Skip to main content

In Philadelphia, at least, “socially patient” capital

We are told that the justification for the size of certain projects, like Atlantic Yards and the New Domino in Williamsburg, is the inclusion of affordable housing and other social goals, but another justification is certainly the expected return by the developers—which remains a mystery.

But we shouldn’t think that for-profit developers are making a major sacrifice—the social goals are factored in, subsidized by the public, and offset by market-rate units that would bring the expected (yet unspecified) profit. Yes, risk and vision should reap reward, but that deserves some public vetting when there are so many public dollars at stake.

By contrast, nonprofit developers—which, it should be said, may not always have the institutional weight and expertise to pull off large projects—can factor in other goals. In her book The University and Urban Revival: Out of the Ivory Tower and Into the Streets, by Judith Rodin, president of the Rockefeller Foundation and former president of the University of Pennsylvania, calls it “socially patient” capital, not expected to bring typical financial returns but to bring other returns.

Broader parameters

Rodin writes:
The usual financial parameters for returns on the University’s investment in its endowment were not plausible in this case; we needed to establish much broader ones, and once against the vision and commitment of our trustees was laudable—and critical. Besides using patient, social-investment rates of return, they allowed us to include a number of nonfinancial returns as metrics for success: an increase in median income in the area… increase in value of noninstitutional real estate holdings of the university.

Of course, for Forest City Ratner, Atlantic Yards should bring an increase in the value of its two malls, Atlantic Center and Atlantic Terminal, across Atlantic Avenue. Not only would new residents and arena visitors shop at the malls and patronize the restaurants/bars, the much-reviled Atlantic Center mall is poised for some new Frank Gehry towers to transform it.

That's not to say that Columbia University or other nonprofits, working in New York City’s superheated real estate market, have it as easy (in retrospect) as Penn. Some of Rodin’s examples, in contrast with New York, seem almost laughable. Penn’s trustees initially allocated $2 million to rehabilitate vacant housing. Another $5 million investment was used to “attract other investors with ‘socially patient’ capital.” That won’t get you far in Brooklyn.

Gentrification

Those involved in Penn's West Philadelphia Initiatives aimed to keep the neighborhood from gentrifying, “or ‘Penntrifying’ as detractors would say,” writes Rodin. Though that was more doable in Philadelphia, even there it didn´t quite work.

Rodin cites a 2001 Brookings Institute report by Maureen Kennedy and Paul Leonard, Dealing with Neighborhood Change: A Primer on Gentrification and Policy Choices:
Maureen Kennedy and Paul Leonard theorize that if residents, developers, officials, and interest groups spent more time developing strategies to avert or address the adverse consequences of gentrification, and less time opposing or supporting the market-driven process itself, they would increase the chances of building strong, economically diverse communities in our cities. This is something Penn tried hard to accomplish… Nonetheless, the housing interventions did substantially increase area property values, which benefited long-term residents but at the same time placed a greater burden on hopeful prospective residents. On the plus side, we did not cause any involuntary displacement or original residents, which is a key feature of gentrification, according to Kennedy and Leonard.”

That’s because there was enough vacant housing stock, and places to expand. Beyond that, Penn tweaked its program—for example offering low-cost loans in the neighborhood immediately around the university, then later shifting the incentives away from a stabilized zone to a much less revitalized area.

It´s tougher to meet such goals in New York; that ratchets up the controversies.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

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…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…