Thursday, April 24, 2008

Questions unanswered in the State Funding Agreement

One lesson from the Atlantic Yards saga is that, at least in this case, the approval in December 2006 by the Empire State Development Corporation (ESDC) was not the end of the story but a midpoint, given that negotiations regarding funding agreements--and thus project deadlines--were in the future.

(Is this standard operating procedure for most ESDC projects? That's a question worth looking into.)

And even the State Funding Agreement, signed last September but made public last month, leaves several ambiguities subject to further negotiations. In other words, it's very much not over--but the negotiations are not exactly public. Perhaps the law, proposed by Assemblyman Richard Brodsky, requiring the ESDC to report on details of the project might get to some of these details.

Pending questions

Part 33 of the Funding Agreement includes Exhibit K (Project Documentation Terms), which contains some unresolved or ambiguous segments.

(First page at right; click to enlarge)

I posed several questions to the Empire State Development Corporation. Spokesman Warner Johnston told me last week it was too soon to provide details: "Exhibit K to the funding agreement sets forth certain requirements, or parameters, to be included within the project documents (i.e. the development agreement, leases, etc) with the expectation that certain terms and conditions would be negotiated at a later date (but prior to acquisition of the site and finalization of the documents). "

"The Project Documents have not been finalized and the negotiations are on-going," he added. "Accordingly, we are not in a position, at this time, to respond to these specific questions while the details are being negotiated. Once the documents have been finalized – all project terms will be made available."

[Below, the questions I posed.]

Arena delays

Under Arena Commitment and Remedies, it states that a failure to complete construction within 6 years means an obligation to "repay each year a portion, to be established in the Project Documentation, of State Funding." When might that be established? Do we know the size of each portion?

Phase 1 delays

Under Phase 1 Commitment and Remedies, it similarly states that a failure to complete construction within 12 years means an obligation to repay "a portion to be established...." Again, do we know timing or amount?

Phase 2 delays

Under Phase 2 Commitment and Remedies, it states that a "Final Deadline" will be established in the Project Documentation. Again, when might the documentation be concluded?

When's Final Deadline

That same section refers to a Final Deadline that takes "into account the need for satisfaction of Governmental Authorities' obligations to the Project."

I'm not clear on what "Governmental Authorities' obligations" means--is that the direct subsidies of $100M from state and $205M from city? Or does that refer to affordable housing finance? Or something else?

Timetable for affordable for-sale units


Under Affordable Home Ownership, it says that "Developer shall provide 600-1000 units..." but there's no timetable or enforcement mechanism. Will there be one? By when? What might it say?

Investing in parks

Under Open Space and Park Improvements, it states "Developer or its Affiliates shall invest $3 million..." Again, any timetable or enforcement mechanism?

Timing issues

I asked Johnston if ESDC had any estimate of when negotiations would be completed. He responded: "I don't have a ballpark but we are working to expedite these negotiations."

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