Dunne firm challenges call for changes to luxury New York apartment planMonday 07 April 2014 23.50
The development company controlled by Sean Dunne's son John has said it is not worth constructing a luxury apartment block in New York for a profit of just $653,000 (€476,573).
The company, TJD21, in which John Dunne is a controlling shareholder, is currently applying for planning permission for a development in the Cast Iron Historic District in Soho.
Developer Sean Dunne, who is involved in bankruptcy proceedings in the US, has previously admitted an involvement in the project while his wife Gayle also has an ownership interest.
The company wants to develop a six-storey building comprising retailers in the basement and ground floor and four luxury apartment units on the remaining five floors.
Planning documents show the apartments are expected to be priced between $3,295,125 and $7,760,606.
The New York City planning authorities have raised concerns about the development plans, which only include a rear yard of 6.09m.
They have suggested they would prefer a yard of 9.14m and asked the Dunne company to submit new plans to take account of this.
Ahead of a public hearing tomorrow, lawyers for TJD21 have filed new documents to the New York Board of Standards and Appeals.
These papers show the impact of redesigning the apartment block to accommodate the larger yard space, and therefore reducing the available residential space.
This design would cost $18.1m to develop but would only put a value on the whole investment of $18.8m.
The company says this would mean the return on their investment would be just 1.47%, making the project "completely infeasible".
They also re-submitted their original design for the smaller yard, but have removed rear balconies from the units to allow for more light and air to the yard.
This design would mean development costs of $18.4m and would value the investment at $21.4m, therefore generating a return on their investment of 7.05%, or $3m.
This was a profit the Dunne-controlled company said would make the project "feasible"; adding that this design is the "only viable development".
The site at 74 Grand Street in SoHo was purchased for just over $5m and the documents lodged with the planning authorities show that the building construction would cost over $9.5m, plus another $3.3m for associated construction costs such as fees and services.
The company intends to cover these costs with a construction loan of $13.5m.
The New York planning authorities will consider the case further at a public hearing tomorrow.