Thursday, December 14, 2006

Development Vision Would Help Queen

By Harry Saltzgaver,
Executive Editor

Suja Lowenthal calls it looking at the big picture.

Tuesday night, the councilwoman from the Second District pushed ahead with a visioning process for development of the 55 acres surrounding the Queen Mary across Queensway Bay from downtown and Rainbow Harbor. The city owns the land, but it is under along-term lease to Queens Seaport Development, Inc.

QSDI is in the midst of bankruptcy proceedings. The court-appointed trustee, Howard Ehrenberg, recently signed an agreement with the city resolving a dispute about how rent credits were applied. That apparently cleared the way for a sale of QSDI assets, which primarily are the lease and development rights on the property.

“With the recent settlement between the city and QSDI, we have taken the first step toward resolving issues involving the bankruptcy court, allowing us to look forward to the opportunities afforded with the Queen Mary and the 45 (sic) acres surrounding it,” Lowenthal said in her letter calling for a visioning process involving the Downtown Visioning Committee. “In order to maximize our opportunities, we need to begin with a plan for reaching consensus followed by development of principles and goals for the site.”

Ehrenberg said that he has one offer of at least $40 million for QSDI’s assets, with that group about halfway through its due diligence. Another offer was received last Friday, he said, and others are expected to surface once the bidding process through the bankruptcy court begins.

“I don’t think this effort directly changes what my charge is,” Ehrenberg said. “I’m trying to bring as many viable offers as I can to the city. There’s no real downside; this is a cooperative effort with the city to find a buyer.

“From a practical perspective, it helps the developer. Who’s going to buy the lease if they know the city isn’t going to like the plan they have?”

Development of the waterfront around the landmark Queen Mary was the key to the council granting QSDI and CEO Joseph Prevratil a 66-year lease in the late 1990s. While several plans have been suggested, the only major addition has been a cruise ship terminal and adjacent parking garage.

This is a once in a lifetime opportunity,” Lowenthal said. “We didn’t put our best foot forward recently with CityPlace or the Pike, but we are living with it.

“We can’t micromanage what a developer is going to do, but we can paint the big picture. We can imagine. This is the city’s public space, and we can and should set some guidelines for what goes there.”

First District Councilwoman Bonnie Lowenthal said she was “ecstatic” over the possibility of a visioning process.

“I think that area has to be linked with the entire downtown,” she said. “So far, everything that has happened has been developer driven, not community driven. It’s time for that to change.”

So far, even the settlement between the city and QSDI has yet to go before U.S. Bankruptcy Judge Vincent Zurzolo. Ehrenberg said he expects a hearing on that settlement some time in January. In it, the city will receive $4.9 million as a secured creditor when the assets are sold, and could receive as much as $4.1 million more if there is money left after unsecured creditors are paid.

Whoever ultimately purchases the QSDI assets still will have to deal with the nonprofit RMS Foundation, which has a sublease to operate the Queen Mary itself. That sublease runs until 2015.

Prevratil, who continues as president and CEO of the RMS Foundation, said that the study group might be a good idea.

“It’s always important to have input from the community about how to deal with an icon like the Queen Mary and the land around it,” he said.

City Attorney Robert Shannon said there likely would be some constraints on a study group when it comes to telling developers what they can and cannot do, but added that offering direction and “wishes” were within the rights of the city.

“Before there is any formal visioning, we would explain the process and details of the lease,” Shannon said. “We likely would do that in a closed session since the case is still in bankruptcy court. But we can do that in January.”

The council unanimously approved Suja Lowenthal's proposal. City Manager Jerry Miller is expected to present a formal process some time in January.