Building Trades Cry Foul Over Westchester IDA’s Approval of Gateway II Project Changes

WHITE PLAINS—Earlier this year, the Westchester County Industrial Development Agency approved new workplace regulations requiring applicants seeking incentives to hire more local workers and enroll in apprentice programs. On Thursday, voting on the first project that would fall under those rules, the IDA Board in a 6-1 vote granted the developer some relief from those newly imposed rules.

Shortly, after the IDA Board’s vote to preliminarily induce the $275-million Gateway II mixed-use project in Downtown White Plains, Edward Doyle, president of the Building & Construction Trades Council of Westchester and Putnam Counties Inc. said the terms proposed by the developer (Greystar Real Estate Partners and the Alaska Permanent Fund) were “totally unacceptable.” He said the council’s Executive Board was planning to send a letter detailing its objections to the developer’s revised terms to the Westchester County IDA.

The IDA Board’s vote approving the preliminary inducement of the project qualifies the developer to receive $5.36 million in sales tax exemptions and $1.65 million in mortgage recording tax exemptions. The PILOT (Payment in Lieu of Taxes) agreement reached with the City of White Plains and the White Plains School District is valued at $27,183,162, according to documents filed with the Westchester County IDA.

The Gateway II project is to be developed by GS White Plains Owner, LLC, which is led by Greystar Real Estate Partners and the Alaska Permanent Fund. The developer asked for modifications easing some of the newly imposed workforce regulations approved earlier this year based on negotiations between Westchester County and the county’s building trades. Labor representative on the IDA Board, Richard McSpedon voted against the incentives due in part to the workforce modifications.

Representatives of the developer, Eon Nichols, Esq., an attorney with Cuddy & Feder LLP of White Plains and Ryan Souls, vice president of Greystar Real Estate Partners, told the IDA that if it were to comply with the recently enacted workforce rules, the project cost would increase by 20% or by $37.9 million. The developer spelled out the cost overruns in a June 23rd letter that was first given to IDA Board members at the session held on June 24.

Both the IDA’s McSpedon and Doyle of the Building Trades Council, questioned those labor cost estimates.

Greystar’s Souls in the letter stated, “By way of this correspondence, the Applicant is requesting, in writing, a relaxation of two of the Labor Policies relating to the Project, namely the Local Hire Labor Policy and the Apprenticeship Program Policy. To be clear, the Applicant is not seeking to brook an exception from complying with Labor Policies in their entirety. Instead, the Applicant is proposing a number of good faith, alternative means of achieving the spirit of the Labor Policies, which is to promote an important IDA corporate purpose, namely job creation for residents of Westchester County and the lower Hudson Valley.”

The developer stated in the letter that it would engage in best efforts by its Construction Manager (LRC Construction, LLC of White Plains) to hire up to 85% construction workers from the local labor markets (Bronx, Dutchess, Orange, Putnam, Rockland, Westchester and Albany counties) with a minimum of 50% local labor from these markets, subject to available workers. Applicant will also request best efforts by the Construction Manager to hire 30% of the above workforce solely from Westchester County.

The new workforce rules require Applicants receiving IDA benefits shall utilize at least 85% local labor (Bronx, Dutchess, Orange, Putnam, Rockland and Westchester) for their approved projects; 35% of which must be Westchester County residents.

In terms of the apprenticeship requirements, the developer is proposing an apprenticeship program through the Business Council of Westchester, whereby the Construction Manager has agreed to join with BOCES in enrolling apprentices into both classroom studies of 144 hours minimum as well as hiring for the project for field experience and practical training immediately upon enrollment into the BOCES or other New York State Department of Labor courses. The Construction Manager expects to offer enrollment to 30 apprentices which will be up to 15% of the project’s 200 workers at the project site.

Doyle said he also objected the modifications to the apprenticeship requirements. He told Real Estate In-Depth that he was first contacted by the Construction Manager, Louis Cappelli of LRC Construction on June 23 to discuss workforce specifics of the Gateway II projects.

In its letter, Greystar stated it intended to hire union workers on the project. Specifically, the firm stated it would hire Local 456 Teamsters for all concrete deliveries; Local 137 Operating Engineers on the excavation equipment, as well as assisting on cranes, tower cranes, and high-rise building hoist car operations; Local 279 Interior Carpenters for studs, finished trim, and cabinet/millwork installation; Local 46 Lathers for post-tension cable installation on high-rise section of building superstructure and Local 60 Laborers for general cleanup on debris of the high-rise building.

IDA Chairman Joan McDonald, prior to the vote, said in explaining her support for the preliminary inducement of the project, noted that the Gateway II developer is looking to begin construction in August. “I think what has been negotiated with the developer regarding the apprenticeship program—enrolling a minimum of 30 apprentices in an apprenticeship training program—is a very positive first step,” she said.

McDonald said she also factored into her decision the project’s economic impact, as well as the fact that the developer had recently held discussions in good faith with the building trades and has committed to the IDA to use local labor and in particular members of the building trades, which is not a requirement. McDonald noted that if the developer failed to comply with the terms of its deal with the IDA, there are claw back provisions in place.

Project Details

The proposed Gateway II project seeks to redevelop an existing surface parking at 25 North Lexington Ave. into a 500-unit, 25-story residential apartment building. The project includes 19,000 square feet of ground floor retail and 755 parking spaces (626 serving the project and 129 spaces dedicated to the adjacent Gateway One office building, which is owned by the Alaska Permanent Fund.

The proposed residential building encompassing 500 apartment units includes a 25-story tower portion paralleling North Lexington Avenue to the East and an intersecting 16-story tower running westerly from North Lexington to Ferris Avenue. The residential lobby will be located with access on both Lexington Avenue and Hamilton Avenue. The residential building will also include both indoor and outdoor amenities serving residential tenants.

The mix of apartment units includes 167 studio units, 208 one-bedroom units, 117 two-bedroom units, and eight three-bedroom units. A total of 15 on-site units will be classified as affordable in compliance with the city’s Affordable Rental Housing Program Regulations in addition to a $3.8-million contribution to the City of White Plains’ affordable housing contribution fund.

The ground floor of the project will include 19,000 square feet of retail designed to activate the Hamilton Avenue frontage.