Skip to main content

The AY back story: the desired Devils, modest condemnations, "possible" govt.-backed bonds, and no blight

The original goal of the Atlantic Yards project was based on sports, not the creation of affordable housing or the elimination of blight, two goals stressed today. According to a 6/17/03 Forest City Ratner (FCR) presentation (2 MB PDF) to the Empire State Development Corporation (ESDC), unearthed via Assemblyman Jim Brennan's lawsuit to extract Atlantic Yards financial documents, the mission was to relocated both the New Jersey Nets and the New Jersey Devils to Brooklyn, "thereby stimulating economic growth..."

The document also predicts a modest need for the use of eminent domain, a quick approval and construction schedule, and "possible" government backing of bonds--all of which might be considered lowball estimates.

The desired Devils

It has been reported that developer Bruce Ratner was considering buying the Devils, but never that the Devils were, at one point, an equal element to the Nets in the Atlantic Yards plan. A 1/25/04 New York Times article headlined Ratner's Path To Buy Nets Had Pitfalls And Promise explained:
By the spring, Ratner was seriously examining the Nets, who had the unfettered right to move into New York. The team's holding company, YankeeNets, had floundered in trying to build an arena in Newark for the Nets and the Devils, in whom it owns a 30 percent stake. And tensions between the owners of the Yankees and the Nets were simmering, as were those within the Nets.

The Devils were losing money; a $50 million note, the final payment to the team's former owner, John J. McMullen, was due in August. Believing he could find a way to buy the Nets by investing in the Devils, Ratner began discussions with Lewis Katz and Raymond Chambers, principal owners of both teams


A 10/27/03 New York magazine article headlined Back to the Future described Bruce Ratner's goals:
He envisions the triumphant arrival of the Nets—and maybe even the NHL-champion Devils—at a gleaming pleasure dome on the very site where the O’Malleys once dreamed of building a new Ebbets Field. It would be the crowning achievement of his real ambition, he says, which is to help bring about one of the country’s great urban renaissances.

Two arenas

Now both teams have announced they will leave the Continental Airlines Arena for urban arenas, but in two different cities: Newark for the Devils and Brooklyn for the Nets.

And that means that another goal announced for the project--a "second venue in down state region for entertainment events"--is complicated by a competitor. Indeed, the financial projections for the Brooklyn arena's success, by Forest City Ratner consultant Andrew Zimbalist, assume no competing arena. (Then again, success refers to government revenue; Forest City Ratner, thanks to its Barclays Center naming deal and copious luxury suites, would seem to do just fine.)

Modest condemnations

Note that the developer originally predicted condemnation of 1+ blocks with approximately 91 housing units. That's because the condemnation map at the time did not include blocks between Pacific and Dean streets between Sixth and Vanderbilt avenues, much less Site 5. That soon changed, since the project map as we now know it was largely set by September 2003.

Also note the prediction that a Memorandum of Understanding (MOU) with the city and state would be signed in 60 days. (The MOU was signed 2/18/05.) State approval was to be completed by August 2004. (The approval by the Public Authorities Control Board came on 12/20/06.) The arena was to open in October 2006. (Now the prediction is 2009, but that's highly doubtful.)

"Possible" bonds

The presentation cites "Possible government backing of a portion of bonds."

As I wrote last month, more than half the project financing would consist of government-authorized bonds: $1.4 billion in housing bonds via the Housing Development Corporation and $637.2 million in arena bonds via the Empire State Development Corporation.

Project feasibility

The 6/17/03 statement of project goals noted that the size of the project, 7.5 million square feet of mixed-use projects, was "necessary for project feasibility, and also stimulates economic growth." By a 9/29/03 presentation (3.2 MB PDF), the goal was expanded, noting the project was "to respond to New York City's housing shortage and business.

Still, there was barely a mention of affordable housing--a reference to "mixed-income housing" is buried on p. 21 of that later presentation. And there's no mention of the elimination of blight, the ostensible justification for the exercise of eminent domain and a factor in both state and federal lawsuits challenging the project.

Comments

Popular posts from this blog

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…

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…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.