Builder Bets a Billion on Catskill Resort

Mon October 13, 2008 - Northeast Edition
Laurie Mercer



In April 2008, Louis S. Cappelli finally got to break ground in Sullivan County, N.Y., on an opportunistic project of tremendous scale that he had been working toward for nearly a decade. Coincidentally, as the first crunch of masonry was snipped from the two towers that were once the Concord Hotel, Cappelli celebrated his birthday.

In helping restart the engine on the glory that was once the Catskills, the new Concord Resort and Convention Center that will rise from the ground is embraced like a shining beacon of hopefulness in a largely economically depressed region. The Catskills were once a vacation Mecca for many years, up until circa 1970.

With the new Concord resort better days are here again. Gov. David Paterson said in a statement, “The beauty and majesty of the region has not changed, and this deal will help return the Catskills to their former glory as a destination spot.”

Short history: Amid the same rolling hills in 1935, a Russian immigrant named Arthur Winiarick took possession of The Ideal Plaza in Kiamesha Lake in settlement of a debt. With its reputation for size (1,200 rooms), fine kosher food in a 3,000-seat dining room, and top entertainment, the Plaza that Winiarick created became one of the top vacation destinations in the Northeast. The Concord was the largest of the 400 hotels scattered across Sullivan County and the Catskills. A lot of the vacation action was devoted to matchmaking.

This will not be your grandmother’s resort. Cappelli’s history with the property is yet to be written, but it will be glossier than the original and more intensely entertainment-oriented. Cappelli seeks to frame a Las Vegas experience within an hour’s drive from New York City.

The new Concord resort destination will feature:

• 750-room hotel

• 7,500-seat event center

• convention center

• 15 to 18 food and beverage facilities

• boutiques and retail

• 6,500-car covered parking garage

• a spa and spa suites for the truly pampered

• two time-honored, signature championship golf courses (still in use)

• brand new harness horse racing track

• floor-to-ceiling video simulcasting

• 3,000 video game machines

And during the next two years, all of it is going to be constructed from the ground up. Every piece of the original Concord Hotel has been demolished and will be remediated, recycled, resold, reused, or disposed of. Changing times and lifestyle patterns brought an end to the old Catskill summer experience, but American vacations keep getting bigger, have more expectations to them, and are more expensive than ever.

Ambitious Projects

Cappelli’s construction manager, Peter Palazzo, president of George A. Fuller Company, is a busy man these days. Describing his average workday he said, “Typically for a half a day or a day a week I’m in White Plains, which is in the process of being wrapped up. Another in Stamford is being topped off.”

Here’s the back story. City Center at White Plains is a $320 million, 1.1-million- sq.-ft. (102,193 sq m) retail complex with two adjoining 35-story residential hotels, and it includes Renaissance Square, a $400 million, 890,000-sq.-ft. (82,684 sq m) project with a five-star hotel, condo-hotel suites, luxury residences, office space, and street-level retail in two glass enclosed towers. It has been hailed as the catalyst for the revitalization of downtown White Plains.

Trump Parc Stamford, another partnership that includes Cappelli and Trump, is destined to become the city’s tallest building and boasts a record-breaking $4.3 million sale for a penthouse. Stamford’s high-rise condominium tower features tony, luxury-appointed residences with favored spectator views of Long Island Sound and New York City.

On deck is one of Palazzo’s most ambitious projects — the $1 billion, 3-million-sq.-ft. (278,709 sq m) Concord Resort and Convention Center. People who remember the old Concord Resort will not recognize this shiny new jewel being created. The old Concord, with 1,600 acres (647 ha), cost Cappelli $10.5 million in 1999.

Buildings on this scale are a project for titans with deep pockets and satisfied investors. With his current goal of transforming an abandoned property to a jewel-like destination spot, Cappelli hopes to hit the jackpot in this $1 billion deal.

One significant change from the old to new is that old temptress — gaming in the form of VLTs and a Racino.

Other green items, besides money, have not been overlooked. Palazzo said that Requirements for Leadership in Energy and Environmental Design (LEED) certification influenced the building’s design to make the resort sustainable and more cost efficient to maintain. Consultants also are working on the feasibility of a co-generation facility, which is designed to reduce utility consumption.

Getting the Job Done

“The total square footage will be in excess of three million square feet set on a site with 1,600 acres,” said Palazzo, whose famous company originated in 1882 and is credited with building much of the Chicago skyline and innovating construction techniques along the way before being sold and liquidated. Cappelli bought George A. Fuller in 1999 and now employs a core group of approximately 100 people dedicated to his construction projects.

At the very top tier of construction development on this scale, it’s not uncommon to have in-house construction as well as every other level of functionality under one roof. According to the company’s Web site, Cappelli Enterprises has seven related subsidiaries: George A. Fuller Company; Fuller Development Company; Summit Aviation; Summit Property Management; and several entertainment organizations that deliver in-house expertise for all development and construction work, including architecture, engineering, finance, leasing, design, construction, property and asset management.

On the construction side Palazzo said, “We’ve got a great crew.” One area of expertise is managing high-rise construction. He said typically employees can do “10,000 to 15,000 square feet of floor plates in a two-day cycle.” The larger floor plates that a hotel requires will affect that timeline, but he said that longer days and a seven-day work week will maintain the pace.

Cappelli has long sought to bring casino gambling to the Catskills, and the new Concord Resort includes a partnership with Empire Resorts, which owns the old Monticello Raceway, a nearby harness track of long standing, somewhat enlivened by video lottery terminals called VLTs.

