Thursday, August 06, 2009

Did the MTA request a new appraisal for the Vanderbilt yard? No. Were board members officially told that was OK? Not in writing.

Apparently the Metropolitan Transportation Authority (MTA) thinks the 2005 appraisal of the Vanderbilt Yard was sufficient, but I still haven't found out the instructions its counsel gave board members before they voted in June to revise the deal with Forest City Ratner.

Last month I noted that discussion at the 6/24/09 Board Meeting referenced the Public Authorities Accountability Act, which states:
[A]ny public authority may dispose of property for not less than the fair market value of such property.... Provided, however, that no disposition of real property, any interest in real property, or any other property which because of its unique nature is not subject to fair market pricing shall be made unless an appraisal of the value of such property has been made by an independent appraiser and included in the record of the transaction.

(Emphasis added)

The resolution passed by the board stated:
Whereas, the Boards of the MTA, LIRR and NYCT further find that an appraisal of the value of such MTA Property was previously made by an independent appraiser and is included in the record of the transaction.

So, did the MTA board get any official advice from its counsel that the 2005 appraisal, which was for $214.5 million--not $100 million, which is what FCR offered only after bidding $50 million and seeing rival Extell bid $150 million--was still legitimate? 

Or that the appraisal still applied to the revised deal, with only $20 million down and the equivalent of the remaining $80 million paid over 22 years, at a generous 6.5% interest rate?

Board discussion

"I find it would be helpful if we had an updated appraisal," said board member Donald Cecil, and asked, if the vote were tabled, how long it would take to get an updated appraisal.

"Are we getting what it’s worth?” responded board member Jeffrey Kay, who spoke next. “The reality is, it’s only worth what someone’s willing to provide... You could re-do the appraisal three times during three different business cycles, but there was an RFP process. There were things brought forward. The market is what the market is. I think this is actually a good win. I think, there’s obviously not the full upfront 100 million dollars would be provided initially, but... this deal provides us with an upfront 20 or 28 million dollars over a short period of time, and then, as the development goes forward, the full value of the 100 million dollars. And that comes, in my opinion, at no risk, because if, in fact, this other part... doesn't exist, the MTA owns the air rights... it’s really a no-lose proposition. If in fact the developer flips the property or decides not to build, it’s ours.”

“But there is no other market,” he said. “No one else has come forward with a credible proposal at this time, and we should take advantage of that.”

He then went to the question of whether the deal was legal. He stated: "I think it's pretty clear--I guess our legal department has advised us that this is a legal transaction and, other than that, I do respect--obviously, we want to work with the community and the neighbors, and what's good for the economy. It's not actually in our purview." (See 3:10 of the video below.)



FOIL request

I was told to file a Freedom of Information Law (FOIL) request, and I did so.

I sought documents, including any additional legal or staff memo, that indicated 1) whether and why a new appraisal was necessary or not, and 2) whether and why the 2005 appraisal of the site remains valid.

Last week, I got a response. The MTA told me it did not have any records responsive to my request.

I've filed another FOIL request asking specifically for the advice from the legal department.

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