Mitchell Pally, who represents Suffolk County, told me that, at the MTA board meeting last Wednesday, members were briefed verbally about negotiations regarding Forest City Ratner’s request for extending payments rather than paying the pledged $100 million at the time of closing. (Press reports have indicated FCR wants to pay just $20 million up front.)
He said board members were not briefed regarding a reconfigured Vanderbilt Yard replacement, though Williams testified Friday at a state Senate oversight hearing that the MTA and FCR reached an agreement—to go from the planned nine tracks to seven—before Memorial Day. Pally told me that, while the agreement had been reached by MTA management and staff, the board had not yet weighed in.
(Noticing New York's Michael D.D. White offers several arguments about why compromising with Forest City Ratner might not be such a good deal for the public.)
Later this month
Pally said that, according to typical protocol, the deal would first be discussed at the MTA Finance Commitee meeting June 22, two days before the full board meeting June 24. Typically board members get summary materials during the previous week.
Pally said he recognized that the economic situation had changed, but suggested that the financial return to MTA should be compared against three things: the original bid, zero (meaning the deal fails), or a potential alternative.
Will the MTA provide board members with a cost-benefit analysis regarding the revised bid? “Obvious if the project changes, the benefits have to change,” Pally said, expressing hope that such details would be provided.
In 2005, Pally supported development at the Vanderbilt Yard, but voted against Forest City Ratner’s bid, because of the contrast between the $100 million cash offered by FCR, with an MTA appraisal at $214.5 million: “My concern was, were we getting fair market value for our asset?”
He said he had not supported the rival bid by Extell, which offered $150 million cash. “We never got to that point,” he said, noting that there was never a full analysis of the value--in cash and other benefits--for the Extell bid. But the appraisal, he said, was “very clear regarding what the property was worth, and I did not believe at that the current developer met that criteria.”
Pally’s prescience about delay
As the Brooklyn Paper reported, during a September 2005 board meeting, Pally questioned why the board didn’t insist on getting more money, or ensure that Forest City Ratner paid the full price up front.
“Why is the MTA making closing contingent on these other bodies?” asked Pally at the time. “We don’t know when this sale will close. It could be two years, it could be five years, it could be 10 years.”
Indeed, it has been nearly four years.
As for a new railyard, one of the reasons MTA Chair Peter Kalikow touted the FCR bid, Pally pointed out that the MTA’s needs assessment had not mentioned upgrading the railyard.
Pally indicated yesterday that the revised deal is on a fast track. “We were told that, at MTA, decisions have to be made rather quickly, because of a variety of dates,” he said.
Is this basically a done deal? Pally said there was significant backing, from both the political structure and from many individual board members, for the project, and to make changes to continue to make it happen. “What those changes are I don’t know yet, and how they’d impact the project,” he said.
As I wrote last month, according to the ESDC’s Modified GPP, Forest City is supposed to consummate its purchase prior to or contemporaneously with the first acquisition by ESDC of a parcel not owned by the MTA--presumably by eminent domain.
The contract, apparently, will be executed at closing, an MTA spokesman told me--essentially conflating the two events.
When is closing? Only after the completion of all approvals, including a GPP. Given that there may be another GPP, closing may have to wait until later this year.