Friday, September 15, 2006

Forest City CEO: Crain's poll a boost after New York mag article

In a conference call on 9/12/06 with investment analysts, executives of Forest City Enterprises expressed optimism about the Atlantic Yards project developed by subsidiary Forest City Ratner. They said they expect government approval before the end of the year, yet also displayed some defensiveness about critical press coverage.

First, Bob O’Brien, executive vice-president of finance and investment, offered a summary of the process:
New York continues to be our most active development market We continue to move forward with perhaps our most visible and ambitious project, Atlantic Yards. As we’ve indicated previously, we’ve acquired the vast majority of the land in Brooklyn necessary for the development. In the second quarter, the Empire State Development Corporation [ESDC] certified the draft EIS—environmental impact statement—adopted the General Project Plan, and authorized a public hearing. The first public hearing occurred in August and we expect a final ruling on approval of the EIS before the end of the year. Our long term objective is to build the Nets basketball team into a great franchise, relocate the team to Brooklyn, a city of two million people, and to develop a large-scale mixed use project with the Nets and the Frank Gehry-designed arena as catalysts for the project and the further development of Downtown Brooklyn. Our commitment to build affordable housing as part of this development is one of the largest of its kind and addresses a significant housing shortfall for the people of New York.”

Nongovernmental hurdles?

Later, Joanne Minieri, executive vice-president and chief operating officer of Forest City Ratner, was asked about the governmental and nongovernmental hurdles facing Atlantic Yards. Her response:
We are in the ESDC approval process. We’ve had a public hearing in August. There will be two more community forums, and basically by September 29, the record will be closed for all public comment. We expect that within the last few weeks of November, ESDC will move to get the Public Authorities Control Board approval for the project. Right now, we’re basically receiving public comment and the state and city are reacting to them.

It sounds like the developer is receiving the comments, but that's the job of the ESDC (via consultants paid by FCR)--and not the city. Still, if the city is in fact reacting, shouldn't those agencies be telling us?

But Minieri neglected to mention another likely factor: a lawsuit over the use of eminent domain in the project, and perhaps also regarding the ESDC's environmental review.

One more boost

Near the end of the call, CEO Chuck Ratner felt compelled to bring up Atlantic Yards again:
I just want to add that there was an article in the past week or so, I think it was in the Crain’s in New York, which referenced polling on our project in Brooklyn. You know, you’ve read lots of negative publicity, bad article in New York magazine, but the truth is that poll came out extremely strong for us. Not only do we have the full commitment of the leadership, the governor, the mayor, the borough president, the speaker of the Assembly and the Senate, but we have very strong support, 60-plus percent from the people who live in Brooklyn. And that also, I think, speaks very well, to our track record, our credibility, the way we’ve hung in there and made our case, and it gives us real optimism for how it will come out.

[Note: it sounded to me like Ratner said "bad article" rather than "that article" in reference to the New York magazine piece, but if any listener hears differently, let me know.]

As I argued, the poll was deeply flawed, and different questions might have yielded a different result. Had the conference call been held a day later, though, Ratner undoubtedly would have cited the election results as well.

As for how the developer has "made our case," well, that's not clear. Was Ratner talking about the no-towers brochure? The apparently-shelved Brooklyn Standard? The stage-managed public hearing? The "absolute absence of democratic process" that the New York magazine article identified?

Forest City restructuring

As for the restructuring in which Forest City Ratner properties will be folded into the parent Forest City Enterprises, Chuck Ratner said the deal with his cousin had been under discussion for years. Minieri added:
Clearly it is a great time to sell real estate. Forest City [Enterprises] and [Forest City Ratner CEO] Bruce [Ratner] were able to negotiate a fair price as well as a tax-effective structure. The resulting transaction provides Bruce, who is now 61 years old, with greater liquidity and a marketable asset for his estate planning.”

Bruce Ratner will own 4% of the company stock and will become a member of the Forest City Enterprises board. Chuck Ratner said that Bruce Ratner will continue in his role, noting that the latter had commented, “This business is my life.”

Was the restructuring because, as suggested on No Land Grab, Bruce Ratner was having trouble raising capital? None of the analysts in the call raised the question, and none have done so since the deal was announced last month.

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