Thursday, September 17, 2009

In spite of the State Funding Agreement, ESDC will now pay Ratner's "soft costs" and speed up $25 million

In testimony today before the board of the Empire State Development Corporation (ESDC), project supporter John Holt of the Carpenters Union said, "[Developer Bruce] Ratner's not asking you for a handout. He's asking for a hand in partnership."

Well, that partnership has just gotten a little easier for Forest City Ratner, given that the developer will get $25 million in state money faster and can use the funds for purposes previously disallowed in funding agreements signed in September 2007.

Statement at meeting

ESDC Senior Counsel Steve Matlin said, "We are requesting authorization to amend, as necessary, the city and state funding agreements. Pursuant to board authorization, ESDC entered into a funding agreement with a Forest City affiliate in 2005 to provide up to $100 million in funding for infrastructure improvements. Approximately $75 million has been disbursed or is pending disbursement. We are seeking authorization to amend the funding agreement to allow the corporation to advance the remaining funds at closing. The total state funding commitment to be made available by ESDC will remain unchanged."

According to Section 3.02 (b) of the State Funding Agreement, p. 9-10, the ESDC would not advance State Funding Payments
which (1) would reimburse Soft Costs, (2) aggregate more than the Eligible State Project Costs actually incurred as of the date of such request, (3) would result in the aggregate State Funding Payments disbursed pursuant to this Section 3.02 exceeding the aggregate City Funding Payments disbursed by ESDC pursuant to Section 3.04 hereof, (4) would result in the sum of (x) the aggregate State Funding Payments disbursed pursuant to this Section 3.02 and (y) the aggregate City Funding Payments disbursed pursuant to Section 3.02 hereof, exceeding fifth percent (50%) of the Eligible Project Costs actually incurred as of the date of each request.

Changes made

According to board materials just released, however, that's changed:
It is proposed that ESDC enter into an amended State Funding Agreement with Forest City to permit the Corporation to disburse the balance of the State funds at closing for eligible costs – including soft costs incurred by Forest City in connection with the design and engineering of the infrastructure improvements and certain site preparation costs (e.g. demolition costs) related to the development of the Arena or Vanderbilt train yard.

Maybe that's why another supporter, Travis Lock of the Salvation Army, testified today, without irony, "It is my sincere hope this morning that you would move forward with this project, the Atlantic Yard projects, on behalf of the Forest City Ratner Corporation."
(Remarks as delivered)

City funding speeded up as well

As the Observer notes, the board materials also allow for the speed-up of $15 million in city funding and the delivery to Forest City Ratner of city money it planned on infrastructure--in essence, helping the developer's cash flow.

No comments:

Post a Comment