January 14, 2006

Expected Credit Union
Now Appears Less Likely

The Island may not get a new credit union, after all.

USAlliance Federal Credit Union has been attempting to rent the space occupied until September, 2004, by Montauk Credit Union, a $57 million institution with only eight employees that left the Island after a seven-year effort to make a go of it here. USAlliance has a deposit base of $500 million.

The hitch is a clause in the lease held by New York National Bank for its space in the Westview building. The WIRE asked the Roosevelt Island Operating Corporation for the language in the lease, but it was not supplied by press time. Nonetheless, it reads, "Tenant (New York National Bank) acknowledges that Landlord (RIOC) has entered into a lease agreement with the Montauk Credit Union to provide depository and banking services on Roosevelt Island. Landlord agrees that it shall not enter into any lease agreements or permit any facilities owned or controlled by Landlord or affiliates of Landlord to enter into lease agreements, with a bank for a period of ten years unless this Lease is earlier terminated."

Chris Lazowy, a USAlliance spokesman, told The WIRE this week, "After we learned of a restrictive lease provision with New York National Bank being imposed by RIOC, we attempted to contact New York National Bank regarding several options, such as a waiver and a release, and even a possible assumption of their lease, in order to mitigate this restrictive lease provision. We have received no official response from them. Without this exclusionary clause being addressed by RIOC and New York National Bank at least in the form of a waiver and release, USAlliance cannot pursue the establishment of a branch office on Roosevelt Island." New York National Bank ($130 million in assets) has recently been acquired by Yonkers-based Hudson Valley Holding Corporation (which also owns Hudson Valley Bank) and rechartered as a State (rather than National) bank, which may account for its failure to deal, thus far, with the USAlliance letter, which was sent in September. Though asked, RIOC has not provided any explanation for its failure to deal with the matter.

Meanwhile, Chase Bank is expected to open a branch in Southtown, though David Kramer of The Hudson Companies said on Tuesday that "nothing’s been finalized, including Chase" for the commercial spaces on the plaza in Southtown.

Lazowy added: "We have done everything in our power to provide credit union service to the residents of Roosevelt Island, but it seems nothing has worked. Therefore, unless substantial changes can be made to assist us in this endeavor, we must render this project closed. We would like to thank everyone who assisted us in this attempt, and wish everyone a very Happy and Healthy New Year."

Under New York banking law, a credit union is defined as part of the banking world, according to Lazowy, despite the differences between them. A credit union is a non-profit membership organization, while banks are profit-oriented entities.