Not a Very Merry Christmas for Local Developer

Along with me, I am sure all of you have been watching the development of the Uptown Worthington project on Route 29.  This redevelopment project taken on by Brian O’Neill and O’Neill Properties Group on 100 acres of the former Worthington Steel factory was supposed to be a model for the planning concept ‘New Urbanism’.  The project had a price tag of $540 million, 1.6 million sq. ft and was supposed to include 753 luxury residences, nearly 800,000 sq. ft. of upscale retail and about 185,000 sq. ft. of office space.  Having Wegmans Market in our backyard was exciting news for a lot of us! 

Now it looks like Uptown Worthington may be a model for great projects falling to the woes of today’s economic crisis.  O’Neill Properties Group is in danger of having to give the keys back to Citizens Bank.  Citizens Bank has secured a $61 million judgment against the developer who borrowed money to build the project.  Court documents filed a couple of weeks ago show that the bank entered the judgment against Brian O’Neill, after the bank and the King of Prussia developer were unable to come to terms on the loan.  In researching the situation, I determined that O’Neill Properties originally arranged an $86 million loan with Citizens Bank through Malvern Hill Associates and other O’Neill-affiliations for the land acquisition and construction costs.  O’Neill guaranteed the loan, which was initially made in 2006 and amended in October 2008 when the financial markets worldwide were in turmoil. As of this date, Mr. O’Neill has not filed a petition to strike the judgment (the legal option when someone places a judgment against them.)  

The million dollar question (or rather $61 million question) – what does this news mean for the project? I am not sure what the timeline is for O’Neill Properties to resolve the loan issue . . . and what happens in the meantime, does the project continue with O’Neill Properties?  I’d like some of our developer, planners, and contractors to weigh in on this one.  Does my much anticipated Wegmans Market get completed?  Will Citizens Bank become the developer in this project?   

This turn of events for Brian O’Neill certainly must be causing pause for Peter Monaghan and Strategic Realty Investments (SRI).  Here we have SRI, the recently-named master developer of the Paoli Transit Center project which is to include multi-use development, just down the road from the current financial woes of the Uptown Worthington project.  I don’t personally know Brian O’Neill, but in the interest of the community, here’s hoping that some good news comes his way (in the form of $61 million!).  For Peter Monaghan, O’Neill Properties Group’s misfortune must be an eye-opening revelation, so here’s sending best wishes to Strategic Realty Investments for their success with the Paoli project!

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3 Responses

  1. Pattye,
    Great job on this article. I believe Wegmans owns their pad site so you should get to shop there soon enough :). This is another typical disaster caused by the economic melt down we’ve experienced. I don’t think anyone out there has a good answer for this one. Money , money and more money is the only thing thats going to fix this one.

    Really impressive detail, keep up the good work.

  2. Great post Pattye..

    The deal is, commercial real estate development is like a ponzi scheme. They require current rent roll to maintain their cash flow. I am surprised the development has continued this far. Over in Collegeville, the Wegmans over there is involved in the same fiasco. The Brandolini property over there is sucking wind big time. Only a handful of stores are open.

    I suspect the Wegmans here will open. There is another one slated for 2011 at the site of the old Valley Forge Golf Course.

    I won’t be shocked to see firms like Brandolini and O’Neill to go under in the near future.

  3. Pattye,

    First and foremost I wanted to thank for your kind words of support and well wishes for the Paoli rail yards project. And thanks for your continued good work supporting Tredyffrin Township and its residents. I wanted to highlight a few matters that I think are important to consider in light of your December 20th blog post.

    The redevelopment of the Paoli rail yards is in the very early planning stages, and while Strategic Realty Investments has recently been named master developer for the site, no decisions have been made as to what will be constructed there beyond the long awaited new Paoli train station, new transit parking garage and related transit infrastructure to replace the very outdated existing station and parking. A comprehensive vision that will benefit all stakeholders will be crafted in the coming months. Our goal is to provide all stakeholders with the opportunity to have input into the planning process. To that end, Strategic Realty will be holding a series of small group meetings within the community, and we will be sure to let you know the details so you can inform your readers.

    In addition, we are at least 18 months from breaking ground at the site. The first phase of the project will address modernization of the Paoli Train station, and many infrastructure improvements are also in the queue as first steps toward redevelopment of the site. Long story short: we have ample time for the economy to recover before any ribbon cuttings occur. In the interim, our goal is to build a vision for the site that provides a unique transit-oriented asset in the heart of Paoli with a range of resources that benefit the community as a whole. This vision will be created in a collaborative manner, with consideration given to other resources already existent in the community such as the Worthington development.

    Sincerely,

    Peter Monaghan

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