By creating a new, shinier track and placing it by the Concord Resort project, horses add the gambling piece of the vacation destination, which has proven lucrative in nearby Atlantic City, N.J., and Connecticut. Despite a 10-year effort to court Indian tribes from far away, the Federal Government ruled against casino gambling in this part of the Catskill Mountain range.

Instead, in addition to scheduled harness racing, the 3,000 video gaming machines to be featured here are controlled by the New York State Lottery, making them legal VLTs.

VLTs were created by lawmakers as a way to build funding for education. In this instance Cappelli will get to keep 75 percent of all VLT revenues as a financial incentive. In turn he must meet a series of performance thresholds including investing $1 billion, increasing education aid (at least $38 million, along with Empire Resorts), and creating 2,000 permanent jobs.

As demolition yields to excavation and ground work, the spirit of determination to find solutions drives Palazzo and his team as the plan of action is constantly being massaged and updated. They’ve got only two years before the grand opening and ribbon cutting. One reporter wrote that tearing down the old Concord began without too much fanfare. A New York Times article suggests that the lower profile was due to a previous event in 2000 where plans for a new hotel were launched. The 9/11 attacks and thwarting of the gambling ventures were what kept that idea from moving forward.

Cappelli believes in the Catskills so much that since 1999 his firm has invested more than $100 million in the area. He and other investors bought the Concord Resort and Golf Club, which was in bankruptcy. Then he bought Grossinger’s, another resort icon, for $6 million. His enthusiasm has not slowed down. One article said, “This spring he [Cappelli] negotiated an option to buy Kutsher’s Country Club by giving the Kutsher family a nonrefundable payment of $2.5 million, in addition to his offer.”

How to Hit the Ground Running

Time is money, so it’s the construction team’s job to make a tight two-year deadline work. Palazzo cited weather, availability of skilled help, and final logistical decisions as just three distinctly vexing aspects of the job, but he thrives on the excitement.

“This is intended to be a resort complex, and the architecture reflects that, but we are still a work in progress,” Palazzo said. “While the main structures are pretty much set, we still have more than 3 million square feet of covered parking that has to be constructed.”

Palazzo said that sequencing the various elements is the most interesting for him. Possible deal breakers like “ordering the priorities and making sure that the long wait items are released in a timely fashion,” are given as examples.

Palazzo quickly described three primary construction approaches to the work in progress — pre-cast concrete, cast in place concrete and structural steel.

“We have a mix of structural systems on this project. Certainly it’s very different [from] what we are finishing in White Plains, which is a suburban environment.”

For the garage portion he said, “Pre-cast is generally more cost efficient, particularly with the configuration we have, but we might just go back to the idea of doing cast in place.” He said some choices are dictated by materials availability. Another issue is manpower.

“You may need a few hundred workers for a concrete crew. For the amount of cast-in-place concrete work called for you may need to double that number, and then the question is, ’can you find the same quality workers in this fairly remote area for the same amount of time?’”

Tight logistics also play a hand in this deal. “The garage is close to the steel structure, and I know I will need that space for the steel and my crane for erection. So in this abbreviated time frame it may make more sense to fabricate it off site.”

Some Structural Decisions Are Already Made

“The project is a hotel, retail, entertainment, casino, and convention center,” as Palazzo described it. “There is a total in excess of three million square feet just in the main complex. Two main structures are connected at the base. One will house a 750-room hotel, while the low-rise component will house the spa and spa suites.”

In addition, the two renowned championship golf courses, which are still in use, will be updated with new cart paths and some ground work on low areas, but as Palazzo put it, “The courses have their own character, which has withstood the test of time. We are going to leave the design alone.”

But that’s where nostalgia fades. There will be no reminders of the once tremendously popular Concord Hotel. “Our renderings show a modern glass façade on the new resort, while the old hotel was large and imposing but not very attractive,” Palazzo said.

“The glass facades are going to be for the hotel and the entrances and some retail space,” he added. “While the convention center is more like a Madison Square Garden-type arena with 7,500 seats, not a performance hall. There will be a 440-seat IMAX theater. All these different elements are special projects unto themselves.”

Once they get to construction he said they will use structural steel systems because of the “additional spans that are required for the components of the project. For example, we have a ballroom at the base of the building and a hotel above that. You need structural steel to create the spans in the ballroom. Because of lead times and cost efficiency, the hotel will be concrete.”

It is in the structural steel area that sophisticated uses for cranes will become apparent with crab rigging systems. Palazzo explained how cranes are used to clad the building in glass. “We’ll have a couple different types of power cranes. Those components rigged off the floor and put in place are called a crab. Crabs are small. They are placed on each individual floor and assist with the erection of each individual panel, which weighs a few hundred pounds each. The panels are swung out over the floor that is being clad.”

Palazzo said his all-union crews are well trained and constantly reminded of safety issues adding, “The union is especially good at bringing them up to speed. Great care is taken here; we are especially aggressive about safety.”

Upstate New York winters are notorious, especially in the mountain regions. There is always a question of what activities a contractor can work at efficiently when he or she is forced to be outside. Palazzo said. “We’ve done a fair amount of work like this in the past. With rain or snow it’s more difficult to avoid delays, but we can heat the slabs when it’s just cold.”

Just One Tank of Gas = More Money for Gambling

And people can talk about higher gasoline prices forcing many families to cut back on travel, but as one Concord Resort and Convention Center proponent described the shiny new resort’s proximity to New York City, “It’s cheaper to get here on one tank of gas for 10 million people.”

Cappelli summed up the appeal of the place best when he said, “I believe that single-handedly this project could evolve into one of the great revitalization opportunities that the state has ever experienced.”

But for now the scene is one of demolition and excavation. Like many VLT terminals, the real pay out is yet to come. CEG