheelchair.

FDR Hope Fundraiser from Burgeon & Flourish, LLC on Vimeo.

According to the RIOC November 12 Board Agenda

PLEASE TAKE NOTICE that a Special Meeting of the RIOC Board of Directors will be held on Tuesday, November 12, 2019 at 5:30 p.m. at the Cultural Center Theater, 548 Main Street, Roosevelt Island, New York, 10044.


Approval of Deferral of Specified Rental Payment and Related Modifications for Southtown Development Building # 9 (Board Action Required)

Authorization to enter into Contract with Sea Crest Construction Corp. for construction services in Connection with the FDR Hope Memorial Project (Board Action Required)
Apparently, no public session prior to the Special Meeting.

According to this memo from RIOC Chief Financial Officer John O'Reilly to RIOC President Susan Rosenthal in support of deferring Hudson Related's rental payment of Southtown's Riverwalk Building 9 development:
The Southtown Plan and Project approved by the Board of Directors on September 22, 1999 included general requirements for the development of Building #9. Additional conditions of the development were outlined in five separate amendments to the development agreement.

As part of the Fifth Amendment to Development Agreement, Hudson Companies Incorporated & the Related Companies L.P. (Hudson/Related) was required to pay RIOC a Specified Rental Payment in the amount of $16,800,000 for Building 8. According to the terms, such payment was due on the Rental Commencement Date, but the developer could defer payment of the Specified Rental Payment until the earlier of (i) a period not to exceed thirty-six (36) months from the Rent Commencement Date, or (ii) developer’s sale of development rights under the Inclusionary Housing Program, set forth in section 23-90 of the New York City Zoning Resolution (ZR), and in either case, all unpaid Specified Rental Payment would bear simple interest at the rate of 4%.

Per the amendments to the development agreement, Rent Commencement Date is defined as “the earlier of (i) the date upon which one or more Temporary Certificates of Occupancy is issued by the New York City Department of Buildings for at least ninety percent (90%) of the Completed Units in the Building, and (ii) the second (2nd) anniversary of the date of this lease.”

For Building 9, the Fifth Amendment to Development Agreement states that the Specified Rental Payment “shall be equal a Blended Land Value of $152.33 per square foot floor area, minus $60 per square foot floor area, if the Ground Lease is signed in calendar year 2019”; that the Blended Land Value would increase annually, at a rate of 2.75%; and such payment would be due upon Substantial Completion of the project.

Unlike for Building 8, the development agreement does not provide a right to the developer to defer such payments. The Specified Rental Payment for Building 9 is estimated at $24,800,000.

Issue: Hudson Related is requesting that the Specified Rental Payment be deferred for 18 months from the Rent Commencement Date instead of Substantial Completion. Hudson Related is also asking that the definition of Rent Commencement Date be amended to “the earlier of (i) the date upon which one or more Temporary Certifications of Occupancy is issued by the New York City Department of Buildings for at least 90% of the Completed Units in the building; and (ii) 30 months from the signing of the ground lease.” Hudson Related is making such request due to the size of the building, it being larger than the other Riverwalk buildings; and because the construction is expected to last about 28 months. Moreover, the balance of payments from the institutional purchaser is scheduled to occur 12 months following the Rent Commencement Date, and the deferred payment would ensure that funds are available to Hudson Related from the institutional sale to pay the Blended Land Value payment due to RIOC. This request would also move the time in which ground rent would be due by 6 months.

In exchange for such request, Hudson Related has agreed to pay interest at a rate of 4.5% on the unpaid principal portion of the Specified Rental Payment until the end of the 18-month deferral period, when the principal and interest would be due in full.

Recommendation: Based on the above, we recommend the Board approve the request to modify the definition of the Rent Commencement Date, to defer the ground rent that will be due by 6 months; and to allow for an 18-month deferral on payment of the Specified Rental Payment from the Rent Commencement Date (instead of the date of Substantial Completion), at a 4.5% interest rate for the duration of that time period. As a result, RIOC would gain an interest income in the amount of $1,692,693.59 in addition to the principal amount owed.
Here's Hudson Related developer David Kramer talking about Riverwalk Building 9 during May 29, 2019 RIOC Real Estate Development Advisory Committee meeting.

