As Capelli Seeks 13th Extension for LeCount, Building Owner Accuses Capelli Rep of Lying to City Council

Tomorrow, representatives of Capelli Enterprises will seek yet another extension for their LeCount Place project from the New Rochlle City Council. The following email — sent by Michael Long, owner of the building at 5 Anderson Street in New Rochelle to Ralph DiBart, Executive Director of the New Rochelle Business Improvement District — is stirring up a firestorm. Word is that Capelli officials have hunkered down and are refusing to respond to calls from City officials. The Council session tomorrow at 3:45 PM will be broadcast live on cable access and over the Internet. Should be quite a show!

Mr. DiBart (New Rochelle BID)

I thought you would be interested in this.

I, Michael Longo, am the owner of the building at 5 Anderson Street in New Rochelle, that is part of the proposed redevelopment site called LeCount Square.

We signed an option contract with Cappelli Enterprises in 2005. We did a blended deal with very little money upfront with a retail space to be delivered to us at the completion of the project. Cappelli Enterprises wanted to vacate the building of the tenants and did so back in 2006. At the end of 2007 Capelli Enterprises exercised the option which consumated our deal with them. They are suppose to pay us a monthly fee to cover the mortgage, expenses, and income/profit on the building we had before and they have complete control of the building.

About 14 months ago Cappelli Enterprises stopped paying us completely and we been struggling to carry the building while trying to resolve this matter with them. Recently we became aware that at a the City Council meeting in New Rochelle a Cappelli represenatatve made many untrue statements to the council about our relationsip. Below is how our attorney para phrased it:

“Joseph Apicella, speaking on behalf of Cappelli Enterprises and New Rochelle Revitalization, LLC (NRR), made certain statements to the Common Council, which are material to NRR’s application for an extension of its Memorandum of Understanding with the city, but which are wholly untrue and were deceptive to the Common Council. My clients and I have seen the streaming video , http://www.webcasting.com/newrochelle/ , of the 11/10/09 meeting and we were astounded by the blatantly untrue responses given by Mr. Apicella to certain direct questions of the Council.

When asked, at that meeting, by Mr. Tarantino, if Cappelli Enterprises and NRR had any financial issues with my client, his response was “Absolutely not”. He advised that they “have made any and all payments” required to by made to my client and that there is “no dispute” with my client. Those statements are simply false. Pursuant to its contract with my client, NRR owes my client over $785,500.00 for rent, taxes, mortgage payment reimbursements, utilities and maintenance on the building. My client has been carrying that building for NRR. There contract provides for certain monthly payments and reimbursements from NRR to my client. NRR has not made its monthly rent payment, mortgage reimbursement or tax reimbursement for over a year since September of 2008, other then a single payment of $20,000 back in July 2009. In addition there are utility, Insurance and maintenance expenses that have not been reimbursed.

As a result of that failure, in March of 2009 Anderson Development Group put New Rochelle Revitalization, LLC on formal Notice of Material Breach of the Option to Purchase the property. NRR has not responded to that Notice. My client has withheld commencing formal action for breach or to cancel the contract because of its hope that NRR will pay what it owes, and continue, but it may do so at any time. The continued participation of 5 Anderson Avenue, as an integral part of this development plan, is definitely at risk.

Mr. Apicella also said that NRR has authorized my client to re-rent the ground floor of that building. Not true. NRR has complete control over the building and is obligated to maintain that building. Although Mr. Apicella did, once, verbally suggest that my client consider re-renting the ground floor, under the contract, unless and until that contract is cancelled, my client has no right to do that. NRR has complete legal control over the building. Only NRR can re-rent any portion of that building. In addition, in order to re-rent any portion of that building, moneys will have to be expended to prepare the building for tenants. That would by NRR’s obligation. Of course any positive cash flow resulting from the renting of that space could be used to pay down NRR’s debt to my client.

We understand that the LeCount Square project is on an upcoming Common Council agenda on Tuesday, December 1, 2009 starting at 3:45 pm, for an extension of its Memorandum of Understanding. That would be the Thirteenth Amendment. My client objects to that extension. Although NRR presently controls 5 Anderson Avenue, my client is prepared to take formal action to cancel its contract with NRR unless all back payments are brought current.

We request that the Common Council withhold any extension unless my client is made whole. If the agreement lapses at the end of the year, my client will cancel the contract and pursue its remedies with Mr. Cappelli.

My client and I are prepared to meet with the Common Council, if it so desires, to provide evidence of NRR’s failure to pay and breach of its agreement and to provide any other information the Common Council requests.

We would be happy to attend a Council Meeting for that purpose.”

Regards,

Michael Longo

NOTE: in this case, the typos above are not mine.