The Morning Call du lieu suivant : Allentown, Pennsylvania • 3

THE MORNING CALL JMED EVELOPMENT CHALLENGE SUNDAY, OCTOBER 17, 2004 A3 1 1,11 BETHWORKS NOW: KEY PLAYERS The five principals in efforts to redevelop the former Bethlehem Steel property in South Bethlehem PARTNERS FROM PAGE A1 Group has experience in similar ventures RICHARD FISCHBEIN Managing partner, Fischbein, Badillo, Wagner Harding. Fischbein, an attorney, built the firm into a political powerhouse by hiring Liberal Party leader Ray Harding and Herman Badillo, a former congressman and education adviser to former New York Mayor Rudy Giuliani. In 1999, the firm also merged with the firm of Florio and Perrucci, bringing former New Jersey Gov. Jim Florio to its roster. Fischbein has represented luminaries such as Donald Trump and represents the estate of deceased rapper Tupac Shakur.

NEWMARK CO. Newmark Co, founded in 1929, is a privately-owned, comprehensive real estate firm that advises tenants and owners and provides property and asset management, corporate advisory, engineering, financial and retail advisory services. It has offices throughout the United States and in Europe. Newmark and its 700 employees complete more than 15 million square feet of transactions, and last year had leasing transactions and sales totaling $6.5 billion, making it the 13th largest real estate brokerage in the country. Additionally, Newmark manages or leases more than 50 million square feet of commercial space nationally.

Newmark principals Jeff Gural, Barry Gosin and Jim Kuhn own a majority of New York's Flatiron Building, as well as other properties in New York, New Jersey, Newport News, Va, and Minneapolis. Gural, Gosin, Kuhn and attorneys Richard Fischbein and Michael Perrucci last month purchased the Bethlehem Works property for $2 million in cash and $1.16 million in other considerations. Sources: Newmark, National Real Estate Investor THE WALENTAS BUILDING, part of the DUMBO (Down Under the Manhattan Bridge Overpass) project in Brooklyn. Ed Landrock The Morning Call On seeing tht Bethlehem Steel property for the first time: "There is a moment in time when a property that you've walked by 1,000 times and sometimes you're too close to it but somebody sees it and says, 'My God, what a fabulous piece of property, the things that could be done on And it happened long before anybody raised the notion of gambling because who knew about gambling?" NIP r1 'f irr 111 If in v'z gV Si. fcfftv- 1 Lt i I BARRY M.G0SIN Vice chairman and chief executive officer, Newmark.

Also a principal of Newmark since 1978. Gosin has served as CEO since 1979. According to the company, Gosin has been responsible for leasing more than 30 million square feet of commercial space in New York City. Gosin made news pages recently with a proposal to move the United Nations offices to the new World Trade Center site. The U.N.

building will be renovated, but will not move to the WTC site. 1 1 i ft 1 1 fy wJ On remaking and renaming urban neighborhoods in New York and South Bethlehem: "We were one of the first into midtown south, we were certainly one of the first into DUMBO, we were early into SOHO, and we would like to be that early into SOBE." i JEFFREY R. GURAL Chairman, Newmark Co. He joined Newmark in 1972 and has been a principal in the company since 1978. He has responsibility over the firm's non-institutional portfolio of about 150 owned or managed buildings in the New York metropolitan area.

Gural also supervises Newmark's construction division, which has been responsible for interior construction. Gural also is president of the New York chapter of the Starlight Foundation, a national organization that provides services and wishes to seriously sick children. is to have the site, known as Bethlehem Works, mentioned in the same breath as Boston's Faneuil Hall or Baltimore's Inner Harbor. The prospect of redeveloping the steel site through a partnership including James Kuhn, Gural and Gosin principals of Newmark one of New York's biggest comprehensive real estate companies and the politically connected Fischbein and Phillipsburg attorney Michael Perrucci, has turned one-time skeptics giddy with anticipation. "I've been working on this project for seven years," said state Rep.

Rooney, D-Le- highNorthampton, a friend and former partner of Perruc ci who initially supported another developer. "To think about where we were 2 v2 years ago and to think about where we are today, it's a quantum leap. I'm real encouraged, and I didn't start out there." Newmark is a major player in New York City's real estate market It was the city's second-largest commercial property manager last year, according to a survey by Crain's New York Business. Gosin said the group's expe rience with DUMBO shows that as developers, they know how to turn old manufacturing sites into viable dwellings, offices and shops while retaining their old city flavor. But the Bethlehem Works site is a bigger redevelopment challenge, with its own icons the blast furnaces and other structures that are "half fallen apart," said Gural, the New- mark chairman.

