Thursday, June 26, 2008

For Ground Zero, Paterson promises timeline candor; for AY, it's the party line

Regarding Ground Zero reconstruction, Gov. David Paterson has expressed skepticism about the professed timetable, and asked for clarifications. Despite reasons to doubt the professed timetable for Atlantic Yards, he has not merely failed to express skepticism, his administration has endorsed the chimerical timetable asserted by developer Forest City Ratner.

Two weeks ago, Paterson wrote to new Port Authority head Christopher Ward:
To this end, I am asking you – in your role as the new Executive Director of the Port Authority – to complete a comprehensive assessment to determine if the current schedules and cost estimates for reconstruction are reliable and achievable. If they are not, I would like an evaluation of what viable alternatives exist to get the project back on track or whether we need to alter our targets to meet the reality on the ground.


Last night, speaking at an event honoring the "Observer 100" in real estate, Paterson reiterated his concern. "We need to find workable and sensible and achievable goals, as opposed to what we have to lived with in the most recent past," he said. "This is why I've asked the Port Authority to come out with a report that will be available next week, on the real numbers about Ground Zero, the real deadlines, and the real timetables of that project."
(Emphasis as delivered)

The audience applauded.

"I don't know if you're going to like what you're going to hear, but it will be honest," Paterson continued. "The same type of scrutiny must go to the idea of expanding Moynihan Station..."

What about AY?

Paterson didn't mention Atlantic Yards, but some of the same concerns apply. After all, even an Atlantic Yards supporter like Comptroller Bill Thompson has said, “I’m not sure what that project is any longer."

However, in a 5/8/08 letter to the Internal Revenue Service and U.S. Treasury Department, the New York City Industrial Development Authority and the Empire State Development Corporation (ESDC) cite the chimerical timetable in arguing that the PILOTs (payments in lieu of taxes) plan for arena financing should stand, even though the feds want to change the rules for tax-exempt bonds. (Here's the letter in full.)

Part of the argument is that Atlantic Yards has already proceeded significantly. But a realistic timetable would acknowledge the project is much farther away from its completion date.

Arena 2010, project finished in a decade?

The letter states (click to enlarge):
In order to illustrate the substantial progress that has been made with the Project prior to the issuance of the Proposed Regulations, we have provided the chronology of events set forth below. The Project commenced in 2003; the Arena is anticipated to be completed in 2010, and the balance of the Project is expected to be built over the next decade.

The claim that the arena would be completed in 2010 is doubtful, and the developer's shifting rhetoric offers little confidence. (Fun flashback: in a 10/30/04 Brooklyn Paper article, uberflack Joe DePlasco claimed, "There’s no reason to think the team is not moving to Brooklyn for the 2007 season.")

The claim that "the balance of the project" would be "built over the next decade," which is extremely unlikely, given the loose deadlines for the arena and Phase 1--and the lack of any deadline for Phase 2--in the State Funding Agreement, not to mention the other snags in Bruce Ratner's projections.

A lawyer for the ESDC, in court on Monday, asserted that the developer must make “commercially reasonable efforts” to move forward. "It means you have to try your hardest,” he said, but acknowledged that “external circumstances”--presumably the credit market, among other things--"should be taken into account."

So the IRS and the Treasury Department should take the ESDC's claims with a big grain of salt. And Governor Paterson should explain why he approaches Ground Zero with much more skepticism than he analyzes Atlantic Yards.

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