Wednesday, September 14, 2011

Latest consultant's report: arena still ahead of schedule (but lead is narrowing), while transit connection is on schedule (but no longer ahead)

According to the latest Arena Site Observation Report, dated 9/9/11 (and based on a 7/28/11 visit and documents made available 8/29/11), the Barclays Center remains one month ahead of schedule, while the associated transit connection to the Atlantic Avenue subway hub--after being ahead of schedule--is simply on schedule.

The estimate, based on cash flow, comes in a report prepared by Merritt & Harris, the real estate consultant to the arena PILOT Bond Trustee. Last month's report, however, stated that the transit connection was two months ahead of schedule.

(The transit connection is supposed to be completed by 3/26/12, while the arena is due 8/27/12.)

Some opacity

Also, there seems to be a lingering dispute about the schedule for which the resolution just keeps being put off, with no clarity from the consultant.

NetsDaily stated that the arena is ahead of schedule "despite" the hurricane and earthquake in August. The Site Observation Report makes no mention of the impact of either.

The hurricane hit 8/28/11, by which time nearly all of the month's spending, in documents made available 8/29/11, had been completed. In other words, next months' report should be more illuminating, though, given the relative opacity of these reports, I wouldn't bet that the impact of the hurricane will be noted.



Workers on site: 409 vs. Ratner's 430

There seem to be fewer workers on site than Forest City Ratner has reported. Page 40 of the document indicates 409 workers: 365 persons at the Arena and 44 persons at the Transit Connection.

By contrast, at the Atlantic Yards District Service Cabinet meeting 7/14/11, the developer reported 430 workers on site.

Forest City Ratner likely counts additional workers on the railyard, which is not subject to bond funding and thus not subject to the trustee's report.

Still, as I've stated, such discrepancies might be explained by a report from the Independent Compliance Monitor (ICM) required by the Community Benefits Agreement, but no ICM has been hired.

Arena progress

The graphic indicates that the arena is still ahead of schedule, though it suggests that the gap is narrowing.

The graphic is based on spending. As of June 2011, for example, the estimated cumulative spending was $139.1 million, while the actual spending was $149.8 million. As of July 2011, the estimated cumulative spending was $164.15 million, while the actual spending was $170.3 million.

Transit connection progress

The graphic indicates that the transit connection, while slightly ahead of schedule (though apparently closer to "on schedule" than a month ahead), has slowed down somewhat.


The graphic is based on spending. As of June 2011, for example, the estimated cumulative spending was $26.65 million, while the actual spending was $29.2 million. As of July 2011, the estimated cumulative spending was $30.5 million, while the actual spending was $31.8 million. That gap is $1.3 million, while in March 2011 the gap was $8.1 million.

Schedule disputes or discrepancies?

For months, Merritt & Harris has hinted at some unresolved, if not necessarily highly contentious, discrepancies over the schedule, with a resolution "expected" soon but instead continually put off.

From p. 8 of the latest document:
The original High Level Arena Summary Construction Schedule, dated July 16, 2010, had been provided for our review. We subsequently received the Executive Level Summary for Schedule 12M, dated February 10, 2011, prepared by Hunt, which indicates that substantial completion is anticipated to be by August 27, 2012. The Developer is currently reviewing that schedule and is working with Hunt to reach an agreement. A resolution is expected by September 2011.
(Emphasis added)

Nearly the same statement appeared in the documents in August and July, with the erroneous prediction that a resolution was expected in the month of the document.

The resolution date has been steadily pushed back. The 1/28/11 report:
A 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.
(Emphases added)

Note that the substantial completion date has since been nudged back 15 days to 8/27/02, and that the term "schedule disputes" is no longer used.

The 1/3/11 report also used the term "schedule disputes" and hinted at a much earlier resolution:
A 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 there is a meeting anticipated for mid-December to resolve current schedule disputes.

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