Wednesday, December 20, 2006

KPMG report to ESDC... says nothing about net revenue to city and state

[Update: While those watching the Brodsky hearing Monday may have concluded that the KPMG report was the basis for the fiscal impact study, the KPMG document only assesses the project's financial viability.
Apparently another report, which has not yet emerged to scrutiny, was the basis for the memo released by the Empire State Development Corporation and offers a more complete analysis of new tax revenue to the city and state. Perhaps it can explain some confounding changes between documents released in October and December.]

I got a look at a copy of the "independent economic analysis" of Atlantic Yards conducted by KPMG for the Empire State Development Corporation (ESDC).

Though the ESDC could not provide it to Assemblymember Richard Brodsky on Monday, yesterday, a new version of the analysis was prepared and released to Assembly Speaker Sheldon Silver, the key vote on the Public Authorities Control Board (PACB).

The document concerns cash flow assumptions regarding Forest City Ratner's revenue for the arena and mixed-use development. It says nothing about new revenue to the city and state. And while it discusses the developer's internal rate of return, it doesn't specify the developer's expected profit.

It does suggest that Forest City has further trimmed the project, cutting the number of condominiums from 1930 to 1608, or more than 300,000 square feet. (Update 7/23/07: Apparently the document just left out a building.)

(Indeed, Crain's reports that the height of Miss Brooklyn, planned at 620 feet, will now be shorter than the 512-foot Williamsburgh Savings Bank, and that there will be 200 on-site affordable for-sale units. One of Assemblymember-elect Hakeem Jeffries's requests has been for on-site affordable for-sale units.)

New public revenue?

The new public revenue is the subject of an internal memo from ESDC, and ESDC staffers on Monday were unable to fully explain reasons for the nearly one-third drop in expected city and state revenue.

So, at 2 pm, will Silver and the PACB vote on Atlantic Yards without looking at the rationale for such changes in new tax revenue? Or is their only role to see whether Forest City's project will be successful enough to make the state's $100 million contribution a sound investment? If so, even this memo doesn't address the full public costs involved.

Incentives review

While it doesn't address public costs, it does include an analysis of government "economic incentives," or tax breaks and subsidies. Listed are:
--federal low income tax credits
--421-a real property tax abatement
--50/30/20 program tax exempt benefits
--property tax abatements for commercial space
--commercial rent subsidy
--$200 million for city and state infrastructure support.

Missing is anything about "extraordinary infrastructure" costs. Or anything about what this means to the public's bottom line.

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