Skip to main content

At hearing on new MTA head, Kruger warns murkily of intransigence on AY; Perkins says AY deal lost MTA public confidence

I questioned last week whether Jay Walder, nominated as chairman and CEO of the Metropolitan Transportation Authority (MTA), would be asked at state Senate hearings about the agency's controversial revision of the deal with Forest City Ratner for the Vanderbilt Yard.

Well, not quite, but AY certainly came up at the second and final hearing, held yesterday at the State Office Building in Harlem, and there was a murky hint that the Vanderbilt Yard deal might be stalled by some additional MTA effort at due diligence.

Walder, who faces a confirmation hearing on Thursday, drew coverage for comments on improving service, New York's lagging standing among transport systems, and labor costs.

Kruger's warning

In fact, state Senator Carl Kruger, long ready to carry Forest City Ratner's water (and also receive campaign contributions), issued a press release before the hearing that stated that the hearing left him feeling “cautiously optimistic” that the Atlantic Yards project will proceed as planned to provide Brooklyn and the city with “an urgently-needed economic boost” in the form of jobs, housing, retail and commercial space and an arena to house the Nets basketball team.

“We were deeply concerned on the Finance Committee that the MTA would become an obstructionist body that would ultimately stand in the way of Atlantic Yards,” said Sen. Kruger, Chair of the Finance Committee, noting that the full MTA board had supported the Forest City Ratner project since its inception.


“Today, after questioning Jay Walder, we remain cautiously optimistic that Altantic Yards will finally, and at long last, move forward,” he said.


Kruger didn't actually ask Walder any questions about Atlantic Yards. However, in a rather free-associative statement, he referred to "Atlantic Yards and the MTA's inability to finally close down on that, as an agreed-upon already contractual arrangement but sits on some bureaucratic desk in a way that may block it from ever really happening because of the time constraints that are being placed on it..."

(I didn't attend the hearing but listened to a digital recording.)

Concern from Perkins

State Senator Bill Perkins, who's been critical of Atlantic Yards, didn't question Walder about the project, but did bring AY up in his opening statement.

"The MTA's next head must exceed all predecessors in transparency and accountability," said Perkins, who chairs the Committee on Corporations, Authorities, and Commissions. "The MTA's biggest challenge is to restore public confidence--for example, the way it handled the deal at Atlantic Yards. The next head of the MTA must ensure that public benefits tied to the development rights are commensurate with the rights being conveyed and that the public is duly apprised of the rationale behind such deals."

Credibility from MTA

Walder, a New Yorker who formerly ran Transport for London, agreed, "We need to address the issues of credibility, accountability, and transparency... We must develop public information in a way that's clear, concise, relevant, and accessible."

Public authorities reform

Walder said he supported "the broad goals" of the effort, led by Perkins and Assemblyman Richard Brodsky, to reform public authorities.

However, Walder essentially endorsed some of Gov. David Paterson's hesitation in signing the bill, stating that a provision that all contracts over $1 million be examined by the state comptroller would be inefficient.

Public-private partnerships

State Senator Diane Savino warned that a public-private partnership used to help run the London Underground "was a massive failure" and urged Walder to resist calls to privatize the subway or enter into public-private partnerships.

"The effect of the public-private partnership is well known to me," Walder responded. "To be very clear, when we started at TFL, with the support of the mayor of London, we opposed the public-private partnership, even to the point of taking it to court... four years after it started... it went into bankruptcy. Ultimately, the extra bill for the taxpayer is about $4 billion."

"Having said that, I don't believe public-private partnerships for the New York City subway will make any sense at all. There are places where public-private partnerships have been used in London. The Docklands Light Railway is one."

Anyone thinking about entering into such partnerships, he said, should do so "with their eyes open.

While Atlantic Yards is not a public-private partnership to operate the transit system, Forest City Enterprises has used the term "public/private partnership" to describe AY as a whole.

And it does represent a partnership model to produce a replacement railyard for the Vanderbilt Yard, and already the MTA and its constituency is on track to get a smaller yard, housing 56 cars, rather than a larger one, housing 76 cars, as initially planned.

Comments

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…