Monday, May 05, 2008

Crain's defends the funding agreements, takes aim at "opponents"

A brief article in Crain's New York Business this week, headlined "Fine distinctions on Atlantic Yards," takes dubious aim at criticisms of state and city funding agreements raised first by AYR and later amplified by groups like Develop Don't Destroy Brooklyn.

The article begins:
Atlantic Yards opponents omit key details when criticizing the project’s city subsidies, supporters say.

Well, maybe if state and city agencies had released the funding agreements with some explanation, we'd have a more enlightening discussion. Instead, the state agreement was released quietly by the Empire State Development Corporation and the city agreement was made available only after a Freedom of Information Law request, and the New York City Economic Development Corporation was hardly expansive in answering questions.

Not for condemnation, OK

The article continues:
Developer Forest City Ratner Cos. can use the city’s $100 million to buy but not condemn land, and only in tandem with its own investment.

As I reported, the $100 million was for land already purchased, not condemned. Obviously it would have to be in tandem with its own investment; while the $100 million would go for a good portion of the property already purchased for the arena block, the money doesn't cover the whole tab.

Repayment?

The article continues:
Officials say Forest City must repay the money if it doesn’t finish the first phase on time, and would still be obligated to create 1,800 apartments, 35% of them affordable.

What does "repay the money" mean? The State Funding Agreement refers to "a portion, to be established in the Project Documentation, of State Funding Payments previously paid to developer by ESDC with interest and (ii) pay Liquidated Damages as set forth in the City Funding Agreement."

In other words, we don't know how much of the state's $100 million would be paid back. And the Liquidated Damages would be just a portion of the city's $100 million.

Forest City's obligations


As I reported, the State Funding Agreement makes reference to a "City Purpose Covenant" that would govern not just Forest City Ratner but any future owners of the premises.

In other words, the detail wasn't omitted, and Crain's got it wrong, since Forest City might not be the developer.

I reported that the agreement offers the possibility of a significantly smaller project, setting out a hierarchy of uses for the "Premises." If the General Project Plan is abandoned, the site would be used for not less than 1845 units of housing, of which 35 percent shall be Affordable Housing... and not less than 1.98 acres of environmentally sustainable publicly accessible open space.

Mischaracterizing subsidies

The article closes:
Critics also mischaracterize $105 million in city infrastructure work as a subsidy. Though listed under Atlantic Yards in the city budget, the work is not part of the development.

That's an interesting accounting distinction. Keep in mind that the state payments are for infrastructure, and the city's original $100 million subsidy was to be used for the same purpose as the state subsidy, along with the possibility of land purchases.

I reported that city officials had described the additional spending as money that would have to be spent anyway, but also reported skepticism from Doug Turetsky of the Independent Budget Office.

I also reported that Chuck Ratner, an executive with parent Forest City Enterprises, claimed, "[J]ust in these past six or eight months, we got the various governmental agencies, state, city, borough, in New York, to increase their commitments to Atlantic Yards by 105 million dollars on top of the 200 [million] they committed. We still need more."

So, whom can you trust, the "opponents" or the developer? In this case, they're both on the same page.

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