SAVING THE SHEFFIELD, P.2

"Among the many problems the building faced," says Braverman, "was a provision in the offering plan whereby the top two floors were to be redone and made into a high-end amenity space with a pool, a spa, a restaurant and a lounge area overlooking Central Park. Swig had represented that the sponsor would be building out that space. But, in fact, what the offering plan said was that the space would be purchased and developed by a third party [like a health-club chain] that would buy and build out the space and sell memberships to the general public." And at the moment, there were  three floors – the two-floor amenity space and a 59th-floor terrace – that were unusable.

What to do? Observes Wagner: "We said, ‘What did the first offering plan specify – what's legally obligated?' And then, ‘What makes sense for us as owners to have in this environment?' Some of the things they originally wanted in 2006, like a restaurant, might not make sense in 2009. We sat down and went through that with Fortress and with Rose Associates [the new managing agent] and came up with a list of what makes sense."

The board would purchase 

the amenity space for a dollar.

Here's where the directors got creative in a way that could inspire other boards. Fortress agreed to build out the space with input from the residential board. The board, at the completion of construction, would purchase the amenity space from Fortress for a dollar. Both parties then devised a complex agreement over the course of months, in which Fortress retained the architectural firm CetraRuddy to work with the board's design committee to tailor the amenity space to the residents' specifics.

As progress moved further along, someone suggested taking some of the space planned for a lounge and turn it into two rental units, to help the condo association defray some of the amenity-space operating costs. "We always have the option to make it an amenities space again," Wagner says.

Adds Braverman, "We were also able to convince the sponsor to pay for a portion of the [amenity-space] operating expenses over the first three years." Some other sponsors, he notes, "would have said, ‘Fine, we'll build out the space,' and then just put up some sheet rock and paint, throw in a couple of elliptical machines and treadmills and said, ‘See ya, have a good time!'"

Fortress, fortunately, was better than that – and, in what people call "enlightened self-interest," was being pragmatic as well as ethical. "The building had a lot of bad publicity," Wagner says, "and the attorney general's office had its sensors up." Adds Braverman: "They have 200 units they want to sell. They have an investment in this property and they're looking to sell units – and they've been selling at a very good clip."

But, as we all know when it comes to that peculiar animal called real estate, emotion can trump common sense. Not here, though. "I've known them for two years," Wagner says of the Fortress liaisons. "They're good guys and good businessmen. And if you're a good businessman you're not going to do something like throw together an amenity space on the cheap because you're not going to get the best product."

"We changed something that was very dire to something that's a real selling point for the building," says Braverman. Or as Wagner puts it succinctly: "This really is a story about how things can go right."

For articles going back to 2002, join our Archive >>