Skip to main content

The ESDC acknowledges some costs, Times offers some skepticism, story downplayed

More than a day after the Empire State Development Corporation released a sketchy fiscal impact analysis for the Atlantic Yards project, the agency offered some backup calculations--which do allow for nearly $500 million in costs, but still fail to fully account for all costs, including housing subsidies.

The New York Times, in an article headlined Study Shows Data for Claim of Atlantic Yards’ Benefits, offered the agency's explanation:
Because it is hard to determine how many residential tenants of the project would be new to New York, the analysis excludes them as a source of new revenue, as well as the cost for possible increases in municipal services they might require.

Unmentioned by the Times is that the Independent Budget Office and Forest City Ratner's own consultant, Andrew Zimbalist, tried to calculate such costs. The Times did point out that the ESDC had done an about-face after Chairman Charles Gargano had told Channel 13 that the document wouldn't be released.

The Times added:
Perhaps more significantly, the study also excludes public subsidies for the project’s planned 2,250 units of housing priced below market rates. Those subsidies are still under negotiation, but could substantially increase the public cost of the project.

Indeed, if the subsidies for the units amount to $100,000 each--less than the $107,000 figure mentioned by Deputy Mayor Dan Doctoroff regarding the prservation of middle-income (as opposed to more expensive low-income) affordable housing--the total would be $225 million. So we might estimate a number significantly higher than $225 million, unless it's cheaper to produce the range of affordable housing promised for Atlantic Yards than to preserve middle-income Stuyvesant Town and Peter Cooper Village. The city says it would cost $54,000 for new middle-income rentals in Queens.

Note, however, that this story appears on p. 4 of the Metro Section and the bland headline doesn't portray the skimpiness of the ESDC claim. By contrast, a rumored six to eight percent reduction in the project's size was the newspaper's lead story on Sept. 5.

Brennan unconvinced

Assemblyman Jim Brennan, who had asked for the document as well as other financial disclosure, called it "a skeleton projection of state and local tax revenue." The Times reported:
We don’t how much money the arena’s going to make,” Mr. Brennan said. “We don’t know how much the private rental housing is going to make. We don’t know how much the luxury housing and commercial property will make. Therefore, we do not know whether the arena or the affordable housing are independently economically viable. If they are, or if they only need minimal subsidy, then there is no rationale for the size.”

What's missing

I asked ESDC spokeswoman Jessica Copen why some costs were missing. She responded:
We did not estimate the increase costs in municipal services (sanitation, traffic, transportation, cops, schools, water, etc). These are certainly costs, but we have not used estimates for these in any of our impact analyses.

You need to understand that this is our model and may vary from other economic benefit analyses. We use this model consistently to evaluate all our projects. No one model is perfect or all inclusive.


More ESDC data

Shortly after I got the document on Wednesday, I queried Copen for more details, which were provided at 6 pm Thursday. Therefore my first post called it a fiscal benefit analysis, since the document released didn't acknowledge any costs. Neil deMause, in the Village Voice's Power Plays blog, under the headline Secrets of the Ratner Plan Revealed! (Not), also pointed to the omission of costs.

How did the agency reach a $1.4 billion net revenue calculation? Copen responded by citing both the document released as well as other ESDC documents. (This data was released to the Times yesterday, as well.) Some $845.5 million includes the fiscal benefits of operations and construction activity for New York City and the Metropolitan Transportation Authority. The $1.1 billion is net revenue to the city and state from the General Project plan. Total: $1.9 billion.

Fiscal cost for the project for NYC + NYS:

NYS sales tax exemption $20.0 million
NYC sales tax exemption $20.0 million
MTA sales tax exemption $ 1.9 million

NYS mortgage recording tax exemption $ 17.8 million
NYC mortgage recording tax exemption $181.4 million

Bond Financing
NYS $138.3 million
NYC $113.5 million

Total NYS $176.1 million
Total NYC $316.7 million

Total: nearly $493 million (a figure cited in July by the Bond Buyer)

Subtract that from $1.9 billion and you get $1.4 billion. However, as noted, that leaves out all sorts of costs for schools, sanitation, and public safety--not to mention other subsidies.

Does this leave out $200 million in direct subsidies from the city and state, as I had earlier suspected? No. Copen explained that "the bond financing of $251.8 million includes the direct cost of $200 million as the bond principal. The rest is interest payments and taxes foregone. All count as fiscal cost to NYS and NYC."

Bonds? "The $200 million will go into the project as a cash contribution--however, the State and City may issue bonds to come up with the funds," Copen added.

The Council of Brooklyn Neighborhoods analysis, for example, cited the non-competitive bid for the railyard rights, "extraordinary infrastructure costs,” public utility relocation, and affordable housing subsidies, among other things.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…