Thursday, May 21, 2009

Fallout from the Weinstein case: questions of condemnation timing and valuation; will Site 5 really be taken?

(This is one in an irregular series of articles about issues that a State Senate committee might address when it holds a hearing on Atlantic Yards.)

When on May 8 I wrote about the case upholding Henry Weinstein's right to three properties on Block 1129 in the AY footprint (see oval in map), I noted that the Empire State Development Corporation's (ESDC) Modified General Project Plan (GPP) states:
All of the properties within the Project Site would be acquired by ESDC... at the outset of Project implementation.

So that suggests that, whatever the dispute over Weinstein's ownership and the value of the lease to Shaya Boymelgreen (which Boymelgreen, according to the courts, improperly transferred to Forest City Ratner), the ESDC will just condemn Weinstein's property, along with the rest of the 22-acre AY footprint, once the eminent domain appeal is dismissed. 

(The properties in white, or with asterixes, would be condemnations of the unwilling, while most of the rest would be "friendly condemnations" of properties owned by Forest City Ratner;  a few of the buildings contain rent-stabilized tenants whose leases would be extinguished by eminent domain, and thus do not consider the action "friendly.")

Some caveats

But maybe there won't be blanket condemnation after all. Two asterixes should be added to that GPP statement.

Eminent domain attorney Michael Rikon, who has long represented condemnees, told me that, whatever the language in the GPP, the ESDC can acquire property in phases, given that Atlantic Yards was planned in two phases. So much for reading documents literally.

Also, there may be a revision of the Modified GPP, as noted, which could, among other things, change the schedule for the project--it would have to, given that AY was supposed to be completed by 2016--as well as other aspects, such as the acquisition schedule.

Site 5 spared?

So, what might the ESDC leave for a later phase of condemnation? I have to think they won't touch Site 5, the one piece of land below Flatbush Avenue, now home to Modell's and P.C. Richard, and bounded by Pacific Street and Flatbush, Atlantic, and Fourth avenues.

Yes, the ESDC claims the site is blighted, given that the low-slung big box stores fulfill only a fraction of the site's development potential. However, given that Forest City Ratner announced it plans just one residential building--and the City Funding Agreement allows a much smaller Phase 1--it doesn't make sense to demolish existing businesses and leave the site fallow for years.

Parking needed

What about property east of Sixth Avenue, planned for Phase 2? Remember that Block 1129, the southeast block containing Weinstein's property and the site of the Ward Bakery, is needed for interim surface parking and staging.

So Weinstein's property would likely be targeted.

What about the properties on the center block, Block 1120, adjacent to the railyard? There are no plans to build any housing there for a long time, though previous maps suggest parking would be needed. I suspect that those properties wouldn't be taken until closer to the time the arena opened.

What about three houses and an industrial building still extant in the 100-foot lot on Block 1128, just east of Sixth Avenue? Those buildings were supposed to be needed for construction staging for the arena. If the ESDC delays taking them, it might be symbolism, a wariness about taking people's houses.

Questions for the hearing

So it's worth asking about the ESDC's plans at the public hearing: would the whole site be condemned at once? What are the plans for Site 5?

It's also worth asking whether, given that the project likely will take much longer than projected, Forest City Ratner plans any interim open space, as once suggested in plans by landscape architect Laurie Olin.

Valuation questions

I suggested May 8 that, while the appellate court ruling couldn't stop the ESDC from taking Weinstein's property, it could make it more costly, since Weinstein has contended that Boymelgreen’s deal with Ratner diminished the value of his property.

Rikon, who does not represent Weinstein but has met with him in the past, told me that when property is condemned and appraised, the appraiser then can ignore all leases. "That doesn't mean you ignore existing leases, if they're good fair market leases," Rikon said.

The goal is to look at comparable leases, but it may not be easy to find such comparable leases. That suggests to me that Weinstein still gained an advantage in the valuation phase should condemnation occur. 

But Rikon suggests that the more important impact of the lease was in suggesting that Forest City Ratner controlled the property, not in setting its value. And that's another question for the oversight hearing.

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