Monday, September 21, 2009

Why did Ratner say AY could take 25 years? Because that's what the ESDC gives him (despite official claims of a decade)

It would be less complicated if the Empire State Development Corporation (ESDC) and Atlantic Yards supporters simply professed that Atlantic Yards would have a ten-year timetable in official documents while acknowledging in public statements that the project could take much longer (as project opponent Daniel Goldstein pointed out in comments at the ESDC board meeting last Thursday).

Actually, the ESDC's been speaking out of both sides of its mouth in official documents. According to the 2009 Modified General Project Plan MGPP), issued in June:
The build-out of the Project is likely to occur in two phases, with the Project elements on the Phase I Site and the Upgraded Yard (collectively, "Phase I") anticipated to be completed by 2014 and the Project elements on the Phase II Site (collectively, "Phase II") anticipated to be completed by 2019.
(Emphases added)

MTA deal: until 2030

However, as Develop Don't Destroy Brooklyn has pointed out, the revised deal for the Metropolitan Transportation Authority's Vanderbilt Yard gives the FCR 22 years, until 2030, to pay for the railyard, and only after payment would the six development parcels be conveyed to the developer.

In other words, the only way to meet the ten-year timetable would be for Forest City Ratner to speed up payments.



(Click on graphics to enlarge)

25-year deadline

In March 2008, I reported that the State Funding Agreement gave the developer six years to build the arena and 12 years to build Phase 1 before penalties kicked in, and that the clock didn't start ticking until the delivery of property via eminent domain.

Issued in June just a few days after the MGPP, a public hearing notice announced a 25-year deadline for Phase 2:
The Arena Block Interim Lease and the Site 5 Interim Lease will expire upon the last remaining parcel demised thereunder becoming subject to a development lease with FCRC (as further described in this Notice), and in any event, no later than the twelfth (12th) anniversary of vacant possession of the Arena Block and any other properties acquired in the first taking being delivered to affiliates of FCRC, subject to extension for force majeure events or payment of liquidated damages. The Interim Leases for the Project site east of 6th Avenue will expire upon the last remaining parcel demised thereunder becoming subject to a development lease with FCRC or its affiliates (as further described in this Notice), and in any event, no later than the twenty-fifth (25th) anniversary of vacant possession of the Arena Block and any other properties acquired in the first taking being delivered to affiliates of FCRC, subject to extension for force majeure.

So that's why Bruce Ratner told the Daily News it could take 25 years.

From the Board materials

In an ESDC board memo distributed September 17, the interim leases for the arena block and Phase 2 were described as lasting up to 12 years and 25 years:
Arena Block and Site 5: Expires upon the last remaining parcel demised thereunder becoming subject to a development lease with FCRC, and no later than the 12th anniversary of vacant possession of the Arena Block and any other properties acquired in the first taking (subject to force majeure or payment of liquidated damages)
East of 6th Avenue: Expires upon the last remaining parcel demised thereunder becoming subject to a development lease with FCRC, and no later than the 25th anniversary of vacant possession of the Arena Block (subject to force majeure)





2019 completion?

A Response to Comments document distributed to the ESDC board last Thursday dodged the question.

Comment 10: A number of commenters questioned the economic feasibility of the Project and the likelihood of completing the Project by 2019.

Response: ESDC believes that the Project is financially feasible and that the relatively modest changes included in the MGPP do not warrant changing the original 10-year construction period for the Project approved by ESDC in 2006. ESDC and its construction consultant have reviewed the updated construction schedule and determined that it is reasonable.

The 10-year schedule set forth in the FEIS approved by ESDC in 2006 and the Technical Memorandum is based on the assumption that FCRC will proceed with substantial construction promptly after closing and continuously pursue construction to completion of the Project. Those assumptions are reasonable, since: 1) FCR has made a substantial investment to date in acquisition costs, soft cost and preliminary construction activities, and can be expected to seek to recognize a return on those expenditures as soon as possible; and 2) it is reasonable to expect that the market will absorb the additional residential units constructed by FCR in accordance with the schedule. The phased condemnation allowed by the MGPP is intended to facilitate the commencement of the Project and does not change the 10-year construction schedule.


Though the ESDC thinks a ten-year period is reasonable, experts disagree.

Does the ESDC think the ten-year period likely? It didn't say so. Indeed, the evidence from the MTA and the ESDC's own leases indicates that the timetable is unlikely and nearly impossible.

And that means that the claimed project benefits would come much more slowly, and that claimed blight would persist rather than be removed.

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