12.19.04 The New York Times (White Plains)

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IN BUSINESS; New Life for Former Hospital Site
By ELSA BRENNER (NYT)

LURED by the recent economic revitalization of White Plains, a Manhattan-based firm bought the 23-acre St. Agnes Hospital property for $21.4 million at a state-run auction last week. The winning bidder, the Noyack Equity Group, a partnership of six investors formed to acquire and develop the hospital property, said it plans to build housing for the elderly on the site.

Noyack Equity outbid six other groups contending for the prized piece of real estate, which is one of the few undeveloped parcels its size in White Plains. Its proximity of less than a mile from this city’s downtown -- where luxury high-rise residences are being built and big-box retailers are moving in -- makes it particularly valuable.

Noyack Equity Group, was recently formed to acquire and develop the St. Agnes property, said C.J. Follini, managing member for the investors. Mr. Follini, 37, said he and his partners were influenced by the new development taking place in White Plains. ’’If this were 10 years ago in White Plains, I wouldn’t have been a bidder,’’ Mr. Follini said.

The hospital property has six buildings on it but is mostly undeveloped. The campus buildings include medical offices and the former hospital, which closed last fall.

The 184-bed hospital, owned by the Archdiocese of New York from 1988 until last year, was founded by the Sisters of St. Francis in 1908 to help disabled children. The hospital shut its doors 14 months ago, leaving the state Dormitory Authority with an outstanding debt that included $36 million in bonds it issued to St. Agnes to make renovations and to pay off a loan.

The auction represented the first time that the Dormitory Authority, a public benefit corporation that finances and builds facilities for higher education, health care providers, courts and some nonprofit organizations and public agencies, held a foreclosure sale, said Claudia Hutton, a spokeswoman for the authority. The St. Agnes Hospital Corporation, she said, ’’decided one day to close the hospital and walk away.’’

The hospital corporation was part of the Catholic Health Care System in Manhattan, which runs the Children’s Rehabilitation Center on the St. Agnes property, a separate building that is still open and cares for children with developmental disabilities. It was included in the property sold at the auction, but its fate has not been decided, although Mr. Follini indicated he is taking part in discussions aimed at keeping the center on the property.

In all, 45 nonprofit and for-profit groups requested fact sheets, tax maps, leases and other materials related to the former St. Agnes site, Ms. Hutton said.

Mr. Follini said Noyack Equity Group had not drawn up specific plans for the hospital land, and the investors had not decided whether the retirement community units would be geared to high- or middle-income residents. But he said the investors planned to market the housing to empty-nesters and retirees. Much of the St. Agnes property is zoned for single-family housing. Depending on the proposals, some city approvals may be needed.

Mr. Follini and another investor, Alfred Caiola, 40, grew up in Pelham, and their fathers, Charles Follini Sr. and Ben Caiola, had been development partners for residential real estate. The four other partners were not identified.

The other major bidder at the auction, which was held at the Richard J. Daronco Westchester County Courthouse, was 311 North Street Associates, an alliance of three companies. Simone Development Companies of New Rochelle; Fisher Brothers of Manhattan; and the Pirro Group of White Plains. That group had also planned to build housing for the elderly on the site.

“There’s enough high-end and market-rate housing already in Westchester,’’ Joseph Simone said a day before the auction. ’’We’d like to do a different type of housing.’’

Similarly, housing for the elderly is being considered for some of the Reader’s Digest property in Chappaqua, where Greenfield Partners and Summit Development of South Norwalk, Conn., will take title to the 114-acre campus this month. Because the Reader’s Digest property is zoned for corporate use, any plans for housing for the elderly there would require approvals by the Town of New Castle.

Mr. Simone, a developer who reportedly was a contender for the Reader’s Digest property, is building the Hutchinson Metro Center, an office complex in the Bronx on the foundation of what had been a state mental health center. Fisher Brothers is a three-generation family real estate company in New York City.

Anticipating their acquisition of the property at the auction, the partners in 311 North Street Associates acquired a long-term ground lease on a five-story brick medical building on the grounds next to the hospital site on Dec. 7, in what Mr. Simone called a ’’strategic?acquisition.’’ The building, which includes 400 parking spaces, was not included in the auction.

Mr. Simone’s group paid $8.6 million to the previous leaseholder, the New York Medical College, for the 87 years remaining on the 99-year lease. The Medical College, which is affiliated with the archdiocese, leased the office building in 1991 because its medical students and residents completed some of their training there.

Despite 311 North Street’s intentions, Mr. Simone stopped bidding after the 57th offer for the property came from the Noyack group. ’’The economics weren’t there after that,’’ said Geoff Thompson, a spokesman for 311 North Street Associates. Mr. Simone said earlier inthe week that if his group failed to buy the 23 acres, the office building, which is two-thirds leased, would continue to be used for medical offices.

Another bidder for the property, the Italian Hospital Society, a 67-year-old nonprofit group, wanted to build what it said would have been the nation’s first Italian-American continuing care retirement community there. Its initial plans called for up to 270 independent-living units, 75 assisted-living units and 35 to 45 skilled-nursing beds.