The new owners announced last month that they hoped to redevelop the site generally following the idea first proposed by Bethlehem Steel in 1997. But it's impossible to say what the site might look like, they said, because they haven owned the property long enough to have a master plan drafted. Still, Gosin, Newmark's vice chairman and chief executive officer, was more than optimistic that the redevelopment, however it finally comes about, will become a reality. "The only question is when," Gosin said. "It is not a question of if.

It's a question of when. And so if it happens to take 15 years, you know, we'll figure it out" Perrucci, a Phillipsburg lawyer with Pennsylvania ties, led the partners to the site and "began a conversation" with Fischbein, his law firm's managing partner. Fischbein also was a business partner and Hamptons beach neighbor of Wilbur Ross, who purchased bankrupt steelmakers including Bethlehem Steel and created International Steel Group. ISG last month sold the property to the five developers, working under the name BethWorks Now. According to Perrucci, the Bethlehem Commerce Center site first interested the developers.

The center consists of about 1,600 acresof former steel property being converted into an industrial park and truck and rail shipping yard. Unlike the Bethlehem Works site, commerce center properties could qualify for tax breaks. Lehigh Valley Industrial Park purchased most of the commerce center, however. Then, as a pending sale of Bethlehem Works to Delaware Valley Real Estate Investment Fund foundered, the Beth-Works Now developers stepped in, purchasing the property for $2 million in cash and another $1.1 million in other considerations. While Bethlehem Works land is not available for tax breaks, it does qualify for tax increment financing, which would direct increased tax revenues from the new development to pay off the tab for infrastructure improvements.

Five years or 15 years Since BethWorks Now entered the picture, a new element appeared on the horizon: slots. Gaming operators, whom the developers declined to identify, contacted them with the prospect of a license for slot machines as part of the entertainment plans for the On maintaining the former Bethlehem Steel Corp. blast furnaces on the property: "I would like to walk around those blast furnaces, to have guides" giving tours. "I can envision a film to show how steelmaking was done." site. Immediately, the developers could see their dreams, fueled by a new lucrative source of cash, follow a much brisker path to reality than that taken by DUMBO.

"At the end of the day, if that were to happen, you take a project of 10-15 years and you've just made this project happen in five years," Gosin said. "The certainty of success with gaming is 100 percent." The additional slots money that could be brought to the developers and Bethlehem would "really help make something that may be uneconomical, economical," Perrucci said. "It may allow something that you couldn't ordinarily do in a lifetime make economic sense. So there's this window of opportunity. I mean, whether we get that or not, we're excited about this site." Although they say that they entered the project without any thought of slots, the developers say their new concept of gambling with other mixed uses has proved to be successful.

"It's not a coincidence that the most successful casinos in Vegas are associated with big retail and family-style entertainment," Kuhn said. Additionally, slots may take profit-making pressures off a proposed Smithsonian museum of industrial heritage, Gural said. The museum "could be a do-good thing to honor the people who worked there when America was an industrial country," Gural said. The Bethlehem Works site might not be the first shot at gambling for one of the developers. Gural is hoping to bring slots to a closed horse racing track just north of the Pennsylvania border in Tioga County, New York.

A breeder and buyer of standardbred horses, Gural, along with a partner, John Simmonds, have applied for licenses to race horses and operate video slot machines at Tioga Park. The track hasn't hosted a race in 25 years. Simmonds said plans eventually call for a hotel and estimated the partners will spend "well north of $10 million" by the time the project is done. Doug Barton, director of Tioga County Department of Economic Development and Planning, said a horse racing-only facility would have welcome, but limited, economic benefit. Add slots, he said, and the picture changes.

"The combination of the two," Barton said, "makes it a successful proposition." Political connections, donations Slots licenses are a prized governmental commodity, and the developers over the years have not been bashful about getting local and national politicians' attention. As it is, Perrucci, a former Warren County Democratic Party chairman, was a law partner with former New Jersey Gov. Jim Florio. Their firm in 1999 merged with Fischbein's another politically tied firm that counts as members Herman Badillo, a former congressman, deputy mayor and adviser to former New York City Mayor Rudy Giuliani; and Liberal Party head Raymond Harding. The five developers have contributed tens of thousands of dollars to state and national political figures and causes, usually but not always to Democrats.

