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Case Study

When the new International Center of Photography opened earlier this year in the Lower East Side of Manhattan, it marked yet another New York development milestone guided in part by Karen Scanna’s longtime focus on public-private partnerships (PPP).

The ICP is a cultural anchor of Essex Crossing, a flagship project that brings together several private teams and City agencies. The project has been widely hailed as a model for sustainable, community-focused development, regularly featured in publications from CityLab to The New York Times.

Since 2013, Karen has been guiding Taconic Partners, L+M Development Partners and BFC Partners on all aspects of the acquisition, financing and development of this undertaking, which is made up of nine separate sites across six acres of land. Valued at more than $1.5 billion, it comprises 1,000 new residences, more than half of which are affordable, nearly one million square feet of retail and office space, community attractions and green spaces.

Karen’s recent work on the project satisfies two requirements set forth in the transaction documents entered into in 2013: that 15,000 square feet be allocated for cultural and community purposes and that the developer construct a new location for the renowned Essex Street Market.

In April 2019, Karen’s negotiations regarding the first requirement successfully concluded when the International Center of Photography closed its acquisition of two commercial condo units to house its museum and school.

The following month, Karen finalized the second condition, handling the conveyance of the newly constructed market to the City. Karen also negotiated an agreement for the developer to manage Essex Street Market for the New York City Economic Development Corporation.

A Focus on PPPs

Karen sharpened her focus on the PPP space during the 2008 financial downturn, which gave her additional exposure to public-private transactions. These matters included the initial construction, funding and leasing and additional bond financing for the New York Mets in connection with the development of Citi Field as well as continued restructuring of a World Trade Center transaction that she had previously closed for Silverstein Properties in 2001. 

Over the years, Karen has turned public-private developments into a substantial part of her practice, helping clients navigate their way among multiple City agencies in all five boroughs and bringing all stakeholders to the table to make deals happen, notwithstanding their sometimes differing motivations and agendas. 

When a developer is responding to an RFP issued by the City, the developer doesn’t know whether it is one of 20 respondents, the only respondent or somewhere in the middle. Given the competitive nature of the process, it’s crucial that developers approach these transactions practically — fight for what is needed but be sensitive to the fact that over-negotiation can lose the deal — and it’s Karen’s role to counsel them on when they are in danger of crossing this fine line.

After the PPP agreement is struck, the parties will continue to work together for the long term. As a result, Karen notes that it’s often critical to negotiate a framework that provides ongoing benefits to all stakeholders.

Widely described as a “model mega-development” for sustainability and community involvement, Essex Crossing reflects this longtime focus.

Stroock provides strategic transactional, regulatory and litigation advice to advance the business objectives of leading financial institutions, multinational corporations and entrepreneurial businesses in the U.S. and globally. With a rich history dating back 140 years, the firm has offices in New York, Los Angeles, Miami and Washington, D.C. For more, visit www.stroock.com.

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