Skip to main content

"The Case of the Brooklyn Basketball Arena" makes the Commercial Observer's list of "15 Most Fascinating New York Real Estate Cases"

The Commercial Observer, in its list of the 15 Most Fascinating New York Real Estate Cases of the 21st Century, offers The Case of the Brooklyn Basketball Arena:
To its opponents, Forest City Ratner’s controversial plan to build a basketball arena and 16 commercial and residential high-rise buildings above the former Atlantic Terminal rail yards had all the elements of a land grab, much like the ones orchestrated decades earlier by Robert Moses.
But with few exceptions, the cadre of judges who ruled on the case between 2003 and 2011 has thought differently, deciding that, besides seizing property from residents in Prospect Heights, the powerful Cleveland-based developer should go ahead with plans to build in one of Brooklyn’s most congested neighborhoods, bypass city land-review procedures and amend many of its original plans.
A group of rent stabilized tenants near the arena’s footprint and Develop Don’t Destroy Brooklyn, one of the most visible opponents of the project, filed approximately eight lawsuits over six years, charging the developer with a litany of accusations, including failing to provide an independent appraisal of the yards.
And while the opponents have claimed several small victories, the developer and its supporters have declared victory in nearly two dozen cases.
Despite the deluge of legal attacks, the Brooklyn Nets season opener is set to happen this fall. But even before that happens, Jay-Z, the hip-hop impresario and Brooklyn Nets investor, is set to perform at the Barclays Center later this month.
Small corrections

This gets complicated, so let me offer several smaller corrections and one larger one. The first ruling in the list of cases was in 2006, on a case challenging Forest City Ratner's demolition plans, as well as the state's use of a lawyer who formerly worked for the developer.

Jay-Z's first concert is Sept. 28, not "this month." And if there were "approximately eight lawsuits," how could there be "nearly two dozen cases"? (Maybe "rulings.") And the cases were filed not merely by rent-stabilized tenants and DDDB.

Yes, DDDB organized most of the cases, but the eminent domain cases involved individual plaintiffs, while the challenge to the environmental review, as well as the challenge to the MTA deal revision and the 2009 approval by the Empire State Development Corporation, involved numerous civic groups.

The latter case, in fact, was combined with another case filed by the BrooklynSpeaks coalition, involving more civic groups. And elected officials signed on to two of the cases.

A larger correction

Most importantly, the opponents (and others simply seeking accountability) didn't merely claim "small victories."

In three decisions, two of them community victories, state Supreme Court Justice Marcy Friedman criticized a failure of transparency by the Empire State Development Corporation (ESDC), the state agency overseeing the project, in failing to study the impacts of a potential 25-year project buildout.

First, in March 2010, Friedman upheld the ESDC, despite criticizing the agency's  "deplorable lack of transparency."

Then, November 2010, she cited "what appears to be yet another failure of transparency" and requested new findings.

Then, in July 2011, she concluded:
ESDC’s use of the 10 year build date in approving the 2009 MGPP [Modified General Project Plan] lacked a rational basis and was arbitrary and capricious.
The ESDC and Forest City Ratner appealed, only to be smacked down by the Appellate Division, which unanimously stated:
We agree with Supreme Court that ESDC's use of a 10-year build date under these circumstances lacks a rational basis and is arbitrary and capricious.
By the standards of the state court system, those rulings are significant, since the "rational basis" bar is a low one, and judges rarely intervene into agency decisions. The defendants, who didn't have an automatic appeal at the Court of Appeals, asked for leave to appeal, but were denied.

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.