Wednesday, October 24, 2007

FCR executive claims: "We are proceeding according to plan"

An interview in today's Wall Street Journal with new Forest City Ratner president Joanne Minieri finds her, not surprisingly, on message.

The interview, headlined Forest City's Minieri Gets Tested in New York:Brooklynite Executive Steers Big Atlantic-Yards Project Amid Tough Credit Market, has her claiming:
We think it's a tremendous opportunity to help the economy to revitalize the neighborhood -- all the things we like to do in our development projects. We are on the site now, doing some work. We are waiting for the conclusion on some of the litigation. We are proceeding according to plan.

First, Atlantic Yards is hardly the savior of a "blighted" neighborhood. An open bidding process for the Metropolitan Transportation Authority's Vanderbilt Yard would have ushered in development over the working railyard that separates neighborhoods.

Market-rate development has been proceeding apace; a rezoning could have unlocked new development possibilities and required affordable housing. Instead, we get a state override of zoning--essentially a private rezoning.

Also, while the developer may be working on preconstruction demolition and other site preparation, the project is about a year behind plans as announced in last year's environmental review, and several years behind plans as announced in 2003. (The arena was supposed to open in 2006!).

Credit stress

Yes, the financial markets could have a significant impact.

WSJ: Given your financial background, does the stress in the credit markets keep you up at night?

Ms. Minieri: The availability of capital to do these terrific developments and stimulate the economy concerns me.... Value creation is impacted tremendously when you have to pay more for financing proceeds. [Re Atlantic Yards] We will probably encounter a couple of different market cycles as we move through that development.

Translation: the project could be delayed well beyond the stated ten-year time line and, as with the Frank Gehry-designed Beekman Tower project that went from condos to rentals, things can change.

After all, as former Atlantic Yards project head Jim Stuckey once famously said, "Projects change, markets change."

On the promotion

People have asked me if I thought Minieri's promotion signaled anything untoward. Given that the job change was not announced by p.r. guru Howard Rubenstein, as with Jim Stuckey's mysterious departure, and that Minieri was made available for a Wall Street Journal interview, we can assume that parent company Forest City Enterprises and subsidiary Forest City Ratner are quite happy with it.

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