A sidebar headlined PINCHING THE PUBLIC PURSE describes how public agencies and private developers react to rising costs. The Metropolitan Transportation Authority explains that it has included rate escalation clauses in its contracts. The Port Authority has called for "value engineering" in redesigning its projects. And Forest City Ratner--well, the developer won't comment.
The development by Forest City Ratner Companies (FCRC) is supposed to make 50 percent of its rental units affordable, but the first phase of project--scheduled for completion in 2010--is only required to designate 30 percent of the units that way. Members of Develop Don't Destroy Brooklyn and City Councilmember Letitia James claim rising costs could postpone or derail the second phase of the project, which is due to end in 2016, thus endangering the unusually high affordable housing benefits that the construction promised to provide. Loren Riegelhaupt, a spokesman for FCRC, wrote in an email that he would not comment on "ridiculous speculation by opponents whose only goal is to stop the project."
Going to the record
CLI could have gone beyond the "opponents" and pointed out that much milder critics have questioned the promise, and representatives of the developer have given fuel to doubts. For example, BrooklynSpeaks requests:
Ensure that the proportion of affordable units built in the first phase of the project is the same as the overall proportion of affordable units in the whole project.
Assemblyman Jim Brennan has also questioned the promise, calling for specific guarantees. Those are apparently still unresolved, given questions about the availability of tax-exempt financing. Forest City Enterprises' most recent annual report acknowledges that final documentation of the transactions are subject to the completion of negotiations with local and state governmental authorities...
The annual report also acknowledges:
There is also the potential for increased costs and delays to the project as a result of (i) increasing construction costs, (ii) scarcity of labor and supplies...
And then there's FCE executive Chuck Ratner, who has estimated that the project could take 15 years, not ten, and offered a not very convincing clarification.
Could ACORN, signer of the Housing Memorandum of Understanding, enforce the promise? They'd have to go to court. (No, the developer couldn't simply pay $500,000 and walk away.)