Developer backs out of Rocky Pt. deal

01:00 AM EST on Wednesday, January 31, 2007

By Cynthia Needham

Journal Staff Writer

WARWICK — A development consortium has apparently backed out of a deal to build condominiums at the former Rocky Point Amusement Park, raising questions about the future of the site.

In a letter to the Small Business Administration, the state-appointed receiver for the park, developer Vanderbilt Capital, LLC said it was unable to come to an agreement with the City of Warwick on the size and scope of the project, adding, “the city’s impositions are beyond those which [the] buyer could reasonably be expected to agree to accept.” Vanderbilt was a partnership between national home builder Toll Brothers and South Carolina developer Arnold Goodstein.

The news leaves officials and developers wondering what will happen to the waterfront property and whether another developer will step in.

“There have been a couple of other inquiries from other developers over the past few weeks as they heard that Toll Brothers was basically walking away from the deal,” said Warwick City Planning Director Mark Carruolo.

Among them is Providence developer Michael Integlia. Reached by telephone, Integlia was circumspect about his interest in the project.

“I note with interest that there are some recent developments where it is possible the Rocky Point property may be available again. It would certainly be something we would like to know more about,” he said.

“I can tell you it’s a wonderful piece of property, it’s a great location with great views and Warwick is a wonderful city, so there are lots of very positive reasons why development of that property in that city is a good thing,” Integlia added.

When the former amusement park property was sold at auction in 2003, Integlia made an unsuccessful bid to purchase the 122-acre swath of land. The property was sold to Vanderbilt Capital, LLC for $25 million, roughly twice what other developers were reported to be offering.

But the development plans stalled as the city argued with Vanderbilt about the size of the proposed development. Vanderbilt wanted to build 396 condominiums, townhouses and duplexes, a number that the city said would tax the municipal water and sewer services.

Meanwhile, the city has pushed for the SBA to raze the remaining buildings at Rocky Point, which fire officials deemed hazardous following several devastating fires at the site. The request, and the SBA’s belief that Vanderbilt should pay for the demolition, landed the two sides in court last fall.

Last week, U.S. District Judge Ronald R. Lagueux ordered the SBA to demolish the structures.

Warwick City Solicitor John Earle said the order was the result of an eleventh-hour deal struck between the SBA and Vanderbilt Capital. In exchange for pulling out of the deal, Vanderbilt would forfeit its $500,000 deposit, which the SBA would in turn use to pay for the demolition and, possibly, back taxes on the property.

A lawyer for Vanderbilt Capital and a Toll Brothers spokeswoman did not return calls for comment yesterday. Toll Brothers, a Pennsylvania-based home-building company, has built several projects in Rhode Island in recent years. The company’s financial statements show that earnings were off in the fourth quarter of last year, when the housing market continued to flag.

SBA District Director Mark Hayward yesterday refused to discuss the Vanderbilt deal, saying the organization expects to issue a statement about demolition sometime in the coming days.

The SBA was appointed to manage the Rocky Point property in 1999, four years after the park closed, loaded with debt after years of losses under its former owner, Arnold Kilberg’s Moneta Capital. Kilberg died last week.

City Planning Director Carruolo says Warwick cannot afford to wait much longer before it starts work on the site. A $2.2-million federal grant to preserve parts of Rocky Point as open space expires in September. As a condition of the grant, the city must come up with an additional $2.2 million to match the federal money. Vanderbilt had agreed to provide the matching funds as part of its agreement. With that deal dissolved, Carruolo says the clock is ticking.

Mayor Scott Avedisian says he’s not worried about the property just yet. For now, Warwick is celebrating the small victories, such as the promise that demolition of the buildings is coming.

“Right now we have a resolution of the buildings; our concerns are being met,” Avedisian said. Once that phase of the project is done, the mayor says the city will confront “the long-term” prognosis for Rocky Point.

cneedham@projo.com