Wednesday, November 10, 2010

Court ruling apparently leaves Forest City Enterprises a bit unnerved; executive at Investor Day says "we continue to evaluate the situation"

During an Investor Day event today, with investors and investment analysts in attendance at the Arena Stage's Kreeger Theater in Washington, DC, Forest City Enterprises offered a confident update on its projects and its progress, and a notably less confident assessment of the court ruling yesterday regarding Atlantic Yards.

Chief Operating Officer David LaRue, who had to consult a recently-prepared script regarding the ruling, stated, "There is, just with regard to the Atlantic Yards project, while we're there, there was news that came out yesterday, we want to make sure we address it, immediately, what we know. Yesterday the state Supreme Court made a ruling that--Justice Friedman issued a ruling--which for the first time was in favor of the opponents of Atlantic Yards and against the EDC, the Empire State Development Corporation."

(Actually, in New York, the EDC is the New York City Economic Development Corporation, while the state agency is the ESDC.)

Tentative tone

"This is different--last spring she actually ruled in favor on this particular issue, which is the environmental impact study that was done," LaRue continued, in a tone far more tentative than in the rest of his presentation. "Uh, what's she's asked the EDC to do in this regard is to go back to reconsider the impact on the environmental study regarding an extended development period which we were able to negotiate, which gave up to 25 years for development of the project, versus a ten-year base plan that was used."

What he didn't tell the audience is that the judged slammed the ESDC for "what appears to be yet another failure of transparency" and "totally incomplete representations" in legal papers.

"We are studying" the ruling

"The EDC and ourselves, we are studying what this ruling means, and the EDC will decide whether they are going to appeal this to an higher court or make a step and do additional analysis regarding the environmental impact," LaRue said. "This is mostly focused on the Phase 2 development, so it does not have any impact at this point on Phase 1. As I said, it's under construction, and we're moving forward with the Barclays Center."

Either response would be interesting, since it would open up the process to further scrutiny.

"And again, if this does get appealed, it will end up being in the New York Appellate Division," he concluded. "So, it's early, this came out yesterday afternoon and, right now, we continue to evaluate the situation."

He then paused and launched more confidently into another phase of his talk.

2 comments:

  1. Hi Norman,

    I honestly can't figure out exactly what this ruling means.

    There does not appear to be a clear articulation of next steps, a time line for those next steps and a sense of what impact Friedman's ruling has on the contruction that's happening right now. So a couple quick questions:

    1. What will ESDC do next and when will they be required to do it?
    2. What will DDDB do next and when?
    3. Does this ruling effect the Barclays Center getting built?
    4. Does this ruling effect Phase I getting built?

    ReplyDelete
  2. The timetable for an ESDC response is unclear.

    They can appeal, or conduct the studies Friedman said they had to do. (The timetable for that is unclear, as well.)

    In either case, the response of the petitioners (DDDB and BrooklynSpeaks) depends first on the ESDC response.

    It does not appear to affect the arena.

    It's unclear if it affects Phase 1, but it's far more likely it would affect Phase 2. Friedman focused on the 25-year buildout for the whole project and said it was not appropriately disclosed. That same Development Agreement refers to a 10-year start date for the third building.

    It's possible that revised ESDC documentation would have to involve a more realistic timetable for Phase 1, but that certainly was not the focus of the court argument or of the decision. Phase 1 likely is much more dependent on financing and subsidies.

    ReplyDelete