DeWitt Clinton owners seek help/buyer for rehab


The owners of the historic DeWitt Clinton in downtown Albany are seeking help for long-standing plans to convert the structure into a high-end hotel — or a buyer willing to take on the project.

In an online CB Richard Ellis ad, the owners are seeking “either a property sale or a joint venture partner” to turn the highrise at 142 State Street (map) into an Embassy Suites. (Mike DeMasi at the Business Review was the first to report this; his story is here.)

The DeWitt’s downstate owners, Chaim and Yakov Ausch, announced their intention to turn the building into a hotel in 2009. The state pledged $4 million in reimbursements for the $25 million project.

The economy no doubt helped stall the project, but it also has faced unusual complications, including the revelation that the owners owed $615,000 in back property taxes and water bills. There was a very public lease dispute with a comedy club located in the building.

The DeWitt is across from the Capital, an obviously prominent location. It’s also adjacent to the stalled Wellington Row reconstruction. The block is an eyesore, albeit one with tremendous potential.

Chris Churchill

23 Responses

  1. Wayne says:

    I think there is enough hotels downtown, especially the hotel that is included in the future convention center plan. I say create medium income apartments to off set the high end apts and condos being built downtown. Medium income apts so close to the capital would attract politicians. May of the politicos I know rent on Madison and around Lark Sts. during session.

  2. Tim in Waterford says:

    I agree with Wayne, either medium-income apartments or medium-income condos. I like the trend of condos being built locally, but I don’t like the fact that they’re all so pricey.

  3. CTR SQ says:

    I believe that site could best serve as an Albany annex of HVCC.

  4. William Van Valkenburg says:

    Be serious!!

  5. raymond south sr says:

    parking lot

  6. LouHarv says:

    It would be fantastic for Albany if this project came to fruition. However, given the state of the economy, I’m not hopeful. I think it’s embarrassing that we have abandoned buildings across the street from the state Capital building. Whatever happens with this building, I hope it happens soon.

  7. Maria says:

    apartments or conods would be best – of course, they need to be affordable to us making $50,000 salaries that becomes $35,000 in take home pay.

  8. elmer says:

    Maria, I am interested. What would you consider affordable? Lots of people throw that word around but rarely with the specifics you provide.

  9. J says:

    Elmer, she just told you what she thought was affordable (to her).
    It wouldn’t be too hard to figure out a range where someone taking home 35k would probably be able to afford. Ever heard of getting pre-approved?

    And yes, I too think the word “affordable” is used too freely.
    A multi-million dollar mansion is “affordable” to some people.

  10. LouHarv says:

    What might be the best option would be a type of “mixed income” project. In many larger cities like Boston and NY developers wanting to build luxury condos are required to set aside a certain number of them as “affordable”, which can be up to 120 percent of the median income, which in Boston is up to $81K for a single person. They also offer classes and help with downpayments. Albany is starting down that path by offering the City/employer sponsored program that they announced a few months ago, but there is so much more they could do. We don’t have to look far to find a model that works. Clearly there’s a demand for apartments and condos downtown, now we just need to find a price point that works for “middle income” people, and programs to help get them into the units.

  11. elmer says:

    I was not being snarky, I was interested in what maria would pay on that salary. Obviously it’s anonymous, and obviously it’s jsut one person’s price point, but it is interesting nonetheless. And we are talking apartment rentals, what does pre-approval have to do with it?

  12. J says:

    It’s not that hard to narrow down. I’m sure if you had a son or daughter taking home 35k a year you could help them do a simple budget and figure out pretty quickly and easily how much rent they could afford.
    A banks loan pre-approval with help you if you are trying to buy a house or condo.

  13. the nomad says:

    I have to assume that those suggesting this 180k square foot building be converted into middle-income apartments lack commercial real estate development and/or banking experience. Such a massive undertaking isn’t easy, nor is it cheap, nor is it practical. Even if it were, the conduit lenders (investment banks) that would need to fund this project are, for the most part, skittish to lend new money. Traditionally, the lenders would issue the debt, consolidate their debt with other banks’ debt, have that debt pool credit rated, and sell it to investors as CMBS offerings (essentially bonds) allowing the lenders to take the debt off of their books. But because of overly-creative use of derivatives and debt tranching, the rating agencies didn’t accurately rate the debt and investors got hosed, ultimately resulting in the crappy credit market we’re currently stuck in. So, if a bank wants to issue new debt today, they have one of two choices: either keep the debt on their books (rare) or issue debt only to the highest-quality projects that will be seen as such by the rating agencies and ultimately sold off as a transparent CMBS offering. However, this is Albany, the land of high commercial vacancy rates, a shrinking population, low mean and median incomes, minimal new commercial activity, no similar large-scale conversions to use as comparables, etc… no sane lender would issue $20MM+ in debt to such a risky and unproven conversion project in this economic environment, regardless of how many locals feel the need is there.

  14. J says:

    So we’re dead in the water.

  15. elmer says:

    nomad no doubt was equally certain the now filled Alexandar Apartments would never be built, or if built would fail.

    To say this area has “minimal new commercial activity” is to be blind to facts.

