12.20.04 Westchester County Business Journal

State short $11M after St. Agnes auction
?By ALEX PHILIPPIDIS?

The state Dormitory Authority netted $21.4 million by auctioning the former St. Agnes Hospital campus in White Plains last week, but the agency still must find another $11 million to settle a debt incurred by the defunct institution.

The $11 million marks the difference between the winning bid by Noyack Equity Group L.L.C. - a group of Westchester and New York City investors seeking to build senior-citizen housing and medical offices on the site -- and a state-backed outstanding mortgage loan. Currently, $35.9 million of the loan is outstanding, but the Dormitory Authority has $3 million in reserve funds that can be applied toward settling the debt.

“There are some other reserve funds we can use to lower the cost to the state further. Whatever is left will have to be applied to the state debt service. I can’t tell you how much it will be ultimately,” said Lora Lefebvre, the dormitory authority’s managing director of policy and program development.

That amount won’t be known until a day or two before Noyack closes on its purchase next month, after the amount of back taxes and even water bills are calculated, authority spokeswoman Claudia Hutton said. The authority still plans to make a scheduled February repayment of about $1 million to the bondholders.

The agency foreclosed on the hospital’s mortgage and pursued the auction in hopes of raising funds to repay bondholders. Hutton said the agency was satisfied with the auction results. “What we wanted most was for the free and open process that would value the property at what the market would bear. This was the best outcome,” she said. ?

SURPRISE WINNER ?

The auction produced a surprise winner in Noyack, whose half-dozen investors have Westchester roots. Managing member C.J. Follini and another investor, Alfred Caiola of New York City, both grew up in Pelham, and Follini has residences in New York City and the Long Island hamlet of Noyack - hence the group’s name. Individually, the investors have developed more than 50 residential, industrial and commercial projects in the metro area. Follini credited the redevelopment effort shepherded by White Plains officials with attracting the investors to the St. Agnes campus.

“We feel the property has a unique benefit in terms of size, location and existing clientele to bring a long-term benefit to the community,” Follini said. ?Noyack’s high bid bested by $200,000 that of a trio of developers led by Joseph Simone’s Simone Development Cos. of New Rochelle: The Pirro Group, the development consultancy of Albert Pirro Jr., and New York City developer Fisher Brothers. “In the end, they felt the economics were not sensible enough to keep upping the bid,” said a spokesman for the Simone-led venture, Geoff Thompson.

STILL A FACTOR

However, the Simone-led venture will maintain a significant role in the future of the St. Agnes property. The venture is in contract to buy a ground lease for one building, the 85,000-square-foot 311 North St.

Noyack said it would also talk cooperatively with nonprofit groups interested in the campus - including the Italian Hospital Society, which wants to develop a $90 million senior housing campus.

During the auction, the society placed the opening bid of $5 million through a partner, Matrix Development of New York City, but lacked the money to bid higher.

’COULD BE SUCCESSFUL’

An investor group’s plans to convert St. Agnes Hospital in White Plains into a senior-citizen housing campus makes sense, according to a Florida-based real estate professional familiar with the metro area’s senior housing market.

“It’s very tough to do. You can’t convert every hospital. But in the case of St. Agnes, it can and should be done. I think it could be a successful conversion,“ given the campus’ location near Interstate 287 and downtown White Plains, as well as the county’s graying population, said Mel Gamzon, president of Senior Housing Investment Advisors Inc., a Fort Lauderdale, Fla., senior housing development consultancy.

Follini said Noyack believes it can attract empty-nesters and ex-White Plains residents who left as the city’s downtown deteriorated during the 1990s.

He said Noyack would work closely with officials and residents in hopes of winning support from both. “Our project is going to be dictated by the wishes of the community, and by what the mayor and Common Council want,” Follini said.

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