Skip to main content

Flashback: ESDC attorney once assured court that Forest City have "to bring the Project to completion by 2019, with sanctions imposed for any failure to do so"

Way back in January 2010, as the last major Atlantic Yards legal case faced its first hearing, I pointed to a key point of dispute. In retrospect appears to be either a glaring untruth or, more charitably, an incredibly misguided prediction about the state of New York's capacity to negotiate with Atlantic Yards developer Forest City Ratner.

It's worth another look. (Tomorrow I'll write about the legal battle over the appeal in the aftermath of the convoluted case.)

Timetable challenge

Two coalitions of civic groups had challenged the Empire State Development Corporation's (ESDC) September 2009 approval of the Modified General Project Plan (MGPP), asserting that the project could last some 22 years--because of the revision of the Vanderbilt Yard deal, allowing much slower payments--rather than the promised ten year.

The ESDC said no, and countered by pointing to a set of documents that, at the time of the November 2009 filing of legal papers, had not yet been signed. They were signed in December 2009, but withheld by the agency until after the January 2010 court hearing.

A state judge ruled in favor of the state and Forest City, thus allowing financing for the arena to proceed. Had the documents actually been released, the financing--or at least the release of proceeds--instead might have been stalled.

Only after the documents released was the case reopened and the result reversed--the state would have to conduct a Supplemental Environmental Impact Statement (SEIS). The result was upheld by an appellate court, but the ESDC and Forest City are trying to appeal to the state Court of Appeals.

The ESDC contention

The ESDC Memorandum of Law made an entirely inaccurate prediction:
Petitioners' errors in describing the purpose and effect of the MTA term sheet are compounded by the fact that they look only to the transaction with MTA to discern FCRC's obligations. What they apparently fail to apprehend in painting their dismal picture of the future course of the Project is that there will be an entirely separate set of agreements between FCRC and ESDC, and that under those agreements FCRC will be contractually committed to implementing the 2009 MGPP. (Fact Statement 39.) Among other things, FCRC will be required to use "commercially reasonable efforts" to complete the Arena and certain Phase 1 buildings in accordance with a specified schedule, and to bring the Project to completion by 2019, with sanctions imposed for any failure to do so. (Fact Statement 39, AR 4692, 7979.)
(Emphases added; click on graphics to enlarge)

Yes, there would be an entirely separate set of agreements, but there were no sanctions imposed for a failure to bring the project to completion by 2019. Rather, the sanctions for Phase 1 would kick in after 12 years and for the project as a whole would kick in after 25 years.

Still under negotiation

What was in the cited Fact Statement 39, used as backup for the legal claim? According to the ESDC's legal Answer:
As required by the 2009 MGPP, the Development Agreement being negotiated between ESDC and FCRC will require FCRC to "use commercially reasonable efforts... to complete the entire Project by 2019." (AR 4692.) (As used herein, the term "Development Agreement" encompasses the development agreement, interim leases, development leases and ancillary agreements being negotiated between ESDC and FCRC to implement the project. (AR 7067-79.)) In the unexpected event that FCRC were to renege on its contractual commitments to ESDC and abandon the Project, the 2009 MGPP would remain in full force and effect, and would not be rendered unlawful as a plan for the Atlantic Yards site. In the event of such a default, ESDC could seek to recruit another developer to finish the work.
What was said in court

In court, as the transcript showed, ESDC attorney Philip Karmel admitted, "Well, the penalties are not set forth in the record." That's because the record did not include the Development Agreement, even though it had been signed during the interim period between the filing of legal papers and the court hearing.

And, indeed, there would be no sanctions for failure "to bring the Project to completion by 2019." Instead, the deadline is 25 years.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

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…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…