Thursday, April 24, 2008

MTA head "concerned" about $100M owed by FCR; developer says first tower residential

On the New York Observer's Real Estate blog yesterday, Eliot Brown mined a April 9 "webinar" by the Metropolitan Transportation Authority, in which executive director Elliot (Lee) Sander expressed concern about the whereabouts of the $100 million in cash that developer Forest City Ratner in 2005 agreed to pay for the agency's Vanderbilt Yard.

The Observer's report also quoted FCR spokesman Loren Riegelhaupt, who stated that the first building to open, along with the arena, would be residential. That means that Building 1, aka Miss Brooklyn, remains on hold until an anchor tenant is found, as the New York Times first reported last month. It also means that, unless certain parts of Building 1 are completed, the arena would open without the Urban Room, the atrium that would serve as a combination building lobby, arena entrance, subway entrance, retail/restaurant space, and public gathering space.

Sander's concern

Sander was asked why, if the agency was about to sell the West Side Yards, was it crying poor. He said the money is assigned to the 2005-09 capital program, and brought up Atlantic Yards without being asked. (The segment appears about three-quarters of the way through the webinar.)

His comment:
There was approximately a billion dollars associated with the sale of MTA real estate assets to support that program. There are some monies there that look like there may be challenges to proceed upon right now. There is money there--100 million dollars associated with the sale of Atlantic Yards, and I think many of you have read in the newspapers some of the difficulty Forest City is having with that development, so hopefully that will proceed, but we want to make sure that that happens—but we’re concerned about that.

Note that he incorrectly used the term "Atlantic Yards" to refer to just the railyard.

FCR says: later this year

Riegelhaupt, a spokesman for the developer, told the Observer that the $100 million would be delivered later this year, once the company closes on the deal.

(Does that mean before lawsuits are cleared, or after? If the latter, it may not be later this year.)

FCR's statement

The Observer offered Riegelhaupt's statement. This first part isn't new:
The reality is the project is moving forward and we are making significant progress on the site each day. Thus far we have contracted out over $42 million worth of work on the site and roughly 50% of the structures on the site have already been taken down. We have begun construction of the temporary rail yard and we expect to break ground on the arena later this year.


Of course, Chuck Ratner of Forest City Enterprises last year said the developer was "committed" to opening the arena by 2009.

Affordable housing by 2011?

Riegelhaupt's statement continued:
We expect to open the first residential tower, which will have a significant amount of affordable housing, at the same time as the opening of Barclays Center. By that time we also expect to have started construction on the second residential tower which will also have a significant amount of affordable housing. The rest of Atlantic Yards, including all of the remaining affordable housing, will be built out from there.

What does "same time" mean? Officially, the developer promises the arena by 2010. A more realistic best-case scenario is 2011. Maybe we'll learn more about the timetable if the state Assembly passes a law proposed by Assemblyman Richard Brodsky that would require the Empire State Development Corporation (ESDC) to report on the status of major projects, including Atlantic Yards.

How much affordable housing?

How much affordable housing is "significant"? As stated in a Memorandum of Environmental Commitments issued (but little noticed) when the Empire State Development Corporation approved the project 12/8/06:
The Project (including Phase I and Phase II) shall generate at least 2,250 units of affordable housing on site for low-, moderate-, and middle-income persons and families. At least 30% of the units built on the Arena block in Phase I shall be affordable to such households.

This was first announced at a hearing in September 2006 of the City Planning Commission. That might mean 600 of 2000 units, but there's no guarantee how long Phase 1 might take. After all, the developer has 12 years after the close of litigation and the delivery of properties via eminent domain to complete that phase.

The longer the project takes, the easier it might be to compete for scarce affordable housing financing, since the $1.4 billion request would be spread out over many years. But it's notable how Forest City Ratner, in the face of criticism by conditional supporters like City Council Member (and Brooklyn Borough President candidate) Bill de Blasio, is beginning to repeat the "affordable housing" mantra that ultimately became the center of the AY narrative.

Over 12 years, 600 units means 50 units a year.

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