Inner Harbor goes to Destiny USA

Inner Harbor will go to Destiny USA

October 22, 2004

By Rick Moriarty, staff writer

The Lakefront Development Corp. voted unanimously Thursday to recommend that Destiny USA be chosen to develop the Syracuse Inner Harbor.

By a vote of 11-0, the nonprofit corporation's board of directors endorsed Destiny USA Inc.'s plan for a $230 million hotel and commercial development on 40 acres of land around the harbor.

The recommendation goes to the state Canal Corp., which can accept or reject it.

Destiny executive Stephen Congel said the company will start construction in the summer if a development agreement is reached with the Canal Corp. by the end of this year. Construction would take a year, he said.

He said he viewed the unanimous vote as an endorsement of not only the company's harbor project, but also of its plans for a much larger, multibillion-dollar retail and entertainment center in the lakefront area.

Destiny representatives say they want to use the harbor development as the start of the $5 billion first phase of their bigger lakefront project.

"We look at this as a springboard for all of Destiny," said Congel, the son of mall developer Robert Congel.

The lakefront board received one other bid for the harbor development rights. It was a $98 million plan, primarily for a residential project, from the team of Sutton Real Estate Co. and Norstar Development USA LP.

"We are disappointed," said Sutton President Bradford Smith. "We still think our proposal was the best one for the Inner Harbor."

Smith said the Sutton-Norstar team knew it was fighting an uphill battle because its project would not create as many jobs or generate as much tax revenue as Destiny's commercial project.

Nevertheless, he said, the team hoped the board would go for the chance to create a waterfront community, the kind of development that has been successful in other cities.

Destiny USA proposed a much larger project than Sutton-Norstar. Its plans include a 10-story, U-shaped hotel with 600 rooms on the harbor's west shore and 281,000 square feet of dining, entertainment and retail space in several smaller buildings around the harbor and on its two piers.

Sutton-Norstar proposed 651 residential units - a mix of upscale condominiums, luxury apartments and single-family "cottage" homes - restaurants and some retail.

Destiny representatives said their project would create 2,496 permanent jobs, in addition to 3,071 temporary construction jobs. Sutton-Norstar estimated its project would create 293 permanent jobs and 742 construction jobs.

The state Canal Corp., which owns the harbor, stands to make a lot more money with the Destiny plan than it would with the Sutton-Norstar project.

Destiny offered to pay $18.07 million for 36 acres of land and to lease four more acres at the same per-acre value - $500,000 - while Sutton-Norstar offered $5.45 million in payments that would be made over time as it leases and sells its residential units.

Lakefront Development Corp. President Stephen Suhowatsky said the board judged the proposals on five criteria: overall scope of the project; capital investment; qualifications of the developer; benefits to Central New York; and benefits to the Canal Corp.

He said the Destiny USA proposal came out on top in the evaluation, but he declined to say how the proposals scored on each of the five criteria.

"This proposal is phenomenal in terms of what it's going to bring," he said of Destiny's plan.

Destiny executives had said they would have to "re-think" their plans for the larger Destiny USA project if they did not get the rights to develop the harbor.

Suhowatsky said Destiny's harbor proposal was judged on its own merits, without regard to whether the larger retail and entertainment project envisioned by its planners is built.

The Lakefront Development Corp. was created by the Metropolitan Development Association in partnership with the city to oversee redevelopment of the harbor, a former Barge Canal terminal south of Onondaga Lake.

The state and the city have spent $20 million on improvements to the harbor to make it more attractive to developers.