Perrucci, the former Democratic county chairman, wrote a $500 check to Pennsylvania Republican U.S. Sen. Rick Santorum in June, for instance. On the other hand, about a year ago, Perrucci gave $10,000 to the Pennsylvania state Democratic Party. Another $5,000 came from the law firm and Florio sent a third check of $1,000, all on the same day.

Campaign records show Perrucci gave Gov. Ed Ren-dell $1,000 when he ran for governor in 2002. The firm also gave $15,000 to Rendell. Perrucci also is a Rooney campaign donor, as well as a former business partner of his. Tax returns released by Rooney show that he netted about $7,000 over the last two years for political consulting services to Perrucci, an arrangement that Rooney said was approved in advance by the state Ethics Commission.

Rooney said once he learned that Perrucci's group would make an effort to buy the Bethlehem Works property, he severed his business ties with Perrucci. "I want to be able to advocate for reputable people with no cloud hanging oVer my head," said Rooney, who JAMES D. KUHN President, Newmark. Kuhn joined Newmark as a principal and president in 1992. He founded Newmark's Capital Group, a division specializing in providing management and advisory services for corporate and institutional clients.

Kuhn has been adviser, broker or principal in more than $3 billion in transactions for 25 million square feet of commercial and residential real estate. Kuhn also is a piano player in Newmark's house rock band, Square Feet. also has received campaign donations from Perrucci. "They understand how to leverage and get in front of the governor," said state Sen. Lisa Boscola, D-Northamp-ton.

Like Rooney, Boscola supported another developer initially, but since has been converted. "Every time I talk with Mr. Perrucci, we're always talking politics," she said. "I trust him." Boscola said Perrucci already has spoken with Rendell during a recent visit to the Valley and in Harrisburg. At the latter meeting, she said, "the discussion revolved around a slot parlor." Heritage preservation possible Whether they secure a license for slots, the developers said they intend to press forward with development plans.

Perrucci said they are interviewing some of the nation's top architectural firms and may hold a "beauty contest" to see who comes up with the best development ideas that also retain as much industrial heritage as possible. The developers say they won't make promises about what they can retain of the plant, acknowledging the legacy of promises rooted in the property from Bethlehem Steel days on through more recent, largely unfulfilled, redevelopment plans. Since Bethlehem Steel's decline, a few positive steps have become a reality, including the Flyers' Skate Zone ice rink and the landing of OraSure Technologies, a medical diagnostics firm. More numerous were the flops, including grand proposals calling for a 12-screen movie theater, a blues club, and an entertainment center called "The Fundry." Bethlehem Mayor John Callahan said the developers understand the importance of retaining the industrial nature of the land. "I made it very clear to them early on in our discussions that it was my wish to save the blast furnaces and that it was non-negotiable," Callahan said.

"They were not opposed" to the concept, he said. The chief executive officer of the proposed National Museum of Industrial History, Stephen Donches, also has PARTNERS PAGE A4 No. 2 machine shop Urry Printi The Morning Call i ten. M. On whether the Sept.

11 attacks in New York City played a role in the developers' decision to look outside the city: "It's the complete antithesis of 911 If it was a 911 issue, things would be so cheap that nobody would want to be in New York. In fact, it's the opposite. Things in New York are at the highest level they've been in their history for residential and commercial buildings. So if anything, this appeals to us because we have to be value buyers and value creators. We're not interested in just buying and flipping to the next guy, and that's what's going on in New York today." BETHWORKS NOW A team of five people under the name BethWorks Now has purchased 120 acres of former Bethlehem Steel Corp.

land in the city's South Side. Several redevelopment projects have already been completed on the site. MICHAEL PERRUCCI Attorney, Fischbein, Badillo, Wagner Harding. Perrucci, a 1975 Moravian College graduate, on Jim Florio's failed 1981 race for New governor and stayed friends with Florio. worked for another law firm before starting WIT.

1ML their worked Jersey They own company in 1995. He was a member of suuin etirirnrw 1 SOUTH BFTHlf HfM Blast furnace area the Phillipsburg School Board and advised the Delaware River Joint Toll Bridge Commission. i I lech Tech I Center Ccnler I Gas engine house Flyers Skate Zone Tech Center III (OraSure Technologies) Discovery Center itflT 'ThirdSt. A -f 5 Bethlehem Works t'X I Fourtl St. -fc I Property" Discovery Center On comparing the Bethlehem Steel site to the site of a former U.S.

Steel plant in Allegheny County, now a shopping mall known as The Waterfront "If you look at Homestead, they knocked down a lot. That's not our vision at all." Sources: Newmark Co. Web site, news stories Source: Morning Call research If.