A cleanup team is nearing the end of an oil spill remediation at the HNA Palisades Premier Conference Center in Orangetown that began on Aug. 30th, according to the New York Department of Environmental Conservation (DEC).
The 5,600-gallon fuel spill, which the DEC defined as “significant,” began when a pump in a day tank in the basement malfunctioned. The main 20,000-gallon tank feeds into the day tank, which has a capacity of about 300 gallons of fuel. The DEC said spillage from inside the boiler room basement mainly went into the footing drain, the sump, and the town sewer line.
Workers at the Orangetown Sewer District detected a fuel odor around 7 am on Aug. 30. The district, which has 40 pump stations and treats an average flow of 8 million gallons a day, traced the source of the leak to HNA. The DEC was notified, and the sanitary system treatment plant was shut down for a couple of hours.
“The HNA property had a generator and diesel holding tank that had mechanical failure, and the fuel oil was making its way into floor drain and the sump, which are connected to sewer,” said Eamon Reilly, Commissioner of the Orangetown Sewer Department, Dept of Environmental Management and Engineering.
“We took immediate action,” continued Reilly. “Castleton Environmental responded to the spill; they were able to recover a large quantity of the petroleum that made its way into the plant.”
Castleton Environmental is continuing to remediate on site at HNA. The DEC continues to test soil and water samples. The fuel spill did not affect any waterways, according to the DEC.
“A spill of this size and nature is very uncommon,” said Reilly. “We do have accidents that make it into the system, usually 100 gallons. But nothing to this extent. I’ve never seen anything this big.”
HNA has been mostly vacant since COVID shut down the hotel and conference center. The property is in the midst of a redevelopment effort by the town.
Supervisor Teresa Kenny said she could not respond to calls or emails seeking comment on the spill or the remediation because there would likely be lawsuits down the road.
Orangetown inserted itself into the future development of the HNA center nearly two years ago after a prospective sale fell through after the buyer failed to finance the purchase. The town cited concerns about the town being taken off the tax rolls if it were purchased by a nonprofit.
Orangetown officials in June chose a development team to redevelop the 106-acre property at 334 Route 9W. Orangetown chose the Kitching/Pelayo team as the “preferred developer,” which envisions an updated hotel/conference center, world-class spa, a restaurant with biodynamic gardens, spaces for makers, 50,000-square feet of photo and film studios, test kitchens and co-working.
Phase Two of the plan also calls for 20-30 townhomes to create “bigger accommodations for families and longer-term stays.”
The Kitching/Pelayo team refers to Mark Kitching and Jerome Pelayo, a real estate broker for Douglas Elliman and a house builder respectively. Kitching, director of the Estates Division, sells high-end houses in California and Pelayo, of Sunia Homes, is a small-scale developer of ultra-modern environmentally-efficient houses, also in California.
Rounding out Kitching/Pelayo is an entity called New Valley Realty, a real estate investment subsidiary of New Valley LLC, a wholly owned subsidiary of Vector Group Ltd (NYSE: VGR). Run by CEO Howard M. Lorber, New Valley invests in renovations, conversions of office and rental properties to condominiums, underperforming assets, land development and sales, resort and urban hotels, core rental buildings.
HNA is free to market its parcel independently and retains control over whether it accepts an offer. However, the town passed a resolution to redevelop the property that includes language that indicates the town will consider taking the property through eminent domain.
The Palisades hotel and conference center was purchased by HNA Training Center NY LLC for $60 million in 2016 from IBM. In late 2019, ZVG@Palisades LLC, an entity affiliated with Vasco Ventures, tried to buy the property for $40 million.
It has been widely reported that China’s HNA Group Co. is in dire financial trouble and was forced into bankruptcy in January. However, the HNA Training Center in Palisades, owned by a limited liability company in Delaware, is not part of the company’s bankruptcy. Special Counsel Mike Zarin, hired by the Town of Orangetown to shepherd the project, has said “as far as we’re aware, the asset is not encumbered by the Chinese bankruptcy.”