Monday, April 04, 2011

The Post's questionable, conclusory "exclusive," based on SEC warnings: "NBA deal is 'net' loss for B'klyn"

Leave it to the New York Post to conjure up a conclusion out of a very uncertain situation and some boilerplate hedging language. In an article headlined NBA deal is 'net' loss for B'klyn and labeled "Exclusive," the Post reports:
The hoop-la has faded in Brooklyn.

When the Atlantic Yards complex was announced in 2003, its developer promised the borough a basketball team, world-class arena designed by Frank Gehry, 16 soaring residential and office buildings, affordable housing, parks and recreational facilities.

To make the grandiose plans come true, some 800 residents and businesses were dispossessed and city and state taxpayers kicked in $305 million so far.

But it's looking like all Brooklyn will be left with is one of the worst teams in the NBA -- playing in a new, nondescript facility.
Well, it's now one of the worst teams, but it may not be. Some architecture critics give two cheers to the "new, nondescript facility."

Yes, it is likely that "Brooklyn" will get far less than originally promised--after all, Forest City Ratner need not build out the entire project, has loopholes for affordable housing subsidy delays, and faces more significant penalties for Phase 1 and its buildings than the rest of the project.

But it's way too conclusory to state that the only thing that would be built is an arena. After all, as has been front-page news, Forest City Ratner is looking to save big by building the first tower via modular construction.

The Post recognizes that. Indeed, the print version of the article includes a graphic with the outline of potential towers, described as "what could be lost."

The caption

A caption states:
ALLEY OOPS: The billions of Nets owner Mikhail Prokhorov can't save failed development plans (above).
Well, the plans haven't failed yet, and Prokhorov owns 80% of the team and 45% of the arena, with an option to buy 20% of the rest of the project.

He could "save" the plans if he wanted, or if Forest City Ratner gave up a share of ownership, which surely it does not want.

The SEC documents

The Post reports:
Documents filed last week with the Securities and Exchange Commission by developer Bruce Ratner and his Forest City Enterprises warn that the non-arena portions of the plan could experience "further delays" leading to most or all of the rest of the 22-acre, $4.9 million project being scrapped.

Risks to investors cited in the SEC filings include the potential of rising construction costs and financing rates, loss of arena sponsorships and inability to meet government-approved construction deadlines.

"If any of the foregoing risks were to occur we may . . . not be able to develop Brooklyn Atlantic Yards to the extent intended or at all," according to one of the developer's SEC filings.

Ratner and Forest City -- in a doomsday scenario -- could potentially lose $525 million on the project, "excluding any potential write-offs for the arena" and "liquidated damages," the filings say.
I reported on this "exclusive" news two days ago, calling the description of risks "boilerplate."

The real news from the SEC filings, as I pointed out, was that parent Forest City Enterprises is no longer talking about an Atlantic Yards office building, which would bring significant tax revenues.

Update: I wrote about similar boilerplate in March 2010, May 2009, and March 2009.

The opposition

The Post reports:
Councilwoman Letitia James (D-Brooklyn) and Prospect Heights activist Patti Hagan, both longtime foes of Atlantic Yards, said the SEC documents are the latest "proof" that Ratner can't deliver 2,250 affordable housing units and most of the 17,000 jobs he promised state officials in order to gain project approvals.

"It was all just a mirage," James said. "He underestimated the economy and opposition, and now all we're getting is an arena and a large parking lot."
That's conclusory.

Actually, he promised 17,000 construction job-years and, at least originally, 10,000 permanent jobs.

The number of construction jobs would be cut severely if the project is built smaller than proposed and/or via modular construction, while the number of projected permanent jobs has already been cut severely, and depends significantly on an office tower for which there's no market.

The defense

The Post checks in with the developer:
Forest City spokesman Joe DePlasco insisted, "We've invested hundreds of millions of dollars in this development and remain 100 percent committed to building out all of Atlantic Yards."
That's questionable, of course, since there are no penalties for not doing so.

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