Skip to main content

The denunciation of the ESDC's condemnation push that was never resolved, but surely influenced the Goldstein settlement

Why did Forest City Ratner settle with Daniel Goldstein last Wednesday for $3 million? The most obvious reasons were to save the alleged $6.7 million monthly cost of delay it alleged, and to pave the way for Russian billionaire Mikhail Prokhorov's purchase of the Nets, which was depending on vacant possession of the site.

Another reason--and a reason for Goldstein to settle--was that Kings County Supreme Court Justice Abraham Gerges pushed for a settlement. He didn't want to adjudicate the case, nor preside over an eviction that could easily have become a media event.

Given the Empire State Developmeny Corporation's initial and ridiculous lowball appraisal of his apartment, Goldstein had to calculate his vulnerability to pursuing the case and getting a check that was worth far less than a replacement apartment.

That said, it would have been of significant interest had the case continued, because, at least according to a response from Goldstein's attorney, the ESDC was way out of line.

Too fast

Wrote attorney Michael Rikon (disclosure):
The application by the condemnor brought by Writ of Assistance only a week after we appeared for condemnees, and only a month after Notice of Acquisition was served is unconscionable and unprecedented.

The application by condemnor marks a new low in eminent domain practice. It is violative of the statutory rights granted by the Eminent Domain Procedure Law and is based on pure vindictiveness and bad faith conduct. Further, it is not premised on accurate factual basis. Rather, what is submitted are affidavits containing generalizations which read more like public relations press releases than truthful statements or evidence to support the very drastic remedy of evicting a family from their home. The cost estimates provided by Forest City Ratner are wildly exaggerated. (See Atlantic Yards article by Norman Oder).
That was a citation to my post April 20 analyzing the ESDC's Order to Show Cause.

Accelerated timing

Remember, Gerges transferred title on March 1, upon which the ESDC asked everyone to leave by early April--and then filed papers seeking eviction by May 17. Wrote Rikon:
The agency (ESDC) is no stranger to the process. Normally fair and reasonable advance payments are made available within ninety or more days with interest. A condemnee is then accorded a reasonable period to find new premises and move out.
An accompanying affidavit by Goldstein detailed "a diligent effort to find a new home," including
visits to 48 dwellings since January 10, but the ESDC hadn't made it easy:
Not only is the search for a new home difficult, it is virtually impossible based on the bad faith offer made by ESDC which is lower than Goldstein paid for his home seven years ago. Further, any equivalent home that the family now lives in will cost at least twice as much as the alleged advance payment.

No writ should issue if the advance payment is on its face inadequate... Any application should be denied until there is a trial.
ESDC shortcuts

Goldstein pointed out:
The condemnor and the developer did not inform the court that the advance payment that has been authorized is $510,000. I have a three-bedroom, two bathroom, 1,295 square foot condominium in an architectural distinctive building with unobstructed south and west views. I paid more for my home seven years ago at the first offering. Obviously, this is a bad faith advance payment.

I have read the affidavit of Gary Curry of the Cornerstone Group. He states that he made twelve attempts to contact me regarding our relocation needs. I do not know what "an attempt to contact" means, but I never met with him. He never visited my home. His group only provided listings of five condos which we carefully examined. None were suitable or comparable. This is hardly effective relocation assistance.
Bad faith and vindictiveness

Rikon wrote:
There has never in my forty-one years of practice in this area of the law been a clearer example of bad faith and vindictiveness.

In her affidavit, sworn to on April 6, 2010, MaryAnne Gilmartin, Executive Vice President of Forest City Ratner, does little to hide the personal animus directed at Daniel Goldstein.
He noted that Gilmartin charged that Goldstein was delaying the demolition of 636 Pacific Street because it may take several months to perform the pre-demoliton work like an environmental assessment to determine whether asbestos or other hazardous materials are present:
I am not sure why Ms. Gilmartin swore to this under penalty of perjury. Forest City has controlled the building for over five years and has had environmental experts on its payroll for a longer period of time. it knows whether or not there is asbestos in the building. If if didn't, ESDC had statutory ability to conduct an environmental survey on the building before taking title. EDPL Sec. 404.
Strained argument

Rikon seemed on firm ground in the above argument, but strained in court and in the papers to argue that there should be a 90-day notice before condemnation, because there's federal money involved in the project.

There was no solid evidence of such funds, just evidence of federal lobbying, and potential federal grants for housing, as well as a community development grant to Forest City Enterprises, based in Brooklyn but with no clear evidence it was targeted for Atlantic Yards.

Demolition plans

Rikon said that it would take six months or longer to clear other buildings Forest City Ratner owns.

The developer stated it need to have the entire street closed to start digging, but there were no clear plans.

Affordable housing

While Gilmartin claimed that 2,250 affordable housing units were in jeopardy, Goldstein in his affidavit pointed out that "there are no available subsidies for the units now."

It would have been interesting, to say the least, to hear that argued fully in court. Rikon raised the issues in papers delivered that morning. The judge didn't provide the opportunity for much scrutiny.

Comments

  1. I don't oppose the use of eminent domain for public projects(like schools and roads-and sometimes other public amenities but for about 200 years, NY did without the use of eminent domain for private development and the world worked just fine. yes it took more time and there was sometimes a hold out on the block that was built around, but the right balance between public and private rights were maintained.
    Kelo upset that balance on a project that is NOT going to be built. Most states have passed laws that restrict the unbridled power of the government to take land for private development.
    Would anyone argue that for a rail yard for the subway eminent domain can't be used? But for a private shopping center, I doubt that people would want this particular government power to be used. An Arena is one thing that reasonable people can disagree.

    Lots of things can and should be done without the use of this governmental power.

    ReplyDelete

Post a Comment

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…

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…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.