Wednesday, February 28, 2007

ESDC-released documents from Forest City lack vital information

The Empire State Development Corporation released three pages of Forest City Ratner-prepared documents estimating investment returns over 12 years.

I'll have more analysis later, but it's important to remember that these pages differ greatly from the financing plan that the Metropolitan Transportation Authority required from bidders for the Vanderbilt Yard, and which Develop Don't Destroy Brooklyn and other organizations tried in vain to see.

Firstly, that financial plan covered 20 years, not little more than a decade. Secondly, the MTA required (p. 15, or PDF p. 18) the developer to account for "sources and uses"--in other words, the combination of subsidies, investment funds, and internal funds that would be used.

Required were:
a. Development schedule and budget;
b. Sources and uses statement;
(i) Sources, amounts, terms and conditions of financing, and the Proposer’s equity; and
(ii) Breakdown of uses of funds in the project, including an itemized list of all costs associated with the improvements of the Site;
c. Pro forma cash-flow statements, with documentation of assumptions for a 20-year period


"I find it very surprising that a full 'sources and uses' on the transaction is not publicly available, given the significant amount of public resources going in," affordable housing expert David Smith told me in December. He noted that affordable housing transactions typically offer a transparent document explaining where the money is coming from and where it will go.

The same lack of transparency apparently persists.

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