REPORTER’S NOTEBOOK: Does Thor Equities plan to resell 280 Richards Street? by Noah Phillips

There’s reason to be skeptical of Thor Equities’ Red Hoek Point plan.

Many people in the community have raised questions about the project itself – if space might be made for local nonprofits, if the construction would jeopardize our neighborhood’s historic cobblestones, if the tenants would change the character of Red Hook, if the development will economically benefit the community in any way (through local hiring or tech internship programs), and others.

But in the mind of this reporter, the question of whether or how the project as presented would benefit the community is secondary. The primary issue is whether Joe Sitt plans to build on the former Revere Sugar Refinery site at all.

There’s reason to think he won’t, and it’s important that the community, and our surrogates on CB 6, do due diligence on that question before giving a perfunctory thumbs-up to the project the only way it can – through its parking permit.

“Joe Sitt has a reputation for buying property, getting some kind of zoning change that raises the value of it, and then selling it,” says Kelly Anderson, who directed My Brooklyn, a documentary about redevelopment of Downtown Brooklyn. “He doesn’t seem like somebody who is highly ethical in business dealings, that seems pretty obvious… It just seems like Sitt will say whatever he needs to say in the moment to get what he wants.”

Past instances of this pattern include Thor Equities involvement in Fulton Mall as well as in Coney Island. In both cases Thor Equities purchased large swaths of land, worked to rezone the areas, and sold for huge profits.

Sitt doesn’t need a full rezoning or even a variance to build the Red Hoek Point, but he does need a Special Permit from the Board of Standards of Appeals (BSA) to reduce its required number of parking spaces. If granted, the permit would significantly increase the value of the property (especially in concert with the other improvements Sitt is making).

Further, the permit would transfer if Sitt were to resell the property, according to Carlo Costanza, Deputy Director of BSA. If Sitt was to unload his augmented property on a new owner that also wanted to build offices, it wouldn’t necessarily go back to BSA and there certainly is no guarantee the community would have another opportunity to weigh in.

Here’s a bit of speculative arithmetic:

• Thor Equities purchased 280 Richards Street for around $40 million.
• The work they’re doing now on the site (repairing the bulkheads, expanding the footprint into the water, and leveling off the land) will probably not cost more than $10 million.
• Local developer Marshall Sohne (who supports the project as presented) estimates that the total cost of construction will come to $500 million.
• At the December 1 CB 6 Landmarks/Land Use Committee meeting, Thor Equities’ representatives said that they hadn’t yet figured out what the rent would be in the Red Hoek Point space. This is almost certainly untrue as it would be a fundamental part of the business plan, but $50 per square foot per year seems like a pretty reasonable guess. That comes to just less than $40 million per year.
• That would mean that it would take at least 14 years for Thor Equities to see a profit on this massive development.

Alternatively, Thor Equities, having invested around $50 million in preparing the site for development and obtaining this special permit, could turn around and sell the property for a profit right away.

In short, Red Hook needs to seriously consider the otherwise unforeseen consequences of approving this parking variance before getting too caught up in smaller demands like those listed above.

The point of this piece isn’t that the Red Hoek Point, or any other office space, wouldn’t be a good use of the 280 Richards Street site. The point is that exogenous developers coming into neighborhoods have a moral obligation to be up front about their intentions, and Thor Equities has enough of a track record of bait-and-switch for the burden of proof to rest squarely on their shoulders.