Crains New York Demo - (Page 3)

GOES SOUR Grand plans to remake Domino sugar site come unstuck as partners war, financial woes mount BY AMANDA FUNG When Rafael Cestero took the helm of CPC Resources Inc. in mid-January, the development firm’s ambitious plan to transform the sprawling remains of the Domino Sugar factory on the Williamsburg waterfront into a vibrant residential complex was at a standstill. Worse, the project’s $125 million land loan had come due a month earlier and there was no cash to pay it off. Last week, the picture darkened still further when CPCR’s partner, the Katan Group,filed a suit claiming that CPCR mismanaged the project and asked the court to block last-ditch efforts HUGE to rescue the project by converting much of the project’s debt to equity. ORIGINAL cost If Katan triumphs, estimate for the all bets are off for Mr. Cestero, the former development commissioner of the city’s Department of Housing Preservation and Development, who is hoping to turn things around. “From the day I was offered this job, I knew this was one thing I had to tackle,” said Mr. Cestero. He is taking on stewardship of plans unveiled five years ago to convert the 11.2acre sugar-factory site into a $2 billion mixed-use development that will include 2,200 apartments—30% of them affordable—and four acres of open space. Those plans also include restoration of the 100year-old industrial landmark’s famous sign looming over the East River. Over the years, the project, which began in 2004 when CPCR and Katan paid IN BRIEF GRAND CENTRAL TERMINAL WILL BECOME EVEN GRANDER NEXT YEAR WHEN IT celebrates its 100th year of operation with several major initiatives, including a new restaurant in Vanderbilt Hall, a renovated 42nd Street entrance and a historic exhibit of rare trains. The festivities will kick off Feb. 1, 2013, 100 years to the day after the landmarked building opened. A centennial committee comprising nearly 30 business leaders, celebrities and government officials will determine details of the celebratory year. Its honorary chair is Caroline Kennedy, whose mother, Jacqueline Kennedy Onassis, saved the building from demolition in the 1970s. BROOKLYN’S BARCLAYS CENTER WILL SELL TICKETS STARTING THURSDAY FOR THE FIRST hockey game to be held at the new area. Fans will be able to buy seats for the Oct. 2 NHL preseason game, which will pit the New York Islanders against the New Jersey Devils. It’s an important milestone for the facility, which has been in the making since 2003, when Bruce Ratner of Brooklyn-based developer Forest City Ratner Cos. first announced he would be purchasing the New Jersey Nets. $2B BY THE NUMBERS Weekly shift of the city’s economy SOLE SUCCESS American firms are hiring again. The rub is that the world’s No. 2 economy, China, is cooling, and Europe’s is getting downright frosty. ANNUAL RISE IN NY STATE TB CASES reported in NYC in economic activity high-school grads generated in between 2002 2011, lowest on Times Square and 2009 record Source: Source: NYC area Department of Health and Mental Hygiene Source: Times Square Alliance Building a Grad Nation 689 $110B 32K See SWEET DEAL on Page 43 MORE IS LESS While the number of women-owned businesses has shot upward in NYC in the past decade, the total number they employ has sadly gone the other way. Number of firms Employment* 670,100 604,678 510,692 521,585 508,301 499,100 Once America’s best-managed bank. Now, a different story bloomberg news 2002 2007 2012 (est.) *Employment figures do not include business owners Source: American Express Open A bad interest-rate bet on $30 billion in loans suddenly upends Hudson City’s ride BY AARON ELSTEIN When the financial system nearly collapsed in 2008, Hudson City Savings Bank stood out as a bastion of sober, responsible banking. For steering clear of subprime mortgages and complex derivatives, Chief Executive Ronald Hermance was praised by CNBC’s Jim Cramer as the “George Bailey Banker of the Year,” after the character played by Jimmy Stewart in It’s a Wonderful Life. The New York Times chimed in with its own admiring profile. Forbes lauded New Jersey-based Hudson City as the best-managed bank in the nation. Perhaps the ultimate tribute came the day after Lehman Brothers filed for bankruptcy: Hudson City’s stock hit an all-time high as investors embraced just about the only bank in the world whose profits were Jim Cramer called longtime CEO Ronald Hermance his ‘George Bailey Banker of the Year’ growing. The company’s earnings jumped 50% in 2008 and continued rising over the next two years, crossing a half-billion dol- lars annually,as the stock soared 400% during the 10-year stretch ended in 2010. Unfortunately, the story doesn’t end there. Last year proved to be an absolute disaster for Hudson City—and the future of a local financial institution that dates back to 1868 is now very much in doubt. It posted a whopping loss of nearly $750 million in 2011 after a bet that interest rates would rise soured, and the fallout from that fiasco may be a long way from over. In addition, Hudson City got smacked by a key government response to the financial crisis that forced the modest institution with $45 billion in assets to compete against the federally controlled mortgage guarantors Fannie Mae and Freddie Mac. “The cure to the crisis is what’s hurt us,” acknowledged Hudson City’s acting CEO, Denis Salamone, a longtime executive at the bank who assumed the top job last month after Mr.Hermance,64,took a leave of absence for a bone-marrow transplant. Some of what ails Hudson City is shared by the nation’s thousands of community banks, which have seen profits See HUDSON CITY on Page 46 ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY CORRECTIONS Valerie Geller was program director at WABC after Rush Limbaugh launched his national show from New York in 1988. That fact was misstated in the March 19 “Groups aim to crush Rush.” Hartford Realty Co. owns 309 Columbus Ave., which is managed by Five Star Management Co. That information was misstated in the March 19 Real Estate Deals. Doug Moore joined FSO Onsite Outsourcing as executive director of client services and solutions. His name was listed incorrectly in the March 19 Executive Moves. The Mufson Partnership is one of a handful of interior-design firms that specialize in hedge funds. The full name of the firm was misstated in the March 12 article “Hedges draw a crowd.” Gruzen Samton-IBI Group, a New York General Partnership, which ranked 11th on the 2012 Largest Architecture Firms list, was the architecture company for the modernization of the Emanuel Celler U.S. Courthouse. The project name was unclear in the Feb. 27 list. vol. xxviii, no. 13, march 26, 2012—Crain’s New York Business (issn 8756-789x) is published weekly, except for double issues the weeks of July Fourth, Labor Day and Christmas, by Crain Communications Inc., 711 Third Ave., New York, NY 10017. Periodicals postage paid at New York, N.Y., and additional mailing offices. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912. for subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. (GST No. 13676-0444-RT) ©Entire contents copyright 2012 by Crain Communications Inc. All rights reserved. March 26, 2012 | Crain’s New York Business | 3

Table of Contents for the Digital Edition of Crains New York Demo

Crains New York Demo
Contents
Sweet project in danger of a total meltdown
More red ink on the books at Reader’s Digest
Bank in the tank: Bad bet on rates sinks Hudson City
Neighborhood Journal
The Insider
Small Business
Viewpoint
Really dumb move, Upper West Side
Real Estate Deals
Classifieds
Business Lives
Hot Jobs
Executive Moves
The Week Ahead

Crains New York Demo