Thursday, May 14, 2009

When will MTA get any of FCR’s $100 million? Not yet, so it's worth asking about an alternative fate for the Vanderbilt Yard

(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.)

So, when is the Metropolitan Transportation Authority supposed get Forest City Ratner's $100 million cash payment for rights to the Vanderbilt Yard? When is the MTA even supposed to get the $10 million nonrefundable deposit?

Not yet.

I wrote yesterday about developer Forest City Ratner's reported attempt to stretch out payments of the $100 million it owes as well as its reported effort to build a less extensive replacement railyard.

But it's worth a look at the documentation regarding when they're supposed to pay, and what the promises have been. And it's worth asking the MTA if it ever pressed Forest City Ratner.

The GPP on the $100 million

Note this sentence from Part 1 of the Empire State Development Corporation's (ESDC) Modified General Project Plan, or GPP (p. 14):
FCRC shall be required to consummate such purchase prior to or contemporaneously with the first acquisition by ESDC of a parcel within the Project Site not owned by the MTA.


After MTA Executive Director Elliot (Lee) Sander in Apri. 2008 expressed concern that the $100 million was delayed, Loren Riegelhaupt, a spokesman for the developer, told the Observer that the $100 million would be delivered later in 2008, once the company closed on the deal.

That didn't happen and, indeed, Riegelhaupt has left Forest City. The ESDC has yet to acquire any parcels. Sander recently said that the agency is "flexible and thoughtful" in its negotiations--but we don't know whether his successor will be more flexible.

Deposit comes later

Paragraph #3 of the 9/15/05 sale letter concerns the Purchase Price:
One Hundred Million ($100,000,000.00) Dollars payable as follows: Ten (10%) percent non-refundable deposit (in cash) on contract execution and the balance, in cash, at the Closing; provided, however, that if the MTA fails to close for reasons to be set forth in the contract of sale, the deposit will be returned to FCRC.

But the contract hasn't been executed. “As noted in the document, the 10% nonrefundable deposit is payable ‘on contract execution,’” MTA spokesman Aaron Donovan told me. "We expect that payment when the contract is executed at closing.”

When is closing? According to paragraph #7 of the 9/15/05 sale letter:
The Closing of the purchase and sale shall be subject to the completion of all public approvals for the FCRC Atlantic Yards Project, of which the development of the VD Yard as set forth in the FCRC Proposal forms a part, including approval of an ESDC General Project Plan, Public Authorities Control Board approval, approval under the Eminent Domain Procedures Law [EDPL], City and State funding approvals, and a final environmental impact statement. The parties will agree in the contract on the appropriate sequencing of construction of temporary and permanent improvements to the VD Yard, Closing of the purchase and sale, and an outside date for the Closing.
(Emphases added)

Cause of delays

The deal is still in the pre-closing period, during which work proceeds according to a license agreement. MTA spokesman Jeremy Soffin told the Observer in September 2007 that the deal was expected to close at the end of that year or in the beginning of 2008.

He told me more recently that negotiations are still going on; the question of "appropriate sequencing" is apparently unresolved. Also, though he didn't say so, no property has been delivered via eminent domain, and the EDPL has been challenged in court.

Plans way behind

As I reported in December, according to the Construction Schedule attached to the Atlantic Yards Final Environmental Impact Statement, the temporary yard was supposed to open 8/17/07.

According to the Preliminary Draft Construction Schedule that is part of the 2/14/07 license agreement entered into by MTA and LIRR with FCR, the temporary yard was supposed to open 11/8/07. According to another document, Construction Schedule Stage One, dated 5/20/08, the Temporary Yard was supposed to open 10/24/08, more than 14 months late.

Reversal possible?

As I wrote in December, a license for temporary yard work signed 2/14/07 states that, if construction of a permanent railyard does not begin within 24 months, the MTA has the option to ask Forest City Ratner "to fully restore the Present VD Yard Functions" and--apparently, though the language is murky--end the deal.

There's no indication that the MTA would exercise such leverage, but no construction has begun within that timetable.

It's worth asking the MTA whether it renewed the license, and why, or in what circumstances it would restore the railyard functions. 

After all, it's been nearly four years, and the MTA hasn't received the capital funds it expected from the Vanderbilt Yard deal.

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