Skip to main content

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.


Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…