Also, here's RIOC Assistant VP of Capital Planning & Projects Jonna Carmona-Graf memo to RIOC President Rosenthal in support of funding construction of the long awaited FDR Hope Memorial sculpture depicting President Franklin Roosevelt in a wheelchair.
Background: In 2010, when the Franklin & Eleanor Roosevelt Institute (FERI) sought approval from the Roosevelt Island Operating Corporation (RIOC) to build FDR Four Freedoms (FFP), the Roosevelt Island Disability Association (RIDA) protested the lack of representation of FDR as disabled in the park’s design. In response, FERI pledged $100,000 toward a sculpture project sponsored by RIDA that would portray FDR in his wheelchair at a site nearby. The Board of Directors approved the siting of the FDR Hope Memorial in Southpoint Park north of the Small Pox Hospital in May 2010.

Subsequent to the Board’s approval of the siting, RIDA formed a committee to solicit a call for Artists to commission a monument. This competitive selection process resulted in RIDA’s hiring of Meredith Bergmann. Following a period of extensive research, the two-person scene within the circular plaza was conceived and was presented to the community and other oversight groups such as NYC Public Design Commission, NYC Parks and NYC Community Board 8. Fabrication of the bronze statues commenced upon approval of these groups.

In April 2018, as RIDA did not have the funds to complete the project, RIDA requested the assistance of RIOC. Materials were submitted and approved by the Board authorizing RIOC to:
  • a. Assume responsibility for the FDR Hope Memorial project execution estimated at a cost to RIOC of approximately $300,000; based upon an estimation prepared by Accu-Cost Construction Consultants, Inc. (Accu-Cost)
  • b. Enter into an agreement with NYC Parks and Recreation (NYC Parks) for reimbursement of up to $150,000 in construction costs;
  • c. Enter into an agreement with RIDA donating the statue to RIOC; and
  • d. Procure Mt. Airy White granite and St. John’s granite from North Carolina Granite as a sole source.
Since the Board approval on April 18, 2018, a contract with NYC Parks was executed and registered with the NYC Comptroller’s office on July 12, 2019; an agreement with RIDA was executed and the sole source procurement of the granite pavers was initiated. The actual cost incurred for the stone was $175,088 vs. a budget of $193,147 (which includes contingency), yielding a savings of $18,059. We also moved forward with the development of contract documents for bidding purposes, including drawings and technical specifications. The artist’s team only prepared preliminary construction documents for the plaza. As such, RIOC engaged the services of an Architect of Record to complete the construction documents for bidding and issued a purchase order to the Lawrence Group, one of the Architecture/Engineering firms on our panel.

Final technical drawings and specifications were delivered to RIOC for review in June 2019. These contract documents were reviewed by the LiRo Group (RIOC’s Owner’s Representative) for completeness, constructability and estimating prior to issuing an RFP for construction services. The estimated value for work included in the RFP documents prepared by LiRo, is approximately $620,000.

Procurement: A request for proposals was advertised in the New York State Contract Reporter and RIOC website on August 26, 2019. Bids were due on October 10, 2019 and two proposals were received.

Contractor bid proposals were reviewed by Capital Planning & Projects and LiRo (Owner’s Representative). We assessed pricing included in the RFP bid proposals, the final cost estimate prepared by LiRo and the design estimate of approximately $300,000 provided to RIOC by the artist’s team and Accu-Cost.

Upon RIOC and LiRo’s review of the bid pricing and the Accu-Cost estimate we found essential scope items were not included in the Accu-Cost estimate, including demolition, lighting, fill, erosion control and concrete aggregate (an approximate value of $164,000). In addition, there was a variance in the quantity of pavers and general conditions costs were very low (an additional cost of approximately $263,000). We met with both contractors to understand their assumptions included in the pricing and requested clarifications.

The proposals were then reviewed by Capital Planning & Projects and LiRo (Owner’s Representative) and found to be fair and reasonable and in accordance with RIOC’s procurement guidelines. Sea Crest’s proposal was most responsive to the criteria set forth in the RFP and was within industry range of the LiRo estimate of $620,000.

Recommendation: Based on the above, RIOC Capital Planning and Projects recommends subject, to the satisfaction of all contracting requirements, that the Board of Directors authorize and approve entering into contract with Sea Crest Construction Corporation to provide Construction Services for the FDR Hope Memorial Project for a total amount of $650,000 with a 5% contingency of $32,500 bringing the total authorized not-to-exceed amount to $682,500. We expect construction work to be complete within four (4) months.
More on the FDR Hope Memorial at their web site.