Thursday, March 10, 2011

Arena slightly ahead of schedule, consultant reports, but "schedule disputes" linger; report reissued after chart errors found

According to the latest Site Observation Report by Merritt & Harris, the real estate consultant to the arena PILOT Bond Trustee, dated 3/3/11 and based on a visit 1/31/11, the Barclays Center is still on schedule, but questions remain:
The original High Level Arena Summary Construction Schedule, dated July 16, 2010, has been provided for our review. The current schedule, prepared by Hunt, indicates that substantial completion is anticipated to be by August 12, 2012. The Developer is currently reviewing that schedule and is working with Hunt to resolve current schedule disputes. A resolution is expected over the next few months.
Note that resolution of such disputes was originally expected in December.

An early substantial completion date of June 1, 2012, has been established, which means that the arena could be used in June and July.

Ahead of schedule?


The report states, "Based on our computerized progress chart which compares the cash flow amount to the projected construction progress, the project is currently slightly ahead of schedule."

That's confusing. I pointed out last month that the chart did not indicate that the project was ahead of schedule, as actual spending lagged projected spending.

Similarly, the report initially issued yesterday contained a chart--excerpted above left--that indicated that cash flow was behind schedule. (Click on graphics to enlarge.)

Chart revised

I contacted Merritt & Harris, asking about the apparent contradiction, and got a quick response. The chart was in error, I was told, as it did not reflect the numbers elsewhere in the document.

Later in the day, a revised report, with a new and accurate chart (excerpted at right), was issued, indicating that spending is slightly ahead of schedule. It's still quite early in the project.

Given that the problem had persisted since the previous report was issued 1/28/11, it makes me wonder: how many people are reading such reports closely?

After all, it would be in the interest of arena backers to make sure that the chart, which contains essentially good news, is accurate.

Pushing back the opening date

Whether the opening date is June or August, it's still somewhat behind projections made to potential bond buyers as of late 2009.

As I wrote 12/3/09, the Standard & Poor's report rating tax-exempt bonds for the planned Brooklyn arena stated that "construction is expected to be completed by April 1, 2012."

That same day, I noted that a market study attached to the Barclays Center Arena Preliminary Official Statement (prepared by Goldman Sachs) stated, "It is assumed that the arena will open in May of 2012. As such, the year ending June 30, 2012 only reflects two months of operations."

Arena tweaks coming

The Merritt & Harris report notes:
Construction Documents (Drawing Volumes 1 - 6, Specification Volumes 1 - 3) marked "Not for Construction," dated July 31, 2009, were provided for our review; 60% CD drawings, dated to include the Arena façade have been made available. The CD drawings for pricing, dated August 13, 2010, have been made available as of August 18, 2010. The latest drawings submitted were the 100% Construction Documents, dated October 15, 2010.

Revisions and additions in the Arena to support enhancements in program, services, MEP infrastructure and interior finishes along with comments received by the Design Architect, the Developer, and the NBA are to be incorporated into the Construction Documents and an updated set was submitted on December 22, 2010, but the final drawings incorporating all changes are expected mid-to-end of February 2011.

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