Skip to main content

A partial loophole in Forest City Ratner's plan to hire an Independent Compliance Monitor for the CBA, but the developer still hasn't fulfilled its obligation (and backers are quiet)

I should revise my analysis of Forest City Ratner's obligations under the Community Benefits Agreement (CBA) to hire an Independent Compliance Monitor (ICM).

I wrote 11/29/10 that Forest City Ratner lied about CBA, claiming it went into effect only when the arena broke ground, and avoided hiring an ICM. I stand by that overall critique. The CBA went into effect shortly after it was signed in June 2005.

However, in terms of hiring an ICM, a footnote in an RFP (Request for Proposals) gave the developer slack until shortly before the groundbreaking, thus contradicting the language (likely) and spirit (clearly) of the CBA.

Even with that slack, however, Forest City Ratner has evaded its obligation, leading to regular situations, as I've described, in which the developer publicly self-reports on compliance with the CBA.

The whole point of the ICM was to have an independent authority, rather than rely on the developer and its contractor, The Darman Group, led by the ethically compromised Darryl Greene and his daughter Yvette Dennis.

Securing all approvals

The RFP for an ICM (embedded below), was issued in March 2007. It includes this line:
The contract will become effective upon Developer securing all approvals necessary to commence the Project.
No contract was ever announced.

Those approvals were acquired, I'd suggest, in November 2009, when the New York State Court of Appeals dismissed the eminent domain lawsuit, allowing the developer and state to proceed to a Master Closing, and to the sale of tax-exempt arena bonds.

Or, to give Forest City Ratner even more slack, then the final approval came 3/1/10, when Supreme Court Justice Abraham Gerges dismissed a challenge to condemnation.

What FCR said

However, as I reported last November, Forest City Ratner officials weren't making such distinctions. Executive Jane Marshall claimed that the CBA itself--not merely the RFP for an ICM--had been put on hold.

"The CBA agreement was signed a long time ago," Marshall responded. "It didn't actually go into effect until we broke ground for the arena."

What the CBA said

The CBA was signed 6/27/05. It clearly contradicts Marshall's claim:
TERM. This Agreement shall commence on the date hereof and continue until either (i) the Developers abandon their efforts to acquire or lease from the Metropolitan Transportation Authority and to obtain a rezoning of the Project site for large-scale development, or (ii) thirty (30) years from commencement of construction of the first residential building to be constructed by Project Developer or its Affiliates at the Project.
(Emphasis added)

In other words, it was supposed to govern site work that preceded "all approvals." After all, Forest City Ratner kept issuing press releases, such as on 2/20/07, touting its minority contracting and compliance with the CBA.

Beyond that, in several places the CBA indicates that implementation would begin soon after it was signed, rather than some unspecified later groundbreaking.

The ICM loophole?

So, what if Forest City Ratner waited to hire an ICM, as per the loophole in the RFP, until "all approvals" were secured--say, March 2010?

That clearly violates the spirit of the CBA; after all, if the developer was to tout its minority contracting it should have paid for the promised monitor.

And it sure seems to violate the language of the CBA, given that the ICM was part of the reporting process.

As per p. 41 of the document, the ICM was supposed to get quarterly reports on such things as number of people placed through CLE (Community Labor Exchange) program, construction and non-construction contracts awarded to "Community based, Minority and women owned businesses"; and notices of upcoming bids for contracts.

So that's further evidence an ICM should have been hired early not, and not until "all approvals" were secured.

Delay, and silence

But even giving Forest City Ratner the most generous interpretation, the developer is already late--at least 16 months late.

And none of the CBA signatories, the only parties with legal standing to ensure CBA compliance, have tried to enforce this provision. Nor have any of the elected officials who supported the project, citing the CBA.

RFP for Atlantic Yards Community Benefits Agreement Independent Compliance Monitor

Atlantic Yards Community Benefits Agreement (CBA)

Comments

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.