  16. Tim in Waterford says:

    Allow me to summarize nomad’s comment in one sentence:

    Only rich people get to have nice things.

  17. J says:

    @15—what facts?

  18. LouHarv says:

    The problem is that nomad probably works in either commercial real estate or commercial lending/banking. So he’s predisposed to take a negative, or at the very least cynical view of ideas stated above.

    While it’s true that investment banks have been reluctant to lend money, it doesn’t mean they’ve been completely unwilling to lend. If a project can demonstrate feasibility then it will find investors somewhere. And this project has a couple of things going for, not the least of which is $4 mil set aside from the State. Additionally, the $25 mil projection was based on an assumption that it would be built to Embassy Suites standards. Hotels are often very strict about amenities and such. So as an apartment/condo project it could probably be renovated at a cost lower than $25 mil.

    As a residential conversion it would open up avenues to things like tax abatement programs like new market tax credits or local programs like 485-a. It would also open the project up to funding through companies like Community Preservation Corp and other lenders who gear their financing specifically to projects targeted at middle and lower income residents. And that doesn’t even take into consideration additional grants through agencies like DHCR.

    There are many options available to a project like this and developers are using these options already in other parties of Albany and other cities. This isn’t as difficult or far-fetched an idea as nomad would have us believe.

  19. the nomad says:

    Just to clear things up, I’m not saying that increased middle-income housing downtown is a bad idea. On the contrary, I think it’s a good idea for selfish reasons… I’m a middle income resident of downtown Albany and would love to live in a building like this and think it would be a great to start revitalizing the city. That said, if someone handed me a check for $20MM and told me to invest it any way I wanted, this would not be the project that I would choose.


    While The Alexander is in Albany, it isn’t downtown. You’re smart enough to know there’s a major difference, and so are the banks. Also, there’s a much greater risk of massive cost overruns during the renovation an 80-year-old 180k sf 12+ story building in the middle of a city than The Alexander’s new construction on a cleared site in a less densely populated area. The banks know that too. Asbestos, historic significance, outdated infrastructure, code compliance, attaining permits, etc. are other concerns that either don’t exist or are easier to manage on projects like The Alexander.

    #16/Tim in Waterford

    I don’t know where you made that assumption… I was simply trying to explain why financing would be next to impossible to get on this type of project. Developers aren’t charities… if there’s money to be made in renovating huge old buildings in downtown Albany into middle income apartments, someone will try to do it sooner or later, but who’s going to loan the developer $20MM? You? Me? Elmer? No – a bank – and banks are trying NOT to make the same mistakes they made 5+ years ago when they were lending money to anyone that asked for it… that’s how we got into this crappy credit market in the first place.


    I explained the idea of conduit loans to shed some light on the way things are done to the readers that aren’t in the industry, not to make the issue overly-complicated. Renovating a building of this size could very easily surpass $20MM… an estimate of ~$110 psf for renovating a building of this size and age is actually pretty conservative in my opinion (it could be less depending on how updated it is). Even with all of the grants and gov’t funding available, a bank still has to see this project as a sure-fire success in order to fund it, and that’s the bottom line.

  20. elmer says:

    nomad, I guess the only real problem I have is with your last line:


    If bankers think that way then get the hell out of the lending business and just take deposits, buy Treasuries and pay 1% to your depsoitors, and have a nice life. I don’t think there is one answer to what ails the economy but am fairly confident a large problem is that bankers fail to understand their role in society and the economy. As in “waiting for a sure thing” is self-defeating and hazardous to our health.

    LouHarv, as you seem to know the issues, I look at the Executive House Apartments on Swan, which seem to be well past their useful life and sitting on some valuable property, at least to the State. Aren’t those Mitchell Lama units (or maybe what used to be called that?). Lord knows who owns them or the details but I see a swap…

  21. Tim in Waterford says:

    @nomad: Don’t mind me, I’m just being snarky. It’s nothing personal. (Yet. :D) Frankly, you’re probably closer to “right” on this than the rest of us (though LouHarv makes some good points). But in a way, that does lead to my comment. Developers are logically going to follow the money, and in this economy, fewer and fewer people have enough money for a decent return on investment. Therefore, most of what is produced (around here, at least) ends up being high-end.

  22. LouHarv says:

    @nomad, I agree that $100 /sq ft is conservative in a normal market, but I’ve seen several projects where bids came in at or below that, especially from non-union shops. There’s very little construction going on out there and even big name contractors are coming in with amazingly low bids just to keep their guys working and their name out there.
    My last point on this issue, if the pro forma has been done and the projections hold up there’s going to be financing from someone? Also, the developer is going to have to have some skin in the game. A good example would be 17 Chapel St condos. There is a case where there really weren’t any comps, and they broke ground on a $20+million project at the height of the recession and they were able to secure financing. My point is that if the developer has done their homework, they have assets and a history of successful projects, and the support of key stake holders (Mayor/Gov/Bank Board members/etc.) the project will find financing.

  23. elmer says:

    @22, I think 17 Chapel is self-financed. Having said that I agree 100% with the rest of your comments.