Dunne firm could lose $2.8m profit on New York project

Lawyer for bankrupt developer’s son says building plan would not be feasible with restriction

The area of lower Manhattan for where Mr Dunne’s building project is planned. Photograph: Google Maps

The area of lower Manhattan for where Mr Dunne’s building project is planned. Photograph: Google Maps

 

The son of bankrupt builder Sean Dunne would lose out on a profit of $2.8 million (€2.2 million) on a proposed development in New York based on restrictions suggested by the city’s planners.

In the first public planning hearing to approve a five-storey residential building in the fashionable Soho district of Manhattan, a lawyer for the property firm owned by John Dunne said the project would not be financially viable if it was forced to make space for a larger backyard in the plans.

Mr Dunne’s company TJD21 has applied for permission to construct a building with four apartments and shop space on the ground floor on a vacant lot at 74 Grand Street in lower Manhattan.

The company submitted revised financial records to the city’s Board of Standards and Appeals showing that the company would make a profit of just $541,000 if the board insisted on a 30-foot yard to the rear of the building, compared with an estimated profit of $3.4 million with a 20-foot yard.

The records show the value of the project would fall to $18.5 million from an earlier estimate of $22 million because the bigger back yard would shave about 1,000 square feet off the building’s floor space.

Sean Dunne told creditors during a US bankruptcy meeting in December that he is advising on the project. His wife, former gossip columnist Gayle Killilea, and son John have an “ownership interest” in the New York property, he said.

Mr Dunne, who filed for bankruptcy last year with debts of $942 million, has insisted that he is an employee of his wife’s American property companies and has no ownership role.

His son John is listed as the “managing member (shareholder)” of TJD21 on official planning records. The Soho site was purchased last year for $4.95 million.

At today’s hearing Meenakshi Srinivasan, chairman of the New York Board of Standards and Appeals, raised concerns about that the building did not have the standard 30-foot backyard.

“There has to be a really compelling reason why you cannot provide the rear yard,” she said.

The proposed balconies would further cut off light and air, she said. “This can create a real canyon for you and while right now, it looks bright and open, at some point it may be closed,” she said.

Judy Gallent with Manhattan law firm Bryan Cave, representing Mr Dunne’s company, said the company would not generate enough of an investment return with the larger rear yard.

“It is not feasible,” she told the five-member planning committee during a 23-minute hearing. Even on the building’s reduced size, the company estimated the penthouse apartment would sell for $6.2 million.

Ms Gallent told the planning board that other buildings on the same block had smaller rear yards than the one being sought. The neighbourhood was “characterised by small rear yards,” she said.

Mr Dunne’s firm was asked to re-submit plans next week. The hearing was adjourned until April 8th. The earliest possible date that the project can be approved is the end of next month.