Bank Meltdown Affects Loehman’s Plazza

The local impact of banking industry meltdowns is still not quite over. Smithtown Bank, located in Long Island, might not seem to have a local connection, nor make the headlines with news of bailouts, but the bank is in FDIC receivership. According to Seligson Properties spokesperson Jeffery Kaplan, the bank’s woes has placed the company in an awkward position regarding outstanding property taxes. The taxes for Loehamn’s Plazza sit in an escrow account with Bank of Smithtown and have not been paid to the City of Norwalk.

“We’re still on the hook for the taxes,” Kaplan said, “But the escrow situation has proven to be complicated.”

Loehman’s plaza is home to Loehman’s, a retail fashion store, The Gap, Bull Head Deli and a Bikram Yoga Studio.

According to Tom Hamilton, Director of Finance City of Norwalk, the taxes for the Loehman’s Plaza property have been outstanding since 2008. But the story of Loehman’s PLaza, officially owned by Four Sixty Seven West Ave LLC can’t be summed up so neatly. A look at the tax payment history for the company reveals that about 2007, the Four Sixty Seven West Ave LLC started falling behind on property tax and sewer use taxes. In 2008, two payments were made to catch up the property, but by then they were paying interest on the outstanding balances from 2006 and 2007.

According to Lisa Biagiarelli, City Tax Collector, the delinquent taxes currently by Four Sixty Seven West Ave LLC are owed are from July 1 2009, and January 1 2010 (2008 grand list year, both installments).   The office has sent the owner two delinquent notices already, including a notice of intent to lien with a proposed tax sale on July 19.

Meanwhile Seligson properties owes about $518,000 in delinquent property taxes to the City of Norwalk, including Loehman’s Plazza, as of last week. According to a search of tax records, Seligson is listed on between 30 and 50 separate business entities, making a property tax search somewhat difficult.

Complicating the story, is the fact that Loehman’s Plazza is on the judicial docket of the Stamford Superior Court . That case has Federal Realty Investment Trust foreclosing on Four Sixty Seven West Ave LLC, along with Sixteen-Eighteen Merwin Street LLC, and Seventeen Butler Street LLC as of 2/03/2010.

But back to the Bank of Smithtown. The directive from the FDIC is that the Bank must divest of commercial real estate loans in order to comply with the FDIC action.

The January 29, 2010 FDIC enforcement action states that Smithtown Bank must:

Within 60 days from the effective date of this ORDER, the Bank shall develop and submit a written plan, acceptable to the Regional Director, for systematically reducing and monitoring its commercial real estate (“CRE”) loan concentration of credit identified in the FDIC’s Report of Examination reflecting the examination of the Bank as of June 30, 2009 (“ROE”) to an amount which is commensurate with the Bank’s business strategy, management expertise, size, and location. For purposes of the plan, “reduce” means to charge-off or collect CRE loans or to increase Tier 1 capital.

This may explain last weeks foreclosure action on the Frost Building, 520 West Ave. in Stamford Superior Court. Although the Frost building is not part of the Waypointe development, the other foreclosure action of the Bank of Smithtown is. 525 West Ave. is the building where Crystal Spa was once located, and sites between Merwin and Orchard and Loehman’s Plazza are.

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  • Thank you!

    About time someone pointed this out. Of course every Scott Merrill out there gets screwed but not the moneybag developers! Where is Secondhand Rose when you need her? Heck, I’ll settle for Secondhand Hosebeast at this point!?

  • NorwalkSpectator

    So, what you are saying, Turfie, is that although Siegelson has the money for the taxes, it’s in an escrow account that he can’t access because the bank is under FDIC control right now, right?

    In other words, Seigelson hasn’t defaulted, but the assets are frozen.

    Interesting. I would hate to see the Frost building sold to someone else and demolished.

  • Secondhand Hosebeast

    A wink and a tip 0′ the special interest hat to Thank You! Point well made and taken. As much of a wingnut as Merrill is, the old saw “Money talks and bulls*it walks” applies here.

    Others on this rag have pointed out that some of the same developers who are currently responsible for the (lack of) shovels in the ground in Norwalk seem to be quite active in other communities with development projects. I’ve lived here for 20 years, though, and to be honest don’t expect to see anything happening on the development front for another 20. We’ve moved from being the hole in the donut to being the donut hole. Maybe we can get DD to sponsor the next round of the Connectivity forums.

    • Thank You!

      I too have lived here long enough to know that nothing will happen in my lifetime down there. And by all accounts I have a good 45-50 years to go!

      I remember actually believing these guys! That something was actually going to happen and all of the “models” that they had constructed were actually going to rise out of the donut holes. Of course, as I have grown, I have become more wise. I’m with you hosebest! At least Merrill stands for something! LONG LIVE MERRILL!

  • http://stamfordarearealestate.com Stamford CT Real Estate

    All the thanks goes to British Government who initiated and supported the rescue at the time of ultimate difficulty

  • longtimer

    So Seligson was in financial trouble when we were asked to float city bonds?

  • OLD TIMER

    The story seems to be that Seligson, or companies he controls, owns a lot of properties and has some mortgaged. There is no indication that he is in default on anything. One of the Banks that holds one of the mortgages is in trouble and has not paid the taxes, although it apparently has the money in an escrow account. That bank, in Smithtown, NY, is now calling the loan on a mortgage, because of their problems, not Seligson’s, and Seligson is refinancing with a different lender. I read several versions of this story and did not see anything to show Seligson is in trouble. That doesn’t prove anything, of course, and his ability to refinance will tell us how solvent he may or may not be. Let’s not jump to conclusions. Seligson has been in business a long time and always done well.