Monday, January 09, 2012

Will Carlton Avenue Bridge reopen in time for arena? Maybe, as double-shift work continues. But evidence suggests it's delayed, and penalties are toothless.

January 2008 photo by Tracy Collins
Evidence--including a delayed start and a search for funding--suggests that the reconstruction of the Carlton Avenue Bridge is behind.

And that's provoked an accelerated, double-shift pace (as announced in the 12/19/11 Construction Alert) to complete the work by the time the Atlantic Yards arena is deemed substantially complete by 8/30/12.

Maybe it'll get done, even as deadlines for the arena and site work have already been pushed near their limit.

But if it doesn't--a potential "surprise" that I predicted last week--the impact likely would hit the local community far more than it would damage developer Forest City Ratner, which faces no direct penalties.

The hazards

If the arena opens without the bridge, that would set up some hazardous, frenzied conditions in Prospect Heights, notably two-way traffic on narrow Sixth Avenue bordering the Barclays Center and a bottleneck on Carlton Avenue.

Sixth Avenue, which for years was a one-way street, was converted to two-way service when the Carlton Avenue Bridge was closed. (Click on graphic at right to enlarge.)

Sixth Avenue
is supposed to be converted back to one-way service
will remain two-way, and the burden will be greater, obviously, if the Carlton Avenue Bridge doesn't reopen.

The question is when that reopening will happen.

Few penalties

The bridge reconstruction is part of an "Arena Opening Condition" required by the Atlantic Yards Development Agreement. However, failure to meet that condition would result in a rather toothless penalty: freezing of Forest City Ratner's rights to move forward on any new residential development.

However, it would not stop ongoing work, and presumably Forest City will get the first tower, Building 2, started before the arena opens.

No other state penalties, including fines, are contemplated. City penalties could kick in only beginning in 2013, after a five-year time period.

Series of delays

The delay in the bridge is part of a frustrating history. The bridge, which connects Pacific Street to Atlantic Avenue and thus Prospect Heights to Fort Greene, closed in 1/23/08. In January 2009, the Department of Transportation said the work "is scheduled for completion January 2010.

That was subsequently nudged back to January 2011, April 2012, and, as currently stated, "estimated for completion summer 2012."

(Even the tweak in terminology from "scheduled" to "estimated" might give reason for pause.)

Why the delays?

Why is it all taking so long? As I wrote 2/24/11, it's partly because Forest City Ratner is proceeding in three stages, a far slower sequence than that disclosed in the Final Environmental Impact Statement (FEIS).

As I wrote, Chapter 17, Construction Impacts, of the FEIS prepared by the Empire State Development Corporation (ESDC), made no reference to such phasing. Rather, the bridge was presumed to be fully demolished and reconstructed within two years, during the construction of the temporary yard.

However, the contract terms were more generous than predicted in the FEIS. While Forest City Ratner had three years to complete the job without penalty, a clause in the contract, signed 12/17/07, provides up to five years to complete the work in case of Unavoidable Delay.

One definition of Unavoidable Delay is a delay in "completing the Master Closing," which includes the ESDC's exercise of eminent domain and the closing of a purchase and sale agreement with the MTA/LIRR for the Vanderbilt Yard. That Master Closing took place in December 2009, thus giving Forest City an extension.

Originally, as I wrote 3/1/10, the bridge was supposed to reopen by the time a temporary railyard was completed. That's long been accomplished.

A key factor in the delay was likely Forest City Ratner's effort in 2009--well after the demolition process had begun--to renegotiate plans for a smaller and less costly permanent railyard.

Delays were obscured

Did Forest City Ratner fudge the timetable? Yes, to an extent. Delays were obscured, as initial work was promised but not executed.

According to the two-week Atlantic Yards Construction Update, prepared by the developer and issued 8/30/10 by Empire State Development:
During this reporting period work related to the demolition of the Carlton Ave Bridge and the associated piers located in the north side of the existing LIRR yard located within blocks 1120 & 1121 will commence.... Work will commence upon receipt of such approvals and permits.  
That language--"will commence"--was repeated in the next updates, dated 9/13/10 and 9/27/10. But the work never began.

Perhaps that's why, in the next updates, dated 10/11/1010/25/10, and 11/8/10, the language changed to "may commence."

By 10/25/10, the language at the end of the paragraph had changed subtly:
Work will commence upon receipt of such approvals and permits which are anticipated to be in place during this  reporting period.  
Were they? It took at least two more weeks, until early November. The 11/22/10 update stated:
Work related to the demolition of the Carlton Ave Bridge and the associated piers located in the north side of the existing LIRR yard located within blocks 1120 & 1121 will continue during this period.
The implication was that it had begun in previous weeks.

The 12/6/10 update stated:
Demolition of the roadway slab of the Carlton Avenue Bridge using Hoe-Ram method has commenced.  
What FCR said

Indeed, despite the language of the Construction Alerts, Forest City Ratner officials were more candid.

At the 11/4/10 Atlantic Yards District Service Cabinet meeting, Forest City Ratner executive Maryanne Gilmartin stated that the railyard work necessary to put the Carlton Avenue Bridge back in service by the 2012 arena opening would start in December.

And, in a 12/14/10 email message to the New York City Economic Development Corporation, FCR executive Kate Bicknell stated, "Carlton Ave Bridge and related yard work--just beginning."

(I acquired the latter and the follow-up message via a Freedom of Information Law request.)

In a follow-up message 1/31/11, Bicknell stated that "the next phase of yard construction necessary for opening the Carlton Ave Bridge is underway and on track for completion prior to arena opening."

That remains in question.

Where's the money?

Meanwhile, as of 12/28/10, Forest City Ratner Bruce Bender unsuccessfully tried to get state Senator Carl Kruger, who has since pled guilty to bribery, to commit $9 million of state funds to the Carlton Avenue Bridge reconstruction, thus paying the majority of the $16 million the developer owed. (The city was already putting up $24 million.)

It's unclear where this money would come from, but the late date suggests that the developer was scrounging for it. While that's hardly proof of delays, it's another hint that the project faced challenges.

Is there any leverage? 

What leverage does the state have if the bridge is delayed? Not much, it turns out.

According to Section 8.6(b) of the Atlantic Yards Development Agreement, "the Substantial Completion (as defined in the Arena Development Lease) of the Carlton Avenue Bridge is an Arena Opening Condition." That sounds serious.

Other Arena Opening Conditions: Substantial Completion of the Urban Experience/Urban Room (which can be delayed), the Subway Entrance, and the Arena Parking.

And one "Event of Default," according to Section 17.1(f), is "the hosting of the first event at the Arena open to the general public prior to the satisfaction of the Arena Opening Conditions."

The key, however, is the penalty for such an Event of Default. It's not a fine or a stall on other development; rather, it's a likely ineffectual block on new development.

According to Section 17.2(a)(iii), upon an Event of Default described in Section 17.1(f), as well as other sections, neither Atlantic Yards Development Company nor any other developer "may request the creation or severance of any Development Parcels under this Agreement or any Interim Lease, request the execution and delivery by ESDC of any Development Lease or commence the performance of any Development Work under the applicable Development Lease."

But that would give Forest City Ratner a grace period of many months, likely well more than a year.

As long as Building 2 is started, the developer is relatively free. The next building does not have to be started for two years, according to Section 8.6(d)(i)(II).

Commitments?

The developer is supposed to be committed to reconstructing the bridge. From the 12/21/09 Amended Memorandum of Environmental Commitments for the Atlantic Yards Project, signed by Forest City Ratner to document commitments made to avoid adverse environmental impacts described in the Final Environmental Impact Statement:
Among the roadway improvements FCRC shall fund and/or implement are the following:

...4. FCRC shall construct a new entrance to the Atlantic Avenue/Pacific Street subway station complex on Block 1118...

7. FCRC shall reconstruct the Carlton Avenue Bridge so as to be functional as of the opening date of the arena.
That's what it says. It just doesn't look very enforceable.

Timetable update in November 2011

The bridge came up for discussion at the 11/3/11 meeting of the Atlantic Yards District Service Cabinet. “As far as the LIRR work is concerned, the major piece of the excavation there is complete, and we continue to do drilling to support the Carlton Avenue Bridge,” Forest City executive Bob Sanna said. “The bridge abutments are currently being constructed at the moment. We have a big pour contemplated tomorrow.”

He added that overtime continues: “We are working in a premium time program... five days a week, ten hours a day,” with an eight-hour day on Saturdays. “We're watching that schedule carefully to be complete in anticipation of the arena opening."

Later, Council Member Letitia James asked Chris Hrones of the Department of Transportation (DOT) if DOT was keeping track of the progress with the long-delayed bridge.

“Our bridges people are monitoring that project,” and looking at both the schedule and the work, Hrones replied. However, he didn’t provide any details on those conclusions.

No answer re delays

At another junction, Council Member Steve Levin asked, “Do we have a projected date of completion, and what happens if it's not open, what if you can't finish it by that time?”

“It is required to be open, and we are monitoring it very carefully,” replied Sanna, who also referenced the DOT’s role. “So we're working very aggressively to ensure that it does open.” He didn't provide a specific completion date.

Levin continued: "What if it doesn’t?"

“We're not contemplating that it will not open,” said Sanna, who noted that “the bridge structure itself is actually in fabrication... We do not anticipate that it will not open.”

“In the world of capital construction, stuff gets delayed all the time, so I’m just wondering,” Levin said.

“That has not been our track record to date,” responded Sanna.

Actually, the track record is a lot more questionable, since the bridge, of course, was originally supposed to take two years.

So stay tuned. The District Service Cabinet is supposed to meet every two months, but its first 2012 meeting, originally scheduled for last week, was postponed, and no date yet has been announced.

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